GERI INCOMESOARED 35%IN JAN-MARCH

www.businessmirror.com.ph n TfridayNovember 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 7 sections 32 pages | 7 days a weekn Friday, May 15, 2015 Vol. 10 No. 218

A broader look at today’s businessBusinessMirrortHREE-tIME

ROtARy Club Of MANIlA JOuRNAlISM AwARDEE2006, 2010, 2012u.N. MEDIA AwARD 2008

PESO ExCHANGE RAtES n uS 44.7610 n JAPAN 0.3756 n uK 70.4314 n HK 5.7747 n CHINA 7.2144 n SINGAPORE 33.7870 n AuStRAlIA 36.2878 n Eu 50.8082 n SAuDI ARAbIA 11.9363 Source: BSP (14 May 2015)

By Lenie Lectura 

The Manila electric Co. (Me-ralco) is worried over the sudden price hike at the

Wholesale electricity Spot Market (WeSM), saying this could trigger an increase in power rates if it con-tinues to shoot up. “We have observed that WeSM prices since Monday have, at times, been approaching P30 per kilo-watt-hour [kWh]. In contrast, for the whole of last week, spot-mar-ket prices seldom exceeded P5 per kWh,” Meralco Utility economics head Lawrence Fernandez said. Meralco sources about 3 percent of its power requirements from the WeSM, which serves as the trading floor for the buyers and

sellers of electricity. Fernandez shared this observa-tion after he was asked to give up-dates on the Malampaya natural-gas supply cut that started on May 10. “While natural-gas supply nor-malized this morning [May 14], we were just advised that SPeX [Shell Philippines exploration BV] will again curtail natural-gas supply,” the Meralco official said. early  Wednesday, Fernandez said the Malampaya gas power fa-cility was starting to produce more gas compared to last Sunday. In par-ticular,  Unit 2 of Kepco Philippines Inc.’s 1,200-megawatt (MW) Ilijan combined cycle plant was switched on again. Later that day, energy Secretary Carlos Jericho L. Petilla said, “as far

as Malampaya is concerned, they are back to normal.” however, he added, “there could be lag in the switching from liquid to gas.” The Malampaya facility accounts for 40 percent of the Luzon grid’s re-quirements. It supplies natural gas to Ilijan and to the 1,000-MW Santa Rita and 500-MW San Lorenzo natu-ral gas plants of First Gas, a subsid-iary of the Lopezes’ First Gen Corp.Fernandez said the latest advisory Meralco received was that “starting 4 p.m., five of the six First Gas units will be forced to shift to liquid fuel.” No further details were provided as of press time. Officials from SPeX and the De-partment of energy also did not re-ply when sought for comment. “We

The decision, observers said, is a validation of the view that the $272-billion economy is primed for continued growth and without need for monetary-policy support. According to the BSP, the poten-tial for accelerated growth this year remains undiminished, such that the rate at which it borrows from or lends to banks had been kept steady at 4 percent for borrowing and 6 percent for lending. The banks’ deposit-reserve ratio and the interest rate on special de-posit accounts the various lenders maintain at the BSP were similarly left unchanged. “The MB decision is based on its assessment that current monetary- policy settings remain appropri-ate given a manageable inflation environment. The MB, likewise, observed that the risks to the infla-tion outlook continue to be broadly balanced,” BSP Governor Amando M. Tetangco Jr. said at the post-MB meeting news briefing.  BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said the central bank now forecasts inflation to average 2.3 percent for 2015, or slightly higher than the assessment in March of only 2.2 percent.  For 2016, the BSP also recali-brated its inflation forecast upward from 2.5 percent originally to 2.6

By VG Cabuag

Global Estate Resorts Inc. (Geri), owned by tycoon an-drew l. Tan, reported that its

net income grew 35 percent in the first quarter of the year after its sales and hotel income soared. The company that develops inte-grated tourism estates said its income reached P139 million for the period from last year’s P103 million. Consolidated revenues for the first three months of the year amounted to P885 million, a growth of 38 per-cent from P640 million last year, as residential sales and hotel and service income soared. “It has been an impressive start of the year for Geri. We started 2015 with a robust sales performance across our projects. We are confident that Geri can sustain this strong momentum for the rest of the year,” said lailani Villanueva, company chief finance officer. Real-estate sales grew 35 percent year-on-year, to P554 million from P411 million last year. The company said this was attributed to strong residential sales in various estate projects, such as the boracay Newcoast in aklan, Santa barbara Heights in Iloilo, Twin lakes in Tagaytay, Southwoods City in Cavite-laguna and alabang West in las Piñas City. “The strong marketing efforts for our various projects across the country have certainly gained ground as far as revenues are concerned. With our vast land bank, we have more opportuni-ties to tap to even further expand our developments,” the company said. at the moment, Geri, a unit of Mega-world Corp., has five major develop-ments across the country covering more than 2,200 hectares of land. Megaworld last year folded Geri into the company after it bought the 49.2-percent stake of parent firm alli-ance Global Group Inc. for P10.43 billion. Megaworld now owns 80 percent of Geri and leads the company in trans-forming its huge tracts of land bank into integrated urban townships.Continued on A2 See “Malampaya,” A2

INSIDE

D1

Life Friday, May 15, 2015BusinessMirrorEditor: Gerard S. Ramos • lifestylebusinessmirror@gmail.com

W E, Christians, are not just people who believe in Jesus Christ. We believe in Him as the one with whom we form one mystical body. We do not exist

along with Him, but in Him, since at our baptism we have been engrafted into Him. “I am the vine, you are the branches.” This is not a figure of speech, but a wonderful reality. It is thanks to our deep union with Him that we can enjoy God’s salvation and produce fruits that are worthy of our new life in Him. Such is His gift to us and His challenge. Amen.

One mystical body

EXPLORING GOD’S WORD, FR. SAL PUTZU, SDB AND LOUIE M. LACSONWord&Life Publications • teacherlouie1965@yahoo.com

REDEFINING BAR FARE CLASSICS

»D3

B R RMiami Herald

NOBODY does post-apocalypse like George Miller. In 1979’s Mad Max, his low-budget directorial debut, the certified doctor-

turned-filmmaker depicted a society that had started to crumble, with leather-jacketed, sadomasochistic nomads terrorizing people on the roads outside Melbourne. The movie was a brutish, ferocious tale of grindhouse revenge filled with vehicular stunts that looked a little too real and dangerous.

Mad Max launched the young Mel Gibson’s career and brought international attention to the burgeoning Australian film industry. Two sequels followed: 1982’s The Road Warrior (titled Mad Max 2 in its native turf), which kicked off what is considered to be the greatest summer movie season of all time (Blade Runner, Poltergeist, E.T. the Extra-Terrestrial, The Thing, Tron, Star Trek II: The Wrath of Khan, Rocky III) with a 94-minute bolt of turbocharged, R-rated action that made every other Hollywood car-chase picture made before seem like it was shot in slow motion.

1985’s Mad Max: Beyond Thunderdome, which Miller codirected with George Ogilvie, toned down the mayhem and threw in stunt casting (including Tina Turner) to lure in mainstream, PG-13-friendly audiences. Although it grossed more than the previous two installments, the cumbersome, talky Thunderdome wasn’t as well-received as its

predecessors. Miller, now firmly ensconced within the studio system, moved on to more respectable endeavors (Lorenzo’s Oil, The Witches of Eastwick).

This is why the anticipation for Mad Max: Fury Road, the first new installment in the series in 30 years, has been sky-high ever since the first teaser trailer for the film was released in September. With Tom Hardy taking over for Gibson in the lead role, and an astonishing display of vehicular mayhem on a scale much larger than we had seen before, the movie promised a return to the lean, pared-down visceral thrills of The Road Warrior, right down to its R-rating, for violence and gore.

Even Miller himself was blown away by the initial trailer—until he realized he would now have to fulfill outsized expectations.

“The trailers were so great, I realized we would have to lift the bar higher than ever in order to live up to them,” Miller says via telephone from Los Angeles. “We were doing postproduction on the movie and I felt a new level of pressure. We had to deliver.”

And he did. Too many big, spectacular entertainments today either fail to measure up to their elaborate, spoil-all marketing campaigns. Or they rely on over-the-top special effects to outdo what has come before, often at the cost of plausibility or basic common sense (see: Furious 7).

But Mad Max: Fury Road, which opens on Friday, is a return to the tactile, thrilling excitement of The Road Warrior that broadens

Furiosa Fabulosa and mad about MaxDirector George Miller gets no small help from Tom Hardy and Charlize Theron in rebooting the high-octane franchise with ‘Mad Max: Fury Road’

IN CHARACTER Tom Hardy and Charlize Theron get ready for all sort of glorious mayhem as Max Rockatansky and Imperator Furiosa in the post-apocalyptic steampunk spectacle.

C D

REDEFINING BAR FARE CLASSICS

WARRIORS MAKEMINCEMEATOF GRIZZLIES

SportsBusinessMirrorC1 | Friday, May 15, 2015mirror_sports@yahoo.com.phsports@businessmirror.com.phEditor: Jun Lomibao

The Golden State Warriors crush the

Grizzlies, 98-78, on Wednesday

in Game Five of the conference

semifinals to take a 3-2 lead in the series as

they could not be stopped at Oracle

Arena.

ATLANTA—Atlanta’s Al Horford swooped in to snatch an offensive rebound and dropped in a shot from right under the basket with 1.9 seconds remaining to give the Hawks an 82-81 victory over

Washington on Wednesday and a 3-2 lead in the National Basketball Association Eastern Conference semifinals. Atlanta went more than seven minutes in the fourth quarter without making a basket, then ripped off 14 straight points to take the lead. Then there was another sudden shift as Atlanta went cold again, and it looked as though Washington’s Paul Pierce had doomed Atlanta for the second time in the series. Having already made a buzzer-beating winner in Game Three, he got open in the corner and swished a three-pointer with 8.3 seconds left, putting the Wizards up 81-80. Pierce taunted the Hawks bench and home crowd on his way back down the court before bowling over teammate John Wall, who was playing for the first time since Game One after fracturing several bones in his left hand. Wall didn’t mind, throwing up his hands in celebration. The Wizards were on the verge of heading home with a chance to wrap up the series. Atlanta had one more chance. The Hawks gave the ball to backup point guard Dennis Schroder, who ignited a fourth-quarter rally and stayed in the game at the suggestion of All-Star Jeff Teague, who watched the closing minutes from the bench. Schroder drove down the lane and put up a shot, which was swatted off the backboard by Wall. But Horford yanked the ball away from Nene, who tumbled to the court, leaving the Hawks

center all alone under the basket. Horford, who had 23 points and 11 rebounds, put it the easy shot on a night when both teams struggled offensively. “I wasn’t supposed to be involved in the play at all,” Horford said. “When I saw the ball go up, I just ran in there.” The Wizards threw up a wild shot from halfcourt that didn’t come close as the horn sounded. The sellout crowd nearly stormed the court, held back by security while the Hawks celebrated. Horford screamed and pumped his fists, having put the Hawks one victory away from advancing to the third round of the playoffs for the first time since the team moved to Atlanta from Saint Louis in 1968. About 10 minutes after the Wizards lost, there was more heartbreak for D.C.sports fans. The Capitals were eliminated from the National Hockey League playoffs with a Game Seven overtime loss to the New York Rangers. At least the Wizards still have a chance. Game Six is on Friday night in Washington. “These guys are fighting. I love it,” Washington Coach Randy Wittman said. “They made one more play than us.” Wall, who fractured several bones in his left hand in the series opener and missed the next three games, wound up with 15 points, seven assists and four steals. Bradley Beal led the Wizards with 23 points. AP

» AL HORFORD’S late follow gives the Atlanta Hawks an 82-81 win over the Washington Wizards. AP

HORFORD SAVES HAWKS

By Diamond LeungThe Oakland Tribune

 

O AKLAND, California—Blow by blow, the Golden State Warriors buried the Memphis Grizzlies with a barrage of backbreaking shots and now find themselves one win away from advancing to the Western Conference finals. The Warriors crushed the Grizzlies, 98-78, on Wednesday in Game

Five of the conference semifinals to take a 3-2 lead in the series as they could not be stopped at Oracle Arena. Stephen Curry did a little bit of everything, racking up 18 points, seven rebounds, six steals and five assists. He came out firing and matched a playoff career high with six three-pointers. Klay Thompson scored a game-high 21 points, with his four-point play in the fourth quarter giving the Warriors a 24-point lead and one more thrill to remember before they headed back to Memphis for Game Six. The other standout for the Warriors was their collective defense, which smothered Memphis. Meanwhile, the Grizzlies were already in a bind when top perimeter defender Tony Allen was unable to play and guard Thompson due to a sore hamstring. Once Andre Iguodala (16 points) and Harrison Barnes (14 points) began doing what they wanted and enjoying big games, as well, there was little the Grizzlies could do but fight another day. Even if the Warriors can’t close out the series on Friday, Memphis would have to win a Game Seven on the road to advance. “You don’t want to mess around,” Warriors Coach Steve Kerr said of looking to end the series in Game Six. “You never know what can happen.” If Game Five wasn’t the knockout blow, it sure felt like one. The Warriors’ defense limited the Grizzlies to 39.8 percent from the field. Marc Gasol led them with 18 points, but was eight-for-22 from the field with Draymond Green draped all over him. Andrew Bogut added six points, all on alley-oop dunks, nine rebounds and four blocked shots. “This is what it’s going to take, this kind of defense from tonight,” Kerr said. “We sped the game up with our defensive activity, forcing turnovers.” The Warriors were 14-for-30 from three-point range with Curry leading the way and Thompson hitting three of them. Curry erupted and hit four three-pointers in the first quarter alone, bringing the Warriors back from as many as 13 points down to lead 26-25. Curry tantalized Beno Udrih with the dribble before launching from long range to close out the quarter with the Warriors in the middle of an 18-2 run. After the shot, Curry motioned to the Oracle crowd to get even louder than it already was. He hit two three-pointers during that stretch, with Green adding a three-point play. It was clear Curry came out ready to shoot, as he attempted eight shots from long distance in the first half and only one shot from two-point range. Zach Randolph finished with 13 points and had gotten the Grizzlies off to

a hot start, making his first four field goal attempts, including a rare three-pointer to give them an 11-4 lead. He had nine of those points and four rebounds in the first four minutes. While the Warriors blew numerous opportunities to score in transition and committed seven first-quarter turnovers, the Grizzlies took a 23-10 lead before Curry and Barnes led the comeback. Barnes had a three-pointer and a jumper followed by Curry’s three-pointer in transition to cut the deficit to 23-15. Barnes’s second three-pointer gave the Warriors a 41-35 lead in the second quarter. Thompson hit a three-pointer, and then Curry drained his fifth from long range to give the Warriors a 49-37 lead. They finished the first half with 14 fast break points, with the Grizzlies failing to score any. Barnes scored 10 points by halftime and despite committing four turnovers was aggressive and effective. Late in the second quarter, his foot slid while guarding Courtney Lee and caused him to painfully do the splits. He still came out to start the second half. Curry’s sixth three-pointer gave the Warriors a 63-51 lead, jump-starting a 12-4 Warriors run. Andre Iguodala had two dunks in transition off passes from Curry, who after the second one once again motioned for the crowd to go crazy. Iguodala’s putback dunk off Curry’s lay-up attempt made it 74-57 heading into the fourth. In the final period, he had a three-pointer and another dunk to put the game out of reach for Memphis. Iguodala’s putback dunk off Curry’s lay-up attempt made it 74-57 heading into the fourth.

» STEPHEN CURRY does a little bit of everything, racking up 18 points, seven rebounds, six steals

and five assists. He comes out firing and matched a playoff career high with six three-pointers. AP

BSP: No need to tweak rates‘ECONOMy PRIMED fOR CONtINuED GROwtH wItHOut NEED fOR MONEtARy-POlICy SuPPORt’

liFe d1

sporTs c1

Electricity-rate hike feared on WESMprice increase, Malampaya supply cut

furiosafabulosa and mad

about max

B3-1 | Friday, May 15, 2015 • Editor: Lyn ResurreccionWorldBusinessMirror

The

Chinese President Xi Jinping (left) makes a statement watched by indian Prime Minister narendra Modi after signing agreements in new Delhi, india, on sep’tember 18, 2014. AP/MAnish swAruP

XI’AN, China—Lion dancers and flower-bearing children welcomed Indian Prime

Minister Narendra Modi on Thursday to central China where President Xi Jinping planned to host him with a touch of personal diplomacy that is rare for a Chinese leader.

Modi arrived at the airport in Xi’an clad in a traditional Indian costume. He then visited the mu-seum showing China’s famed terra cotta warriors and a Buddhist tem-ple housing works translated from Sanskrit. In the afternoon, he was scheduled to hold a lengthy meeting with Xi, whose family hails from the region.

By hosting of Modi in his home province of Shaanxi, Xi is reciprocat-ing for the Indian leader’s invitation

to Xi to his own hometown of Ah-madebad last year. Chinese leaders almost never receive their foreign counterparts in anything other than formal settings in Beijing.

The visit highlights warm-ing ties between the rising Asian powers—the world’s two most populous nations, with a combined population of 2.6 billion—despite their continuing rivalry and con-trasting political systems. That trend has been given added impetus by the

personal authority enjoyed by the two men, who are widely seen as their countries’ strongest leaders in years.

China is looking to India as a market for its increasingly high-tech goods, from high-speed trains to nu-clear power plants, while India is keen to attract Chinese investment in manufacturing and infrastructure.

With a slowing economy, excess production capacity and nearly $4 trillion in foreign-currency reserves, China is ready to satisfy India’s es-timated $1 trillion in demand for infrastructure projects such as air-ports, roads, ports and railways.

Modi’s top priority in China is finding ways to reduce India’s $48-billion trade deficit with its neighbor through greater market access for Indian goods and services and by convincing Chinese compa-nies to manufacture in India.

Indian and Chinese officials have said the sides plan to sign invest-ment deals and trade agreements during Modi’s visit worth about $10 billion, the official China Daily news-paper reported on Thursday.

Xi and Modi are also expected to discuss efforts to end a long-fes-tering border dispute that sparked a

bloody monthlong conflict in 1962. No resolution is expected soon, al-though the sides have been in close contact to avoid flare-ups.

India has also grown increas-ingly concerned about forays by Chinese naval vessels, including submarines, into what New Delhi considers its strategic backyard. China’s navy is active in the Gulf of Aden as part of antipiracy pa-trols, and Beijing has heavy invests in port facilities in Sri Lanka and Pakistan.

Another divisive issue is Chi-na’s deep ties with Pakistan, India’s archrival, where Xi received a lav-ish reception last month. China has made a commitment to invest up to $46 billion in Pakistani pow-er generation and other projects.

Meanwhile, the presence of Ti-betan exiled leader the Dalai Lama in India rankles Beijing, although New Delhi has avoided using him as a diplomatic foil. China reviles the Buddhist cleric, who fled to India in 1959, as a separatist.

On Friday Modi will hold talks with officials including Premier Li Keqiang in Beijing before moving on to Shanghai on Saturday for activi-ties focusing on trade relations. AP

India’s Modi visits China’s Xi’an amid warming ties

WASHINGTON—The House of Representatives vot-ed by a wide margin on

Wednesday to end the National Se-curity Agency’s (NSA) bulk collection of Americans’ phone records and re-place it with a system to search the data held by telephone companies on a case-by-case basis.

If the House bill becomes law, it will represent one of the most sig-nificant changes stemming from the unauthorized disclosures of former NSA contractor Edward Snowden. The House vote set the stage for a showdown with the Senate just weeks before the Bush-era provi-sions authorizing the program are due to expire.

President Barack Obama sup-ports the House legislation, known as the USA Freedom Act, which is in line with a proposal he made last March. The House passed a similar bill last year, but it failed in the Senate.

Many Senate Republicans don’t like the measure, and Senate Ma-jority Leader Mitch McConnell has introduced a separate version that would keep the program as is. Yet, he also faces opposition from with-

in his party and has said he is open to compromise.

Most House members would rather see the Bush-era provisions expire al-together than re-authorize NSA bulk collection, said Rep. Adam Schiff, ranking Democrat on the intelli-gence committee.

The issue, which exploded into public view two years ago, has im-plications for the 2016 presidential contest, with Republican candidates staking out different positions.

The revelation that the NSA had for years been secretly collecting all records of US landline phone calls was among the most controversial disclosures by Snowden, a former NSA systems administrator who in 2013 leaked thousands of secret documents to journalists.

The program collects the number called, along with the date, time and duration of call, but not the content or people’s names. It stores the in-formation in an NSA database that

a small number of analysts query for matches against the phone numbers of known terrorists abroad, hunting for domestic connections to plots.

Officials acknowledge the pro-gram has never foiled a terrorist at-tack, and some within the NSA had proposed abandoning it even before it leaked—on the grounds that its fi-nancial and privacy costs outweighed its counterterrorism benefits.

Proponents of keeping the pro-gram the way it is argue that the rise of the Islamic State group and its efforts to inspire Westerners to attack in their own countries make it more important than ever for the NSA and Federal Bureau of Investi-gation to have such phone records at their disposal to map potential terrorist cells when new informa-tion surfaces. And they say there is no evidence the program has ever been misused.

Under the House measure, the NSA would no longer collect and store the records, but the govern-ment still could obtain a court order to obtain data connected to a specific number from the phone companies, which typically store them for 18 months. AP

U.S. HoUSe paSSeS bill to end bUlk collection of pHone recordS

WASHINGTON—Senate Dem-ocrats have dropped a key demand that led them to

filibuster President Barack Obama’s re-quest for expedited consideration of a major trade deal, quickly resolving a rare internal battle between the presi-dent and his party.

On Tuesday a group of lawmakers opposed to a Pacific Rim trade agree-ment persuaded most of their fellow Democrats to join them in blocking a vote on Obama’s request that he be granted the authority he says he needs to help finalize negotiations with the 11 other nations in the pact.

The Democrats’ blocking of Obama’s priority magnified the difficulty that the president has had in persuading his al-lies to support the trade agreement, which he calls the most progressive such deal in American history.

Key Democratic constituencies, though, fear the pact could hurt American manufacturing.

The deal is one of Obama’s top re-maining legislative concerns, requiring a sustained lobbying campaign that in-cluded last week’s visit to Nike’s head-quarters to highlight potential benefits to the US economy of increased exports and lower tariffs on goods produced by American companies.

He also met on Tuesday after the filibuster with a group of 10 pro-trade Democrats at the White House to dis-cuss the path forward. As a result of that and other negotiations, Senate Majority Leader Mitch McConnell, Republican-Kentucky, said the Senate will again attempt to vote on the trade measure in coming days.

Democrats, led by Sen. Charles E. Schumer of New York, the No. 3 Senate Democrat, had pushed to use the trade authority bill as leverage to force a vote on a measure penalizing countries that manipulate their currency.

Schumer has long accused China of deliberately devaluing its currency to gain an unfair advantage in trade, and more recently critics have complained about Japan using its depreciated yen to do the same.

China isn’t part of the trade nego-tiations, but Japan is, and American car manufacturers, labor unions and some others want the pact to include sanc-tions for countries found to be manipu-lating their currencies.

The Obama administration has re-fused to seek tough currency provisions in trade negotiations, saying it would kill the deal, and Obama is likely to veto such legislation if it should clear both chambers and reach his desk.

Though Democrats dropped the de-mand to package the currency bill with the measure to give Obama negotiating power on trade, a leadership aide said that if it were to pass the Senate, the House could still link the two.

McConnell called it a “reasonable” solution that would guarantee Demo-crats had up-or-down votes on the currency bill “in a way that that will not imperil the increased American exports and American trade jobs we need.”

Senate Minority Leader Harry Reid, Democrat-Nevada, also called it a fair outcome.

“This is a complex issue, one that deserves a full and robust debate,” he said. TNS

Deal reaCheD in senate that CoulD aDvanCe obaMa’s traDe Push

a sign is shown outside the national security agency campus in Fort Meade, Maryland. AP/PAtrick seMAnsky

CAIRO—Far below the gridlocked streets of Egypt’s capital, a virtual second city thrives.

The Cairo Metro system sprawls across the city, delivering an estimated 3.6 million passengers a day over three different lines and approximately 78 kilometers of train track, both above ground and below the city center.

In a city known, as much as anything, for its dysfunction, the Cairo Metro stands as a singular achievement. It’s reliable, well-maintained and relatively clean. And

it may be the only place in Egypt where no-smoking rules are actually enforced.

At 1 Egyptian pound (13 cents) per ticket, the Metro is a bargain even in a country like Egypt where nearly half the population of 90 million lives near or be-low the poverty line.

“It’s like the life train,” said Leila Abdel Basset, a 24-year-old journalist who has taken the Metro to work every weekday for the past three years. “It’s crowded in some stations, and empty in others, but it always gets me to my station.” AP

cairo SUbway tHriveS beneatH tHe cHaoSa FeMale senior security officer speaks to women inside a female-only car at the shohadaa (Martyrs) Metro station, in Cairo, egypt. AP/hebA elkholy

world B3-1

india’s modiVisits CHina’s

xi’an amidWarminG tiEs

WarriorsmakE

minCEmEat of GrizzliEs

By Bianca Cuaresma 

Only eight months old, the

country’s monetary- policy settings were left unchanged on Thursday’s rate-setting meeting of the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP), a development various economists and observers widely anticipated.

New pccci oFFicers philippine-chinese chamber of commerce and industry (pccci) outgoing president anson Tan (second from right) and incoming president wong cheung sha hand a plaque of appreciation to sen. cynthia a. Villar, who served as the inducting officer and inspirational speaker during the organization’s induction ceremony at a restaurant in pasay city. The senator urged the newly elected officers and members of pccci to continue promoting trade and investments here and abroad, and keep pace with the market and policy shifts due to the impending asean integration. ROY DOMINGO

BusinessMirror news@businessmirror.com.ph Friday, May 15, 2015A2

NewsMalampaya. . . Continued from A1

FMOC liftoff. . . Continued from A8

BSP: No need to tweak rates. . . Continued from A1

have no information why natural-gas supply is curtailed.” Fernandez said it was too early to say if the curtailment and the recent increases in WESM prices will affect the generation charge, the largest compo-nent of a Meralco bill. But the Energy Regulatory Commission has put in place a primary and secondary price cap to address any sudden spike. Petilla, in a text message, said the spike in WESM could be attributed to the Malampaya incident. “But it’s still lower than summer prices in the last few years.” Liquid fuel is more expensive than natural gas. However, First Gen President Francis Giles Puno said, the company still has cheaper supply of fuel left. “When we were preparing for the Malampaya shutdown last March, the price of liquid fuel went down. It was, at that time, close to gas,” he said. “We have, I think, about one week of supply on base -oad. In the meantime, we will order additional fuel just in case,” he added. In case they need to order additional fuel soon, Puno said the gas seller, which, in this case, is the consortium that runs the Malampaya facility, would have to pay for any ad-ditional cost. “What will happen is the differ-ence will be covered by the gas sell-ers because, in the first place, we are supposed to be running on natural gas,”  said Puno, adding that their power plants are still able to deliver to Meralco its power requirements. SPEX just recently implemented

Phase 3 of the Malampaya project that involves the design, fabrication and installation of a new depletion compression platform (DCP). Early this year, the MP3 (Malam-paya Phase 3) platform has been towed from its fabrication site in Subic Bay and installed beside the existing Malampaya platform in the West Philippine Sea, near Palawan. It is the first offshore gas platform to be built in the Philippines, and MP3’s local fabrication contractor, Keppel Subic Shipyard, constructed a 1,500-ton gantry crane to execute the critical heavy-lift activities. The platform is designed to float, and an inbuilt jacking system will enable the 80-meter legs to be jacked down to lift the platform from the water into its final position. Laying the foundation for the in-stallation of the DCP’s legs also re-quired transporting 41,000 tons of rock from a quarry site in Angono, shipping it out of Luzon via the Batan-gas port, and installing it on the sea-floor. SPEX said that, while the task involved numerous challenges, the work was achieved with zero injuries. MP3 has provided over 1,400 direct new jobs for Filipinos and generated more business for local companies supporting the project. The Malampaya consortium has remitted $900 million in royalty payment to the national government last year. This brings to $8.5 billion the total payment turned over to the government since the successful com-missioning of the project in 2001.

stations and general merchandise retailers also declined. The latter category includes department stores, which saw the biggest drop in purchases in more than a year. The figures used to calculate gross domestic product (GDP), the so-called control group that excludes categories such as food services, auto dealers, home-improvement stores and service stations, were little changed after a 0.5-percent increase in the previous month that was larger than previously estimated. Unusually harsh winter weather was blamed for some of the slowdown in retail sales in the early part of 2015, when delays related to a West Coast port dispute also held back other economic activity. The economy barely grew in the first quar-ter, with GDP advancing at a 0.2 percent annu-alized rate.Household consumption expanded 1.9 percent in January through March after growing at a 4.4-percent pace in the prior three months, according to Commerce Department

data issued last month.

Spending forecastsEConoMISTS may mark down estimates for this quarter after the retail sales figures. Consumer spending was projected to accelerate 3.5 percent in the April through June period, according to the median forecast of economists surveyed by Bloomberg in April. “It definitely does not point to as much of a strong acceleration in the second quarter for consumer spending as we were hoping to see,” said Brittany Baumann, a new York-based economist at Credit Agricole CIB. An improving job market is among reasons some economists remain optimistic toward spending. Payrolls bounced back in April with a 223,000 increase following a 85,000 gain the prior month, and the jobless rate fell to 5.4 percent, the lowest since May 2008, according to Labor Department data. Wage gains remain steady, albeit at relatively low levels. Hourly pay was up 2.2 percent in April

from a year earlier, holding within the narrow range tracked over the past four years.

Remaining upbeat“GIvEn the strengthening labor market and rising wages, that should help the consum-er going forward this year,” Baumann said. “We could see a pop-back in those May retail sales numbers.” Fed policy-makers also need to be convinced that inflation is likely to return to their 2-per-cent goal before raising rates. other figures on Wednesday also cast doubt on pricing power. The cost of foreign-made goods unexpect-edly dropped 0.3 percent in April, as the rela-tively strong dollar held down expenses for such things as food and automobiles, according to data from the Labor Department. The decrease in the import-price index com-pared with a 0.3-percent gain median forecast of economists surveyed by Bloomberg. Bloomberg News

percent instead. Guinigundo said the slightly accelerated forecast inflation in May could be blamed on the weak peso, the adjustments in oil prices in recent months, as well as on the impact of the El niño weather disruptions for both this year and next. “El nino is now expected to extend beyond June this year and up to December 2015,” Guinigun-do said, quickly adding that this could heighten supply-side pressures on agricultural production and electricity rates. The increase in the BSP’s inflation outlook could have been higher were it not for so-called

downside factors, such as lower actual inflation rate the past few months, lower electricity rates in Luzon and the delayed adjustments in water rates, among others, according to Guinigundo. The BSP further said strong domestic demand conditions support the central bank’s decision to keep the rates steady, proving that the economy does not need additional stimulus. “In the months ahead, ample domestic liquidity and higher public spending are expected to sup-port domestic economic activity and sustain the economy’s momentum,” BSP Governor Amando M. Tetangco Jr. said.

Guinigundo, one of three deputy governors, also said the MB took into consideration what the US Federal Reserve (the Fed) will likely adopt when it meets within the month. Guinigundo said the MB was fully cognizant of the possible impact of the US Fed action seen happening in the second half. He said the BSP has sufficient monetary-policy legroom to handle such a de-velopment given earlier anticipatory preemptive measures pursued much earlier. The BSP will next meet on June 25 to decide whether further monetary-policy adjustments are required to ensure the country’s continued growth.

briefsgroups seek probe

on workers’ death in valenzuela factory fireLABOR groups on Thursday demanded a thorough investigation into a deadly fire in Valenzuela City, which killed dozens of factory workers on Wednesday. The labor groups that issued a statement were Partido Manggagawa, Sentro ng Nagkakaisang Manggagawa, the Associated Labor Unions-Trade Union Congress of the Philippines, the Federation of Free Workers, the National Confederation of Labor and the Public Services Labor Independent Confederation. The groups’ leaders said they believe a substantial number of establishments all over the country are not compliant with occupational health safety standards.

COMMISSION on Elections (Comelec) Chair-man Andres D. Bautista urged Congress to review the law covering the conduct of recall

polls, saying that a three-year term is too short to be subjected to recall elections.

“Think about it, you only have three years in office and then gets recalled,” Bautista said in Filipino.

“Maybe we should think about a new term. Should there still be a recall to a three-year term?” According to the newly appointed Comelec head, three years is “too short.”

Bautista cited as an example the recent recall elections in Puerto Princesa, which was conducted a year before another election is held.

There was a recall election on May 8 in Pala-wan; next year, May 9, another election would be held, he noted.

Under Section 74 of Republic Act 7160 (Local Government Code), “no recall elections shall take place within one year from the date of the official’s assumption to office.”

Likewise, the code states that there can be no recall elections within “one year immediately pre-ceding a regular local election.”

The Comelec has been mandated to provide all the expenses necessary for the holding of re-call elections.

It can be recalled that in May 2014, the Comelec en banc decided to discontinue any proceedings rela-tive to holding recall elections due to lack of funds allotted for such.

The poll body eventually lifted the suspen-sion of all recall proceedings in November 2014. Joel R. San Juan

In a news briefing, Centrist Democratic Party Rep. Rufus Rodriguez of Cagayan de Oro said the panel is still working on the contents of the proposed BBL. “Still we do not have the final version,” Rodriguez said.

On Wednesday Rodriguez has distrib-uted the “chairman’s working draft” of the BBL to the panel’s 98 members. That draft contains 125 changes to the original Palace-draft measure.

However, after a meeting with Com-mittee Vice Chairman and House Speaker Feliciano Belmonte Jr., Rodriguez said a second “working draft” of the bill con-taining the amendments proposed by Liberal Party Rep. Anthony del Rosario of Davao del Norte, together with at least 20 allies of the administration in the lower chamber is currently being prepared for

Monday’s committee voting. “The request of the vice chairmen

was that, for the eight provisions, the chairman wants to be deleted, instead of only having a proposal to remove them contained in the working draft, [there should also be a proposal] to modify the language, which is really what was pro-posed by Congressman del Rosario. So there would now be two options to be con-sidered in the new edition of the chair-man’s working draft,” Rodriguez said.

The 107-page chairman’s working draft only contains the proposed amendments that Rodriguez agrees with. The lawmaker said the panel members are set to vote on the deletion of eight unconstitutional provi-sions of the original Palace-proposed BBL.

He said that among the unconstitu-

news@businessmirror.com.ph Editor: Dionisio L. Pelayo • Friday, May 15, 2015 A3BusinessMirrorThe Nation

tional provisions the panel are set to delete include that authorizing the new Bangsam-oro administration to have its own version of the Commission on Elections, Ombuds-man, Civil Service Commission, Commis-sion on Audit, and Commission on Human Rights. Other provisions eyed to be deleted include those creating the Bangsamoro administration’s own defense and police forces. A provision allowing other areas outside the Bangsamoro territory to also join the entity upon a petition of at least 10 percent of constituents would also be deleted, according to Rodriguez.

Meanwhile, Rodriguez expressed con-fidence that the May 18 to 20 voting on each of the Bangsamoro bill’s 221 provi-sions will move at a faster, “and more de-terminative,” pace. He explained that the voting will proceed with a House member moving for the approval of the chairman’s draft of a particular section.

“If somebody will say they have pro-posed an amendment, we’ll recognize that and vote on it. If that amendment loses, we’ll go back to voting on what I presented. That will be put on the third screen [in the room] and we’ll tabulate all the approved provisions. That will become the draft committee report,” he said. Jovee Marie N. dela Cruz

Comelec chief eyesrecall-period review

FOUR days before the panel voting on the proposed Bangsamoro basic law (BBL), the House Ad Hoc Committee on BBL

still has no final version of the controversial measure, its chairman admitted on Thursday.

No final BBL version yetfor Monday’s House vote

u.n. human-rights probers to see phl women prisoners’ conditionMEMBERS of the UN Subcommittee on Prevention of Torture (UNSPT) would conduct a probe on the conditions of political prisoners, especially Miradel Torres, a breastfeeding mother of a 5-month-old baby detained at the Taguig City Jail. According to human-rights group Karapatan, the UN team visits detention centers in several countries to examine the condition of prisoners. As of March 31 a total of 527 political prisoners have been documented by Karapatan, with 220 of them arrested under the current administration. Torres is among the 43 women political detainees.

By Catherine N. Pillas

ATAX measure aimed at raising the taxable-income threshold will reduce revenue collection

by P30 billion annually but is still nec-essary to ensure a fairer tax system for middle-income workers, Senate Ways and Means Committee Chair-man Juan Edgardo M. Angara said. Speaking before the Employers Confederation of the Philippines (Ecop) 36th National Conference for Employers, the senator aired anew his push for the adjustment of individual income-tax brackets. Senate Bill (SB) 2149 initially proposed that tax rates be adjusted from the maximum rate of 32 per-cent to 25 percent. However, Angara said he already agreed not to touch the rates but just compress the income-tax brackets by raising the maximum taxable-income ceiling from the current P500,000 to P5,000,000. “If you adjust P500,000 for infla-tion from 1997 when it was set, that P500,000 is already P5 million now. I’m willing to keep the percentages at their current level, concession ko na nga ’yon, basta make it equitable,” Angara told the Ecop members on Thursday. Currently, the maximum tax rate of 32 percent is applied to all individuals earning above P500,000 a year. With this outdated tax system, those who earn roughly P42,000 monthly are paying the same rate as the country’s millionaires. Angara said the potential take-home pay, for instance, of a busi-ness-process outsourcing worker of P20,000 to P30,000, or around $5,000, is taxed annually at a rate of 25 percent in the Philippines. By comparison, in Malaysia, the same amount is taxed at a 2-percent rate; Thailand, 10 percent; Indonesia, 15 percent; and Singapore, tax exempt. In the country today, the mini-mum tax rate of 5 percent is applied to those earning P10,000 and below per moth. A 10-percent rate is applied to income higher than P10,000 but less than P30,000. Angara’s proposal of adjusting the income-tax brackets would mean that individuals who may have been pay-ing a larger tax rate of 15 percent may be classified into a lower tax class, as a result of the ceiling adjustment. The senator is keeping mum on the actual tax structure, but said the move will likely result in P30-billion revenue losses annually, as middle-income workers may qualify for lower tax rates. At present, the Senate is done with the committee report on the SB 2149, but has not reported it out yet on Senate floor. The House of Repre-sentatives must pass its own version of the bill first before the Senate can take further action.

BusinessMirror news@businessmirror.com.ph A4

Economy

By David Cagahastian

THE oustanding public-sector debt (OPSD) decreased to P7.4 trillion as of the end of 2014,

from its previous level of P7.5 trillion as of June 2014. As a percentage of the gross do-mestic product (GDP), the OPSD also decreased to 58.8 percent of GDP as of the end of 2014, compared to 61.9 percent of GDP as of June 2014. The OPSD is the sum of the con-solidated nonfinancial public-sector debt and the debt of financial pub-lic corporations, minus intrasector debt holdings. The Department of Finance (DOF) said improved financial performance of public corpora-tions, along with higher economic growth, resulted in the drop of net borrowings. Meanwhile, the general govern-ment debt increased by 1.6 percent as of the end of 2014, from the figures that were registered a year before. By the end of 2014, general govern-ment debt stood at P4.6 trillion, as compared to the P4.5 trillion by the end of 2013. The general government debt consists of the debt of the national government, borrowings of the Cen-tral Bank Board of Liquidators, social security institutions (SSIs) and local government units, minus intrasector debt holdings, such as investments of the Bond Sinking Fund and SSIs in government securities.

The DOF said the increase in the general government debt was maintained at a “very minimal” level through bigger revenue collection and a better liability management program. As a percentage of the GDP, the general government debt ratio im-proved to 36.4 percent, or a 2.8-per-centage-point decrease from the previous ratio of 39.2 percent. Finance Secretary Cesar V. Puri-sima said the decrease in the ratios of both OPSD and general govern-ment debt in relation to GDP is proof of the country’s creditworthiness and sound economic fundamentals. “We are a bright spot amid global economic uncertainty precisely be-cause of our strong fundamentals. We owe this to our proactive liability management. We vow to continue protecting our growth trajectory, making it as stable and sustainable as can be,” Purisima said.

By Butch Fernandez

PRESIDENT Aquino on Thursday labeled as counterproductive a move

by Sen. Antonio Trillanes IV and other petitioners to suspend the implementation of the K to 12 education-reform program aimed at making Filipinos more competitive in job markets here and abroad.

Mr. Aquino acknowledged concerns raised over the plan, including additional expenses for poor parents with school-aged children; but said the benefits from having adequate qualified graduates joining the work force outweigh that.

The President pointed out

that while some quarters may win points for advocating the K to 12 suspension, this does not address a looming problem as other countries that employ overseas Filipino workers are now questioning their school credentials.

Should he agree to suspend K to 12, Mr. Aquino said, this problem will not be solved. “So, hindi mawawala ’yung problema kung hindi natin iso-solve. Hindi lang naman sa Middle East, maraming ibang lugar na nagsasabi—dahil balikan natin ha, Pilipinas na lang ho ang isa sa tatlo na may basic education program na 10 years. So, kaagad lahat nu’ng ibang lugar papasok ako ng college sasabihin, ‘oops, teka muna kulang pa ng preparation mo dito, et cetera.”

By Jovee Marie N. dela Cruz

Speaker Feliciano Belmonte Jr. said the passage of the proposed philippine Fair Competition act will

benefit not only the business sector but the common people, as well. Belmonte, in an interview with reporters late Wednesday, said the proposed philippine Fair Competition act is a larger contributor to economic growth, as foreign direct investments (FDI) are seen to increase once it is implemented. “FDI can be translated into buildings, machineries, office, industries, jobs and taxes payments for utilities, and all other benefits can be enjoyed by common people,” said Belmonte, the main author of the proposed philippine Fair Competition act. The Speaker added: “Unlike the come-and-go type of money that is just playing in our stock exchange, this fair competition [law] will translate the real benefit of FDI to common people…our interest is to benefit the common man.” The bill, which has been recently approved on second reading, aims to minimize, if not totally eradicate, unfair competition, monopolies and cartels. according to Belmonte, the proposed philippine Fair Competition act has been repeatedly filed since the 8th Congress but has never succeeded. “I’m very happy with the fact that the antitrust bill has been passed and, as I said, it’s probably the longest-running bill, the bill that took the longest time before it becomes a law; it’s been filed virtually in all previous congresses, finally it has seen

the light in the House,” he said. The lower chamber is set to approve the measure on final reading next week. “Hopefully, in the near future, we can get together [with the Senate] in the bicameral conference committee and come up with the final version and that’s definitely will be an achievement of the 16th Congress,” Belmonte added. The measure refers to monopoly as a form of market structure in which one entity, having earned a privilege or obtained advantage over the others, dominates the sale of a good or service. as defined under the measure, mergers are situations where two or more entities, previously independent of one another, join together. These include transactions whereby two entities combine into one; one entity takes control of the whole or part of another; two or more entities acquire control over another entity and other transaction whereby one or more undertakings acquire control over one or more entities. The bill also proposes to create the philippine Competition Commission (pCC) that will prosecute those engaged in unfair and deceptive trade practices and other such practices with the purpose of preventing, restricting, or distorting competition. Further, the bill provides for a Transitional Clause to allow affected parties time to renegotiate agreements or restructure their business to comply with the law. according to the measure, the pCC is an independent body that shall have original and exclusive jurisdiction to enforce and implement

the competition law. Likewise, the bill said the pCC is empowered to investigate violations of the competition law, issue subpoena duces tecum and testificandum, cease-and-desist orders, conduct administrative proceedings, impose administrative fines, issue advisory or legal opnions, and is mandated to submit reports to Congress, including proposed legislation for the regulation of commerce, trade and industry. Under the bill, any person who fails or neglects to comply with any term or condition of a binding ruling, a cease-and- desist order or an order for readjustment issued by the commission, shall pay a fine of not less than p50,000 and not more p2 million for each violation. The measure, however, said the decisions of the pCC are appealable to the Court of appeals, with the Supreme Court as the court of last resort. The pCC may also impose upon entities fines of up to p1 million where, intentionally or negligently, they supply incorrect or misleading information in any document, application or other paper filed with or submitted to the commission. The bill also provides that an entity that enters into any anti-competitive agreement or conduct, as defined under this act shall, for each and every violation, be penalized by imprisonment from five to 10 years, or a fine up to 10 percent of the annual turnover based on the audited financial statements of violator during the previous fiscal year or up to 10 percent of the value of the assets of the violator, whichever is higher, or both imprisonment and fine.

In the Economic and Social Survey of Asia and the Pacific 2015 report, the Unescap raised its economic-growth projection for the Philippines to 6.5 percent in 2015 from the earlier projec-tion of 6.4 percent. The UN agency also bared its 6.4-percent growth forecast for 2016. These growth estimates, however, are below the government’s targets of 7 percent to 8 percent this year and in 2016. “Domestic consumption will remain the main driver of growth aided further by the fall in global oil prices and continued good per-formance in the services sector, which is the largest contributor to the economy,” the Unescap said. In terms of inflation, the Unes-cap expects a slight uptick in the average increase in prices in 2016, on the back of the expect-ed election spending. The coun-try’s presidential election is in May 2016. Unescap expects inflation to in-crease to an average of 3 percent this year and 3.2 percent next year. These are both within the central bank inflation target of 2 percent to 4 percent until 2016. “The government is likely to expand fiscal spending in the run-up to elections in 2016,” the Unescap said. The growth expectations in the Philippines are above the estimates Unescap made for the region’s de-veloping economies. Growth in the region’s developing nations will increase only slightly, to 5.9 percent in 2015 from 5.8 percent last year, with no significant change expected in 2016. The survey projects that Chi-

na’s planned moderation will low-er its growth to 7 percent in 2015 from 7.4 percent last year, which is expected to be partially offset by an acceleration of growth in India to 8.1 percent from 7.4 per-cent last year. Indonesia is also forecast to see growth acceleration to 5.6 percent, from 5 percent last year. However, in the latter two countries, this outlook depends critically on solid and sus-tained domestic reforms. Inf lation is also forecast to further decline and remain low, largely due to lower international oil prices, which have led to inter-est-rate cuts in many economies of the region. The growth potential of Asia-Pacific developing economies is being held back by infrastruc-ture shortages and the exces-sive commodity dependence of some countries. The Unescap said fragile glo-bal economic recovery and conse-quently subdued global trade pose additional challenges. Dr. Steve Gui-Diby, economic af-fairs officer of Unescap, said the Phil-ippines needs to address challenges caused by its lack of infrastructure and skilled labor. The report said although the government has rolled out mid-sized public-private partnership projects, foreign participation may be needed in larger projects, such as the construction of a planned subway and commuter railway. “[But] the Philippines needs to build regulatory framework to assure private businesses on the country’s long-term growth prospects,” Gui-Diby said. With Estrella Torres

Friday, May 15, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

Unescap raises PHL growth forecastBy Cai U. Ordinario

The United Nations economic and Social Commission for Asia and the Pacific (Unescap)

estimates that the Philippine economy will continue to post growth of above 6 percent this year and in 2016.

Belmonte: Competition law to benefit business, public

‘Workers deservefairer tax system’

CEMEX BOSS IN TOWN President Aquino greets Cemex CEO Fernando Gonzalez during the courtesy call at the Music Room of the Malacañang on Thursday. Also in the photo are United Mexican States Ambassador to the Philippines Julio Camarena Villaseñor, Cemex Asia President Joaquin Estrada and Cemex Strategic Philippines Inc. President and CEO Pedro Palomino. GIL NarTea /MaLaCañaNG pHoTo BUreaU

THE BEAUTY OF VELOCI Veloci Watch models pose with the newly launched watch collection during the unveiling of the new Veloci offerings held in The Palace Pool Club on Thursday. NoNIe reYeS

Palace thumbs down K to 12 suspension

Public-sector debt down to P7.4 trillion

PURISIMA: “We are a bright spot amid

global economic un-certainty precisely

because of our strong fundamentals. We owe

this to our proactive liability management.

We vow to continue protecting our growth

trajectory, making it as stable and sustainable

as can be.”

news@businessmirror.com.ph Friday, May 15, 2015 A5BusinessMirrorEconomy

Defense Secretary Ashton Carter has asked the Pentagon to consider options for using extra land- and sea-based surveillance aircraft and naval vessels to underscore the freedom of navigation in the South China Sea, according to a defense of-ficial with direct knowledge of the discussions. The official spoke on the condition of anonymity because the planning is classified. China claims more than 80 per-cent of the South China Sea, which carries some of the world’s busiest shipping lanes. It has quadrupled its land reclamation to 2,000 acres and begun construction of at least one air-strip on the new islands, prompting protests from other claimant states, including the Philippines. The US is treaty-bound to defend its Asian ally in a conflict with China. The official confirmed a Wall Street Journal report that one option under consideration is using aircraft and ships to challenge China’s will-ingness to enforce a 22-kilometer (12-nautical-mile) exclusion zone around the islands and other terri-tory it contests in the area.

‘Close notice’DAvID SheAr, assistant secretary of defense for Asian and Pacific security affairs and a former US ambassador to vietnam, neither

confirmed nor denied the report when asked about it at a hearing on Wednesday of the Senate Foreign relations Committee. “In general the Chinese take close notice of our freedom of navi-gation operation in the South China Sea,” Shear said. “We’re going to continue exercising that right both on the surface of the water and in the air.” Any move by the US to challenge China’s jurisdictional claims “raises the prospect of more aggressive encounters between the US and China’s military both at sea and in the air,” said Ian Storey, a senior fellow at the Institute of Southeast Asian Studies in Singapore.

Air zonesChInA’S foreign ministry said last week it reserves the right to establish an air-defense identification zone over the South China Sea. US military officials have said that China may seek to install long-range detection radars, and base warships and war-planes on the new islands to possibly enforce such a zone. In november 2013, China estab-lished a zone over islands in the ad-jacent east China Sea also claimed by Japan, prompting the US to fly B-52 bombers into the area to challenge its enforcement.

Freedom of navigation now a concern in disputed seaThe US may more aggressively

patrol the disputed West Philippine Sea (South China Sea)

as it searches for answers from China on the purpose of its reclamation work in the area, a move that raises the risk of a confrontation between their militaries.

China says its right to carry out its reclamation is undisputed, even as five other nations also lay claim to parts of the South China Sea. “We express grave concern about the relevant US remarks,” Foreign Ministry Spokesman hua Chuny-ing said on Wednesday at a briefing in Beijing. “It’s necessary for the US to provide clarification.”

‘Stay firm’“ChInA advocates the freedom of navigation in the South China Sea, yet the freedom definitely does not mean that foreign military vessels and aircraft can enter one country’s territorial waters and airspace at will,” hua said. “China will stay firm in safeguarding ter-ritorial sovereignty.” hua has said China would use the islands to provide aid for navi-gation and search-and-rescue op-erations, as well as marine meteo-rological forecasting and fishery services for China and neighbor-ing countries. China may also use the islands for military purposes, she said.

“The Obama administration knows that it cannot stop China from building these things, so it is really aiming at trying to influence how China uses them,” said Bonnie Glaser, a senior adviser for Asia at the Center for Strategic and Interna-tional Studies in Washington.

China may have accelerated its reclamation given a legal challenge by the Philippines in the United nation’s Permanent Court of Arbi-tration in The hague. The South-east Asian nation asked the court to uphold its right to exploit wa-ters within its 200-nautical-mile exclusive economic zone under the Un Convention on the Law of the Sea, much of which falls within

China’s claimed area.“It was that submission that pro-

voked China into moving forward with these reclamation projects be-cause the atolls were explicitly iden-tified,” Storey said.

Submerged featuresThe Philippines asked the tribunal to determine if the features were submerged, in which case they can-not generate a 12-nautical-mile area over which China could exercise sov-ereignty, Storey said.

The US official said additional US military activity would involve an increase in the frequency and range of current surveillance and patrol missions, which include photo reconnaissance and other satellite monitoring of commercial shipping and military activity.

The official declined to say if the options include moving more aircraft or warships to Guam or elsewhere in the region, or requesting temporar y basing rights at Subic Bay or Clark Field in the Philippines, or Cam ranh Bay in vietnam. Such issues may come up on the sidelines of the Shangri-La Dialogue of defense officials, which Carter plans to attend this month in Singapore, the official said.

The South China Sea, Malacca Strait and other regional waters are critical to the energy supplies and economies of east Asia—including China—the official said, adding that the point has been made to Chinese officials in an effort to prevent ten-sions from escalating further.

American senators press actionU.S. senators pressured the Obama administration on Wednesday for a more robust response to China's provocative actions in east Asian

seas, as concern grows in Wash-ington that Beijing is building ar-tificial islands to assert military control over disputed territory.

Sen. Bob Corker, the republican chairman of the Senate Committee on Foreign relations, complained that the administration lacked a “coherent policy,” and disputed the administration's view that China is losing international stature because of its provocative moves.

“I see no price whatsoever that China is playing for their activi-ties in the South and east China Seas. none. In fact, I see us paying a price,” Corker said. “We see our friends coming in constantly wor-ried about where we are, what our commitment levels are.”

Secretary of State John Kerry is traveling this weekend to Beijing, where he is to meet with Presi-dent Xi Jinping. US officials say he’ll be carrying a message that China’s large-scale land reclama-tion and general behavior in the South China Sea will hurt China’s image and its relations with its neighbors and, potentially, with the US itself.

China has rattled the region with its assertive claims both over islands held by Japan in the east China Sea, and in the South China Sea, where islands and reefs are con-tested by China and five other Asian claimants. China has reclaimed about 2,000 acres of dry land since 2014 that could be used as airstrips or for military purposes, according to US officials.

China claims the islands are its territory. Its Foreign Ministry on Wednesday voiced serious concern about a Wall Street Journal report, which cited anonymous US offi-cials, that the US is considering sending military ships and planes

to challenge Chinese claims to is-lands it is building.

The assistant secretary of de-fense for the Asia Pacific, David Shear, declined to comment on the report at the committee hearing on Wednesday, and on whether the US was considering a demonstration of freedom of navigation within 12 nautical miles of the islands’ notional territorial zone. But Shear said many of the features claimed by China in the disputed Spratly Island chain are submerged and do not carry territorial rights.

“We claim the right of inno-cent passage in such areas and we exercise that right regularly both in the South China Sea and glob-ally, and we are going to continue exercising that right both under the surface of the water and in the air,” he said.

Top diplomat for east Asia, Daniel russel, said that no matter how sand China piles up on reefs, it can’t “manufacture sovereign-ty.” he said the US is calling for restraint on territorial disputes, and “diplomacy will continue to be our instrument of first resort.”

russel maintained that China’s provocative actions had hurt its standing. he cited recent, thinly veiled criticism of China by the Southeast Asian bloc and a legal challenge brought by the Philippines. The US is “increasingly in demand” as a guarantor of security in the re-gion, he said.

“If the Chinese strategy was to freeze us out, it has backfired,” russel said.

But the top-ranking Democrat on the committee, Sen. Ben Cardin, complained that sometimes it ap-pears that the only US response to provocative Actions by China is a “press release.” Bloomberg News, AP

Friday, May 15, 2015

OpinionBusinessMirrorA6

China’s quest for oileditorial

THE thinking in the Philippines from both the government and the public is sometimes incred-ibly parochial—narrow in outlook and unable to see the big picture. This is particularly true when

it comes to China’s expansion in the West Philippine Sea (South China Sea).

The ongoing reclamation projects and the building of what are obviously military installations are being met with two over-riding themes, neither of which is connected to the reality.

While China pursues a policy of hegemony, the Philippines’s Department of Foreign Affairs (DFA) slams China for destroying 300 acres of coral reefs. While coral reefs are critically important to the ecosystem, does anyone think China cares? Does the DFA really believe that any other government pays even the slightest attention to this issue?

Perhaps, the pundits who have be wailing about the coral reefs believe that Greenpeace is going to attack Chinese war ships the way they attack Japanese whaling ships.

The idea that the US has the Philippines’s back in this situation is beyond naive. While the US said that it is “considering using aircraft and Navy ships to directly contest Chinese territorial claims,” that is all blustering talk to keep the Filipinos happy. Notice that the US has not sent its military aircraft or ships within 12 nautical miles of the reclaimed reefs “to avoid escalating tensions.” Not entering that 12-mile zone actually recognizes and validates China’s claim.

And look that the US successes from all of its talk. North Korea has nuclear weapons. Russia annexed Crimea. Saudi Arabia and Iran are fighting a proxy war in Yemen.

The Chinese will not be deterred from their actions because an important part of that country’s future is dependent on what happens on those small insignificant islands that separate the Philippines from the rest of Asia.

Control of those islands is about Asia’s main shipping lanes of which the Philippines seems to have no interest. That is understandable since the num-ber of our merchant ships is zero.

It is also about oil. China just eclipsed the US as the largest importer of oil. That puts China is the position of controlling the global oil price. For 40 years Middle East oil producers controlled the price. But now there are 2 million barrels of oil being produced every day more than demand. Now its buyers’ market and China is the biggest.

China needs the oil flowing through Southeast Asia’s shipping lanes and it wants the oil under the ocean. Nothing is going to stop its current policy. Those who call China a “bully” are unbearably out of touch. This is not about ego and power. This is about economics and geopolitics. Controlling those sea lanes means it holds its longtime enemy Japan (and South Korea) hostage for its oil requirements.

When China develops those oil resources in the next five to 10 years, it will dominate the global oil markets as both a producer and a buyer.

The Philippines must figure out how it fits in with the reality of the current and future situation, not how it wishes the world could be.

SO you decided to vote after all. Good for you. Still, you have to remember that there are

voters and there are good voters. Voters simply wait around for election day so they can get to do their civic duty. With very little forethought, these people go to the polling places, shade in a few ovals and leave, congratulating themselves on being patriotic members of society.

So you decided to vote

And then there are the good vot-ers. In my experience, these people invest time and effort in the exer-cise of their right of suffrage, going through three stages of preparation.

The good voter starts by prepar-ing himself on three levels. Physi-cally, he ensures that he is registered to vote. He checks his registration status to know for certain that his voting record hasn’t been deactivat-ed; he takes the time to submit him-self for biometrics capture, knowing that if he fails to do that, he won’t be able to vote; and, if he isn’t reg-istered or has been deactivated, he sorts that out, as well.

Intellectually, the good voter prepares himself by making the conscious commitment to actually vote. With the political atmosphere

the way it is now, people can be easily spurred into saying they will vote in the next elections. It is quite another thing, however, to hold fast to that decision when things are going smoothly and the elections are still about a year away. A good voter’s determination to go to the polling place a year hence, remains constant, not because it is rooted in transient emotions—such as disgust or dissatisfaction—but in the full comprehension of the importance of suffrage.

Most important, the good voter prepares himself morally. He makes sure that he is an exemplar of the kind of elected official he wants to cast his ballot for. It would be the height of self-delusion—not to men-tion hypocrisy—for a person to rant

against corruption one moment, and in the next, convince a traffic en-forcer to look away in exchange for a few pesos. After all, an individual who has no qualms about petty cor-ruption is more likely to vote for a politician who will tolerate more serious forms of sleaze.

The second stage of preparation good voters go through is to draw up the platform of government he would push himself, if he were the one running for office. It doesn’t have to be a detailed plan, of course, but this crystallizes what is impor-tant for the voter, allowing him to have a concrete idea of what he thinks is good for his country, his city, and his community. With these priorities in mind, the voter stands a better chance of not falling for the emotional overtures and mother-hood slogans that are often used as substitutes for a clear platform.

The good voter also pays close attention to those who are running for office. Politicians nowadays run very slick campaigns that are tailored to elicit the best possible response from the targeted demo-graphic, and nearly all of them seek to leverage the sexiness of social media. The end result is a glittering package that may sometimes mask unimpressive legislative records, a history of lacklustre performance, or in some cases, the palpable ab-sence of qualifications more sub-

stantial than good looks and a good heart. A good voter is the one who is able, in the blinding light of this campaign image, to keep his eyes on what matters most: the candi-dates’ ability to perform the job for which they were elected. The good voter will then solicit other people’s opinions in order to get a more well-rounded view of the candidates—both those he may already be pre-disposed to voting for and those he may have already dismissed.

Having said all that, do you know what turns a good voter into an ex-cellent voter? Sharing. If you’ve gone through all the work to ensure that you’d be a good voter, then you will have acquired knowledge and in-sight that some people around you might not have. Instead of going on and on about how some people are too dumb to be allowed to vote, why not try reaching out to them and educating them instead? If you do that, then you multiply the number of good voters who will be reaching for the ballot on election day.

Think of the knowledge and in-sight you’ve acquired as a candle flame. Sure, you can brighten up a room with it, but if you really want to dispel the darkness, let others light their flames from yours.

James Arthur B. Jimenez is direc-tor of the Commission on Elections’s education and information department.

spoxJames Jimenez

BUSINESSMIRROR

Friday, May 15, 2015

OpinionA7BusinessMirroropinion@businessmirror.com.ph

annotationstito Genova Valiente

TWO poets came home last week. Luis Cabalquinto and Marne Kilates are two of the

most laurelled Filipino poets. They are also Bikolanos: Cabalquinto is from Magarao, Camarines Sur, and Kilates is from Daraga, Albay.

THE US is known for its propensity to import. Less talked about is what it exports.

According to the World Bank’s 2014 data, the US is the second-biggest exporter in the world (China is the biggest). The US exports about $1.6 trillion. Over 20 percent of the total includes heavy-duty equipment and engines, and electronic equipment. In terms of intangibles, some also talk of US exporting its culture through Hollywood pictures, pop songs and the like. Less talked about is arguably America’s best export and that is regulation.

Two poets under the moonAmerica’s best export

Cabalquinto is home from New York, where he has resided for de-cades now. Here and abroad, Manoy Luis, as the younger poets would address him, has won prestigious competitions and received writing grants, as well as fellowships.

Kilates worked in government and, then, moved to advertising—the path of good writers in the 1970s and 1980s. Even in those prosaic positions, Marne wrote poetry with a distinct sound and rhythm. Bikol was close by, but Marne remained always in the big city.

Cabalquinto and Kilates are com-pelling in their art because they are singular voices. But, if we persist in looking for a tie to bind these two poets, it is in their poems and prose that always remind us of their roots. A kinship almost ethereal hover over these two poets as they lay claim to a region, a birthplace.

The two poets came home to launch their respective books: Cabalquinto with his The Fog: Stories and Poems; Kilates with “Time’s En-chantment and Other Reflections.” Expectedly the works were brewed

in two lives that have seen them all but never lost, not a bit, the curios-ity to know more.

Knowledge is at the core of these two poets’ works; the homeland is the heart of these two artists.

Cabalquinto, even if he writes about the north breeze and a brown hawk, in his poem “Details,” seems to recall his dear Magarao with: “the dull, distant thud/out to harvest crab/traps in the brackish/muddy river just beyond/the dense blind of trees.”

In “The Fog,” Cabalquinto, through his characters, remembers a night of moonlight and mist. The house is imagined once more with jasmine and other blooms. Even in memory, or, perhaps, only in mem-ory, a journey home is perfection, a site, a love at home, is paradise.

Cabalquinto’s longing for home is pensive and fun in the story, “The Box,” delivered by an alien who, before disappearing into the clouds, warns him not to open it till the sign is up to see what is in-side. The box is from the writer’s hometown, Magarao.

Consider the US Foreign Corrupt Prac-tices Act (FCPA). The FCPA outlaws brib-ery of foreign officials, to keep inaccurate books and records, or to have inadequate internal procedures to prevent bribery of any US publicly listed corporation. Interestingly, the crime does not have to occur in US territory. These include acts executed abroad. Publicly listed corpora-tions do not have to be US-owned. They also include those that are foreign-owned. Finally, the penalized corporation does not have to be the “actor” of the crime. It can either be the subsidiary, or mother corporation, of the actor.

The biggest fine that resulted from the violation of the FCPA is on Siemens. Ironically, Siemens is a corporation based in Germany, a country known to be one of the least corrupt in the world. Just over a month after the 9/11 terrorist attack, the US passed the “Uniting and Strengthening America by Providing Ap-propriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot) Act. The law allows the Federal government to search and conduct surveillance of business records and individuals’ finan-cial records. The intention was to catch potential terrorist activities. Strangely not really related to terrorism, the US found that a list of corporations under Siemens’s umbrella had paid more than $1.4 billion in bribes to obtain public contracts to 65 countries in Asia, Africa, the Middle East and South America be-tween 2002 and 2007.

According to Garrett’s 2014 book Too Big to Fail, Siemens ended up paying fines of $450 million to the US Department of Justice, $350 million to the US Securities Exchange Commission (SEC) and $800 million to the Munich Public Prosecu-tor’s Office. More important, Siemens agreed to rehabilitate itself spending $500 million on internal investigation, $800 million on US attorneys and $100 million on information technology and analysis. Since then, Siemens has been one of the world’s biggest advocate of ethical and competitive business. Many still think that one must bribe to some degree to remain competitive in devel-oping economies. In contrast, Siemens shows its earnings increase with ethical standards and practices.

As for governments that have con-tracted Siemens, they have imported tangibles made in Germany. More impor-tant, they have imported US regulation.

Leading to Siemens’s fine, German authorities did not initially go after the multinational firm. They justify that the crime had been done outside of Germany. With peer pressure, Germany ended fin-ing Siemens. The huge fine sent a mes-sage to German companies that future corruption outside its territory will be

penalized. Before 2010 one of the world’s biggest military aircraft contractor—the British multinational corporation BAE—was accused by US regulators for bribing one of Saudi Arabia’s top officials. The bribe included months-long vacation in England for the official, a shopping spree for one of the wife and a luxury car for an-other wife. The UK did not go after BAE. They justify that it went against national interest. Yet in 2010, the US fined BAE’s US subsidiary for $400 million. Perhaps embarrassed, the UK passed in 2011 the Bribery Act, which regulated payments to foreign officials.

At this point, whenever the Philip-pines import US regulation, it happens by luck but not deliberately. For example, if a multinational under US jurisdiction bids to partner in a public private partnership (PPP), the Philippines imports US regu-lation only if the corporation somehow wins. Requiring the enlistment in a US stock market or requiring an affiliation to a listed firm in a US stock market will make importing of regulation deliberate. If the current system requires a show of financial capability, the requirement will guarantee ethical accountability.

Multinational corporations, like Siemens, will be pressed to conduct business ethically, or else the US would go after them. If the Philippine gov-ernment is so corrupt, multinationals falling under US regulation would be discouraged to join the charade of Phil-ippine bidding process. Corrupt multi-nationals that are unlikely to be listed in a US stock market or affiliated to a listed company in a US stock market will be disqualified to bid.

If the Philippine Department of Justice (DOJ) cannot expeditiously prosecute graft and corruption involv-ing multinationals, the US DOJ will. If the Philippine courts cannot efficiently deliver the economically efficient due penalties, the US courts will. If the Phil-ippine government cannot encourage whistle-blowing, the US will.

For example, anyone who provides new information leading to a penalty of more than $1 million to the Office of the Whistleblower of the US Securities and Exchange Commission is entitled to collect 10 percent to 30 percent of the penalty. In an ocean-dumping case, Garrett, in his book, cites a true story where a Filipino seafarer was rewarded for blowing the whistle on his employer shipping company.

Perhaps, it is time to deliberately import the US’s best export.

Luis F. Dumlao is former chairman of the Economics Department and senior fellow of Eagle Watch of the Ateneo de Manila University.

Kilates unites home and land with his mother. In his dedication to his mother, he says: “In my intention to lay upon your/ Grave a wreath I fashioned /With my hands, I dedi-cate this book/ To your memory; humble and not /Worthy of you, but for now, / The loveliest wreath that can come/ From your son’s in-expert hands.

The homecoming can be strong even. In “Old Home,” Kilates wrote: “Where scent of camia and sampa-guita mingle/And the gravid jack-fruit cracks and sheds/The talisman pearl of its redolence/That invades the quivering nostrils of noon.”

Luis Cabalquinto invited us on May 8 to his home. It was fiesta in San Miguel. Marne Kilates came over and some young writers joined in. On the table in the living room were wine and almond nuts. The din-ing table groaned with sumptuous food: The head of a lechon coveted the center portion of the feast and looked like it would be remembered forever. A plate of pinangat, the gabi leaves embracing the rare white-ness of freshwater shrimp and tiny river crabs.

For these poets, old houses re-main and old town never dies. When they are not seen anymore—the houses and the sites—the mind will always bring back flowers and moon and nights of terrific recol-lection. Then the towns and the loves will come back. In Marne’s memory, communion wafers and old churches are vital signs of the past. Even the fire that razes structures will always be a brightness carried by the person. In Luis Cabalquinto’s world, the fog brings forth a lovely

woman, while a brother, who kisses you with the blood drawn from each other, gifts you with reminiscence and passion.

The gift of words comes with these two artists. As I look at them that night, across the sofa, I think of two minds at rest. They were not looking for reflections from the past. They were in the past and they were in the present.

The future that night was un-necessary, an impertinent, unwar-ranted threat, as we joined them in paying tribute to the gabi leaves and the food of our grandparents, while the moon, if it was there at all, swung. If the moon was not there, then the community of those who write about heritage and literature.

The two promised to come back as all artists who leave home always vow to make a return. Maybe they will come back. If they do not, then there is no sleepless nights for those who are left to tend old homes, for they will write stories and compose poems that will be about homes and the journey homes. Or, as in the case of the story of Cabalquinto, “Phale-onopsis,” they will be the expatri-ate Filipino who ties his body to an oak tree and whose human form disappears fully. In its place, flow-ers bloom and from them mouths will smile. Or from Marne’s para-pharased tribute to his mother, the most beautiful of garland from an expert mind.

The books of Cabalquinto and Kilates were published by the Ateneo de Naga University Press.

E-mail: titovaliente@yahoo.com

TWENTY years after bringing down a major British bank, Nick Leeson is sounding alarm bells about China. Unless the country reforms its stock markets, he warns, it’s only

a matter of time until his earlier disaster repeats itself on a larger scale.

Man who brought down Barings warns on China

EaGLE WatCHLuis F. Dumlao, Ph.D.

BLooMBERG ViEWWilliam Pesek

In 1995 Leeson was a 28 year-old master-of-the-universe wan-nabe running a trading desk in Singapore for Barings Bank. When markets turned against him, he tried to hide his losses with unau-thorized trades—trades that were enabled by the lax oversight on Singapore’s then-underdeveloped

exchanges. Eventually, Leeson’s losses mushroomed to $1.4 bil-lion, shaking world markets and toppling a 223-year-old bank that held an account for Queen Elizabeth and financed the Napoleonic Wars. (Leeson, for his part, ended up in jail, where he wrote a book about his experience called Rogue Trader.)

Leeson is now warning that an-other Asian market could be ripe for similar manipulation. “In Singapore it was all about systems not being there to handle the volumes that were coming in,” Leeson, now 48, told the South China Morning Post this week. In that sense, he suggests, 1990s Singapore bears a close resemblance to today’s China.

As Leeson points out, China’s new stock connect plan—which aims to link markets in Shanghai and Hong Kong—has caused the country’s hectic trading activity to become even more frantic. Trading volume exploded within days of the plan’s debut last month. It hit a high of $38 billion on April 9, and has remained roughly twice what average transactions were before its introduction.

What troubles Leeson is that China’s market infrastructure may

be getting overwhelmed by an ava-lanche of buy orders. There’s a mis-match between the flood of data on stock dealing and the ability of regu-lators to track who is trading what—and how they’re doing it. That opens the door to all sorts of troubling (and potentially illegal) activity.

“You have to keep pace with it and get ahead of the curve and typically [regulators] are behind it,” Leeson said. “Wherever you’ve got change or a need to consolidate [information], there are opportunities for wrongdo-ing.” He added that “anybody who is going to do something wrong is not standing still, whether that is cybercrime or anything else within the financial industry.”

Chinese regulators are starting to grasp the problem. On May 12, one day after Leeson’s warning, Se-curities and Futures Commission Chairman Carlson Tong Ka-shing

pledged to clamp down on “any un-usual share movement.” But capital flows have accelerated so much—with millions of mainlanders hav-ing signed up for multiple trading accounts each—that it’s not clear if regulators will know where to start. (President Xi Jinping’s crack-down on international media hasn’t helped matters. Shielded from the scrutiny of journalists, corporate China has become more opaque in its financial dealings.)

Unless Beijing builds a more open and predictable financial system at home, it will always be at risk of exporting its potential for instabil-ity. That’s worth keeping in mind as China lobbies companies, like MSCI Inc., to include its $7.8-trillion stock market on global indexes.

The indexes should wait until Beijing provides clearer proof of share ownership on its markets,

crafts more predictable taxation policies, offers more hedging tools to traders and relaxes curbs on money flowing back into China. As long as China’s financial reforms lag, Beijing shouldn’t be given new channels to affect world markets. If China’s stock markets are included on global indexes, it would allow China’s economic troubles—data yesterday showed investment is now the slowest in 14 years and credit growth is weakening—to spill over to other countries. It would also provide an opportunity for financial fraudsters in China to expand their operations.

China shouldn’t delay in taking bold and credible steps to create a transparent and reliable finan-cial system. Otherwise, as Leeson warns, the country’s rogue stock markets are liable to attract the world’s rogue traders.

By Cai U. Ordinario

MeMbers of the Asia-Pacific economic Cooperation (Apec) are set to discuss and

take a closer look at what multilateral institutions refer to as the “middle-income trap.”

A8

2ndFront PageBusinessMirror

www.businessmirror.com.phFriday, May 15, 2015

‘Middle-income trap’ debates calendared in Apec meetings

DFA SUPPORTS CONVENINGOF NSC TO TACKLE SEA ROW

By Recto Mercene 

The Department of Foreign Affairs (DFA) on Thursday said the problem in the West Philippine

Sea (South China Sea) should be ad-dressed by all concerned government agencies, with the convening of the National Security Council (NSC) being a step toward the right direction. “As much as we are concerned, the South China Sea dispute should be addressed in whole by the govern-ment. The convening of the NSC will support this belief that this should be a whole-government approach,” DFA Spokesman Charles Jose said in a news briefing. however, he said, he is not aware if the DFA has recommended to President Aquino the convening of the country’s highest security body. The NSC is the President’s principal forum for considering national-securi-ty and foreign-policy matters with his senior national security advisors and Cabinet officials. Its function is to ad-vise the President on the integration of domestic, foreign and military policies relating to the national security. The NSC also serves as the President’s principal arm for coordinating these policies among various government departments and agencies on matters involving national security. The call for the convening of the NSC cropped up after China last year was reported to have started its land-reclamation activities on Mischief Reef

and surrounding islets. Today, the reclamation had pro-gressed to an alarming degree that Foreign Secretary Albert F. del Rosa-rio was quoted as saying China would have “de facto” control of the West Philippine Sea. Jose said del Rosario is now in Wash-ington to urgently give more focus on recent developments in the West Phil-ippine Sea and provide substance to its Asia rebalance policy. Del Rosario assured Washington that the Philippines remains support-ive of the US government’s rebalance toward Asia during the launch of the US-Philippines Strategic Initiative (USPSI) on May 12, at the Center for Strategic and International Studies in Washington, DC. The joint cooperation aims to high-light the enduring alliance “through sustainable and strategic engagement on high-impact global and regional is-sues,” the DFA said. The USPSI is expected to produce pol-icy recommendations that would enable the Philippines-US alliance to effectively deal with current political and economic realities, the DFA said. “At the core of this initiative is the realization that the US must remain an active player in strengthening the re-gional architecture for stability, security and development. The Philippines, in turn, contrib-utes to and has an important role in maintaining that regional stability,” the secretary emphasized.

National Economic and Devel-opment Authority Deputy Director General for Planning Emmanuel F. Esguerra said the concept of the middle-income trap is still being debated worldwide.  Esguerra said that, despite this, Apec economies must discuss the de-velopment and economic challenges that middle-income countries face.   “The concept of a middle-income trap remains the subject of an on-going debate,” Esguerra said. “But we would like to take a closer look and assess whether there are press-ing issues and real challenges that middle-income countries like ours need to address.” The “middle-income trap” is a term used to describe the situa-tion of an economy that has es-

higher middle income. Lower middle-income countries have a gross domestic product (GDP) per capita of at least $2,000 but less than $7,250, while higher middle-income countries have a GDP per capita of at least $7,250, but less than $11,750.    Nine Apec economies, including the Philippines, are currently classi-fied by the World Bank as middle-in-come countries, and have remained as such since 1987, when formal income-based classifications began.  According to the Philippine Sta-tistics Authority, per capita GDP of the Philippines in 2014 is estimated at P71,867 in constant prices. “We will review the implications of these constraints and the role of innovation in structural reform and inclusive growth,” Esguerra said.  The discussions on the middle-

income trap will take place in an Apec seminar today  (May 15) at the sidelines of its second Senior Officials’ Meeting on Boracay island, Aklan.  The seminar will gather experts to reflect on current research and work on the middle-income trap so as to inform future Apec work in the area.  Esguerra said it is hoped that the seminar would like to have clearer and more specific areas for cooperation that Apec leaders can discuss in the Apec Structural Reform Ministerial Meeting in Cebu in September. Aside from the seminar, the Neda will also host the Apec Eco-nomic Committee Preparatory Meeting for the Structural Reform Ministerial Meeting and the Struc- tural Reform Roundtable on  May 16 and 17, respectively.

caped poverty, but is still unable to graduate into high-income status due to uncompetitive industries and underdeveloped human capi-tal, among others. According to the Asian Develop-ment Bank, middle-income econo-mies are classified into two brack-ets: The lower middle income and

See “FMOC liftoff,” A2

telus continues phl expansion telus opened another site in the country, with canadian ambassador to the philippines neil Reeder (from left), philippine economic Zone authority Director General lilia de lima, telus international president Jeffrey puritt and telus philippines General Manager Rajiv Dhand heading the opening rites. the new telus site will welcome more than 2,500 employees. Story on B1. NONIE REYES

Weak start to spending in secondquarter may delay FMOC liftoffAMERiCAN shoppers’ reluc-

tance to open their wallets has economists stumped.

Retail sales barely budged in April, confounding projections for a small increase, figures from the Commerce Department showed on Wednesday. That followed a 0.2-percent drop from January through March, which marked the first quarterly decline in almost three years. Even with all the stars aligned, consumers have socked away the extra cash from lower gasoline prices and rising employment, instead of spending the windfall. That casts doubts on how soon Federal Reserve (the Fed) policy-makers, who need to be convinced that growth is gaining momentum after a first-quarter slump, will be able to raise interest rates. “The economy needs to pick up steam for the Fed to be really satis-fied that we’re leaving the weakness of the first quarter behind us,” said Guy Berger, an economist at RBS Securities inc. in Stamford, Con-necticut, who projected sales would be unchanged and is the top-rank forecaster for retail purchases over the past two years, according to data compiled by Bloomberg. “This puts a lot of pressure on the next month’s number to be very strong to make up for the weakness in April.” Stocks closed little changed, as

corporate deal activity was over-shadowed by concern a fixed-income selloff is not done, and the weaker-than-forecast retail sales data dis-appointed investors. The Standard & Poor’s 500 index fell less than 0.1 percent to 2,098.48 in New York.

Funds futuresFuTuRES in the Fed’s benchmark interest rate imply a 0.32-percent rate at the end of 2015, down from 0.33 percent on Tuesday. Most econ-omists in a Bloomberg survey late last month had predicted that the central bank will start tightening in September and the median forecast of Fed officials at the March Federal Open Market Committee meeting projected the rate would end the year in a range between 0.50 percent and 0.75 percent. “The sluggish spending and economic growth performance will continue to argue for a later start to liftoff, essentially ruling out a mid-year hike,” Millan Mul-raine, deputy head of uS research & strategy at TD Securities uSA in New York, wrote in a research note. “And, if the growth momentum does not rebound, more meaning-fully in the coming months, even the September meeting might be too soon for the Fed to gain the necessary confidence in the sus-tainability of the recovery to justify policy tightening.”

Fed liftoffFOR now, TD Securities continues to project the first increase will oc-cur in September, “but with numbers like these, the odds are falling fast,” Mulraine wrote. The median forecast of 88 econo-mists surveyed by Bloomberg pro-jected that April retail sales would rise 0.2 percent. Estimates ranged from a decline of 0.5 percent to an advance of 1 percent. Revisions to most categories for March were a saving grace for the otherwise disappointing fig-ures for last month. Sales climbed 1.1 percent in March, the biggest gain in a year. it was previously reported as an increase of 0.9 per-cent. Seven of 13 major categories showed increases in April, led by restaurants and bars and online merchants, the report showed. A tiny advance among miscellaneous stores tipped the balance in favor of gainers. The dour tone of the report was reinforced by declines among discre-tionary items, such as automobiles, furniture and electronics. Receipts at electronics stores have declined for seven consecutive months, tak-ing them to the lowest level since January 2014.

Weakness broad-basedDEMAND at grocery stores, service