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Soft power: Our defense in the Chinese century

Back in 2010, Goldman Sachs predicted that China’s economy will surpass that of the United States by the year 2030. It could happen sooner if the US fails to get its financial house in order. By the year 2050, China is seen to have an economy 40% larger than that of the US with nominal GDP of $58 trillion. America will trail behind with its $34 trillion economy.

We live in a time in history when a shift of world powers is taking place. The next 15 years will usher in the dawn of the Chinese epoch where our neighbor to the north will have the loudest voice in world trade, global policy, and geopolitical influence. This will have a profound effect on the Philippines given the many paradigm shifts we will have to contend with.

First among these shifts is that the new superpower will be one that operates according to strong Confucianism values. These are values we Filipinos are hard-pressed to understand considering our predominantly western orientation.

Secondly, we will be coexisting with a superpower that views itself as not as a nation state but a “civilization state.” As such, it act like a empire and for all intents and purposes, is governed like one. It has aggressive expansionist ambitions with the military and financial resources to back it up. This “kingdom” state of mind is nothing new. It is deeply entrenched in the Chinese psyche, one that goes as far back as the Qin dynasty.

Third, unlike former superpowers like the US and UK who embrace diversity on the back of their multi-racial societies, ninety percent of Chinese identify as belonging to the Han race. In Chinese society, cultural purity is embraced while diversity is frowned upon. This explains their aversion towards inter-racial marriages as the Hans view themselves as superior to others.

Finally, the Chinese generally look at its government as a morale authority. To their majority, the state is infallible as it is seen as the guardian of their civilization. Citizens rarely challenge the state, unlike western democracies who question their governments at every turn. This leaves the Chinese government with virtually no moral check and balance from within.

These paradigm shifts make China a dangerous superpower, especially for the Philippines whose territories and resources are within China’s expansion path.

MULTIPLE POLARITY OF POWER
Thankfully, China will not be the lone superpower of the future, according to former American assistant secretary of Defense, Joseph Nye. The US and the European Union will still maintain collective dominance on the military front. It will also maintain its influence on public opinion given its iron clad grasp of the communication superhighway through mass media and the internet. Economically, the US, India, Brazil, and Russia will balance the financial might of China.

Hence, the world of tomorrow will have a multiple polarity of power with China as the predominant figure. In many ways, it will be akin to the world order of the 18th and 19th century when the UK was the dominant force, but mitigated by France, Germany and Italy.

The dynamics of power will be different with China in the forefront as compared to how it is today.

Whereas in the 20th century, America dictated how the world was governed through the establishment of the United Nations, with a polarity of power, no single organization or country will have the final say on global policy or rule of law. Global governance will be largely dictated by agreements and treaties between nations. We are seeing it already with treaties like the Paris Agreement on Climate Change and the World Trade Organization.

Thus, we will see alliances shift depending on the interests of nations. The Philippines must attract and collect enough allies to battle China’s creeping invasion.

SOFT POWER TO NAVIGATE THE ‘MIDDLE LEVEL TRAP’
Pricewatehause Coopers and Goldman Sachs both see the Philippines rising to become the 19th largest global economy by 2050 with GDP of $3.3 trillion. In financial respects, this is welcome news. However, this puts us in a dangerous place known as the “middle level trap.” The middle level trap is that awkward place where an economy is too small to dictate global policy but large enough to be affected by every accord signed by the more powerful nations. The Philippines must gain a louder voice in the world stage.

The ability to influence policy and global decisions is where true power lies. Traditionally, power was gained by amassing military power and/or economic strength. But in this age of hyper-connectivity, a new source of power has arisen — its called “Soft Power.”

Soft Power refers to a nation’s ability to attract coalitions, followers, cohorts, and cliques not by force or money but by persuasion. It is the ability to shape the preferences of others through appeal and attraction, says Nye.

It is not a far fetched idea.

Just think how we Filipinos despised and feared Russia in the height of the cold war. We Filipinos identified with America and viewed the situation through their point of view. This is soft power at work.

As a nation in the middle level trap, the Philippines must attract followers towards policies that work to its best interest. After all, policies that are pushed by many are those that are most likely to be enacted. This is especially important for us as China pushes forward with its agenda of territory expansion at our expense .

How does a nation gain soft power?

Two ways, the first is a given — by putting into place a well-oiled diplomatic machine. The second is to aggressively promote a nation’s culture so as to let the world identify with it and embrace it as its own.

Developed countries have been working on their soft power since the end of world war one. France has created Alliance Francaise for this purpose as did the UK with its British Council, Germany with its Geoethe Institut and Spain with Instituto Cervantes. A few developing countries in Asia have recently been on a cultural assault of their own. India has been doing it through the promotion of Bollywood, Yoga, and Ayurveda while South Korea has been successful with K-Pop.

In the Philippines, the National Commission for Culture and Arts (NCCA) is the main agency tasked to preserve and promote Philippine culture. The fact that Congress has granted the NCCA a token budget of P30 million reflects how our legislators view cultural development and promotion. They don’t think much of it. The time has come for government to revisit our cultural program.

The Philippines must plant the seeds today to gain its gravitas for tomorrow. Amassing soft power must be part of our arsenal given our military and financial limitations to face China. The good news is that we are not bereft of cultural facets to sell to the world. Our performing arts, visual arts, cuisine, and folklore are compelling enough to have people appreciate what it is to be Filipino. Done right, we can influence the world to embrace the Filipino way of life and help us defend it.

 

Andrew J. Masigan is an economist.

PLDT, Globe signal opposition to common cell tower policy

THE telecommunications industry’s incumbents, PLDT, Inc. and Globe Telecom, Inc. said they oppose government plans to ban them from building cellular sites as part of its “common tower policy”.

PLDT Chairman, President, and CEO Manuel V. Pangilinan said the telcos should be allowed to continue building cell sites, while Globe legal counsel Froilan Castelo said that there is “doubtful” legal basis for the policy.

“If the government wants to do it, it’s entirely up to the government to build its own towers. I think that’s their plan. I believe we should be allowed to build towers pursuant to the requirements of PLDT or Smart. If they’re willing to lease the towers to us, we might lease the towers that we need from them,” Mr. Pangilinan told reporters on the sidelines of a PLDT launch on Feb. 6.

He added that PLDT would want “flexibility” in selecting where to lease or build cell sites. “We just need flexibility to say, in areas where there are no towers we could lease, we should be allowed to build.”

Mr. Castelo said that there legal questions to the policy.

“The legality of it is really doubtful. Number one, as I said, you are creating a monopoly and monopoly is frowned upon in our existing laws. Number two, we are authorized by Congress to put up our own networks, to put up these cell sites. We are empowered by Congress and that’s an act of Congress and only Congress can amend our franchise. Malacañang cannot do it by themselves and it’s really natural for entities like us to have our own network because we have our own brand of service and unique way of serving our customers and offering services. We have to have our own network,” Mr. Castelo told reporters on the sidelines of a Globe briefing on Feb. 6.

The government said in December that it plans to implement a common tower policy, which will require current telecom operators to lease cell towers from tower companies instead of building their own sites. The policy is aimed at providing better services to the public and leveling the playing field with the entry of a third player. Guidelines are set to be released this month.

The country only has 16,000 cell sites. It needs about 50,000 for better coverage, according to Presidential Adviser on Economic Affairs and Information Technology Communications Ramon P. Jacinto.

PLDT and Globe have cited red tape as a barrier to building more cell sites.

Globe Telecom said in a statement last week that it has initiated discussions with “independent third parties” for the establishment of an “independent” tower company to help speed up the build and deployment of cellular towers in the Philippines.

Mr. Jacinto said on the plan of Globe: “The operators will not be allowed to own any stake in the independent tower company or companies. Otherwise, it will no longer be independent. In some countries where there are many telcos, this is possible. In the Philippines, the very idea of an independent tower company is to take away the burden of investing and building towers from the telcos so they can invest their funds and concentrate their energies on improving their service (upgrading their equipment) and enable them to channel extra funds to the less profitable underserved areas which the duopoly has failed to serve.”

“The duopoly was the first to admit it cannot build enough towers. Allowing it to own equity gives it undue influence over the smaller players and would give them leverage to influence the policies and management of the independent tower company. Again, the telcos should wait for the guidelines first.”

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo

Asians’ freedom from high inflation and regulations

“Bad times make good policy and good times make bad policy. If you want to introduce important reforms, wait for bad times and the politicians will listen to you.”

— Chatib Basri, former
Indonesia Minister of Finance

That was among the important advice and reflections based on experience given by one of the keynote speakers in the recent Asia Liberty Forum (ALF) 2018 held in Mandarin Oriental Jakarta, Indonesia last Feb. 10-11. Dr. Basri spoke on “How to do Reform in an ‘Imperfect World’: The Case of Indonesia.”

The ALF is an annual liberty conference sponsored by the Atlas Foundation (US) and co-sponsored by other organizations and independent think tanks. In this year’s event, the local host and co-sponsor is the Center for Indonesian Policy Studies (CIPS), a great and dynamic free market think tank.

Dr. Basri is a friend since 2004 when I first attended the Economic Freedom Network (EFN) Asia Conference in Hong Kong in October 2004, sponsored by the Friedrich Naumann Foundation for Freedom (FNF) and co-sponsored by the Lion Rock Institute. I was impressed by his silent, cool, and reflective composure.

He became Finance Minister from May 2013 to October 2014 when the term of former Indonesian president Susilo Bambang Yudhoyono was completed. Upon his appointment, at least one Indonesian newspaper headlined “Free marketer becomes Finance Minister.”

He started his presentation with this quote from Jean Claude-Juncker, EU President:

“We all know what to do, we just don’t know how to get re-elected after we’ve done it.”

Other statements he made in the ALF2018 were:

“One reason Indonesians are religious is because of the Government. You submit your business application to the Government, then pray to God.”

“We failed to explain the benefits of free trade to the people. The success of Asia was the success story of globalization.”

“When political power is not favorable and limited, create a success story which enables the people to see and experience positive changes, pick one that is easy to implement but the marginal gain is high, then move to more complex reforms.”

“To help the poor, Indonesia liberalised rice imports. Prices fell.”

Another keynote speaker in day 1 was Suraj Vaidya, Chairman of the South Asian Association for Regional Cooperation (SAARC) Chamber of Commerce, also Chairman of the Samriddhi Prosperity Foundation in Nepal.

Mr. Vaidja quoted Frederic Bastiat’s famous line, “If goods cannot cross borders, soldiers will.”

That statement was true in the past, remains true in the present, and will be true in the future. Trade is the best global peace maker since people and goods crossing borders create goodwill among societies, discouraging criminals, terrorists, and prohibited substances.

Both Dr. Basri (introduced and interviewed by Rainer Heufers, CIPS executive director) and Mr. Vaidja (introduced and interviewed by Ronald Meinardus, FNF Regional director for South Asia) mentioned the role of free trade and free markets in fighting high inflation many goods and services that are unaffordable to the poor.

And this brings us to the issue of controlling high inflation in the continent.

Data from the last 12 years show that average inflation rate has been declining.

For the ASEAN 8 for instance, it went down from 7% in 2006-2010 average to 4% in 2011-2015 average, and only 2.4% in 2016 but slightly went up to 2.9% in 2017 (see table).

Inflation

The rise in average prices in 2017 was partly due to the rise in world oil prices.

For instance, the West Texas Intermediate (WTI), a grade of crude oil used as a benchmark for pricing, went up from $43/barrel in 2016 to $51/barrel in 2017.

For the Philippines however, there was a spike in consumer prices in January 2018. From 3.3% in both November and December 2017, it went up to 4%.

Other countries with available data showed a decline in prices by January 2018 except in India (was already 5.2% in December 2017), Pakistan (4.6% in December 2017) and Taiwan (1.2% in December 2017).

So the Philippines is the “outlier” here, experiencing higher inflation when most neighbors have declining prices. Why?

The most proximate explanation is the TRAIN law signed in December 2017. While there is a decline in personal income tax rates, there are tax hikes in oil products, sugar tax, among others.

The Philippines is entering a period of increasing government intervention, taxation, and regulation. This is not good for the people and private enterprises.

 

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

minimalgovernment@gmail.com.

DTI to push for more agri exports to Hungary as joint committee convenes

THE PHILIPPINES is set to hold an inaugural Joint Committee on Economic and Trade Cooperation meeting with Hungary in September, the Department of Trade and Industry (DTI) said.

In a statement Sunday, Trade Secretary Ramon M. Lopez said the department is promoting more of the country’s agriculture exports in a meeting with its Hungarian counterparts.

With the Philippines opening an embassy in Hungary after 22 years in 2017, the trade department is hoping to tap an additional export destination.

“(Hungary) has strong interest in mango, banana, coconut and carrageenan [products],” he added.

Other food products being considered were canned tuna and marine products. As for non-food exports, the Philippine delegation promoted electronics, auto parts, and aerospace components.

Citing 2016 data, the Board of Investments said that Hungary is the country’s 40th largest trading partner and 26th largest export market.

Mr. Lopez added that Hungarian firms are being encouraged to make the Philippines their Southeast Asian production hubs.

“Their strength in water management made them offer water management services for [Laguna Lake Development Authority]. They funded their own feasibility study,” he added.

Mr. Lopez said that Hungary’s export-import bank has pledged €1 billion in credit to companies winning contracts in the Philippines.

“They are also working on providing more water filtration systems used during and after disasters for NDRMC,” he said, referring to the National Disaster Risk Reduction and Management Council. — Anna Gabriela A. Mogato

Merger proposals

Merger proposals, or marriage proposals by some Freudian slip: some are a good match, some are not. Or maybe we just don’t know well enough.

After a 10-year engagement to be “married,” the Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP) literally “died in each other’s arms” like Shakespeare’s Romeo and Juliet (see Amelia HC Ylagan/Corporate Watch: “The Landbank-DBP merger: erase/delete/trash,” BusinessWorld, July 11, 2016). The idea of a merger between DBP and LBP started in the presidency of Gloria Arroyo and was said to be encouraged by the Bangko Sentral ng Pilipinas (BSP) “in anticipation of the wave of foreign banks that may enter the Philippine market upon the occurrence of ASEAN integration in 2015 (PNA/Asia Pulse, Feb. 16, 2016).”

In his term, President Benigno S. C. Aquino III earlier objected to the merger bill, but in February 2016, barely two months before the national elections and the sure end of his term, he signed and issued Executive Order (EO) No. 198 to merge LBP and DBP, with LBP as surviving entity. The proposal was approved in the House of Representatives; however, it was disapproved in the Senate. (Inquirer.net, Feb. 9, 2016).

Comes the new administration of President Rodrigo Duterte. The new Finance Secretary, Carlos G. Dominguez III noted “First of all, both [were] created for different purposes. I don’t see any rational reason to put them together…One is a development bank (DBP) tasked to give long-term finance. The skills you need to do that are very different from the skills you need to do short-term finance (as with LBP), particularly for farmers (BusinessWorld, June 5, 2016).” End of the affair.

Also in the term of Aquino was the brewing “affair” between the Philippine Stock Exchange (PSE), who was giving the Philippine Dealing Exchange (PDEx) the eye. The PSE was targeting to buy at least 67% of the Philippine Dealing System Holdings Corp. (PDSHC), that owned and operated the Philippine Dealing Exchange — to merge the PSE and PDEx therefrom (BusinessMirror, Oct. 01, 2014). After a year of bank funding solicitation and the courtship of shareholders of PDSHC, PSE President Hans Sicat announced, “We’re confident we can make the minimum 67% super majority. But we think we can get probably 94% to 95% stake (Rappler.com, Oct, 06, 2015).”

“PSE requested for exemptive relief on the 20% industry ownership limit of Exchanges and Exchange Controllers under Section 33.2 (c) of the Securities Regulation Code (SRC). This is required before PSE can proceed to acquire 100% of the outstanding capital stock of Philippine Dealing System Holdings, Inc. (PDS), which is the parent company of the Philippine Dealing & Exchange Corp. and the Philippine Depository and Trust Company (PDTC) and is considered an Exchange Controller. PDEx is the dealing exchange for fixed income securities while PDTC acts as depository and registry for participants for both fixed income and equity securities” (http://www.sec.gov.ph FAQs 10/2015).

The SEC raised concerns that the PSE would then be a de facto monopoly owner of all the exchanges in the country. This would significantly reduce any incentives to lower costs or improve quality on their part. This would be detrimental to public interest. Worse, the PSE’s Share Purchase Agreement with the Bankers’ Association of the Philippines (BAP) includes a 5-year non-compete clause, and Banks are largest players in the bond market (Ibid.).” End of the affair.

But see the quick rebound: “in a letter dated Jan. 16, Landbank President and CEO Alex Buenaventura sought the board’s approval for the acquisition of at least 66.67% of the PDS. He also asked the board to allow the DBP to formally engage in the transaction as the financial advisor (The Philippine Star, Jan. 19). Finance Secretary Dominguez III, ex-officio chairman of LBP, confirmed that the government will have controlling interest in the PDS/PDEx, while expressing disappointment with the PSE for not having explained how its erstwhile proposed merger with the PDS would have been for the best interest of the public (Manila Bulletin, Jan. 21).

Landbank has officially started to do due diligence on PDS (Philippine Daily Inquirer Jan. 30, 2018). It has also filed for exemptive relief on the 20% industry ownership limit in the same way that the PSE worked on this with the SEC for its proposed acquisition of the PDS then. Will the SEC rule similarly on the implications of anti-trust and perhaps monopoly?

Per computation based on 6.256 million outstanding PDSHC shares, LBP’s additional ownership of 66.67% would be equivalent to 4.171 million PDHSC shares. This, plus 1.56% (already owned through BAP), would give Landbank majority control of 68.23%, which would translate to 4.268 million PDHSC shares (Emeterio SD. Perez “Why not sell Philippine Dealing System shares to the public via an IPO? The Manila Times, Feb. 2).

Is there here a “crowding-out” of private sector opportunities vis-à-vis government, in the majority ownership by a government bank of a private dealing system? Would this be some sort of reverse privatization (government buying private)? What is the implication of a government bank owning the majority shares of a system that trades and sells mostly government bonds — 95% of its inventory?

LBP President Buenaventura said that at a price of P320 per share (which was the effective acquisition from BAP), PDS is “undervalued,” adding that purchasing the country’s bond exchange shares could be a profitable investment for Landbank (philstar.com, Jan. 19). Is BAP complaining? Has it accepted the pricing of P320 per share? Are other shareholders of PDS happy, indifferent, or unhappy?

Will the Department of Finance say whether the Landbank has or does not have “skills” or the synergy of the business, with owning the majority (and effectively primarily being responsible for) a dealing system — as Landbank is in the business of “(doing) short-term finance, particularly for farmers,” as quoted earlier, in the aborted DBP-LBP merger dreamed of for 10 years? Were there strategic plans made? Will LBP income improve, by this acquisition?

There are no details yet, and it would be unfair to accuse of self-dealing or conflicts of interest at this early time. Though SEC will not comment at this stage, informal queries assure that SEC investigation and evaluation will not be hasty. The FAQs answered in detail in the SEC website regarding the aborted PSE-PDS merger comfort the public that the same meticulous care will be undertaken to fully evaluate why a government bank should be so decided to invest so much in a private endeavor.

Will the Landbank desire for the PDS survive and last? Will a “marriage” happen at all?

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

PHL wind projects require scale to create more local jobs — Vestas

THE PHILIPPINES can benefit more from renewable energy if the government comes in to help scale up projects, resulting in job creation and boosting local production of power plant components, the regional head of Danish wind turbine maker Vestas Wind Systems AS said.

“What I want to see is bigger scale,” Clive Turton, president of Vestas Asia Pacific Wind Technology Pte Ltd., told reporters.

“The renewable energy industry needs to grow to a certain scale in the Philippines, so you can have local jobs, local production and local manufacturing that will enable the Philippines to exploit its wind and solar resource at a much much lower cost,” he said.

Mr. Turton’s statement comes months after he made a comment on the need for clarity in the local regulatory environment, especially on the government’s stance in boosting the development of renewable energy.

“There is progress,” he said, when asked what has changed since November, when he said investors wanted a clearer policy in the sector.

“We haven’t got any orders in the Philippines but I can see the market developing. I can see investors getting more and more interested in the wind sector here,” he said.

Still, he said there is room for growth in renewables, especially in replacing the capacity provided by conventional technologies.

“I think you can do a lot more to develop the local renewable energy industry. Renewable energy can supply power that’s below the coal and gas prices,” he said.

Even wind energy can be competitive with coal- or gas-fired power plants if the local industry is sizable enough, he added.

“The government needs to kind of help to jump-start the industry to create a bit of scale. It’s a scalable industry. You see it around the world,” he said. “It’s much cheaper than coal. It’s much cheaper than gas and it’s zero-emission.”

“Hybrid” power plants can also be adopted locally, he said.

“In November, we announced Kennedy wind farm in Australia and that’s a combination of wind, solar panels and storage all in one place. So you have the advantage of wind blowing at night, blowing in the mornings … and the sun shining very strongly in the middle of the day,” he said.

Aside from offering guaranteed rates under a feed-in-tariff (FiT) system for renewable energy projects, the government can offer large-scale auctions for thousands of megawatts of new capacity, Mr. Turton said.

“A FiT would do it fine or you (can) create an environment where the local utilities have tax incentives perhaps like they do in the US to develop renewable energy,” he said.

“With the scale comes the cheapness. If you look at a lot of countries in the world, when they do a big auction they will announce [that] in order to participate in the auction, a certain portion of your production has to come from this country,” he said.

“So the manufacturers were oblige to set up production inside the country where the auction is being held so long as the scale is sizeable enough,” he added. — Victor V. Saulon

‘Mindful investing’ and strategic asset allocation

Be mindful of where you are headed. This is the Desiderata of the current investing climate, and investors may wish to be reminded of this philosophy. Against a backdrop of increasingly complex business environments, socioeconomic redirection, intensive regulations and disruptive developments, institutions may find it timely to review their investment strategies and asset allocation by conducting a process called Strategic Asset Allocation (SAA).

What is SAA? It is a process whereby investment opportunities and investment vehicles are identified, tested and evaluated, along with the related risks and regulatory requirements. It is a management tool used in establishing the optimal investment portfolio mix and is often conducted simultaneously with asset-liability management and business modelling. It can also be considered a technique for determining the asset mix that optimizes returns, given specific risks taken and general risks faced. It provides a common view for any institution’s boards and management on their current state and allows discussions — from straightforward to spirited — on the direction of their investment strategies. As the risks and regulatory requirements mark the boundaries of the investments, a path is drawn to meet specific investment objectives and mandates. This process of “mindful investing” helps define both the direction and quality of investments that management can take. It answers the question “Where are we headed?”

Typically, the first vital step is to determine the target asset universe — management’s universe of investment opportunities and vehicles or instruments. The granularity of the research entailed to determine such a universe shall depend on the system processing capacity and the desired depth of analysis as set by management. The investment universe could range from familiar assets like bonds, loans and stocks to alternative assets such as property, venture and private equity, to emerging types that have not been understood or embraced by the mainstream financial system. 

Once the investment universe is clear, the next step is an assessment of the potential performance of the investments and the portfolio. This involves the analysis of historical data as well as the integration of market predictions to come up with expected risks and returns of the investment. An option is to include an asset liability management exercise where the institution’s liability profile is matched with the asset universe — a procedure that should be helpful for insurers, pension funds and other asset management companies, and even banks with increasingly long-term and development-oriented business models.

Given these considerations, an “efficient frontier” may be drawn using generalized maximization techniques. Each point of the frontier represents a portfolio with a specific mix of assets together with its returns and risks, taking into consideration the economic and business environment, market challenges and regulatory requirements. In developing the risk-return metrics for each investment or asset class, both the historical and expected returns should be evaluated against the investment objectives, while the risks should take an integrated view, covering at least market, liquidity, credit and operational risks, as well as actuarial and solidarity risks (in the case of insurers and pension funds). At this stage, the process of testing against historical results and constraints can inadvertently constrict opportunities, particularly for investments with long-term horizons. To provide a healthy check of the historical review and risk assessment process, the SAA process should always include an investment mandate review and allow asset reallocation only when the medium-term outlook has significantly changed and there is evidence of investment drift.

The final step involves the SAA tool, which can help provide an asset mix that optimizes the return at the current level of risk, and even as well at the maximum level of risk that the institution may take. The SAA process can run with multiple interdependent iterations as newer sets of information and predictions become available. Fast iterations coupled with heuristic evaluations are now possible, as scientific computing power becomes more accessible and with the fusion of the computational and data requirements. The visualized results are then used in board and management discussions for capital allocation and business modelling decisions, hopefully contributing to clarity in strategy and direction.

SAA is viewed not as a step that may be taken but rather as a necessary step for management to test, distill and clarify its investment objectives and mandates, squarely answering the question “Where are we headed?” But there are nuances that we need to consider given the heightened intensity of sociopolitical disruptions, economic realignments, digital innovations, and market dynamism — “where are we headed” is not the same as “where are we going?”

The level of investing complexity has rapidly moved from the purview of risk and volatility to the region of uncertainty and extreme conditions. There is a limit to what we can clarify from direction and in rediscovering objectives. Perhaps the question that we need to start answering now is “Why are we investing?” and using this rationale as a springboard to evolve from mindful to purposeful investing.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Christian Lauron is a Partner and Renz Kristofer Cheng is a Senior Associate, respectively, of SGV & Co.

Brazilian women say ‘No Means No’ at carnival

RIO DE JANEIRO — “No Means No” is a new battle cry for Brazilian women mobilizing against assault at carnival, a raucous party whose free-wheeling atmosphere leaves women particularly vulnerable to unwanted sexual contact.

In the wake of the Harvey Weinstein episode that triggered the #MeToo campaign against harassment in the United States, Brazilian women are out in full force — with some even sporting temporary tattoos with the message emblazoned across their shoulders, arms and chests.

Rio’s carnival — the world’s largest — falls during the city’s pre-Lenten blowout which draws millions of near-naked revelers dancing as the alcohol flows, and flows.

The feast of excess is also often the backdrop for a slew of sexual assaults, particularly against women.

Luka Borges, therefore, is tirelessly distributing the temporary “No Means No” tattoos as part of a street parade — known as a “bloco” — set to samba tunes in Rio’s center.

“There is a lot of machismo in Brazil — so doing this for carnival is really pressing,” the 28-year-old project manager told AFP.

“We women spend much more time out in the streets, wearing less clothing — then this is their pretext for aggression.”

Ms. Borges created with four friends “No Means No” tattoos, and began distributing them to women last year during some of the city’s blocos, after one of them was harassed.

Thanks to social media and a crowdfunding campaign, some 27,000 tattoos have been produced for the 2018 carnival, in Rio as well as cities including Salvador, Sao Paulo and Olinda.

POLITICAL ACT
“A lot of the time, at past carnivals, we were harassed and did not even realize it,” said Anna Studard, a 27-year-old theater producer. “We thought it was normal! But I think in the past couple of years we’ve started to realize that ‘no means no.’”

Carnival, with its totally uninhibited and ultra-sexy atmosphere is widely seen as a moment partiers can kiss and touch strangers without concern.

Yet far from taking a puritanical turn, the women behind this campaign simply say they’re simply trying to bolster the “my body, my rules” concept already familiar to many in Brazil.

“If we continue to cover ourselves, to hide, the youngest girls will have to continue to protect themselves,” said Ms. Borges. “I think it’s a political act to walk around with bare breasts, for example.”

For some Brazilians, the “No Means No” temporary tattoo sends a message beyond feminism.

“My fiance is traveling. And this tattoo will prevent anyone from spoiling my party; I feel safer,” said Caroline Fachetti, 19, who sports a striped swimsuit top and blue short shorts.

Beside her, six English tourists drink beers and take in the scene.

“It’s totally appropriate,” said James Allan, 28, of the campaign. “Brazil is years behind Europe.”

The situation for women in Brazil is not only precarious during carnival.

One in three women over the age of 16 has reported being physically, verbally or emotionally abused, according to a Datafolha survey published in March 2017, looking at data from the previous year.

That’s why Ms. Borges refuses giving the tattoos to men, despite welcoming their moral support. “It is our struggle,” she said. “It is on our body that ‘no’ must be written.” — AFP

North Korean leader invites South Korea’s Moon to summit

SEOUL/PYEONGCHANG — North Korean leader Kim Jong Un invited South Korean President Moon Jae-in for talks in Pyongyang, South Korean officials said on Saturday, setting the stage for the first meeting of Korean leaders in more than 10 years.

Any meeting would represent a diplomatic coup for Moon, who swept to power last year on a policy of engaging more with the reclusive North and has pushed for a diplomatic solution to the standoff over North Korea’s nuclear and missile program.

The recent detente, anchored by South Korea’s hosting of the Winter Olympic Games that began on Friday, came despite an acceleration in the North’s weapons programs last year and pressure from Seoul’s allies in Washington.

The personal invitation from Kim was delivered verbally by his younger sister, Kim Yo Jong, during talks and a lunch Moon hosted at the presidential Blue House in Seoul.

Kim Jong Un wanted to meet Moon “in the near future” and would like for him to visit North Korea “at his earliest convenience,” his sister told Moon, who had said “let’s create the environment for that to be able to happen,” Blue House spokesman Kim Eui-kyeom told a news briefing.

A Blue House official said Moon “practically accepted” the invitation.

“We would like to see you at an early date in Pyongyang,” Kim Yo Jong told Moon during the lunch, and also delivered her brother’s personal letter that expressed his “desire to improve inter-Korean relations,” the Blue House said.

The prospect of two-way talks between the Koreas, however, may not be welcomed by the United States.

Washington has pursued a strategy of exerting maximum pressure on Pyongyang through tough sanctions and harsh rhetoric, demanding it give up its pursuit of nuclear weapons first for any dialogue to occur.

“This is the strongest action yet by North Korea to drive a wedge between the South and the United States,” said Kim Sung-han, a former South Korean vice-foreign minister and now a professor at Korea University in Seoul. Moon asked the North Korean delegation during Saturday’s meeting to more actively seek dialogue with the United States, saying that “early resumption of dialogue (between the two) is absolutely necessary for developments in the inter-Korean relations as well,” the South said.

It said the two sides held “a comprehensive discussion… on the inter-Korean relations and various issues on the Korean peninsula in an amicable atmosphere,” but did not say whether the North’s weapons program was mentioned.

A visit by Moon to the North would enable the first summit between leaders from the two Koreas since 2007, and would mark only the third inter-Korean summit to take place.

EXTREME PRESSURE
Pyongyang conducted its largest nuclear test last year and in November tested its most advanced intercontinental ballistic missile that experts said has the range to reach anywhere in the United States.

US President Donald Trump and the North Korean leadership traded insults and threats of nuclear war as tensions rose, with Trump repeatedly dismissing the prospect or value of talks with North Korea.

US Vice-President Mike Pence, who had attended the opening ceremony seeking to counter North Korea’s attempt to use the Olympics for propaganda, said the United States, South Korea and Japan were in complete agreement on isolating Pyongyang over its nuclear weapons program.

“There is no daylight between the United States, the Republic of Korea and Japan on the need to continue to isolate North Korea economically and diplomatically until they abandon their nuclear and ballistic missile program,” Pence told reporters on his flight back to the United States.

A senior US official said Pence and Moon, while watching speed skating together on Saturday night, discussed intensifying sanctions. Moon shared details with Pence of his meeting with North Korean leaders, but did not talk about the invitation to talks in Pyongyang.

As part of his push against North Korean propaganda, Pence attended the short track speed skating with Fred Warmbier, the father of an American student who died last year after being imprisoned in North Korea for 17 months. Moon joined Pence in the arena and sat next to him, turned around to greet Warmbier, according to a White House pool report.

Later, Moon watched the joint Korean women’s ice hockey team — the first ever combined team at the Olympics — take on Switzerland, joining Kim Yo Jong and Kim Yong Nam, the North’s nominal head of state, who is also visiting the South for the Games. — Reuters

Olympic Games organizers confirm cyber attack

PYEONGCHANG — PyeongChang Winter Olympics organizers confirmed on Sunday that the Games had fallen victim to a cyber attack during Friday’s opening ceremony, but they refused to reveal the source. The Games’ systems, including the Internet and television services, were affected by the hack two days ago but organizers said it had not compromised any critical part of their operations. Asked if organizers knew who was behind the attack, International Olympic Committee Spokesman Mark Adams said: “I certainly don’t know. But best international practice says that you don’t talk about an attack.” Russia, which has been banned from the Games for doping, said days before the opening ceremony that any allegations linking Russian hackers to attacks on the infrastructure connected to the PyeongChang Olympic Games were unfounded. — Reuters

Hong Kong police probe deadly bus accident

HONG KONG — Hong Kong police said Sunday they were investigating a deadly bus accident that left 19 people dead and scores more injured, with the bus driver arrested for dangerous driving. The double-decker bus overturned Saturday evening near the town of Tai Po in the northern New Territories, flipping onto its side and appearing to smash into a lamppost. Nineteen people were killed and 65 people were injured, some critically, according to local police. “The 30-year-old male bus driver was arrested for dangerous driving causing death and dangerous driving causing grievous bodily harm. He is still being detained for further enquiries,” police said in a statement early Sunday. Most of the injured and some of the dead were on the upper deck of the bus. The driver was suspected of being over the speed limit as he went down a slope and lost control of the vehicle. — AFP

UN rights chief calls on PNG to safeguard refugees

SYDNEY — Papua New Guinea (PNG) is responsible for the human rights of refugees sent to a remote island by Australia, the UN human rights chief has said, as advocates warn the men are living in fear of violence from local residents. Some 600 men were moved out of an Australian-run camp on PNG’s Manus Island in November to three transit centers after a local court ruled the facility was unconstitutional. The men have expressed fears for their safety at the centers, and also accused Australian and PNG authorities of not providing them with adequate health care. In a day-long visit to PNG on Thursday, UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein raised his concerns about the refugees’ plight during meetings with the government. — AFP