Amber Butler-Davis
Staff Correspondent - ReportingAsia.com

Church takes control over government.
Five bishops led by the Catholic Bishops’ Conference of the Philippines (CBCP) are indicating that they are going to give their blessings for what may be the most dramatic change in government. The CBCP is being led by president Angel Lagdameo and has asked the public to shake the status quo. Lagdameo is not impressed with the “top to bottom” corruption in the government. He went as far as assuring the public that the ‘liberators’ are only just around the corner.
In a forum organised by the CBCP Lagdameo said that in response to the global economic crisis and the pitiful state of the country it is now time to rebuild the country economically, socially and politically. He also stated that the time to start a radical reform and moral regeneration is now. It is also the right time to prepare for a new government. He then continued saying that this is now the time to conquer complacency, cynicism and apathy and to prove that the people have matured from our political statements.
Lagdameo added in his speech that the public should not lose hope and that by changing the present system will not be pointless. He stated that, “in spite of the seemingly hopeless and negative prognosis, our liberation may yet serendipitously happen. We are dreaming, praying and hoping that our county may yet have the needed liberators.”
Lagdameo hopes that these ‘liberators’ will be able to reform the country in a courageous, peaceful, uncompromisingly and effective way.
Lingayen Archbishop Oscar Cruz, Bataan Bishop Socrates Villegas, Masbate Bishop Joel Baylon and Bishop Emeritus Jose Sorra were also present in the forum. It is understood that seven more bishops were to attend the forum but they cancelled for some reason.
At the forum Villegas urged the public to not be passive but to engage with the active involvement which will be effecting the change in government. Villegas believes that by curbing the corruption by at least half will immensely benefit the country. He also stated that the country would have been better prepared to deal with the ongoing global financial crisis if the corruption was not involved.
Cruz believes that the country is now in a dangerous, critical and precarious situation. He directly blames the mass of corruption on the current occupant in the Malacanang as the one in charge.
In Lagdameo’s statement, he also said that rampant poverty and hunger are directly related with rampant graft and corruption “which has invaded all public and private institutions.” Lagdameo noted that corruption under the past few years in the Arroyo government has become “endemic and systemic.”
He pointed to “overprized projects, multi-billion scams of various kinds, election manipulations, anomalous transactions, bribery of both high and low, unsolved murders of media practitioners” as the “faces and symptoms of corruption.”
On the whole, Lagdameo now feels that the country has been tagged as one of the most corrupt countries in Asia. He also can not fathom how the public still loves their country even after hearing about these realities.
The bishops’ statements have been made after hearing about the arrival of former agriculture undersecretary Jocelyn “Joc-joc” Bolante from the US following unsuccessful efforts of seeking asylum there. Bolante, is the main architect of the P728-million fertilizer scam. But has claimed political persecution and US immigration junked as his alibi.
In the past, church leaders have been criticised for simply sitting on the sidelines and also giving mixed signals on its verdict on the Arroyo administration. At the height of the wiretap scandal, where the President was caught on tape giving orders to disgraced poll commissioner Virgilio Garcillano during the canvassing of the results in the presidential elections, the CBCP then took it among themselves to discover the truth but withheld the passing of a guilty verdict. The lack of active Church support has been mentioned as one of the major dampeners on the attempts to oust Arroyo.

Hong Kong Bureau
Principals murderers have been found.
The Lianjiang police bureau confirmed on Monday that the three men who have allegedly stabbed to death a local political advisor in Lianjiang, Guangdong province, were arrested over the weekend. The alleged killers have been reported to be all Lianjiang locals aged between 18-21. They were caught six days after Huang Zhaoluan, the principal of Lianjiang Middle School and Vice-Chairman of the Lianjiang committee of the Chinese People’s Political Consultative Conference, was killed on his way to work last week.
The director of Lianjiang public security bureau, Chen Xuhua said that two of the alleged killers had fled to Baise city in neighbouring Guangxi Zhuang autonomous region after the murder. They were seized on Friday of last week and brought back to Lianjiang on the Staurday. The third suspect was found hiding in a town near Lianjiang on the Saturday morning.
Li Zhongyan, Chen Pixing and Ruan Yuming have confessed to the crime.
It has been reported that Huang, 43 years old, was attacked about 100 meters from his home by the three assailants around six in the morning last Monday. He suffered severe stab wounds to his entire body and died later that day in the hospital from massive blood loss.
The director of Lianjiang public security bureau, Chen Xuhua has commented that it looked more like a revenge attack and that nobody had hired the three alleged assassins. However, he did elaborate any further on how the investigation was going.
The younger brother of the victim, Huang Zhaoyi, strongly believes that someone who was unsatisfied with a certain reform had killed his brother, the Guangzhou-based Information Times Daily reported. They quoted him saying “It is hard to believe that three people, who my brother never knew, can bear a grudge and kill him.” However, Huang also claimed that he would respect polices discoveries and findings.
The director of Lianjiang public security bureau, Chen Xuhua awarded a person with 30,000 yuan ($4,411) reward after reporting seeing the suspects dumping the motorcycle they had allegedly used into the nearby river. This piece of information was a break through in the cases investigation.
In the wake of the murder, the Lianjiang government is now more alert to security than ever before. On Tuesday it was commented that they will spend nearly 10 million yuan to install security surveillance cameras across the entire city.

Jakarta Correspondent - ReportingAsia.com

A 41 year old man has been missing since the 24th of October. Jeremy Hoyland from Penistone, South Yorkshire, was last seen heading off on a sea scooter to the nearby island Nusa Lembongan in Bali. Mr Hoyland traveled to the island as a race official for the Asian Beach Games. Mr Hoylands’ wife, Jacqui and brother, Nicholas have now flown into Bali to help authories search for their family member. In the mean time a close family friend has offered a reward of $10,000 for his return.

Mr Hoyland was traveling with four friends on hired sea scooter to Nusa Lembongan. He had planned to return to Tanjung Benoa beach in Bali only a few hours after his friends arrived. However, it was five hours later that his friends received a text message on their mobile phone informing them that he was only two miles from the beach but required assistance. But after that text message all contact was lost with him and he has not been seen since.

Rescue coordinator Heru Taryoto told the AFP news agency that an extensive air and sea search had failed to locate Mr Hoyland or his red Yamaha Jet ski. Authorities have asked people in Bali, Lombok Nusa Penida and also small neighbouring islands to help with the search for Mr Hoyland but no one has seen him.

A family friend, Jonathon Oddy commented that Mr Hoyland has more than 10 years experience using sea scooters. Mr Oddy is staying optimistic even though there is still no news and no sightings of his friend yet. There are plans to continue with another air search soon. Mr Oddy has realised that Bali had limited resources and are not willing to examine outside the local area. When the authorities call their search off, Mr Oddy, Nicholas and Jacqui are prepared to charter an aircraft and continue the search on their own. Mr Oddy told the AFP news agency that he knows the Balinese are doing the best they can, but the resources are a lot more limited compared to what they have in the United Kingdom. Mr Oddy also commented how the culture is also very different.

In June, British divers Charlotte Allin, James Manning and Kathleen Mitchinson were rescued off the eastern coast of the country after being missing for two days. It is cases like this that are giving Mr Hoylands relatives and family friends hope that he will be found soon.

Mr Hoyland works for an engineering company, SB Components and Mr Oddy understands that if he is stranded on a smaller island, it could take longer to find him, especially if he ran into heavy waves and rough sea conditions while broken down.

Mr Hoyland was invited to the Asian Beach games because of his expertise in the field. As a former competitor and also because he is on the board of the British Jet Sport Racing Association.

Another family friend, Scott Frazier, the executive director of the International Jet Sports Boating Association has also offered a reward for his safe return. While others have pledged money to help with the search fund.

The Foreign Office is in contact with the Indonesian authorities and is providing support and assistance to Mr Hoyland’s family.

Amber Butler-Davis
Staff Reporter - ReportingAsia.com

Exam Answers leaked before examination

The Shaghai Daily reported on the 28th of October that answers to some exams have been leaked and are available for purchase. The Beijing Education Examination Authority confirmed that the exam papers for national tests in civil law, corporate law, legal instruments, civil procedure and environmental law have al been leaked somehow. The Ministry of Education has now begun an investigation to find out how the exam papers have been leaked. However, the authority of the Beijing education examination told the Shanghai Daily that it is hard to tell if a second examination should be set until the investigation is completely finished.
A lawyer with a surname Liu, who teaches Law in a non-governmental university and his student Wang Ming reported the leak. Liu explained to authorities how he bought the answers to seven examinations for the sum of 150 yuan (US$21.90) from a man called Zheng Xin after being introduced to him by his students. The two men then went to the authorities with the evidence along with mobile phone messages and recordings. Liu checked the exam papers and found that the answers to the five tests he had bought from Zheng were in fact correct. Liu commented that Zheng had been particualry cautious throughout the whole process but finally agreed to sell the answers to friends of the acquaintances. Also, it was told that they never did the deals in public and that they money was always passed through and paid to a middleman in the operation.
Wang told the Shanghai Daily that the leaked answers had started to appear about a week ago and that the price to buy all seven examinations was only about 100 yuan. Wang said that some of his classmates got the answers from their teachers or classmates.
Liu and Wang had found answers to several exams in April being leaked and they reported this to the Beijing authorities in May but because they had no hard evidence, no investigation was put into place.
The Beijing examination authorities told the Shanghai Daily that they had checked all the examination areas as well was the printing and transport facilities across the country and no problem was found in any of these places. The Newspaper quoted an authority official saying “There are cameras everywhere during the exams and since it’s a national exam held across the country, we can do very little if the source of the leak is outside Beijing,”

Hong Kong Bureau

10 on trial for Pyramid Scheme

Apparently, money does grow on trees. The Xinhua News Agency reported Tuesday that ten people accused of running a pyramid scheme have gone to trial at the Baotou intermediate people’s court in the Inner Mongolia autonomous region.

The trails began Monday for the defendants, and they are beng charged with conning over 30,000 people out of 1.28 billion yaun ($187million) by selling them overpriced sections of forestry land.

Defendant, Chen Xianggui told the court that he set up the Liaoning 1,000 Miles Forestation Co in August 2002. And that over the next five years he had managed to establish more that 100 different branches in 12 separate provinces across the country. Lui Yanging, also a co-defendant was employed as the company’s general manager.

The company was in full swing having nearly 9,000 salespersons employed to sell unmeasured expanses of land at 26, 600 yaun a piece to unsuspecting investors. The buyers were told that the value of their land was expected to rise to the value of 180,000 yaun within the next eight years. The company also promised the buyers that they would pay back 44 percent of the initial investment every year. However, when the payments promised failed to be given to the buyers, the investors became suspicious and several buyers reported the company to the authorities.

During investigations, the police were able to uncover more that 40 similar schemes that were all being run by the same company and immediately stepped in to shut down and suspend the company’s operation.

The Inner Mongolia autonomous regional government launched a two-month investigation in July to discover the legitimacy of the company’s claims. The investigation found that even though the woodland did exist it could never have yielded the dividends that was offered by the Liaoning firm because of the woodlands such poor location.

Lui, Chen and another eight associates that remain unnamed were subsequently charged with violations of national law.

A spokesman for the investigators told Xinhua on Tuesday that the Inner Mongolian government will “do its best” to minimize the investors’ losses. Once a verdict in the case has been reached, then full details of how and what repayments might be made to those who lost money form the scheme will be announced. However, the defense lawyer, who wishes to remain unnamed, is not expecting a verdict anytime soon even though the trial is now underway.

Beijing Correspondent

Foreign reporters have their chains loosened.

On the 17th of October China issued new rules and regulations on reporting activities by foreign correspondents on its territory. These new rules now allow foreign correspondents to interview persons without having to apply for an application to the foreign affairs department. The last time the foreign correspondent rules were assessed was in 1990, the new rules are significantly different to those issued then. The new foreign media rules are a reflection on China’s determination to carry on the policy of opening up to the outside world. The new rules have been made to make foreign correspondents reporting activities in China more convenient. A senior information officer, Wang Chen told the China daily that the Chinese government welcomes foreign media and reporters. The government also hopes that more stories about the country will be told throughout the world. The new rules and laws not only mean that foreign reporters will have more access to the country’s new but it also means that the government will provide help and services to them. However, the government does hope that the foreign media and reporters will abide by the Chinese law and maintain professional morals; by this the government would like to see the foreign reporters still report unbiasedly and justly, so to promote understanding and cooperation between Chian and the rest of the world

Chinese Foreign Ministry spokesman, Liu Jianchao told a press conference on the 16th of October that the new rules are following the major principles and spirits of the media regulations which were introduced for the Olympic Games in Beijing. Liu also commented that now reporters wishing to interview organisations or individuals Chian no longer need to be received and accompanied by the Chinese organisations. This particular new law has cancelled out an old item that asked foreign correspondents to get approval from the local government’s foreign affairs department when they wanted to report on the regions open to them. However, foreign reporters will still need to ask permission if they wish to do reporting in Tibet and other areas such as some military facilities, which are still off-limits to foreign correspondents.

The new rules says “China adopts a basic policy of opening up to the outside world, protects the lawful rights and interests of the permanent offices of foreign media organisations and foreign journalists on accordance with law, and facilitates their news coverage and reporting activities that are carried out according to the law.” So pretty much this means now according to the new rules, permanent offices of media and reporters can now temporarily import, install and use China’s radio communication devices for reporting on the news but only after gaining approval from the Chinese government.

The document also stated that foreign resident reporters are to apply for a press card within seven working days after arriving in China, which can be issued from the Foreign Ministry or local foreign affairs department. However, with press cards, they also need to get residency cards for m the local police and those who stay in China for less than six months every year will be revoked. But for short term resident foreign reporters reporting news in China, they only have to apply for a journalist visa.

Another new rule that is now in effect is that those foreign correspondents with permanent offices of media and reporters are now allowed to hire Chinese citizens to do auxiliary work. However, they do have to be hired form organisations designated by the Foreign Ministry or local governments.

By: Amber Butler-Davis
Staff Reporter

Baby sold for P30,000

On the 15th of October, Alexander Pineda and his wife Marivic, residents of Rizal Avenue in Sta. Cruz were charged with serious illegal detention. The charges were filed to the couple before a Manila Regional Trial Court for allegedly selling their six month old grandson to a teacher in Tondo, Manila for the lump sum of P30,000.

Similar charges were ordered to the 40 year old teacher, Arturo Tolentino by Manila City Prosecutor Jhosep Lopez. All three defendants were refused bail.

The investigation began when the baby’s 25-year-old mother, Jonalyn Calbay, went to the police and filed a complaint. From Calbay’s complaint, the police learnt that the Pinedas ‘borrowed’ the child on the 2nd August in 2007. And why wouldn’t Calbay agree to the arrangement, Alexander Pineda is her Uncle after all.

But when Calbay went to pick up her son from her uncle two days later she was told by the Pinedas that a doctor in Cebu had adopted the child. Like any mother, Calbay demanded answers and pleaded with the Pinedas to have her baby returned to her at once. It was then that the couple confessed to their niece that they had actually sold her new born to Tolentino, the teacher living in Manila. What sort of state would one have to be in to actually sell a member of their family? If the Pinedas thought that their niece was unfit to raise the child then wouldn’t it be best to involve the child services rather than just sell the baby for P30, 000.

Thankfully Calbay was able to get in contact with Tolentino on his mobile phone, but instead of acknowledging that the entire process was a mistake and Calbay had no intention of selling her child, Tolentino said that he was willing to sell the six month old back to her for the same price he had paid, P30, 000.

It was at this moment that Calbay finally went to the police to ask for assistance in getting her baby back to her safely. Once the police understood the circumstances of Calbay and the missing child, they immediately set up an entrapment operation at the Tutuban Mall in Divisora where they were able to successfully arrest Tolentino on September 18, 2007. Nearly six weeks after the purchase of the child had taken place.

Members of the Manila Police District’s Women and Children’ s Concerns Section recovered the six-month-old baby from Tolentino during the operation. Calbay is pleased to have her child back safely but I am sure she will not be letting any one take care of her child any time soon.

Jon Reilly - Vivid Financial

Vivid Financial Monthly Commentary October 2008

The month of October has traditionally been a volatile one. The 2008 version was particularly so… consider the following statistics for equities and commodities:

Equities
• October was the worst month for the companies in the S&P500 in 21 years, since the 1987 stock market crash.
• Global equities in October shed $9.5 trillion.
• October was the most volatile in the 80 year history of the S&P500.
• America had the most down days in a single month since August 1973.
• During an eight-day streak at the start of the month, the Dow lost 2,396 points.

Considering days with 4% moves up or down: there were none from 2003 through 2007; only three throughout the 1950s and two in the 1960s. As for October 2008, there were nine days with moves of more than plus or minus four percent, which edges out September 1932’s record of eight.

Commodities
• Copper and Crude Oil had their worst one-month losses ever.
• Crude Oil futures lost one third of their value, this was their biggest monthly percentage drop since trading began in 1983.
• Gold lost 18% for the month, representing its worst monthly drop since 1980.

As noted in our blog entry on the web site from October 31, several of the indicators that track various measures of volatility and credit markets have started to show signs of improvement. We again see many commentators asking just how much more bad news can there be that is not already priced in at current levels.

Self confessed market bull Charlie Aitken at Southern Cross Equities believes that the worst case scenario has already been accepted and discounted by current share prices.

Using BHP as an example, he estimates that the company is trading on about 5.5 times earnings for 2008/09, down significantly from both the recent highs of 11.5 times and the long term average for the resources sector of 14 times.

The fall from just the recent high implies that BHP’s earnings will decline by about 52% during the current financial year. Aitken makes the exceedingly valid point that this is nigh on impossible given that about half of BHP’s earnings are contracted and locked in until March of next year.

In the meantime, BHP’s share price has fallen 50% from the recent high of $50. He suggests that a worst case scenario is already being discounted into the share price after the recent correction.

In the listed property trust sector we are now at multi decade lows. The S&P/ASX200 property index got to a level of 900 on October 30, the last time it was there was briefly in January 1991, and prior to that November 1987.

We have commented in the past that the prognosis for the Australian economy appears relatively robust. Applying even the most pessimistic outlook one can imagine still would not seem to warrant the absolute capitulation we have seen in this sector.

The view of our Reserve Bank outlined below suggests that when fear does eventually subside and buyers return to the market that there will be a strong rally in this sector.

RBA Commentary
Our Reserve Bank Deputy Governor gave a speech at the end of October that contained some interesting observations. We have heard much about the fact that our economy is in better shape than many others, so it is good to see someone put some flesh on the bones of this argument.

A selection of comments from Ric Battelino’s speech follows:

On Chinese demand for our resources:
It would be naïve to assume that China will not experience an economic cycle, so we should expect its demand for our resources to fluctuate. However, China’s strong long term growth potential must be a source of optimism about our own long term prosperity, given our role as one of its most important suppliers of raw materials.

On potential returns from share markets:
The one-year forward earnings yield on Australian shares has risen to 11 per cent, well above the long run average. This is a very attractive yield. When the yield has risen to these levels in the past, the return on shares over the subsequent 10 years has almost always been well above average.

On the Australian housing market compared with the US:
US house prices stopped rising essentially because the supply of houses overtook demand… The overhang of unsold houses in the US has created downward pressure on house prices as builders and developers have been forced to sell. This is absent in Australia.

Battelino goes on to note that another key difference is that the borrowers targeted by Australian lenders had much better ability to repay loans than did the Americans who took on obligations they could not manage. He points out that the home ownership rate in Australia was no different at the start of our boom than it was at the end. As a result, the arrears rate in Australia is also no higher than it was at the start of the boom, and is low by international standards.

In Conclusion:
The next couple of years will be noticeably more subdued than the past five. We should not be surprised by this as the income and wealth generated over the past five years were simply extraordinary.

By definition, the economy must grow at a below average pace for some of the time. These periods provide the economy with the breathing space to sustain the expansion. There is no reason to assume that the next year or two will not do the same.

US Presidential Election
By the time you read this the Presidential election will have at least been contested, whether we have a result or not will perhaps depend on the lawyers. Although many polls are forecasting that Senator Obama and the Democrats will have a sufficient margin to ensure that this time the election will not be decided in the courts.

Historically, there is little to suggest that either party has had a significantly better track record at managing the economy. What has been more often sited in the past is the importance of the actual presidential cycle, not which party is occupying the Oval Office.

Historical trends suggest that the year of an election has generally been a good one for the markets, and that the first year of a new presidential term has been not so good. The veracity of the trend is questionable at best, as the last three Presidents have all seen good share market performance in their first years in office.

Similarly, the last year of a presidency is supposed to the best of the four year cycle, which clearly has not been the case during 2008. What should be more important, assuming the predictions are correct, is the genuine opportunity for the Democrats to undertake significant structural reform, or the New Deal II as it has become known in the media. This may just provide the catalyst that the American economy needs to begin its long path back.

The economic landscape for the new President will not be a pretty one. The American economy is very much a consumer driven one, and that same consumer has for many years lived beyond their means, using home equity withdrawals to keep buying the production of other countries, mainly China.

Commentator John Mauldin reports that over 2% and sometimes over 3% of GDP growth in 2002-2006 was the result of rising housing prices, allowing consumers to borrow against their homes and spend on mainly discretionary items.

He has also produced the following chart and makes the point that without this additional spending that George W Bush would have presided over a two year recession in 2001 and 2002, and would likely have only been a one term president.

Interest Rates
Finally a quick comment on interest rates, in the context of the Reserve Bank cutting by 75 basis points in their November meeting. The markets were expecting a 50bps reduction, so the move to cut by 75bps marks the second month in a row where the RBA has surprised the markets.

We are fortunate to have the capacity to do so, and it is worth noting that the 5% rate is generally a considered a neutral policy stance. So in fact, the significant moves which have shaved 2% off rates in the last two months has only brought about a removal of the restrictive stance that had previously been in place.

By comparison to the United States and Europe and especially Japan, our central bank still has significant scope to stimulate our economy.

DISCLAIMER: The information contained in this document is for general information purposes only. It is provided in good faith and is not intended as advice. It does not take into account any individual circumstances, objectives or particular needs. We strongly recommend that you seek professional advice from one of our advisers before making any decisions on your tax or financial planning. Vivid Financial Pty Ltd is a Corporate Authorised Representative No. 317 682 of Australian Financial Services Limited (AFSL 297239 ABN 50 116 900 362).