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Duterte issues order on Marawi’s revival

PRESIDENT RODRIGO R. Duterte has signed Administrative Order (AO) no. 3 creating an interagency task force for the revival of the besieged Marawi City.

Signed by Mr. Duterte on June 28, the AO directs the formation of task force “Bangon Marawi” that will be headed by Defense Secretary Delfin N. Lorenzana as chairperson and Public Works and Highway Secretary Mark A. Villar as vice-chairperson.

The AO spells out the functions of the newly-formed body, which include the deployment of a quick response team as well as the assessment of “post-conflict needs” of civilians affected.

The AO also commands the members of the body to organize themselves into sub-committees that will focus on reconstruction, housing, health and social welfare, business and livelihood, and peace and order.

Moreover, the task force is mandated to facilitate and oversee the construction of temporary shelters for displaced civilians and coordinate the “immediate” restoration of public utilities.

“The chairperson is hereby directed to consult with Muslim leaders in the rehabilitation of predominantly Muslim localities,” the document read in part.

“The resources needed for the implementation of this Order shall be sourced from available funds of the member agencies of the Task Force and such other appropriate funding sources as the Department of Budget and Management may identify,” it added.

President Rodrigo R. Duterte last month promised to increase the allotted fund for the rehabilitation of war-torn Marawi city, which is now at P20 billion from the initial appropriation of P10 billion.

The National Disaster Risk Reduction and Management Council (NDRRMC) earlier said it plans to rehabilitate Marawi “as fast as it can,” although it has yet to determine when it can begin the rehabilitation and estimate the damage from the warfare.

“We are now preparing the mechanism to go into rehabilitation and recovery as soon as the fighting stops in Marawi,” Mr. Lorenzana said in a press briefing on Monday.

“We already have one engineering brigade, Army brigade, always on standby who will go there immediately once the fighting stops to start rebuilding the infrastructure of the city… and rebuilding of houses, buildings of the government,” he added.

The Department of Budget and Management (DBM) has so far released a total of P662.5 million for the government’s response operation for civilians affected by the ongoing battle in Marawi.

In her press briefing at Malacañang in June, Social Welfare Secretary Judy M. Taguiwalo disclosed that the said fund allotted by the DBM to her department as of June 6 will be used to buy food and non-food items for the evacuees.

Meanwhile, Mr. Lorenzana said the US has pledged to help restore Marawi, adding that Mr. Duterte and US Ambassador to the Philippines Sung Y. Kim will discuss Washington’s aid in a meeting at Malacañang on Monday.

“We do not know if they (US) are going to help in kind or in funds or whatever,” the Defense chief said. — Ian Nicolas P. Cigaral

A displaced woman using an American flag as a scarf lines up to receive food from the government in Baloi, Lanao del Norte. — REUTERS

DoJ’s Aguirre admits drug trade back in Bilibid, says SAF ‘tainted’

By Kristine Joy V. Patag
Reporter

REFORMS AT the Bureau of Corrections (BuCor) were among the Department of Justice’s (DoJ) achievements on the first year of his watch, Justice Secretary Vitaliano N. Aguirre said. Yet he also acknowledged that the illegal drug trade has made a comeback at the national penitentiary, even affecting the very police force tasked to end the illicit enterprise.

Interviewed by the media after a Thanksgiving Mass at the DoJ yesterday, Mr. Aguirre said: “When we changed the BuCor personnel with [Philippine National Police-Special Action Forces (PNP-SAF)] personnel on July 20, days after we assumed office, the SAF destroyed the syndicate there responsible for distributing illegal drugs.”

Mr. Aguirre earlier claimed that 70-75% of illegal drugs throughout the Philippines came from the New Bilibid Prison (NBP).

But he admitted that despite last year’s success, there has been a “resurgence” of the illegal drug trade at the NBP. “I have received reports that there were some reactivation. We are doing something about this. We are going to end this resurgence, some sort of resurgence by some inmates,” he added.

The Justice chief is among the first appointees of President Rodrigo R. Duterte, who was catapulted to the presidency on his platform of eradicating illegal drugs, criminality and corruption.

Among the leading targets of Mr. Duterte’ss avowed crusade is Mr. Aguirre’s predecessor in the DoJ, Senator Leila M. de Lima — who is currently detained at the PNP headquarters and is facing three counts of what her supporters describe as trumped-up illegal drug trading charges. Ms. De Lima’s case is pending before the Muntinlupa Trial Court.

Ms. De Lima on Monday challenged her former colleagues at the DoJ to “salvage” the department that she formerly led from “gross mismanagement and further embarrassment.”

She said in a statement that some of the department’s executives and employees “were forced to do jobs with questionable motives and comply with unreasonable orders.”

“I hope that my former colleagues and coworkers, whom I will continue to pray and look out for, can endure these dark times and remain above the dirty fray. The people at the top cannot define you and your institution if the vast majority do not follow the bad examples being set,” Ms. De Lima said.

SAF ‘TAINTED’
Mr. Aguirre for his part said members of the SAF may have been “tainted” due to its prolonged deployment in the NBP and the large amount of money involved in the trade.

“Because of their familiarity, they have stayed there for more than six months. Our original plan was for them to be in the area for only three months,” Mr. Aguirre said, adding, “Because of the huge amount of money involved, they may have been tainted.”

The elite members of the police force were supposed to guard the NBP for three to six months, Mr. Aguirre said. But he noted that the rotation did not push through since members of the Philippine Marines, who were supposed to take over, were deployed to augment the military forces in war-torn Mindanao.

“We have successfully curbed 75% of the illegal drug trade. If ever, the resurgence is about five to 10% only and we are going to clip it again,” Mr. Aguirre said, adding that BuCor Director General Benjamin C. delos Santos has proposed measures to stop the trade.

Mr. Delos Santos, for his part, said in a text message to reporters that the BuCor had “random raids and [were] able to seize sachets of users surreptitiously entered [in the NBP].”

The BuCor chief, however, said he has “no information” on Mr. Aguirre’s source regarding his estimate on the resurgence in the drug trade at Bilibid. — with Jil Danielle M. Caro

Members of the CIDG at the Bureau of Corrections following an altercation late last year that led to the death of convicted drug lord Anthony Co. — EDD GUMBAN/THE PHILIPPINE STAR

Fuel prices higher this week, except LPG

GASOLINE, DIESEL and kerosene prices are increasing this week, starting the month of July with a reversal of June’s general decline in pump prices. After four straight weeks of decrease, prices are up effective 6 a.m. today, July 4, with diesel higher by P0.70 per liter (/L), gasoline by P0.30/L, and kerosene by P0.55/L. During the weekend, on the other hand, retailers of liquefied petroleum gas (LPG) advised of a decrease in the price of the regular 11-kilogram cylinder. Petron Corp. cut the price of its Gasul and Fiesta Gas brands by P1.65 per kilogram, or a savings of P18.15 per cylinder. The price of its Xtend autoLPG also dropped by P0.92 per liter. Eastern Petroleum Corp. also slashed the price of its EC Gas LPG by P1.65 per kilogram. It imposed the price cut on Saturday, July 1. “These reflect movements in the international contract prices of LPG for the month of July,” Petron said. — Victor V. Saulon

Japanese investors keen on theme park project in Daanbantayan

JAPANESE INVESTORS are interested in developing an eco- and agri-tourism project at the Lanao Lake in Daanbantayan, Cebu, according to Mayor Vicente A. Loot. “They are interested in the development of the 16-hectare Lanao Lake into an eco- and agri-tourism destination. They’re sold out to our idea of desilting the lake and constructing a theme park and water sports at the center of the lake as we have proposed,” Mr. Loot said. The lake project is one of several proposals pitched by the local government to the Japanese investors during a recent visit. The mayor said the other items in their investment portfolio include a roll on-roll off port, breakwater and economic zone at the Poblacion, Malapascua Tourism Center, and adventure and water sports facilities in Logon. “They are also interested in the construction of breakwater and boardwalk at the back of the municipal hall traversing the old fish port towards Malocbaloc area. Then they will reclaim the eight-hectare area,” Mr. Loot said, adding that the group from Japan are scheduled for another visit to discuss details of the projects. “My vision and thrust now is focused in exploring the tourism potentials of Daanbantayan,” he said, noting that in the first six months of this year, the local government earned P5 million in dive fees alone, the same amount earned for the full year 2015. Malapascua is a popular dive site for its thresher sharks and manta rays. — The Freeman

NBI to conduct parallel probe on Bulacan family massacre

THE DEPARTMENT of Justice (DoJ) has ordered the National Bureau of Investigation (NBI) to investigate the brutal murder of a family in San Jose Del Monte, Bulacan. Justice Secretary Vitaliano N. Aguirre II, through Department Order No. 446, directed NBI Director Dante A. Gierran to conduct an “investigation and case build-up [on] the rape and killing” of Estrella Carlos and her mother Aurora Dizon, and the killing of Ms. Carlos’ three children last June 27. The victims, found dead in their home at Ridge Royal Subdivision, sustained multiple stab wounds, while the two mothers were also discovered to have been raped. The police is already in custody of construction worker Carmelino Ibañez, who admitted to committing the crime while under the influence of methampethamine, locally known as shabu. However, the drug test conducted on Mr. Ibañez turned out negative. In an ambush interview yesterday, Mr. Aguirre said that he “did not want to do it (order probe), but some people wanted the NBI to take a second look at the findings. — Kristine Joy V. Patag

Yolanda Memorial and Learning Center to rise in Tacloban

THE REGIONAL Development Council has approved the construction of the Eastern Visayas Yolanda Memorial and Learning Center to serve as an educational venue and reminder of the super typhoon’s devastation, and of disaster mitigation and climate change adaptation. The project, proposed by the Tacloban City government, the Departments of Tourism, and of Science and Technology, would cost an estimated P602 million, including the operation and maintenance expenses during the first year of full operations. The project’s one-hectare site — at Barangay Suhi in Tacloban, where at least 8,000 Yolanda survivors are relocated — will have three buildings, a museum and knowledge center and a research laboratory. — The Freeman

Dela Rosa vows to rid police force of ‘scalawags’

MARKING HIS own first year in office, Philippine National Police (PNP) Chief Director-General Ronald M. dela Rosa reaffirmed his vow to get rid of corrupt cops, citing that he had so far sacked 160 and plans to kick out 84 more due to alleged involvement in drugs and corruption. “I will never stop. I will be uncompromising. I will be unforgiving and I have no mercy for those corrupt and scalawag police,” Mr. Dela Rosa said in his speech before the police force on Monday. Last November, however, his boss, President Rodrigo R. Duterte made his own reaffirmation that he would protect the police and military. Mr. Duterte was speaking in a press conference within the context of the Espinosa-Yap killings of Nov. 5, 2016 for which 19 police officers have been originally charged with murder, and later downgraded to homicide. “But as I have said before, right at the start… I will protect and I will support the police in this drive against shabu (methamphetamine),” Mr. Duterte then said. Mr. Dela Rosa, for his part, said, “I will sign all [dismissal papers]. I don’t care. If you did wrong, I will really dismiss you.” — Jil Danielle M. Caro

PHL to trumpet ‘aggressive and bold’ drug war strategies in ASEAN meet

THE PHILIPPINES will trumpet its “aggressive and bold” strategies in addressing the illegal narcotics trade to its regional neighbors during an inter-parliamentary meeting on the drug menace this week, a House leader said. The Association of Southeast Asian Nations (ASEAN) Inter-Parliamentary Assembly Fact-Finding Committee (AIFOCOM) to Combat the Drug Menace is holding its 13th meeting starting today, July 4, at Conrad Manila. “[W]e’re just lucky because being the host country this year with a President being serious in addressing the problem of drugs… We’ll now have the perfect venue to share information to cooperate with other ASEAN member countries as far as the problems and the solution to the drug problem within the country and the ASEAN member countries as well,” Surigao del Norte Representative Robert Ace S. Barbers said in a press conference yesterday. Mr. Barbers also said that they will not raise the issue of extrajudicial killings amid the administration’s drug war, noting than the alleged human rights violations were “product of imagination.” “This is a war. And as you all know, if there is a war, there are collateral damages. And maybe, just maybe, some of them will probably think that it was intended or was done on purpose, which is not,” he said. — Raynan F. Javil

Agri chief defends administration’s 1st year performance

AGRICULTURE SECRETARY Emmanuel F. Piñol has defended President Rodrigo R. Duterte from Albay Representative Edcel C. Lagman’s negative assessment of the administration’s first year. “I was deeply bothered and hurt by the statement issued by Albay Congressman Edcel Lagman, in assessing the first year performance of the Duterte Administration, that President Duterte has done nothing good for the country,” Mr. Piñol said in a Facebook post. “The statement of Congressman Lagman was not only an affront on the President but also a total and cruel disregard of the efforts of the Department of Agriculture (DA) to help his constituents,” he added, noting that the lawmaker had even joined in one of DA’s field visits for the distribution of various interventions to farmers. Mr. Lagman has been a staunch critic of the administration, especially on the alleged extrajudicial killings resulting from the government’s war against drugs. — Janina C. Lim

Factory growth slips, still ASEAN’s best

By Elijah Joseph C. Tubayan
Reporter

IMPROVEMENT of factory activity in the Philippines slowed at the end of the second quarter, but still “signaled another strong expansion in June” that kept the country in Southeast Asia’s lead for the second straight month, according to the latest monthly survey which IHS Markit conducted for Nikkei, Inc.

The Nikkei Philippines Purchasing Managers’ Index (PMI) bared a 53.9 reading for June, down from May’s 54.3.

But it was enough to keep the Philippines in the lead among members of the Association of Southeast Asian Nations (ASEAN) for the second consecutive month which it lost to Vietnam in February.

“The Philippines manufacturing sector signaled another strong expansion in June, ending the second quarter on a positive note. Growth in output and new orders remained key drivers, which in turn boosted hiring and stock-building. Export growth strengthened and business optimism remained elevated,” the report explained.

It quoted IHS Markit Bernard Aw as noting that “[t]he Philippines manufacturing sector rounded off the second quarter on a strong note, with a solid performance in June.”

“That put the domestic economy on track for another quarter of robust GDP (gross domestic product) growth. Driving the upturn was again expansions in output and new business.”

Philippine GDP grew by a slower-than-expected 6.4% in the first quarter that nevertheless made the country the second fastest-growing major Asian economy in those three months.


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Socioeconomic Planning Secretary Ernesto M. Pernia expects economic expansion for the second quarter — which the Philippine Statistics Authority is scheduled to report on Aug. 17 — to “approach seven percent” against the government’s 6.5-7.5% full-year 2017 target.

The manufacturing PMI consists of five sub-indices, with new orders having the biggest weight at 30%, followed by output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%). A PMI reading above 50 suggests improvement in business conditions, while a score below that signals deterioration.

“While the domestic market remained the key pillar of manufacturing growth, there were signs that external demand is contributing more to the expansion. Export order growth strengthened to a three-month high,” Mr. Aw said.

According to the report, firms noted higher demand from Japan, China and Indonesia.

Security Bank Corp. economist Angelo B. Taningco said in an e-mail that this was due to the weaker peso which makes Philippine products cheaper for those buying them in dollars: “I… think the increase in new export orders in June was driven by the depreciation of the Philippine peso and stronger demand from two of the country’s major manufactured export destinations — China and Japan — given better performance of their respective manufacturing sectors…”

“Overall, the outlook for the manufacturing sector remains optimistic into the third quarter, underpinned by buoyant business confidence and strong sales volumes,” Mr. Aw said.

“That will augur well for the Philippines economy and its labour market.”

Mr. Taningco shared his optimism, saying: “I believe this trend of manufacturing expansion and rising foreign demand for manufactured exports will be sustained in the third quarter on the back of improved competitiveness of manufactured exports in the said quarter.”

Natixis analysts allay concerns over increasing trade and fiscal deficits

THE PHILIPPINES can be expected to sustain a bigger trade deficit this year, but this should not be a source of concern for the economy which itself is projected to grow strongly and attract more foreign capital, a France-based investment bank said in a June 29 report.

The aggressive infrastructure push of the current administration will likely sustain import demand and cause wider trade and fiscal deficits, Natixis said, but the same program will likewise attract more foreign direct investments (FDI) to the Philippines that would help keep the country’s external position robust.

“Corporates are investing more, loan growth has been double digits since 2016. And added to this is a push to raise public investment by the new administration…,” Natixis analysts said in the report.

“As spending and investment rise, import demand, as expected, naturally increases.”

Economic managers of President Rodrigo R. Duterte have unveiled plans to spend P8.4 trillion until 2022 on state-funded infrastructure projects under the “Build, Build, Build” initiative, as the government looks to raise the share of its infrastructure spending to an equivalent of 7.4% of gross domestic product (GDP) from 4.7% in 2016.

This is expected to help boost GDP growth to as fast as 7-8% annually from 2018 to 2022 from a targeted 6.5-7.5% this year and an actual 6.9% in 2016.

That faster pace of economic growth, in turn, is projected to slash unemployment rate to 3-5% by 2022 — when the current government steps down — from 5.5% last year and achieve its bottom line of cutting the national poverty rate to 14% also by then from 21.6% in 2015.

The government intends to support the additional spending through fresh revenues from up to five tax reform packages, teh first of which was approved by the House of Representatives in May and now awaits Senate approval. The first tranche provides an additional stream of revenues from higher excise taxes on cars, fuel and sugar-sweetened drinks as well as from fewer value-added tax exemptions that will offset revenues to be foregone from lower personal income tax rates.

“We believe these pro-growth [measures] to be positive for economic expansion and will help the Philippines maximize its demographic dividend,” economists Trinh Nguyen and Nordine Naam said.

“That said, they will cause the fiscal deficit to widen and the current account to turn into negative this year and the next.”

The current account posted a $318-million deficit in the first quarter as imports continued to outpace the growth in outbound shipment of goods.

The Bangko Sentral ng Pilipinas (BSP) expects a $600-million current account deficit for 2017, reversing a $601-million surplus last year.

The current account deficit likewise pulled the January-March external payments position to a $994-million deficit before being trimmed to a $136-million gap as of end-May.

“This means that unless remittance growth increases significantly or the BPO (business process outsourcing) sector outperforms — not our base case scenario — the merchandise trade deficit will continue to widen,” Natixis added.

“And that means the current account, too, will turn negative from previous years of positive.”

The BSP expects remittances to log a fresh high at $28 billion this year from 2016’s $26.9 billion, which will help offset outbound flows.

The Philippines’ young work force and the government’s infrastructure push will also entice more international investors to set up shop here, not to mention state plans to trim corporate income tax rates to 25% from 30% as a core part of the second tax reform package that will be submitted to Congress by next quarter.

“One positive consequence of this pro-growth strategy is the increase of investors’ appetite for long-term investment in the Philippines,” the analysts said.

“We expect FDI to be robust this year and the next, offsetting some decline of the current account and deterioration of portfolio investment.”

The US State Department said in a June 29 report that Philippines has become a “more attractive” investment destination, despite existing constraints such as foreign ownership limits, poor infrastructure, corruption and red tape. That followed the World Investment Report 2017, published on June 8 by the United Nations Conference on Trade and Development, in which “[t]op executives” counted the Philippines “among the most promising host countries” for FDI.

The central bank projects FDI net inflows to hit $8 billion this year, up from 2016’s record $7.93 billion. — Melissa Luz T. Lopez

BSP under new chief to stay course on reforms

By Melissa Luz T. Lopez
Senior Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) will stay the reform course in the face of rising global interest rates and cybersecurity risks, new central bank Governor Nestor A. Espenilla, Jr. said as he formally took over yesterday, adding that he is also looking to trim reserve requirements in his six-year term.

“As policy makers and financial supervisors, we have to be in tune with these emerging market trends and evolving client needs, including the ‘millennial’ upside of our young population… The changing landscape calls for us to be more vigilant, proactive, and dynamic in responding to the needs of our diverse stakeholders,” Mr. Espenilla said in his first speech as central bank chief during the turnover ceremony held at the BSP headquarters in Manila.

The new BSP governor said his six-year term would build on the “legacy of excellence” he inherits from former Gov. Amando M. Tetangco, Jr., as he committed to beef up the central bank’s reform agenda.

In his farewell speech, Mr. Tetangco touted that his 12-year run as central bank governor saw the “ideal convergence” of low inflation — which dropped to a three percent average from 2011-2016 from 5.2% in 2005-2010 — and rapid economic growth, which clocked a 6.1% average over the last five years coming from 4.9% between 2005 and 2010.

The country also bagged investment grade status in 2013, as the three biggest international credit raters took note of the Philippines’ sound fundamentals and its stable, growing banking system.

BANK RESERVE REQUIREMENT
Mr. Espenilla, 58, brings with him 36 years of central bank experience as he assumed the top post on Monday for a six-year term ending in July 2023.

He previously served as deputy governor for the supervision and examination sector, which carries out the BSP’s tasks as banking regulator.

Changes being considered by Mr. Espenilla include reducing at an “appropriate” time the 20% reserve requirement ratio (RRR) imposed on universal and commercial banks.

“We need to find a path to lower the reserve requirement without compromising price stability. I’d like to see that happen, but it is a discussion in the Monetary Board,” the new governor told reporters after the ceremony.

“It’s not going to happen immediately, but it has to be within a reasonable range because… it is an inefficiency to the financial system.”

Talks to cut the reserve standard date back to June 2016 when the BSP migrated to an interest rate corridor scheme and introduced weekly term deposit auctions to prod banks to be more aware of their liquidity positions.

The current 20% RRR is deemed one of the highest in the world.

Mr. Espenilla added that the auction volumes and tenors under the weekly term deposit facility have been under constant review, but any change would have to be data-driven.

The new central bank chief committed to “fine-tuning” monetary policy to make the BSP’s tools even more market-oriented, and in turn help develop the domestic money and capital markets.

He also intends to “lower the cost of doing business, provide more customer choices, promote efficiency, and encourage innovation” among players, while also ensuring financial inclusion and shared and “meaningful” economic growth.

“We need to work on bringing central banking operations closer to the people,” Mr. Espenilla said.

At the same time, the veteran central banker flagged potential risks that have aggravated uncertainty across global markets.

“We have to be prepared as well for the seemingly imminent wind-down of ultra-easy monetary policies in advanced economies,” he said.

“We need to be mindful of such events and their potentially far-reaching consequences since these could undermine our economic performance and disrupt our carefully laid plans.”

The United States has been pursuing policy normalization since a 25-basis-point increase in key interest rates in December 2015 — followed by three other hikes of the same magnitude up to last month — after close to a decade of near-zero levels to help the US economy then recuperate from the December 2007-June 2009 “Great Recession.”

Rapid technology development and robust social media activity are likewise reshaping the financial system, with the regulator looking for the perfect balance between allowing new banking channels and rising cybercrime threats.

Mr. Espenilla took his oath of office before Finance Secretary Carlos G. Dominguez III yesterday morning, together with new Monetary Board members Antonio S. Abacan, Jr. and Peter B. Favila. Former socioeconomic planning secretary Felipe M. Medalla also took his oath for a second term in the BSP’s policy-making body. With his appointment, Mr. Espenilla now heads the Monetary Board as well as the Anti-Money Laundering Council (AMLC).

Mr. Espenilla said he supports amendments to the BSP Charter, additional powers for the AMLC, easing of the deposit secrecy law, passage of a payment system law, and of the Islamic Banking Act that are all pending in Congress.

‘The changing landscape calls for us to be more vigilant, proactive, and dynamic in responding to the needs of our diverse stakeholders.’ — Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla, Jr., shown here in a Jan. 6, 2012 file photo taken at the central bank head office in Manila. — BW FILE PHOTO