BusinessMirror March 28, 2015

By Bianca Cuaresma

Consumer confidence proved more

expansive under the latest survey conducted by the Bangko sentral ng Pilipinas (BsP), the so-called confidence index (CI) having deepened in the first quarter this year to minus 10 percent, from minus 21.8 percent a quarter earlier. Filipinos turned more optimis-tic about the prospects in their economic standing in the first quarter due to expectations of lower prices of commodity goods in the coming months. In the BSP’s quarterly survey, con-sumer confidence deepened to only minus 10 percent in the first three months, from minus 21.8 percent in the previous quarter, indicating the thinning number of predominantly pessimistic consumers among Fili-pino consumers. The CI is computed as the per-centage of households providing a positive outlook minus the percent-age of respondents that responded with a negative view on the given indicators of consumer sentiment. A negative CI means that the num-ber of pessimists outnumbers the number of optimists. In this case, however, the still-ne-gative but higher CI means that the number of pessimists is shrinking

finance construction of roads and other infrastructure. Beijing has pledged to put up most of the initial $50 billion in capital for the bank, which is expected to be set up by year-end. The US has expressed concern the new bank will allow looser lending standards for the environ-ment, labor rights and financial transparency, undercutting the World Bank, where the US has the most clout, and the Asian Develop-

ment Bank, where it is the second-largest shareholder after Japan. But, since Britain broke with Washington two weeks ago and an-nounced it was signing up for the AIIB, the floodgates have opened. France, Germany, Italy and Switzer-land quickly followed. On Wednes-day Prime Minister Tony Abbott heavily hinted Australia would also join. While Japan, which has tense relations with China, is still hold-

ing out, the Obama administra-tion appears increasingly at odds with sentiment in the very region where it has striven to forge closer ties for the past five years. India and all 10 members of Southeast Asia’s regional bloc are among the more than 30 governments that have so far sought to join the bank before a March 31 deadline. T hat has prompted hand-wringing among Asia watchers in

Continued on A2 Continued on A8

PESO ExchangE ratES n US 44.8270 n jaPan 0.3761 n UK 66.5905 n hK 5.7808 n chIna 7.2157 n SIngaPOrE 32.7372 n aUStralIa 35.1805 n EU 48.8121 n SaUDI arabIa 11.9510 Source: BSP (27 March 2015)

enjoying boracay early-morning vacationers enjoy the famous white-sand beach of boracay, which is relatively deserted at this time but is expected to be filled with tourists starting this weekend, as the summer vacation starts. NONIE REYES

government wants ‘big brother’ in cockpits

Consumers more confident in Q1nUmbEr Of PESSImIStIc fIlIPInOS DEclInES On ExPEctatIOnS Of lOwEr PrIcES In cOmIng mOnthS

U.S. ISOlatED aS allIES lInE UP tO jOIn chIna-lED banK

cereMoniaL ToaST apostolic nuncio to the Philippines archbishop giuseppe Pinto (from left), Foreign Undersecretary Lora Q. del rosario and bangladesh ambassador to the Philippines Maj. gen. john gomes (retired) during the ceremonial toast at the 44th anniversary of independence and national Day of bangladesh held at a hotel in Makati city. NONOY LACZA

www.businessmirror.com.ph n Tuesday, november 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 6 sections 28 pages | 7 DayS a weekn Saturday, March 28, 2015 Vol. 10 No. 170

A broader look at today’s businessBusinessMirrorthrEE-tImE

rOtary clUb Of manIla jOUrnalISm awarDEE2006, 2010, 2012U.n. mEDIa awarD 2008

By Recto Mercene

Will closed-circuit television (CCTV) cameras or camera video recorders (CVRs) watch-

ing over the shoulders of pilots inside the cockpit of a commercial airline finally become a reality? is “Big Brother” a welcome intrusion among commercial pilots? Big Brother is a fictional character or symbol in George Orwell’s novel Nine-teen Eighty-Four. it has entered the lexi-con as a synonym for abuse of govern-ment power, particularly in respect to civil liberties, often specifically related to mass surveillance. This question was being asked by aviation authorities in the light of the crash of a low-cost carrier German-wings aircraft on Thursday. German and French prosecutors said the sus-pect, copilot Andreas lubitz, appears to have deliberately crashed the Airbus A320 to the ground. They based their findings on data gathered from the cockpit voice recorder (CVC). The Airbus 320 from Barcelona to Düsseldorf hit a mountain, killing all 144 passengers and six crew, after a scary eight-minute descent. in a televised interview, the prosecu-tor said 28-year-old lubitz had locked the captain out of the cockpit and re-programmed the airplane on auto-pilot to intentionally “destroy the aircraft.” Asked to comment about this latest developments, the Civil Aviation Au-thority of the Philippines (Caap) said it would order local airlines to adopt new cockpit rules, such as requiring two pilots in the cockpit at all times. However, the question of whe-ther to order the installation of CCTV

WASHINGTOUS resistance to a Chinese-led Asian regional bank has left it

isolated among its Asian and Euro-pean allies, and given some heft to China’s frequent complaints that Washington wants to contain its rise as a world power. South Korea one of America’s closest friends in Asia, announced on Thursday it will join the Asian Infrastructure Investment Bank (AIIB), which is intended to help See “Big brother,” A2

even as the number of optimists in the country continue to grow.  The BSP said their improved outlook dur-ing the current quarter was due to expecta-tions of lower oil prices and stable prices of commodities, higher family income leading to more savings, the availability of more jobs and the appreciation of the peso. The improvement and development of road infrastructure was also been cited as one of the reasons behind the optimism, as well as less calamities, less corruption and more assistance

from the government such as the pro-poor Pantawid Pamilyang Pilipino Program. The biggest improvement in sentiment was noted in the middle-income group, followed by the low-income group. In terms of CI, the high-income group remain the most bullish on the country’s economic prospects this year. The sentiment of consumers in the Philip-pines mirrored the improved outlook of con-sumers in the euro area, Indonesia, Japan, South Korea and Taiwan, but was in contrast to the steady outlook by consumers in the US and the less optimistic views of consumers in Australia, China, Thailand and the US in the

first quarter of this year. For next or upcoming quarter, con-sumer sentiment continued to be more fa-vorable as the next quarter CI increased and remained in the positive territory at 4.4 percent, from 0.7 percent in the previous quarter. For the year ahead, meanwhile, the outlook of Filipino consumers was seen to improve sig-nificantly with a CI of 17.3 percent from the 9.6 percent in an earlier survey. “This indicates that the number of consumers with favorable views increased and exceeded those with un-favorable views,” the BSP said. 

SUNRISE SUNSET

NEW MOON5:55 AM 6:08 PM

MOONRISEMOONSET

12:42 AM 12:28 PM

TODAY’S WEATHERMETROMANILA

LAOAG

BAGUIO

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TAGAYTAY

LEGAZPI

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TUGUEGARAO

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CAGAYANDE ORO

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ZAMBOANGA

TACLOBAN

3-DAYEXTENDEDFORECAST

3-DAYEXTENDEDFORECAST

CELEBES SEA

LEGAZPI CITY24 – 32°C

TACLOBAN CITY24 – 32°C

CAGAYAN DE ORO CITY

METRO DAVAO24 – 31°C

ZAMBOANGA CITY24 – 34°C

PHILI

PPIN

E ARE

A OF R

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ILITY

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SABAH

PUERTO PRINCESA CITY 25 – 32°C METRO CEBU

24 – 33°C

ILOILO/BACOLOD

23 – 32°C

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24 – 32°C 25 – 33°C 25 – 34°C

24 – 32°C 25 – 32°C 25 – 32°C

23 – 32°C 23 – 33°C 23 – 32°C

24 – 32°C 25 – 33°C 25 – 33°C

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Watch PANAHON.TV everyday at 5:00 AM on PTV (Channel 4).

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MARCH 28, 2015 | SATURDAY

HIGH TIDEMANILA

SOUTH HARBOR

LOW TIDE

11:57 PM0.00 METER

TUGUEGARAO CITY22 – 30°C

LAOAG CITY 23 – 33°C

TAGAYTAY CITY 21 – 30°C

SBMA/CLARK 25 – 33°C

24 – 33°C 24 – 33°C 24 – 34°C

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HALF MOON

3:43 PMMAR 27

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BAGUIO CITY14 – 22°C

25 – 33°C

3:51 PM0.85 METER

24 – 34°C

MAR 29SUNDAY

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MAR 29SUNDAY

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Partly cloudy to at times cloudywith rainshowers

NORTHEAST MONSOONAFFECTING LUZON

(AS OF MARCH 27, 5:00 PM)

METRO MANILA24 – 32°C

Northeast Monsoon locally known as “Amihan”.It affects the eastern portions of the country. It is cold and dry;

characterized by widespread cloudiness with rain showers.

Partly cloudy to at times cloudywith rainshowers and/or thunderstorms

Cloudy to at times cloudy withrainshowers and/or thunderstorms

Partly cloudy skies

Light rains

BusinessMirror [email protected] Saturday, March 28, 2015A2

News‘Big brother’. . . Continued from A1

Continued from A1

cameras has yet to be discussed in an ongo-ing meeting at the Caap headquarters in Pasay City. At least four airliners, including easyJet and Norwegian Air Shuttle, announced they would adopt new cockpit rules, according to news reports. Unlike many US carriers, Euro-pean companies generally do not require two people in the cockpit at all times. The country’s foremost authority on avia-tion, Dr. Avelino Zapanta, president and CEO of Seair International, said cockpit cameras “will provide the same benefits as CCTV cam-eras. If aircraft have CVRs, cameras should be helpful.” Asked if pilots could have their way pre-venting the installation of CCTV cameras and CVRs inside the cockpit, Zapanta said the pi-lots would not object if such were mandated by the Caap. “Wala naman silang magagawa kapag mandate ng Caap,” said the author of the book 100 Years of Philippine Aviation, 1909-2009. The second so-called black box that re-cords flight data still has not been found, although investigators were quoted as saying the data revealed by the CVR was more than enough to establish the cause of the crash. “The flight-data recorder records the speed, altitude and other aircraft parameters at the time of the crash, but not what the CVR had revealed,” according to one of the investigators commenting on television. Some years ago, the National Transporta-tion Safety Board (NTSB) proposed the use of video cameras in the cockpit of passenger aircraft, following the 9/11 incident when two aircraft piloted by terrorists crashed into the iconic New York Twin Towers. The NTSB then expressed the need for up-grading cockpit voice and flight-data record-ers, citing some 52 accidents and incidents since 1983. The international aviation community is aware of the safety benefits of crash-protected video recorders, the NTSB added. In 2000 in the latest available record of the Air Line Pilots Association, International

(Alpa), their president, Capt. Duane Woerth said: “Alpa has a proud 69-year history of safety advocacy, but these issues are both a waste of precious resources and a senseless intrusion on pilots’ privacy.” He said to the uninitiated that cockpit video, as well as the psychological testing of pilots, offer the false allure of the all-inclusive solution to the nature and cause of every air-craft accident and incident. “The reality is that video surveillance and psychological testing of pilots will not prevent accidents.” “Air safety will be far better served by con-tinuing to focus on improved flight recorders and proactive safety programs such as Flight Operations Quality Assurance and the Avia-tion Safety Action Program,” he added. “Protecting pilots’ privacy and the release of data for inappropriate purposes is Alpa’s highest concern with regard to cameras in the cockpit. Experience with cockpit voice recorders in the past 40 years has proven that regardless of NTSB procedures, pilots are not protected from the misuse of data collected for the sole purpose of enhancing air safety.” “The CVR has been used for sensational purposes by the media. It has been used by litigants in civil and criminal suits. It has even been used by employers for surveillance and disciplinary purposes,” Woerth said. “This is unacceptable,” the Alpa head said. After a meeting in Tokyo, the Interna-tional Federation of Air Line Pilots’ Associa-tions issued a statement: “Unless and until all member-states of the International Civil Aviation Organization subscribe to enact and implement strong protective measures to positively guarantee protection of privi-leged information, and strict measures are imposed for abuses of national laws and regulations governing the use of cockpit recorder derived information, new and enhanced cockpit information collection devices will not be accepted by the inter-national airline pilot profession.”

Consumers more confident in Q1

In the US shadow banking—also known as market finance—grew almost 9 percent to $25.2 trillion in 2013, while banking assets increased almost 5 percent to $20.2 trillion. “One of the oft-cited examples regarding the prowess of the US financial system is our reliance on market finance,” said Lawrence Goodman, president of the New York-based Center for Fi-nancial Stability, a nonprofit research group. “It helps grease the wheels of the financial system.” The grease can also magnify risks. That was the case during the financial crisis, when mas-sive withdrawals from money-market mutual funds, beginning with the $62.5 billion Reserve Primary Fund, helped deepen the credit freeze.

Limited reachONe challenge for the Fed is that its regu-

latory reach is limited. The Securities and exchange Commission (SeC), for example, oversees the $2.6-trillion money-market fund industry. For the SeC, the focus is pro-tecting investors rather than preventing a financial meltdown. The 2010 Dodd-Frank overhaul of financial regulation sought to address the issue by creat-ing the Financial Stability Oversight Council (FSOC), a panel of regulators headed by the Treasury secretary that also includes the Fed, the SeC and the Federal Deposit Insurance Corp (FDIC). The council has used its authority to designate some insurers, such as Prudential Fi-nancial Inc., as systemically important nonbank financial firms, subjecting them to tougher Fed oversight. It has backed away from designating mutual-fund companies.

BlackRock letterNew YORK-BASeD BlackRock Inc. has said repeatedly that asset managers don’t pose a systemic risk. At the same time, BlackRock, the world’s largest asset manager, supports the idea of stress tests of mutual and private funds because they would help ensure “robust portfolio liquidity risk management,” it told FSOC in the summary of a letter released this week. One area where the Fed claims some success is in the tri-party repo market, where broker-dealers borrow, often overnight, from investors including money-market funds, and hand over securities as collateral. The amount of securi-ties financed through tri-party repo averaged $1.62 trillion as of February 10, according to data compiled by the Fed. Bloomberg News

Fed focuses on shadow banking as it gauges financial-system risk . . . Continued from A8

[email protected] Editor: Dionisio L. Pelayo • Saturday, March 28, 2015 A3BusinessMirrorThe Nation

PNP Spokesman Chief Supt. Generoso Cerbo said the alert sta-tus covered Regions 1, 2, 3, 4A, 4B and 5 in Luzon; and Regions 6, 7 and 8 in the Visayas.

“Regional directors in these areas are given the discretion to elevate the alert status of their offices/units, depending on the developing and emerging situ-ation in the respective areas of responsibility,” he said.

All six Mindanao-based Police Regional Offices, however, re-main under full alert condition in response to the prevailing se-curity situation in their areas, Cerbo explained.

He said commanders have been reminded to maintain security in vital installations and economic key points, as well as places of convergence and ensure high state of operational readiness to deter criminal activities and thwart any hostile actions that may be launched by threat groups.

“PNP units in insurgency-affect-ed areas were also alerted against possible rebel-initiated hostilities in connection with the 46th found-ing anniversary of the communist New People’s Army on Palm Sunday, March 29,” Cerbo said.

He said the communist guer-rillas are known to launch armed

hostilities and offensive actions against government and military personnel and elements as part of celebrating their foundation anniversary.

But the Armed Forces of the Phi l ippines (AFP) announced on Friday it is prepared for any offensive by the military wing of the Communist Party of the Philippines.

We are working closely with the PNP in monitoring the NPA and in taking preemptive measures to thwart their plans, such as mount-ing violent attacks against gov-ernment installations, according to a statement issued by the AFP.

Earlier, AFP Public Affairs Of-fice Chief Lt. Col. Harold Cabu-noc said that units based in non-threat areas can grant leave to their personnel wanting to go home this Holy Week.

However, this condition can-not be applied to provinces and areas with intact threat groups, like the NPA.

Areas in the Philippines known to be hosting NPA groups include Masbate, Sorsogon in Southern Luzon and Kalinga in Northern Luzon; Leyte, Eastern and North-ern Samar in the Visayas; and Caraga Regions and Compostela Valley in Mindanao. With PNA

Holy Week observance prompts intense police presenceBy Rene Acosta

WHILE Catholics all over the country are expected to observe beginning on

Sunday the Christian tradition of Jesus Christ’s passion, death and resurrection, the Philippine National Police (PNP) began on Friday to place all of its police units in Luzon and the Visayas under heightened alert.

FOR six days beginning April 1, car owners can use their cars sans worrying about

their plate number ending, as the Metropolitan Manila Development Authority (MMDA) would lift its Unified Vehicular Volume Reduc-tion Program (UVVRP).

The lifting of the UVVRP, common-ly known as “number-coding,” will be lifted by Holy Wednesday until April 6, the Monday after Easter.

Nonetheless, MMDA officials promised to ensure a smooth traffic flow during the observance of the Holy Week, which formally begins on March 29, or Palm Sunday.

Crisanto Saruca, MMDA traffic dis-cipline office head, said they would en-sure smooth traffic flow as the agency launched on Friday its campaign called Oplan Metro Alalay Semana Santa (Oplan Mass). The support campaign, however, would end on April 6, the day the number coding would be lifted.

Saruca said the MMDA launched the campaign, as they expect a heavy inflow and outflow of people to and from the metropolis. He explained the campaign will focus on the follow-ing entry and exit points to and from Metro Manila: the Northern Luzon Expressway, Southern Luzon Express-way, Coastal Road, McArthur Highway, Marcos Higway, Mindanao Avenue and A. Bonifacio Avenue.

Saruca added that about 2,300

MMDA employees would be assigned to these exit and entry points begin-ning on Monday. This contingent would be composed of 1,627 traffic constables, 120 mobile patrol units, 130 motorcycle units, 40 members of road-emergency groups, 200 per-sonnel assigned to parkway-clearing groups and 300 for sidewalk-clearing operations.

Saruca said they would also hire ad-ditional people on a temporary basis to help man the traffic, especially along major thoroughfares, such as Epifanio de los Santos Avenue (Edsa), and road-ways leading to and from transpor-tation hubs, such as provincial bus terminals, airports and seaports. He added that the MMDA would also de-ploy enforcers on areas near churches, where devotees make their Holy Week pilgrimages.

There are about 1,823 major and minor churches in Metro Manila, ac-cording to MMDA data.

Meanwhile, MMDA Chairman Francis Tolentino said the agency will also inspect bus terminals in Edsa Cubao, Pasay City, Caloocan City and along the Coastal Road.

Tolentino added that they would require bus drivers to undergo breath-analyzer tests before they are allowed to travel. “We want to ensure that drivers of buses are not under the influence of alcohol before driving on the road. Claudeth Mocon-Ciriaco

AUTHORITIES accused New People’s Army (NPA) guerrillas as behind Thursday’s ambush of

a convoy of Agusan del Norte Gov. Ma. Angelica Rosedell Amante Matba that left one policeman wounded.

Philippine National Police (PNP) Supt. Martin Gamba said Matba and her escorts were on their way back to the provincial capitol when they were attacked.

Gamba, spokesman of the PNP Regional Office 13, said the ambush wounded one of Matba’s escorts, PO1 Vincent Salvador Dubouzet Jr.

Matba and the rest of her security personnel escaped unscathed, Gamba said. The ambush occurred around 11:20 a.m. on Thursday at Kilometer 12, Sitio Hinandayan, Barangay Camagong, Nasipit, a third-class municipality of Agusan del Norte, with a population of 40,663. Government data revealed 34.9 percent of the population was considered poor in 2009. The provincial governor’s convoy included five vehicles, including

the car bearing Matba and employees of the provincial capitol.

Gamba said the governor and her team were already returning to the provincial capitol from Camagong when they were fired upon. The governor attended a turnover of a schoolbuilding in Barangay Camagong to school officials.

Gamba said they estimate there were eight attackers who, he added, were forced to withdraw after Matba’s escort returned fire. The ambush triggered an exchange of gunfire for about 40 seconds, wherein the rebels were forced to withdraw.

The governor and the rest of the VIPs safely left the ambush area, while Dubouzet was brought to one of the hospitals in Butuan City and now in stable condition, according to Gamba. He urged all PNP “to be on alert and conduct strong checkpoint operations in their respective area of responsibility.”

Gamba said they are coordinating with the AFP to pursue the attackers. Rene Acosta

Number coding for cars suspended for six days

Police finger NPA guerrillas in Agusan del Norte ambush DAVAO CITY—The top

official of government’s National Commission

for Muslim Filipinos (NCMF) denied its units were used to channel funds to the Moro Islamic Liberation Front (MILF).

“We don’t know where critics are getting all the information that they have been announcing to the media, but we can certainly ask the implementing agencies of Sajahatra Bangsamoro and, of course, the Bangsamoro Transition Commission [BTC] to send them the financial reports that were submitted to the Commission on Audit [COA] if they want,” NCMF Chairman Bai Yasmin Busran-Lao said.

“All they have to do is ask.”Busran-Lao issued her

statement on Friday, after news reports came out that alleged money from the Executive branch was being funnelled to the BTC and the Sajahatra

Bangsamoro. The latter is a government-funding program aimed to uplift the economic conditions of the Moro-populated communities.

Busran-Lao said she can attest all government funds spent for these communities are in order and properly accounted for. The Sajahatra Bangsamoro is a legitimate government program “implemented by government agencies that provide services and other development projects for communities in Muslim Mindanao,” according to Busran-Lao.

The BTC, on the other hand, is a government agency created by President Aquino that is under the Office of the President and remains subject to regular government accounting rules and COA audit, she added. 

A statement released on Friday by the Office of the

Presidential Adviser on the Peace Process (Opapp) quoted government peace panel member Senen Bacani on the BTC’s P100-million operational expenses.

Bacani was quoted as saying the money is “subjected to regular government accounting and auditing procedures, since the body is under the Office of the President.”

On the Sajahatra Bangsamoro Program, the Opapp quoted Bacani as saying, “Its main goal is to provide short-term quick-impact projects to the economically deprived communities and other targeted beneficiaries in Mindanao.”

“The draft BBL provides for the creation of the BTA to oversee the transition of the existing Autonomous Region in Muslim Mindanao to the future Bangsamoro region,” the former agriculture secretary added. Manuel T. Cayon

KITES AND KIDS Students from different schools play with kites on March 27 at the University of the Philippines Diliman campus in Quezon City. The month of March signals the end of school and the start of summer vacation for many students. Stephanie tumampoS

Muslim-affairs body denies MILF-funding role

ARCHBISHOP Rolando J. Tria Tirona, executive director of the National Secretariat for Social Action (Nassa) and Caritas Philippines, calls on Catholics to continue supporting “Alay Kapwa,” the Lenten evangelization-action program of the Catholic Church that raises funds for the poor and disaster survivors. Contributions to the program are used to sustain its various initiatives on good governance, sustainable agriculture and children and women’s rights, according to Tirona. Alay Kapwa, which roughly translates to “offering to one’s neighbor,” previously supported the Church’s disaster response, providing as much as P4.95 million to the dioceses affected by typhoons in 2014. Tirona launched a fund-raising campaign for the Alay Kapwa program in celebration of its 40th founding anniversary. Claudeth Mocon-Ciriaco

CArDINAl TAglE: SwITChoff lIghTS oN MArCh 28

BIShoP SEEKS SUPPorTTo AlAy KAPwA ProgrAM

Phl To ACT To SAvE PINAy IN DEATh row IN INDoNESIAFOREIGN Affairs Secretary Albert F. del Rosario confirmed on Friday that Indonesia’s Supreme Court has denied the Philippines’s appeal for review on the case of Filipino Mary Jane Veloso, who was sentenced to death for smuggling prohibited drugs.

“Our initial appeal for judicial review was denied. Nonetheless we will exhaust all possible legal means to save the life of Mary Jane,” del Rosario said in a statement. The High Court did not cite the reason for its denial of Manila’s appeal, which seeks to commute Veloso’s sentence to life imprisonment. Veloso, 30, was arrested on April 25, 2010, at the Yogyakarta Airport for possession of 2.6 kilograms of heroin. PNA

MMDA: BrACE for TrAffICAS DPwh BEgINS roAD rEPAIrTHE Metropolitan Manila Development Authority (MMDA) on Friday warned motorists to brace for heavy traffic as the Department of Public Works and Highways (DPWH) will undertake road reblocking and repairs from April 2 to 5.

MMDA Chairman Francis N. Tolentino said the road reblocking and repairs will start at 12:01 a.m. on April 2 (Holy Thursday) until noon of April 5 (Easter Sunday). Emerson Carlos, assistant general manager for operations of MMDA, said the reblocking and repair of the said areas during the Holy Week are for maintenance purposes. Motorists are advised to avoid the said areas and use alternate routes instead. Claudeth Mocon-Ciriaco

CEBU CIT Y—Tourists are expected to flock to the southern part of Cebu during

the Lenten season, an official of the Department of Tourism (DOT) for Region 7 said.

D O T-7 D i r e c t o r R o w e n a Montecillo said eco-tourism-related destinations are going to be the top choice of tourists, specifically

local travelers, during the weeklong Lenten vacation. Towns like Boljoon, Oslob, Samboan and Santander, otherwise known as the BOSS cluster, are now becoming popular among local and foreign tourists, as eco-tourism destinations are taking the center stage in the travel itineraries.

Aside from these four popular towns in the southern stretch of Cebu,

destinations with inviting beaches are also expected to be visited by tourists. But she said Bantayan Island will always expect more tourists, both local and foreign, not only for its white-sand beaches, but also because its fiesta celebration and its image as the Lenten Capital of the Visayas for years.

Hans Hauri, former president of the Hotel, Resort and Restaurant

Association of Cebu Inc., said the promotions for the hot tourists’ destinations in the Philippines is strengthened by the DOT campaign, “It’s More Fun in the Philippines.” The attractive offers of airlines also augmented the interest of Filipinos to travel within the country.

“The domestic market has grown because the supply has grown,”

Hauri said. He added that the massive promotions of different charming destinations in the Philippines also got interest from the international travel market.

Land-transportation services also has improved not just the number of routes, but also the convenience in traveling inland and through sea transport. PNA

MANILA Archbishop Luis Antonio Cardinal Tagle encourages the faithful to do their part and help save energy by joining the switch off lights for 60 minutes on Saturday. Tagle and other Catholic Church officials said they are throwing their full support for this year’s Earth Hour, which started in 2007 and would be celebrated this year on March 28. Speaking on Church-run Radyo Veritas, Tagle also urged Catholics “to adopt a lifestyle that would conserve energy not just during Earth Hour.” A Makati City official has said that in participant households, establishments and institutions in 2014 racked up over 4.8 million watts in total energy savings, which is roughly equivalent to 2,530 kilograms of CO2 emission. Claudeth Mocon-Ciriaco

DOT-7 sees tourists flocking to south Cebu during Holy Week

briefs

President Aquino on Friday urged Chinese businessmen to pay the correct taxes and

to “share” part of their profits with their employees.

Aquino urges Chinese businessmen to pay correct taxes, share their wealth

The president made this appeal in his speech during the opening cere-mony of the 39th Biennial Conven-tion of the Federation of the Filipi-no-Chinese Chambers of Commerce and Industry Inc. (FFCCCII) held in Pasay City. “Might I note that we did this without raising taxes, apart from the ‘sin’ tax. But, of course, the appeal continues: Please pay the cor-rect taxes,” he said.

Mr. Aquino said beefing up the government’s capacity to help Filipi-nos would boost his administration’s efforts to attain inclusive growth.

Since 2010, he noted that the gov-ernment has nearly doubled the bud-get of the Department of Education, increased the budget of the Technical Education and Skills Development Authority by 84 percent, increased

the budget of the Department of Social Welfare and Development by sevenfold, and tripled the country’s infrastructure budget.

“Empowering these agencies has allowed us to double down on proj-ects that expand the spectrum of opportunities for our people. There is the Pantawid Pamilyang Pilipino Program, for instance, which gives cash grants to our poorest 4.4 mil-lion families and households, on the condition that pregnant mothers go through health checkups, and that children go to school, among others,” he said. While he acknowledged that Chinese businessmen belonging to the FFCCCII have always reached out to help their communities through scholarship funds or medical mis-sions, President Aquino urged

Chinese businessmen “to do even more.”“Perhaps your companies can take

the initiative, make the effort to give your employees a little more and it will serve to drive them to be even more productive, while at the same time, spurring a virtuous cycle of trust, confidence and sustained economic growth,” he said.

Mr. Aquino recalled that when he was still part of Congress, he proposed a measure that called for businesses to share part of their net new profits with their employees. He said the thinking behind this was simple: the country’s business environment had reached a point where management and labor had become “too adversarial.”

President Aquino also recited his ad-ministration’s achievements in the past four years and nine months he was in of-fice. He noted that gross domestic product (GDP) growth averaged 6.3 percent over the period 2010 to 2013, which, he said, was a “stark improvement” from the aver-age GDP growth of 4.3 percent recorded between the years 2006 and 2009.

He said net foreign direct investments also reached an “all-time high” last year, rising to $6.2 billion from just $1.07 billion in 2010.

NOT IMMUNE Even small carts are not insulated from Metro Manila’s traffic jams. In this March 27 photo, a vendor is stuck at the inter-section of Chino Roces Avenue and Dela Rosa Street in Makati City as traffic has started to build up in the area. KEVIN DE LA CRUZ

CEBu City—Cebu City Mayor Michael Rama on Friday said he is looking at the possibil-

ity of borrowing money to pay off the P3-billion yen-denominated loan from the Japan Bank Inter-national Cooperation incurred by the city government for a reclama-tion project.

Rama said the loan is expected to give the city coffers some relief in debt payments. The city govern-ment has borrowed a total of P5.6 billion from the JBIC for the service release premium (SRP) develop-ment. It has yet to pay the remain-ing balance of P3 billion.

But the Department of Budget and Mamagement declared the city’s 2015 annual budget “inopera-tive in part” because it exceeded the debt cap by P2.23 billion.

The city has appropriated P3.2 billion for debt servicing, which is

way beyond the allowable 20 per-cent of regular income.

Since the city’s revenue totaled P4.87 billion, it is, therefore, only allowed to set aside P974.47 million to pay off debts.

Cebu City Budget Officer Mariet-ta Gumia said the city can still push through with the payout since the city’s debt cap is still within what is allowed by law.

“We will not use the regular in-come to pay off the loan. We are still within the allowed debt cap know-ing that we paid P179 million for February and around P160 million in August,” Gumia said.

The city sets aside P300 to P500 million a year for the SRP loan.

Of the amount, P150 million to P200 million is for interest payment and the guarantee fee.

As loan guarantor, the national government gets 1 percent of the

loan balance, which Cebu City is obligated to pay.

At present, the city has an out-standing balance of P2.9 billion based on the prevailing foreign- exchange rate.

Cebu City lawyer Jerone Castillo said it is not a new loan but a “con-version” to retire an existing loan having a zero net effect.

The Land Bank of the Philip-pines, Castillo said, advised them to convert foreign currency-domi-nated loan into a peso-denominated loan to avoid variances on foreign currency. The conversion will allow the city government to save P1.1 billion in guarantee fees.

The city has already paid a total of P6.8 billion, which is bigger than the original loan, inclusive of the national government’s guarantee or commitment fee amounting to P546.36 million. PNA

Cebu City eyes loan to pay JBIC debt

Saturday, March 28, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

EconomyBusinessMirrorA4 [email protected]

THE Makati Business Club (MBC) on Friday urged Con-gress to resume discussions

on the Bangsamoro basic law (BBL) “at the earliest time.”

“It has been more two months since the Mamasapano incident. While the search for truth contin-ues, we reiterate our stand that as the nation steadily moves forward from this tragedy, we must not allow political manipulation to take ad-vantage of the legitimate grief and emotion that continues to pervade the public’s consciousness,” MBC said in a statement.

MBC made the pronouncement during the nation’s commemoration of the first anniversary of the signing of the Comprehensive Agreement on the Bangsamoro (CAB).

The group said it agrees with the position released by 14 framers of the Constitution on January 9, which indicated that the constitu-tional principles of genuine human development, social justice and last-ing peace underlie the CAB and the proposed BBL.

“In this context, we respectfully urge Congress to not allow revisions that would contravene these values nor run against the aspirations of the Filipino people to attain a just, harmonious and progressive Phil-ippines,” MBC said.

The Senate and the House of Representatives suspended delib-erations on the proposed BBL after 44 members of the Philippine Na-tional Police-Special Action Force died in a clash with Muslim rebels

on January 25.Cagayan de Oro Rep. Rufus Ro-

driguez, chairman of the House ad hoc committee on the draft BBL, said they will have an executive session regarding the proposed measure on April 6.

Rodriguez said the delay in the submission of the Board of Inquiry report on the Mamasapano incident affected the BBL’s timeline.

The CAB was signed by the Phil-ippine government and the Moro Islamic Liberation Front on March 27, 17 years after the two parties started talks to end fighting.

The agreement served as the basis for the drafting of the BBL which calls for the creation of a new political entity dubbed as the Bangsamoro. Catherine Pillas

The Philippine Trade and Invest-ment Center (PTIC) in New Delhi, India, said the Nepal Philippines

Chamber of Commerce and Industries (NPCCI) was recently launched at the Philippine honorary Consulate Gen-eral Offices in Kathmandu, Nepal.

“Our commercial post in New Delhi has been steadfast in helping forge closer the relations between Philippines and Nepal, particularly on cooperation in business,” Trade Under-secretary Ponciano C. Manalo Jr. said.

Manalo said the Department of Trade and Industry’s aim is to

strengthen the Philippines’s commer-cial relations with Nepal and other South Asian countries given the re-gion’s potential as a market for Phil-ippine products and services.

The PTIC in New Delhi supports the country’s trade and investment inter-ests in India, Nepal, Bangladesh, Bhu-tan, Maldives, Pakistan and Sri Lanka.

Together with Philippine Consul General Ad honorem Suraj Vaidya, PTIC-New Delhi Commercial Counselor John Paul B. Iñigo congratulated NPCCI officers and members for their resolve to strengthen bilateral business ties

between the Philippines and Nepal.“A brainchild of Vaidya, the organi-

zation aims to promote bilateral coop-eration through investment, trade and technology transfer between Nepal and the Philippines,” Iñigo said.

The NPCCI is currently led by Rose-line Budhathoki as president. Mes-dames Blessie G. Dhakal, Salvacion P. Shakya, Luzviminda P. Thapa and Floramae Paudel are its senior vice president, junior vice president, secre-tary and treasurer, respectively, while Marivic A. Gurung and emma L. Pariyar are executive members.

Resume discussions on Bangsamoro law: MBC

PHL-Nepal business group launched in Kathmandu

PHL ties Malaysia in bottom 2-3of global miners’ ‘Report Card’THE world’s top explorers of

industrial and precious metals see the Philippines as tied

with Malaysia to the bottom of a list by a Canada-based think tank.

A recent study by the Vancou-ver, British Columbia-based Fraser Institute revealed that the Philip-pines tied with Malaysia in sec-ond or third on its list of 122 ar-eas on how attractive the mining

policies of the government are to the business sector. Honduras was tagged by the Fraser Institute as the worst country in the annual survey for the 2014 and 2015 period.

The Philippines were among the

THE Department of Trade and Industry’s Consumer Protec-tion Group (DTI-CPG) con-

ducted its rounds on Friday in bus stations and nearby supermarkets and grocery stores as the country’s observation of the Holy Week nears and many Filipinos are expected to go on trips to their hometowns in the provinces.

The DTI preps up its monitoring teams from the Fair Trade and En-forcement Bureau (FTEB) to partic-ularly check on the products under the list of basic necessities and prime commodities which are commonly used during the travels.

DTI-CPG Undersecretary Vic-torio Mario A. Dimagiba said, “We will ensure that the prices of canned goods and candles in public places of assemblies for trips such as bus stations are being sold within their suggested retail prices [SRPs].”

“We are aware that retailers in bus stations particularly add more on their prices of bottled water and we understand that this is business for them, yet the department stresses that their prices need not to be too high and that such tolerance is lim-ited,” he said.

Although packs and cans of bis-cuits and cup noodles are not in the basic and prime goods’ list, we will also be checking on the affordability and reasonableness of their prices,” Dimagiba said.

Simultaneously, the DTI will inspect the grocery stores and supermarkets and check on the prices of basic necessities and prime commodities.

Dimagiba said, “The department prompts owners and operators of said establishments to consistently comply with the specified SRPs for basic and prime goods and assist the consumers in their purchases.”

“The January list of SRPs on these products still stands and as of the mo-ment, there are no requests for price adjustments from the industries, to which the retailers are expected to observe these prices,” he said.

The DTI, through its FTEB, con-ducts regular monitoring activities on the price and supply of basic necessi-ties and prime commodities under its jurisdiction. These products include: basic—canned fish and other marine

products, processed milk, coffee, laun-dry soap, detergent, candles, bread, salt, potable water in bottles and containers, and locally manufactured instant noodles; prime—flour, pro-cessed and canned pork, processed and canned beef and poultry meat, vinegar, patis, soy sauce, toilet soap, paper, school supplies, cement, clin-ker, Galvanized iron (GI) sheets, hol-low blocks, construction supplies, batteries, electrical supplies, light bulbs, and steel wires.

Upon evaluation, if a retailer is found executing illegal acts of price manipulation, such as profiteering, which is a violation of the Republic Act 7581, or the Price Act, they shall face an administrative fine of up to P1 million subject to the circumstances provided after due notice and hear-ing. They can also be criminally liable for illegal price manipulation that may result to imprisonment of not more than 15 years and a maximum fine of P2 million.

SRPs are issued by manufacturers to retailers to ensure market share and fair competition in the market. Production cost, distribution cost, and profit margins of retailers and distributors are factored in. Con-sumer can access the list of SRPs for basic necessities and prime commod-ities at www.dti.gov.ph. Consumers can report any complaint on prices to DTI Direct 751-3330 and 0917-8343330. PNA

By Recto Mercene 

A BALMY tropical weather, friendly people and afford-able cost of living are a few

of the incentives one should con-sider in retiring, and the Philip-pines has an abundance of these qualities and more.

Hence, the call of our envoy in Washington, D.C. for Filipino-Americans to seriously consider retiring and investing in real estate in the Philippines, especially now that the country has made it to the top 10 list of retirement destina-tions in the world.

Ambassador Jose L. Cuisia Jr. in his meetings with members of the Filipino community put across this message during his recent trip to San Diego, California and El Paso, Texas.

“Affordable cost of living coupled with a warm climate and people are just some of the few things making the Philippines a top retirement destination,” Cuisia said, citing the recently released 2015 Global Retire- ment Index.

The Index, published by In-ternational Living, ranks the Philippines in the top 10 retire-ment destinations in the world, where most expats can live comfortably for about $800 to $1,200 a month.

“More and more foreign retirees are looking to settle in the Philip-pines. Aside from the affordable cost of living, expats enjoy things the country is known for such as its beaches, tropical climate, warm and hospitable people, discounts for senior citizens, and the duty-free import of household goods,” Cuisia said.

However, the envoy said Filipi-nos need not wait for retirement to experience what the Philippines has to offer.

“The Philippines has been receiving a lot of attention as a tourism hot spot by the interna-tional community,” the ambas-sador said as he cited the influ-ential travel guide, Lonely Planet, which recently came out with its list of top 10 destinations in the world to visit in 2015 and ranked the Philippines at No. 8. 

Cuisia also mentioned the award-winning US travel maga-zine Conde Nast Traveler that named Palawan the “Top Island in the World” based on over 76,000 votes from its readers. He said the Department of Tourism has also proclaimed 2015 as “Visit Philip-pines Year.”

“We are counting on our kababayans abroad to help make this a success,” said Cuisia, as he invited them to join the 10th Annual Ambassador, Con-suls General and Tourism Direc-tors Tour in July. He also urged them to invite their friends and colleagues to visit the Philip-pines with them.

During his trip to San Diego, Cuisia, accompanied by Consul General Leo Herrera-Lim and Hon-orary Consul Audie de Castro, met with Mayor Kevin Faulconer and other local officials as well with members of the Filipino American Chamber of Commerce, the Pam-pangueño Association, the Pan-gasinan Association and the Los Chabacanos.

Cuisia was also hosted on board the destroyer USS Kidd by Comm. Brian Shipman and met with Filipino-American sailors under Destroyer Squadron 21.

In El Paso Cuisia was the guest of honor in a gala dinner orga-nized by the Filipino community that was also attended by Brig. Gen. Timothy Coffin, commanding general of the White Sands Missile Range in New Mexico.

THE city government of Para-ñaque has collected more than P1.34 billion in business taxes

and fees in 2014, 40 percent higher than 2013.  Mayor Edwin L. Olivarez said the amount is also the highest in the last eight years in terms of value and an-nual-percentage increase. Olivares said this is a result of good governance and fiscal responsibility that started when he took office in 2013.  Records from the city’s Business Permits and Licensing Office (BPLO) showed the 2014 collection of P1.342 billion is higher by more than P301 million than the previous year’s take of P1.041 billion, or an increase of almost 40 percent. This is the second year in a row that the city broke the P41-billion mark in business-tax collection.  “This is a clear affirmation of the soundness of our policy that we don’t need new taxes in Parañaque; we should only enhance tax-collection efficiency to sustain and improve our financial position that allows us to deliver basic social and infrastructure services to the people of Parañaque,” Olivarez said.  “We are confident that, given the new policies that we have implement-ed, such as streamlining the proce-dures in the payment of fees and taxes and the reduction in the number of steps needed to secure business per-mits, we shall be able to sustain the trend of increasing tax collections in the coming years and maintain our ranking as the Most Competitive City

in the country in terms of economic dynamism,” he said.  Melanie Malaya, the BPLO chief, said the 29-percent increase in col-lection is also the highest since 2006, when the city started computerization of financial data. In 2013 business-tax collection increased by 11.33 percent to P1.041 billion, from only P935.58 million in 2012.  Malaya attributed the robust hike in collection to the “Invest in Parañaque” campaign of the Olivarez administra-tion which led to the big increase in the number of businesses that regis-tered or renewed their licenses in 2014 that totalled 19,477, an increase of 14 percent from the 17,086 firms issued business permits in 2013.  Under the campaign, the BPLO worked with local business groups, the various barangays, and the hom-eowner’s associations in encouraging all business owners to register their businesses with City Hall.  Of the number of firms registered in 2014, a big majority or 17,122 busi-nesses were renewals, while upstarts totalled 2,325. Malaya said the increasing num-ber of businesses and investments in Parañaque also reflects growing investor confidence in the city, which was adjudged as the country’s Most Competitive City in terms of economic dynamism for 2014 by the National Competitiveness Council, the Depart-ment of Trade and Industry, and the United States Agency for International Development. Claudeth Mocon-Ciriaco

DTI checks retailers in bus stations on their compliance with SRPs

BusinessMirror Saturday, March 28, [email protected] A5

Economy

A GOOD SOURCE OF VITAMINS A vendor in Balintawak sells lettuce at P30 per bundle. The lettuce is a good source of vitamin A, vitamin K and potassium. It also provides dietary fiber, carbohydrates, protein and a small amount of fat. KEVIN DE LA CRUZ

FilAms urged to retire in Philippines

Parañaque tax-take rose by 40% to P1.34 billion in 2014

other bottom dwellers: South Sudan, Zimbabwe, Sudan, Nigeria, Cen-tral African Republic, Ethiopia and Venezuela. The Philippines was also among the bottom dwellers in the Fraser Institute’s survey for the 2013 and 2014 period, a statement said.

The Philippines slid from 61 out of 112 jurisdictions in the previous survey to 101 out of 122 jurisdictions in the new survey.

In the latest index, Malaysia ranks as the least attractive in the world for mining investments, dropping from 70th out of 112 previously to 122nd out of 122 this time.

“While it is useful to measure

the attractiveness of a jurisdiction based on policy factors, such as oner-ous regulations, taxation levels, the quality of infrastructure, and others, the Policy Perception Index alone does not recognize the fact that in-vestment decisions are often sizably based on the pure mineral potential of a jurisdiction,” the Fraser said as a caveat.

Nonetheless, the Philippines fares better in a composite list of how attractive mining investments are in a specific area, combining government policy perception and the best practices mineral potential index, which rates regions based on

their geologic attractiveness.The Fraser Institute survey was

conducted from August to November 2014. The group said poll questions were sent to approximately 4,200 exploration, development and other mining-related companies around the world with reported exploration spending of $2.7 billion in 2014 and $3.2 billion in 2013.

Study authors Kenneth Green and Taylor Jackson wrote that the survey had been an attempt to assess how mineral endowments and public policy factors, such as taxation and regulatory uncertainty would affect exploration investments.

THE country can pursue a policy that will put a cap on capacity of Manila ports in

an effort to address the impact of port congestion on businesses and the economy.

Government think tank Phil-ippine Institute for Development Studies (PIDS) released a policy note analyzing port congestion and underutilization in the Great-er Capital Region composed of the National Capital Region and neighboring Central Luzon and Southern Tagalog.

Among the port traffic develop-ment alternatives for Metro Manila and its surrounding areas analyzed by Japan International Cooperation Agency, authors of the PIDS study favored an option to limit Manila port to Berth 6 capacity of Manila International Container Terminal (MICT) and no port expansion for South Harbor.

This scenario involves suspend-ing further expansion of MICT be-yond its present capacity and the conversion of Pier 9 to a foreign container berth.

“Volume restriction is relatively more effective than price incentives

in diverting traffic to Batangas and Subic Ports,” the PIDS study noted.

However, if pursued, the policy notes underscored the need for such effort to be complemented by increasing the number of Bureau of Customs and Philippine Ports Authority personnel at the ports and expand the cargo handling equipment and berth and container yard capacity.

These should commensurate to the volume of cargo and transaction that are targeted to be diverted from the Port of Manila.

Further, the paper proposed that port authorities give instruction that cargoes bound for or coming from the south of Manila should call on the Batangas Port, while those bound for or coming from the north of Manila should call on the Subic Port.

Batangas Port has an annual ca-pacity of 300,000 containers, while Subic Port has an annual capacity of 600,000 containers.

The utilization rates for Batangas Port and Subic Port reached measly 7.8 percent and 6.3 percent, respec-tively, in 2013.

To address the impact of port

congestion, the paper also urged the International Container Terminal Services Inc. to revive the Philippine National Railway (PNR) rail-freight operation to its inland container depot in Calamba, Laguna, during off-peak hours.

“The revival of the Philippine National Railway network from Bi-col region to La Union can provide a convenient and alternative way to travel and ship cargo in the Luzon area,” it said.

The paper said there is also a need for a gradual rehabilitation and im-provement of the PNR line so that it can be used to move empty, un-claimed and abandoned containers to an inland container yard.

Further, the paper noted that the problems of port congestion, high trucking cost and surcharge im-posed by shipping lines to remove large quantities of empty containers persist even after the city of Manila lifted the truck ban indefinitely in September 2014.

These are compounded by the Department of Public Works and Highways’s ongoing road construc-tion and rehabilitation work near the port area.

PIDS study proposes policy to put a cap on capacity of Manila ports

DIMAGIBA

Saturday, March 28, 2015

OpinionBusinessMirrorA6

The Lord giveth and the govt taketh

editorial

SINCE last year, it has really seemed like a Divine blessing to the Philippines and the economy that oil prices have gone down by half. Because we are dependent on imported oil and oil prod-ucts, the benefits of lower global crude-oil prices go throughout

the economy, from the largest conglomerate to the individual tricycle driver. Lower oil prices are a big deal.

Remember a month or two ago when a global report came out saying that the Philip-pines was the top nation in the world that would benefit from lower oil prices? The govern-ment cited this factor to present a rosier picture of economic growth for 2015 and raised its projected forecast.

Now the government is singing to a different tune. The National Economic and Develop-ment Authority (Neda) says that the government should study raising the excise tax on oil, thereby taking away from all of us part of the benefits of lower oil prices.

Neda Director General and Economic Planning Secretary Arsenio M. Balisacan said the Bu-reau of Customs (BOC) may lose P40 billion in revenues this year due to the cheaper oil prices. While we can appreciate that the BOC collections may be lower, Customs is not “losing” any-thing. What it means is that Filipinos will be paying P40 billion less for oil customs duties than they did last year. Why does the government always think that it is its money in the first place?

“This should be designed in a way that the benefits of declining oil prices are shared between the government and the private sector,” Balisacan said.

Our first response to that idea is, “Why”? Is not the government also benefiting just like we are from lower gasoline prices? What obligation do the people have to share the benefits with the government? We wonder if the Neda suggested that the government lower the excise tax and share the benefits with the people when oil prices were above $100 for several years?

The Neda also said, “The government must also take advantage of the current low oil-price regime in a way that would encourage more investors to come to the Philippines.” So, the government is going to encourage more foreign investments by artificially increasing the price of oil through raising taxes and the price of gasoline. Perhaps, that idea needs rethinking.

However, we will not blame the Neda for this wrongheaded idea. It actually comes from the Asian Development Bank (ADB). ADB Philippines Country Director Richard Bolt said the Philippines can increase taxes in favor of obtaining more resources for social spending.

That is the absolute best example of government believing that it can spend your money better and more wisely than you can.

Maybe lower oil prices will mean a person will now be able to buy a new car. Maybe low prices will provide the financial resources for a company to expand and create more jobs.

Perhaps, this idea of raising taxes on oil should be studied for a very long time, and then discarded.

ALLOW me to start by pointing out that the year is 2015. Now, that seems obvious to you and me. But for most of those writing commentary about asset bubbles and valuations, they

are at least a few years up to a few decades behind the real world.

Why the bubblers have it wrong

The other day I read that Philip-pine stock-market prices are too ex-pensive because the price-earnings-ratio (PER) is at 20. Of course, I read the same thing when the PER was 18, and before that at 16.

But the bubblers will say, “‘his-torically’ when the PER gets so high, stock prices are overvalued. As they say on the internet, ‘Your argument is invalid.’” Here is why.

Previously, money was borrowed into existence in order to bring con-sumption forward and, by so doing, to stimulate economic growth. Take out a car loan; get to drive the car today. However, most people actu-ally paid for the things they bought.

But now money has been replaced by debt. You no longer need to cre-ate wealth by adding value to raw materials, but now just borrow and the money you borrow can be free. In Denmark take out a car or hous-ing loan, and the bank will pay you.

What is the price of da Vinci’s painting The Mona Lisa? One might say it is priceless. Then, the price is effectively zero. You cannot place a monetary value on that painting. What is the price of a bag of used cat litter? One might say that it is worthless. You cannot place a mon-etary value on that kitty litter. So, if you cannot make a monetary valua-tion of either, they really do not have any “value.”

Any commodity, including “money,” has a price, and for money, it is the cost of borrowing it; interest rates. Note that world interest rates going back to 3,000 B.C. have never been this low. Yes, we have records of that long ago.

French government-bond yields are currently negative out to five years. My money is so “priceless” that the French government wants me to pay them to use it. In fact, to get even a 1.5-percent interest on

French debt, you have to buy a bond that matures in 50 years.

Therefore, if money is so “cheap” that people will actually pay the French government, as only one ex-ample, to borrow it, what is the value of money anymore?

Assume, instead, of a P15-a day minimum-wage increase, the gov-ernment mandated that all wages, salaries, commissions and whatever be doubled starting Monday, and everyone gets a 20-percent increase every six months.

That would be paradise on earth. But the price of everything would also double. One of our foreign ex-perts would look at the situation, and say there is an asset-price bub-ble that is unsustainable because the price of a car and condo just increased by 100 percent. But the “price” of those goods did not in-crease, except for the fact that the “value” of money collapsed.

Shares of stocks are priced in money. As the price of money goes down, the price of stocks goes up. The experts tell me that Philippine stock shares are too expensive. Well, since they are experts, instead of buying shares, I will go pay the French gov-ernment to borrow my money.

The global financial system has the ability to absorb trillions more in zero and negative interest-rate money, and those rates will continue for some time. But mark this.

Money always flows between

investing in the government and investing in the private sector, and for the last decades, money has gone into the public sector. That cycle will change in the next few months, with money flowing back into the private sector like stocks. The stock-price increases of the last few years are but a shadow of the total amount of money created. In other words, “You ain’t seen anything yet.”

Unquestionably, there will be government debt defaults. But governments will write off those defaults by bailing out the lending banks, as they have done repeatedly. The only other choice is government collapse, which has also happened many times before.

Over the last years, governments have been curtailing and suspending every type of economic and personal liberty to make sure an “Arab Spring” does not happen in New York, Berlin, or even Beijing.

Financial confidence in govern-ment is in Intensive Care. Eventually, it will die, and money will become real again in the private sector. For now, though, call me when the Philippine stock market gets to 10,000.

E-mail me at [email protected]. Visit my web site at www.mangunon-markets.com. Follow me on Twitter @mangunonmarkets. PSE stock-mar-ket information and technical analysis tools provided by the COL Financial Group Inc.

OUTSIDE THE BOXJohn Mangun

THERE’S no lack of ill will in China toward Japan. The chilly diplomatic relationship between Beijing and Tokyo is matched by occasional expressions of antagonism by the Chinese

public. In September the 10th Japan-China Public Opinion Poll (a joint effort by Chinese and Japanese organizations) showed that only 11.3 percent of Chinese had a favorable opinion of Japan, with 57.3 percent claiming that their impression had worsened over the last year. (Grievances about World War II and ongoing territorial disputes were among the top reasons cited.)

Why Chinese tourists love Japan

And yet, despite this apparent dis-dain, Chinese tourists can’t seem to get enough of Japan. In 2014 2.4 mil-lion Chinese visited Japan, an 83-per-cent increase on the previous year. And last week the Japanese govern-ment announced that it was increas-ing Chinese consular staff to handle a surge of Chinese visa applications.

Why haven’t China’s travel plans seemingly been affected by its po-litical views? It comes down to shop-ping—specifically, to the Chinese public’s penchant for shopping over-seas. Given China’s frequent product- safety scandals and the rampant forgeries of designer goods that flood

its markets, Chinese often schedule shopping sprees when they’re outside the country. In 2014 alone Chinese spent $164 billion abroad, making them the world’s biggest vacation spenders.

And Japan is increasingly China’s favored shopping destination. In 2014 spending by Chinese tourists was up 10.3 percent over the previous year—amounting to almost $2,000 per visitor. During this past Febru-ary’s Chinese New Year, Chinese tour-ists spent around $1 billion in Japan. Business has been so good that Laox, a Chinese-owned duty-free chain that caters to Chinese tourists in Japan,

has seen its stock rise 1,400 percent since 2012.

There are a number of reasons for the flood of tourist spending in Japan, including the weakening yen; Tokyo’s relaxing of visa requirements over the past year; and China’s per-sistently high taxes on luxury goods.

But the biggest factor is the out-sized cachet that Japanese products especially household appliances—enjoy in China. Take, for example, this year’s must-have souvenir for Chinese tourists visiting Japan: expensive, feature-laden high-tech toilet seats (complete with bidets, heat and even speakers to play prerecorded music). According to Chinese media reports, Chinese tourists have been buying up the devices in dutyfree shops across Japan—often in bulk.

The fact that China makes high-tech toilet seats of its own—includ-ing some of those sold in Japan and reexported to China—doesn’t deter these shoppers: the fact that they’re Japanese merchandise is precisely why they’re desirable for Chinese consumers. Indeed, one refrain in Chinese media coverage of the coun-try’s foreign shopping sprees is a du-tiful explanation—contrary to any actual evidence—that Japanese rice cookers simply prepare better rice than Chinese ones due to their supe-rior materials.

Increased tourism and trade be-tween China and Japan can’t hurt rela-tions between the two countries. But so far, at least, there’s little evidence that increased fraternization between Chinese tourists and Japanese duty free cashiers has contributed to a broader diplomatic or cultural thaw. Nor should anyone expect it to. Only 5 percent of Chinese citizens have pass-ports, and they’re probably not repre-sentative of the country as a whole.

By contrast, the vast majority of the Chinese population—including the working-class students who have populated China’s sporadic anti-Japanese riots over the years—is unlikely to have immediate plans to travel out of the country at all. It’s worth considering that when the Japan-China Opinion Poll asked Chinese if they’d like to visit Japan, 72.6 percent said that they’d pass; there’s little reason to believe that a substantial portion of them will change their minds anytime soon.

Still, judging from the experience of Chinese tourists who have already been in Japan, nationalism can some-times be tempered by the experience of a good bargain. That’s no guarantee of peace. But it is reason to hope that China’s growing wave of outbound tourists will serve as a force for open-ness and tolerance—if only so they’ll have somewhere good to shop.

BLOOMBERG VIEWAdam Minter

Saturday, March 28, 2015

[email protected]

Join the Good Friday Penitential Walk

In this issue of the Servant Leader, we put on hold our serialized Evangelii Gaud-ium to give way to an invitation from His Eminence Luis Antonio Cardinal Tagle, archbishop of Manila and chairman of Caritas Manila.

SAVE Mother Earth and ease the pain of hopeless marginalized people not only suffering from the devastation of natural disasters and climate change, but also inflicted by

man-made calamities.

Manila Archbishop Luis Antonio Cardinal Tagle is urging the faithful to reflect on Christ’s passion, exam-ine our conscience, reconcile with the Lord and renew of life by joining Ra-dio Veritas846 and the Archdiocese of Manila’s second Penitential Walk (via crucis) this Good Friday, April 3.

The 7-kilometer “Penitential Walk: Deliverance from Calamities and for Peace” will start at 4 a.m. at San Juan de Dios Hospital, Pasay City and will culminate at the Manila Metropolitan Cathedral-Basilica.

Make a differenceHIS Eminence Cardinal Tagle is encouraging the faithful to make

use of the Penitential Walk: De-liverance from Calamities and for Peace to ask for forgiveness from the Lord and make a difference by helping the underprivileged people, not only crippled by the onslaught of typhoons and other calamities caused by climate change, but also due to corruption, injustice, absence of truth, loss of concern for others, of selfishness and insensitivity to others’ feelings.

The prelate acknowledges that although around 20 typhoons hit the Philippines every year, sadly, in truth many Filipinos are “stormed” every day by “non- concrete” turbulences.

Open your eyes and heartsTHE prelate also emphasized the catastrophe of the growing num-ber of street children, street fami-lies, human trafficking, absence of peace and widespread corruption in the country.

The archbishop of Manila also advised everyone to refrain from blaming others for the difficulties they are going through, instead to take action and start anew by means of repentance.

The prelate hopes that through the penitential walk every Catho-lic faithful would be enlightened to open their hearts and would be encouraged to help those who are experiencing calamities due to greed and sins of mankind.

This year’s penitential walk is brought to you by Radio Veritas846, supported by the Archdiocese of Manila and the Vicariates of the Holy Family, Holy Spirit, Our Lady of Loreto, San Fernando de Dilao, San Jose de Trozo, Santo Niño, Our Lady of Guadalupe, Saint Joseph the Worker, Saints Peter and Paul, Santa Clara de Montefalco, San Felipe Neri and Saint John the Baptist.

“Imulat po natin ang ating mga mata upang ang ating puso ay maantig at nang tayo ay kumilos na hindi na mapalala ang mga kalamidad na ito, at humanap ng mga bagong istilo ng buhay upang itong mga kalamidad na

gawa ng tao at ng kasalanan ng tao ay mapigil at hindi na po ito maulit pa. Sa ating tinatawag na Penitential Walk, itong Biyernes Santo, atin pong ilalaan sana sa paghingi ng tawad sa Diyos sa napakaraming paghihirap na naidudulot natin sa ating kapwa lalo na sa mga dukha. Inaanyayahan ko po kayo, parang examination of conscience. Tayo po ay magnilay, pag-isipan natin bakit nangyayari ito? Nakita ko ba yan? Ako ba’y naantig? Meron ba akong ginagawa? [Let us open our eyes so that our hearts will be roused to move, to act to avoid these calamities, to look for new lifestyles so that these calami-ties caused by man and man’s sins will not happen again. We will of-fer this Penitential Walk on Good Friday to ask forgiveness from God for the many hardships we have caused our neighbor especially the poor. I Invite you, like an examina-tion of conscience, together, let us reflect—why are these things hap-pening? Did I see it? Was I touched, was I moved? Am I doing something about it?]” invites our Cardinal.

Let us join our Cardinal in this Penitential Walk.

For comments, e-mail [email protected]. For donations to Caritas Manila, call 563-9311. For inquiries, call 563-9308 or 563-9298. Fax: 563-9306.

SERVANT LEADERRev. Fr. Antonio Cecilio T. Pascual

DATAbASECecilio T. Arillo

By Chandrahas ChoudhuryBloomberg View

LEE Kuan YEw, the founding father of Singapore who died this week at 91, had a lot to say about India. He never sugar-coated his remarks, nor did he resort to the many clichés used by thinkers both in the west and in India.

In 2000 Lee published From Third World to First, an account of the rise of Singapore beginning in 1965. It contains a long section on India’s flaws, both as a civilization—Lee believed the caste system was inimical to meritocracy, which is the foundation of economic development—and as a new nation-state that he said couldn’t transcend its native introversion and its (democratic) directionlessness.

Reading these pages is a bit like reading V.S. naipaul on India, only from the view-point of a rigorously pragmatic, clear-sighted and technocratic statesman. Five Indian prime ministers across five decades—Jawa-harlal nehru, Indira Gandhi, Morarji Desai, Rajiv Gandhi, narasimha Rao—are one after the other allowed one or two kind sentences for their idealism, good intentions and un-promising circumstances. Then their per-sonal frailties and flaws in economic man-agement, leadership and foreign policy are ruthlessly, and very persuasively, dissected.

To Lee, it wasn’t just the big picture of India that was badly diagnosed by those in power, leading inexorably to more poverty, more stasis and more population growth. For him, the devil is in the details. why was the cutlery at the presidential dinner of such poor quality? why did the diplomats who ac-companied him to a reception at the Singapore Embassy in Delhi leave with a present of two

bottles of foreign-made whiskey? why does the High Commission ask him to bring with him several boxes of golf balls to distribute as presents to Delhi’s elite? (The import of such frivolous luxuries was forbidden.)

when people achieve power in such a world, they seem to spend much of their time trying to stop others from climbing the pyramid. Lee’s conclusion could be mis-taken as being hopeful: “India is a nation of unfulfilled greatness.”

One can agree substantially with Lee’s diagnosis of India’s failures without making the mistake, as some Indian writers and poli-ticians did in their obituary notices this week, of believing that India needs its own Lee to realize its “unfulfilled greatness.” (Some partisans even had a name for this savior, and it was, unsurprisingly, narendra Modi.)

Indian democracy has many problems, but the widely held idea that the country has “too much democracy,” and needs a little splash of authoritarianism to knock it into shape, is a mistake that many have made, notably dur-ing Indira Gandhi’s brief Emergency of 1975 to 1977 (of which Lee approved).

Lee “didn’t allow democracy to turn into a mobocracy,” the BJP member of parliament Tarun Vijay wrote admiringly this week.

Hmm. Briefly, the political and miracle achieved with such determination by Lee had much to do with some very specific and inter-

connected circumstances. One was his own unchallenged political authority there—a situation that India could replicate only at great risk to its own long-term stability. There was also the small size of his city-state, with a population about 1 percent of India’s, which enabled hands-on economic management and policy clarity.

Lee could see this more clearly than some of his admirers now do. In an inter-view in the journal Third World Quarterly in 1979, he was asked how Singapore had managed such a rapid transition from an agricultural to a prosperous industrial so-ciety. His answer is revealing:

“The bigger the country, like China or India, the more difficult it becomes be-cause the slighter is the impact on the to-tal population of the major cities. we were fortunate in that because of our small size. The numbers that we sent abroad for train-ing and the numbers of technicians and engineers and managers that came here to do the jobs enabled a very rapid diffusion of knowledge and acquisition of skills. One of the problems is to choose the right people to take advantage of this learning opportunity. You must choose those who are going to be your multipliers.”

There are actually plenty of elements from Lee’s development model that India could replicate, from the willingness to open the economy to foreign capital, to making the best use of ports, to focusing on qual-ity primary education as a way of durably levelling out hierarchies of class and power.

But, as Dhiraj nayyar pointed out on this site, that’s as far as it goes. It’s ironic that many commentators who accuse the Indian state of being excessively paternalistic

praise Singapore’s business-friendly set-up.and although it may not show up in

gross domestic product figures and other economic indicators yet, India’s “discordant democracy” has in just under seven decades wrought revolutions just as significant in the context of its own history as Singapore’s. It’s just that this is a cycle that might take 200 years to reach its mature period, and not three decades. Let’s not forget: despite Lee’s insistence on meritocracy in Singapore, his son is prime minister today. Meanwhile, last year, India comprehensively rejected the candidature of a fourth-generation dynast, Rahul Gandhi, for a man, Modi, whom some Indians love to liken to Lee.

The paradoxes of Lee’s reputation tell the truth more than any argument can. He was a dictator whom even liberals came to love, the architect of a paternalistic state whom Henry Kissinger and many other liberty-loving americans came to admire, a materialist whose vision of the good society many young Singaporeans came to rebel against, sometimes by vot-ing with their feet.

Yet, Singapore’s rise disarmed most of his critics, who bought most of his argu-ments about the mutual interdependence of political centralization and development.

But to me, Lee’s career represents more a fortunate and fascinating conjuncture than a replicable political reality. Had it stemmed from a less competent adminis-trator, Lee’s repression of dissent in Singa-pore would be judged much more harshly by the world as a deeply self-serving de-ployment of his theory of “asian values,” a default setting that apparently always chooses order over freedom.

The country has four constitutions

UNKNOWN to many people, the country has four existing constitutions and this is the reason it’s always in a state of crisis, including armed conflicts.

These are:1. The 1987 Philippine Consti-

tution; framed in 1987 by 48 men and women handpicked by the late President Corazon Aquino, includ-ing leftists and prelates and under which her son President Aquino, took her oath of allegiance as Chief Executive and Commander in Chief of all the armed forces to “Obey the Constitution, enforce the laws and do justice to everyone.”

2. The Constitution of the Com-munist Party of the Philippines (CPP) ratified by its own Congress at the opening of the CPP’s reestablish-ment on December 26, 1968, which coincided with the 75th birth anni-versary of Chairman Mao Tse-tung. It has two articles in 12 pages.

“The Integration of the Univer-sal truth of Marxism-Leninism, Mao Tse-tung’s thought, with the concrete practice of the Philippine Revolution is the Supreme task of the Communist Party of the Phil-ippines,” the leftist fundamental document said in its first paragraph.

3. The Constitution and Bylaws of the New People’s Army (NPA), in 16 pages, issued by the “Meeting of Red Commanders and Soldiers on March 29, 1969.” Included in this Constitution and Bylaws is the draft 10-page Basic Rules of the NPA with a preamble.

“The New People’s Army is under the supreme command of Marxism-Leninism, Mao Tse-tung’s thought and the Communist Party of the Phil-ippines. It is the revolutionary army of he broad masses of the Filipino People against US imperialists, the comprador bourgeoisie, the landlord and the bureaucrat capitalism,” the preamble said.

Both CPP and NPA are classified as terrorist organizations by the US government and the European Union.

4. The Bangsamoro basic law (BBL), which was submitted by the Moro Islamic Liberation Front (MILF) and by Malacañang’s rep-resentatives to the peace talks to Congress for approval under House Bill (HB) 499 and, if approved, is to be ratified in a plebiscite exclu-sively in the areas covered by the BBL. Strangely, the plebiscite is to be funded by taxpayers money, in-cluding money to be collected from taxpayers from Luzon and the Vi-sayas who have nothing to do with the Mindanao conflicts.

“With the blessings of the Al-mighty, do hereby ordain and pro-mulgate the Bangsamoro basic law, through the Congress of the Republic of the Philippines, as the basic law of the Bangsamoro with the central government founded on the prin-ciple of subsidiarity and parity of the esteem.”

The preamble of the ARMM law (Republic Act 9054) explicitly de-clares its existence in pursuant to the 1987 Constitution. The preamble of the HB4994 invokes the Congress of the Republic of the Philippines as basis, employing enigmatic, cryptic and intoxicating prose with dubi-ous syntax, to establish “an asym-metric-political relationship of the Bangsamoro and the central govern-ment founded on the principles of subsidiarity and parity of Esteem,” the Philippine Constitutional Asso-ciation (Philconsa) said.

Explaining further, Philconsa said:“The Constitution was ratified

by the Filipino people in a plebiscite. Congress of the Philippines derives its existence from the Constitution. Congress may not pass laws contrary to the Constitution. The ‘asymmetri-cal political relationship’ envisioned between the Bangsamoro and the

central government stirs ‘uneven’ and ‘brittle’ ties or bonds that will spawn an offspring of confusions and dys-functions in the implementation.”

Asymmetrical, in the “New Short Order Oxford English Dictionary: The New Authority on the English Language,” means “not symmetri-cal, with the parts not arranged in symmetry.”

Symmetry means “proportion: relative measurement and arrange-ments of parts; balanced arrange-ment and relation of parts.”

Parity means “the state or condi-tion of being equal; equality of rank, status, nature, character; likeness, similarities, parallelism.” “Parity of esteem” means “the state or condi-tion of administratively comparable educational institutions being re-garded as equal.”

Subsidiarity means “the quality of being subsidiary; the principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed effectively at a more im-mediate or local level.”

To establish asymmetrical politi-cal relationship of Bangsamoro with the central government founded on the principles of subsidiarity and par-ity of esteem is an oxymoron. Subsid-iarity means state of being subsidiary and parity of esteem means state of equality of nature or ‘comparable’ or likeness. “The Preamble of BBL confuses rather than enlightens. Is Bangsamoro a subsidiary of or equal/comparable to the central govern-ment? Does central government mean the Philippine government or national government to distinguish from local governments?”

n In the memorandum of agree-ment on ancestral domain, the na-tional government was referred to as the “Government of the Republic of the Philippines [GRP].” In HB 4994, it appears the national government refers to the “Central Government.” Is there a distinction between gov-ernment of the Philippines, national governments on the one hand and central governments on the other?

n Is the use of “asymmetrical po-litical relationship [of Bangsamoro] with the central government found-ed on the principles of subsidiarity and parity of esteem” concocted to elude or snub the concept of an “as-sociative” relationship between the central and the Bangsamoro govern-ment already declared unconstitu-tional by the Supreme Court?

This unsettling and pestering is-sue of having armed groups operat-ing in Mindanao and elsewhere in the country with their own separate con-stitutions, territories, sovereignties and flags create a grave and far-reach-ing national security implications.

By the way, national security is not just about the defense of the State from the viewpoint of the military and police organizations. It is also about unemployment, high electric-ity and water rates, education, traf-fic and food supplies, among others

The recurring image of the coun-try is that of a failing State because its four elements—people, territory, sovereignty and government—are already badly damaged.

Indeed, this is reflected by the fact that instead of exercising lead-ership and coming out with concrete solutions to our problems, say the Mamasapano incident and the dis-tressing daily traffic grind, our offi-cials are always looking for someone or some people to blame on for their inability to govern.

To reach the writer, e-mail [email protected].

Lee Kuan Yew’s bad prescription for India

By Rekha BasuDes Moines Register/ TNS

IT might have been the quickest and most self-serving reversal ever of a campaign promise. Two days after winning reelection in Israel by vowing

to reject a Palestinian state—which he previously endorsed—Prime Minister Benjamin netanyahu told americans he’d support one again.

It’s clear he will say anything to get elected, and also to keep $3.1 billion a year of uS aid coming—even if they’re the opposite things.

But something is also clear to three Palestinian women who visited the uS the previous week and talked about the deplorable conditions under which they live: There will be a Palestinian state, no matter how this election turned out. “Shimon Peres once said, ‘we have beaten Palestinians on every level but they refuse to admit they were defeated,” said Tamara Tamimi, 26, referring to the former Israeli president. “we will continue to say ‘no,’ until our basic rights are recognized.”

Tamimi, ayah Bashir and Mary, who did not give her last name, were brought to several american cit-ies, including Des Moines, by the Quaker american Friends Service Committee as part of a project called

Palestinian Youth: Together for Change. Its goal is to connect young Palestinian adults to collaboratively promote policies for change in Israel and the occu-pied territories.

College-educated, smart and keen students of their history, the three offered a perspective that needs to be heard even if netanyahu would prefer their silence.

“The right-wing government is in danger,” he warned in a bit of Election Day fear-mongering. “arab voters are coming out in droves to the polls.”

It’s one thing to spread fear about Palestinian militants, as netanyahu does to justify Israeli shelling campaigns and occupation of Palestinian territories. But spreading fear about some of the 20 percent minor-ity population eligible to vote says the prime minister regards all Palestinians as the enemy.

By their accounts, these women experience that attitude every day. Mary even has Israeli citizenship. Though arab, and Christian, her family’s homeland became part of Israel when it was established in 1948. But she learned nothing about her Palestinian heritage in school and says Israel’s restrictive laws prevent her from going into the west Bank and Gaza to connect with “my arab brothers and sisters.”

Tamimi’s living situation epitomizes the frag-

mentation of Palestinian identity. Her mother is from the west Bank and isn’t allowed to live with Tamimi’s father in Jerusalem, where his father settled after the creation of Israel routed them from their home city of Jaffa. Tamimi and her father have Israeli identity cards because she was born there, but are not citi-zens. Tamimi’s elder sister was born in the west Bank and has the same restrictions as their mother. So to be together, the family has to live in an area under Israeli control called Kufr akab, between the west Bank and Jerusalem.

Tamimi says its residents pay Israeli taxes, but get no services such as garbage pickup or public safety, so it has become a hub for drugs, prostitution and robbery. Her father’s car is licensed in Israel, so he risks arrest for having passengers with west Bank IDs, such as his wife and daughter. Tamimi works in Jerusalem, a 25-min-ute drive that can take an hour because of the security checkpoints. But Bashir, who lives in Gaza, may have it worst. That area has been under siege since 2006, she said; the blockade prevents the movement of people and goods in and out, so livelihoods exporting fish and farming products have evaporated. Her father used to grow flowers for export. Palestinians’ fishing rights have been reduced from 21 nautical miles negotiated under an international peace agreement to three.

The 26-year-old says she has survived three extend-ed bombing campaigns, most recently over seven weeks last year, which killed 2,300. Croplands were destroyed and now 80 percent of Gazans depend on food aid, she said. She gets six hours of electricity a day and the water is only 5-percent drinkable. Human-rights organizations call Gaza “the largest open-air prison,” Bashir says–and young people have little hope for the future. all three women describe lives stripped of dignity.

as netanyahu plays a yo-yo game with Palestin-ians’ future, Tamimi has given up hoping for a two-state solution. She says Palestinian land has been taken over by half a million new settlers in 22 years, and now the answer lies in a single state where everyone has equal standing. a Palestinian state? “Call it whatever you want,” she answered, quipping, “we Palestinians reproduce very quickly. we will regain the majority.”

Israeli Jews have a right to live safely and pro-ductively in Israel. But Palestinians also have a right to live free from occupation. now that netanyahu has shown he lacks a genuine commitment to a Palestinian homeland, President Barack Obama is right to re-evaluate relations with his government. It’s time to end unconditional aid guarantees, and start demanding concrete steps be taken in exchange for future support.

Despite election, there will be a Palestinian state

Washington. Many policy experts have been urging for months that the US has a better shot at reform-ing the new bank from inside the tent than outside. “By maintaining their distance from the bank, American and Japa-nese responses seem problematic at best and churlish at worst,” wrote Jonathan Pollack, a specialist on East Asia at the Brookings Institution.

“It is a small-potato issue that is making the United States look weak at a time when US influence in the region is otherwise quite strong,” said Elizabeth Economy, director for Asia studies at the Council on Foreign Relations. China has been reveling in Washington’s unease. After the European nations signed up, a commentary in the of-ficial Xinhua news agency began

triumphantly: “Welcome Germany! Welcome France! Welcome Italy!” Writer Tian Dongdong accused the US of “sour grapes” and hypocrisy, noting that President Barack Obama has urged a rising China to shoulder more international obligations. Australia’s Mandarin-speaking former prime minister, Kevin Rudd, said on Tuesday the emergence of AIIB was part of China’s geopolitical

reaction to “the door being slammed in its face” over increasing the voting quotas of developing countries at the International Monetary Fund (IMF) and World Bank, currently skewed in favor of the US. Congress has refused to support the proposed quota changes at the IMF—and congressional ap-proval of US membership of an inter-national lender led by strategic rival China would also be a hard sell. AP

FEDERAl Reserve (the Fed) officials, fresh from the latest round of tests de-signed to ensure the safety of the big-

gest banks, are now peering into the darker corners of the financial system as they assess the risks of another crisis. One source of concern: tighter regula-tion of banks is prompting more borrowers to seek funding through the $25-trillion shadow-banking system—money-market mutual funds, hedge funds, brokerages and other entities that face fewer restrictions. “These institutions are a significant and growing source of credit in the economy,” Den-nis lockhart, president of the Atlanta Fed,

said in a March 20 speech. “They are part of an interconnected financial system that, in extreme circumstances, is prone to contagion.” lockhart will draw more attention to the issue next week when he hosts a confer-ence in Stone Mountain, Georgia. The event will bring together current and former Fed policy-makers, money managers and aca-demics to discuss how central banks can best identify and limit the biggest sources of risk to the financial system. A key player in that effort is the Fed’s financial-stability committee, headed by Vice Chairman Stanley Fischer, who will deliver a speech at next week’s forum. His

committee is mapping different parts of the shadow-banking system and trying to figure out which regulator has authority over each portion. Among the measures under consideration by Fed officials: stricter margin requirements for broker-dealers that can serve to limit the amount of borrowed money that firms such as hedge funds use to finance investments.

‘Negative impacts’“SOME activities have moved into the shad-ow-banking sector, and the question is do we have regulatory or other means of control-ling, mitigating, the possible negative impacts

of those things,” Fischer said in response to questions following a speech to bankers and economists in New York this week. “We need to get some coherence about who does what and how those decisions are made.” The focus is shifting to shadow banks af-ter the Fed claimed success in its efforts to build up capital buffers at the nation’s larg-est banks in a bid to avoid a repeat of the financial crisis, which saw taxpayer-funded bailouts of firms including Citigroup Inc. and Bank of America Corp. All 31 big banks tested had sufficient capi-tal to absorb losses during a sharp and pro-longed economic downturn, the Fed said on

March 5. It was the first time since the central bank started stress tests in 2009 that no firm fell below any of the main capital thresholds.

Assets growWORlDWIDE, shadow-banking assets have grown, while banking assets stagnated, ac-cording to a report by the Financial Stability Board, a global group of regulators. Nonbank financial intermediation grew almost 7 percent to $75 trillion in 2013, the latest year for which figures are available, while banking assets declined less than 1 percent to $139 trillion.

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2ndFront PageBusinessMirror

www.businessmirror.com.phSaturday, March 28, 2015

PHL to remain as SE Asia’s ‘bright star’–SCB

Fed focuses on shadow banking as it gauges financial-system risk

JICA exteNds P9.75B worth of loANs to Phl

By Cai U. Ordinario

THE Japanese govern-ment, through the Japan International Coopera-

tion Agency (Jica), is extending P9.75 billion worth of so-called official development assistance, or borrower-friendly loans, to the Philippines.  The loans will support disaster risk-reduction and management programs through the implemen-tation of a flood-control project in the Cagayan de Oro River in Northern Mindanao, as well as help alleviate traffic congestion in Metro Manila. Jica is extending P5.788 billion for the Flood-Risk Management Project for the Cagayan de Oro River Basin and another P3.96 billion to implement the Metro Manila Interchange Project (Phase VI). Both projects will be under-taken by the Department of Public Works and Highways (DPWH). “To help Metro Manila sus-tain growth, and develop it as an attractive investment destina-tion, we aim to continue working with the government to enhance connectivity and mitigate traf-fic congestion and other hazard risks and urban issues through our cooperation projects,” said Jica Philippines chief represen-tative Noriaki Niwa. Through the loan, Jica will help the DPWH implement structural and nonstructural measures to mitigate flood risks in the Cagayan de Oro River Basin.  The project will help con-struct a new dike and other f lood-protect ion measures in the river basin to address flooding problems. The project will also contribute to sustain-

able economic development in Northern Mindanao areas.  Cagayan de Oro was severe-ly battered by Tropical Storm Sendong (international code name Washi) in 2011 that af-fected 1,170 people, plus some 1,250 fatalities.  The Cagayan de Oro River Ba-sin is one of 18 major rivers in the Philippines and was also among the 56 priority river basins identi-fied by the Philippine government under the Jica-assisted Nation-wide Flood Risk Assessment and Flood Mitigation Plan in Selected Areas 2006-2008. Meanwhile, Jica will assist the DPWH in constructing major interchanges to address traffic congestion in Metro Manila, including flyovers, and road links or interchanges in Edsa/Roosevelt/Congressional, Edsa/West/North, and C-5/Green Meadows and North/Mindanao Avenue.  The road-map study has cited, among others, the urgency of de-congesting traffic estimated to cost the country P6 billion per day by 2030 if the problem was not addressed. Data show Metro Manila currently accounting for 37 percent of the country’s local output, measured as the gross domestic product. Finance Secretary Cesar V. Purisima and Niwa signed the loan agreement for the two co-operation projects on March 26.  Jica is a strategic develop-ment partner of the Philippines since the 1960s, contributing some P35 billion in develop-ment assistance as of 2012, and remains a top donor and trade partner.

CORDILLERA EXPEDITION (Seated from left) Nick Barrowclaugh; Yammie Vicera; Patrick Aquino; JP Alipio, head of Cordillera Trust; and Adrian, executive assistant of Rep. Teddy Baguilat of Ifugao; (standing) Leonard Soriano; Tin Ferrera, head of marketing; Iris Torculas; Majo Liao, head of medics; Rashel Peña; and Jonnifer Lacanlale, founder and overall head, during the media launch of the Cordillera Great Traverse. According to its web site, “The Cordillera Great Traverse 2015 is an expedition which aims to establish the longest, most scenic and sustainable hiking/trekking destination in the Philippines by connecting the six provinces of Apayao, Abra, Kalinga, Mountain Province, Ifugao and Benguet, and the charter city of Baguio of the Cordillera Administrative Region.” nonie reyes

Continued on A2

By Bianca Cuaresma

The Philippines remains one of the region’s economic bright spots this year, no matter

the anticipated external headwinds best indicated by the uneven pace of growth of the global economy. 

However, the UK-based Stan-dard Chartered Bank (SCB) said local output growth, measured as the gross domestic product (GDP), looks to fall below the only recent-ly scaled-up government growth target this year. At a news briefing in Makati City  on Monday, Jeff Ng, SCB economist for Southeast Asia, fore-cast growth averaging 6 percent for the $272-billion economy this year, along with upside risks to their assumptions.

back of “anchored” plus factors help-ing the country ride out volatilities caused by external events. But at 6 percent, Ng said the Philippines was likely to outpace its regional counterparts, as domestic consumption continues to drive the local economy and sustain its growth momentum in 2015. The 6-percent growth forecast, however, fell short of the govern-ment target this year, ranging from 7 percent to 8 percent. The SCB is one of several in-ternational lenders saying the Philippines should miss its target expansion this year no matter the optimism on most of the lead eco-nomic indicators. Earlier this month, the Asian De-velopment Bank projected a 6.4-per-cent GDP print for the Philippines this year. london-based HSBC also said forecast growth for the Philip-pines similarly averaging 6 percent for 2015. Ng said there are upside factors to the country’s growth prospects this year, such that local output

accelerates and hit the low end of the government target this year. The largest factor that could push local output higher includes significantly higher investments. Inflation, meanwhile, was seen averaging 2.2 percent this year, or in line with the Bangko Sentral ng Pilipinas’s (BSP) most recent target path for 2015. According to Ng, inf lation should remain muted throughout the year, except in the final months, when the base impact of earlier oil- price reductions begin to be felt in the price matrix.  Ng also said they expect the BSP to maintain its monetary-policy stance until September this year, before starting a tightening cycle toward the waning months of the year. He anticipates a 50- basis-point hike in the overnight policy rate and a similar 50-basis-point increase in the special deposits account interest rate in reaction to antici-pated adjustment of rates by the US Federal Reserve. 

NG said there are upside factors to the

country’s growth prospects this year,

such that local output accelerates

and hit the low end of the government

target this year.

The economist said continued Philippine expansion, averaging 6 percent this year, should ride on the

US isolated as allies line up to join China-led bank. . . Continued from A1