BusinessMirror May 25, 2015

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BusinessMirror

THREETIME ROTARY CLUB OF MANILA JOURNALISM AWARDEE 2006, 2010, 2012

U.N. MEDIA AWARD 2008

A broader look at today’s business TfridayNovember 18,2015 2014Vol.Vol.1010No.No.22840 Monday, May 25,

www.businessmirror.com.ph

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P.  |     | 7 DAYS A WEEK

TUSSLE ON COMMON STATION DISCOURAGES PROPONENT FROM APPROACHING POSSIBLE LENDERS

SMC sees delay in MRT 7 funding INSIDE

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UNDING for the Metro Rail Transit (MRT) Line 7 project could be delayed by the ongoing tussle on where the common station will be situated, as conglomerate San Miguel Corp. (SMC)said it cannot talk to funding agencies until the issue is resolved.

THAT ITALIAN FLAIR Magisterial role of the Catholic Church

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EAR Lord, knowing that in Catholicism, the Magisterium is the authority that lays down what is the authentic teaching of the Church. For the Catholic Church, that authority is vested uniquely in the pope and the bishops, who are in communion with Him. The Second Vatican Council states, “For this reason, Jesus perfected revelation by fulfilling it through His whole work of making Himself present and manifesting Himself through His words and deeds, His signs and wonders, but especially through His death and glorious resurrection from the dead and final sending of the Spirit of truth.” Amen. EXPLORING GOD’S WORD, FR. SAL PUTZU, SDB AND LOUI OUIE M. LACSON Word&Life Publications • teacherlouie1965@yahoo.com

Editor: Gerard S. Ramos • lifestylebusinessmirror@gmail.com

Life

ALL ACCESS: HANGING QUESTIONS

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BusinessMirror

Monday, May 25, 2015 D1

That Italian flair LYCRA Nirvana

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HINK of Italy and all things luxurious come to mind— Ferragamo, Gucci, Armani, Prada, Valentino. When an item is “Made in Italy,” there is the assurance of sophisticasophistica tion, class and uniqueness. And even if a product is somehow inspired by a legendary Italian street, it would be just as gorgeous.

SAVE SA VE MY BAG AFTER the influx of fast-fashion brands such as H&M from Sweden, Uniqlo from Japan, Forever 21 from the US, and SuiteBlanco from Spain, The SM Store is introducing Save My Bag from Italy.

Founded by Stefano Agazzi and Valentina Azzia, the eye-catching accessories line is made of poly-lycra, a material lighter and more durable than neoprene. “An excellent craftsmanship to guarantee international success, Save My Bag is designed, manufactured and produced in Italy, in our hometown Bergamo,” the young couple stated in their web site, savemybag.it. The bag was first designed as a stylish protection for luxury designer bags. But when it was “discovered” by fashion visionary Patricia Field, Save My Bag became a regular bag. “Love at first sight! The ‘Icon’ bag is everything a bag should be: lightweight, strong, happy and gorgeous! Grab one; I did!” gushed the stylist for

VIA VENETTO

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LIFE

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STRATEGY OFFICERS BusinessMirror

www.businessmirror.com.ph

EXPLAIN YOUR NEW STRATEG A Y ATEG BYEMPHASIZING WHAT A IT ISN’T AT

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B N T

T’S nearly impossible to translate—let alone execute—a strategy that you don’t understand. Yet, according to research, almost half of top executives cannot connect the dots between their company’s strategic priorities; and two out of three middle managers say they don’t understand their firm’s strategic direction. So most leaders just don’t get what their organizations are trying to do. Leaders can improve the situation by borrowing a technique from teachers: “compare and contrast.” Planning processes may do a fine job of requiring leaders to spell out what the strategic objectives are, but they rarely require leaders to focus on what they are not. As a result, most leaders don’t fully comprehend their company’s strategic goals. To remedy this, I suggest adding a wait list to your planning process—a list of objectives that you’ll put on hold for three to six months. Let’s assume your planning process has revealed a list of key growth drivers, including the launch of next-generation product lines, enhancing the quality of existing products, tightening up the supply chain, and many others. Before team members divvy up those

goals, discuss which priorities should go on your wait list. Even though all these initiatives will affect your growth for the year, challenge yourself and your team to put at least half of them on a wait list for three to six months. Evaluating those priorities side-by-side will encourage your team to use comparative learning. If your team puts launching the next-generation product line on the wait list but includes enhancing the quality of existing products as a near-term priority, that contrast makes an invaluable distinction. You have clarified that even though your team values innovation, this year’s strategy is focused more on innovating the core product lines than creating the new products. Slowly but surely, through this repeated act of comparing and contrasting top priorities, a common theme will emerge. In the minds of your team members, a hodgepodge list of projects begins taking shape as a bona fide strategy. All of the sudden, they get it. To be sure, execution will always be multifaceted. No one trick or tool will tame it. But a wait list can give your team a much better grip on the reigns. Nick Tasler is an organizational psychologist and author of Domino: The Simplest Way to Inspire Change.

‘COMPETITIVE INTELLIGENCE’ SHOULDN’T JUST BE ABOUT YOUR COMPETITORS

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B B G

N April 2010, Mars, one of the world’s largest privately owned businesses, embarked on a breakthrough initiative. Jessica Eliasi, then the director of competitive intelligence (CI) at Mars Chocolate, traveled the world for a year to run “competitive simulation” games with local market teams from Russia to Mexico to Turkey to England. These simulations weren’t some computer-based hypothetical games. They were intense, intelligence-based, role-playing workshops whose results enabled the Mars leadership to see the market from a different and unfamiliar perspective. By connecting the dots across a series of markets, brands and competitors, Eliasi identified risks, as well as opportunities for the company—global insights that have influenced how Mars develops strategy. This is just one example of how a company can create and sustain agility through CI. It is a perspective on changing market conditions. This means identifying risks and opportunities early enough to allow a company to adapt its strategy or change it.

Information alone is not a perspective on change and doesn’t automatically lead to insights. Yet the vast majority of companies and executives confuse these two. In recent years, collecting digital data has replaced strategic intelligence. Many companies waste millions on massive databases or research projects that don’t yield useful insights, missing out on the value of CI as a source of strategic change. If you want your company to become more agile in adapting to changing market circumstances, start by rethinking your CI process. That means understanding its scope and role. It also means mandating intelligence reviews at critical decision stages, ensuring that your CI analyst has input in strategic meetings and reviews, and tapping an informal internal community of CI experts. Focus on building a strategic early warning capability so you don’t miss the big picture.

Monday, May 25, 2015 E 1

WHAT MAKES A GREAT

CHIEF STRATEG TRATEG TRATEG GY Y OFFI OFFIC CER CER Develop signature strengths

B M B, E G  K S

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REATING good strategy is more important (and more challeng challeng-ing) than ever. Global lobal forces— game-changing technologies, unprecedented growth in emerging markets and rapidly aging populations, to name a few—are transforming the world economy, and with it, the way companies plan for and conduct business. Here are three ways that chief strategy officers (CSO) can craft flexible, comprehensive strategies to weather large-scale changes as well as occasional shocks to the system:

Move beyond strategic planning

TR ADITIONAL strategic planning—picture a march in lockstep toward a series of review meetings and deliverables—can’t absorb the disruptions of today’s volatile markets or stimulate the kind

of deliberations that businesses now require. Organizations need to transform their strategy development into an ongoing process. This means encouraging more frequent conversations among senior leaders and reallocating resources throughout the year. According to our research, companies with higher profitability than their competitors are twice as likely to review strategy on a continuing basis as opposed to either annually or every three to five years.

WHAT A makes a great CSO? To find AT out, we applied cluster analysis to the 13 roles and responsibilities that today’s CSOs described as most important. We identified five strategist archetypes: n Architects look for industry shifts and try to evaluate their companies’ competitive advantage. n Visionaries are experts at trend forecasting and innovation. n Aurveyors focus on long-range topics such as regulatory or reputational risk that potentially change the industry. n Mobilizers build what one CEO called a “higher organizational IQ on strategy” by, for example, training key staffers to create a business plan, essential to a well-informed strategic proposal. n Fund managers optimize corporate portfolios. They also help the executive team direct resources toward a technology that represents the future of the business. Not all these archetypes are appropriate for all strategists or all organizations, which can make it difficult to decide which strengths to develop. But beware the familiarity trap: Many new

strategists gravitate toward what they already know.

Prioritize

CSOS have a vast potential portfolio, so they and those who hire them need to make choices based on the organization’s circumstances and, to some extent, the strategist’s capabilities. In some cases there might be a reshuffling as a CSO takes on roles previously designated to other executives. But the team should keep discussing the division of responsibilities. This pays off: CSOs are up to four times more effective at facets of their role that they prioritize. Strategists have a range of powerful options for adding value to their organizations. But over time it’s easy for mismatches to develop between those focus areas and a company’s needs. By reprioritizing accordingly, strategists, chief executives and other members of the team can boost the quality of their strategy. Michael Birshan is a principal in McK McKinsey’s London office. Emma Gibbs is an associate principal in McKinsey’s London office. Kurt Strovink is a director in McK McKinsey’s New York office.

Why boards get corporate succession so wrong B C F-A

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EW reports from McKinsey and PricewaterhouseCoopers () paint a bleak picture of Csuite (chief officers) succession practices in today’s corporations. According to McKinsey’s survey of 1,195 executives, nearly half the top executives in their firms said they were unable to align colleagues around the goals they set out in their new role, while more than a third admitted they had failed to meet those initial objectives. PwC calculated the cost to large global companies who get it wrong when making their most important C-suite appointment, the CEO: more than $100 billion. Would you hire a surgeon who wasn’t

trained in medicine or delegate a major investment decision to someone who hadn’t studied finance? All too often organizations leave their most consequential hiring decisions to board members who are woefully inexperienced in evaluating C-suite talent. Recently, I met with the nominating committee chairs of some of the largest companies in the world. Less than 30percent had studied the basic concepts of assessment. Studies we’ve conducted also show that most corporate directors have participated in no (or only one) previous CEO succession. This means that many of those responsible for key corporate appointments—decisions that affect not only

careers and companies but also industries and economies—don’t clearly understand how to evaluate performance, competence and potential. Few have studied research on effective hiring processes, and even fewer understand the reliability of various assessment methods and the best practices for conducting them. Many are also unfamiliar with the most important leadership competencies and cannot map them to their company’s particular situations. This isn’t entirely their fault. Erich C. Dierdoff and Robert S. Rubin of DePaul University conducted a study to check the relevance of the typical MBA education. Only 29 percent of programs offered two or more courses in managing human

capital, and a mere 19 percent had two or more focused on managing decision-making processes. By contrast, 87 percent gave that same high weight to managing administrative activities. In an age where the ability of employees and managers to innovate determines the future of most organizations, corporate directors must educate themselves on talent assessment. C-suite appointments should not be made based on cursory evaluations. Directors must master and implement the best practices for making the right hiring decisions.

MONDAY MORNING

Benjamin Gilad is the co-founder and president of the first training institution dedicated to the CIP competitive intelligence certification. He is author of Business War Games, among other books.

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Claudio Fernández-Aráoz is a senior adviser at Egon Zehnder and author of It’s Not the How or the What but the Who.

© 2013 Harvard Business School Publishing Corp. (Distributed by The New York Times Syndicate)

EARTHQUAKES 101 Perspective BusinessMirror

E4 Monday, May 25, 2015

SEPARATING EARTHQUAKE FACT FROM FICTION IN ‘SAN ANDREAS’ EARTHQUAKES 101 Deciphering the waves rolling in How an earthquake feels depends on factors such as distance from the fault, surrounding geology and quake magnitude. It also varies among individuals. Depending on their sensitivity to motion, a quake can feel much stronger to some people.

DWAYNE JOHNSON, as Ray, and Carla Gugino, as Emma, in a scene from the action thriller San Andreas. COURTESY WARNER BROS. PICTURES VIA AP

B A C | The Associated Press

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OS ANGELES—The San Andreas Fault awakens, unleashing back-to-back jolts that leave a trail of misery from Los Angeles to San Francisco. Skyscrapers crumble. Fires erupt. The letters of the Hollywood sign topple. Tsunami waves swamp the Golden Gate Bridge. Hollywood’s favorite geologic bad guy is back in San Andreas— a fantastical look at one of the world’s real seismic threats. The San Andreas has long been considered one of the most dangerous earthquake faults because of its length. At nearly 800 miles long, it cuts through California like a scar and is responsible for some of the largest shakers in state history. In the film, opening this Friday, a previously unknown fault near the Hoover Dam in Nevada ruptures and jiggles the San Andreas. Southern California is rocked by a powerful magnitude-9.1 quake followed by an even stronger magnitude-9.6 in Northern California. US Geological Survey seismologist Susan Hough accompanied The Associated Press to an advance screening of the film. Despite the implausible plot, she said the San Andreas will indeed break again, and without warning. “We are at some point going to face a big earthquake,” she said.

Just how big?

THE San Andreas is notorious for producing big ones, but a magnitude-9 or larger is virtually impossible because the fault is not long or deep enough, Hough noted. The most powerful temblors in recorded history have struck along offshore subduction zones where one massive tectonic plate dives beneath another. The 1960 magnitude-9.5 quake off Chile is the current world record holder. The San Andreas has revealed its awesome power before. In 1906 a magnitude-7.8 reduced parts of San Francisco to fiery rubble. Nearly five decades earlier, a similarsized quake rattled the southern end of the fault. In 2008 the USGS led a team of 300 experts that wrote a script detailing what would happen if a magnitude-7.8 hit the southern San Andreas. They wanted to create a science-based crisis scenario that can be used for preparedness drills. The lesson: It doesn’t take a magnitude-9 or greater to wreak havoc. Researchers calculated a magnitude-7.8 would cause 1,800 deaths and 50,000 injuries. Hundreds of old brick buildings and concrete structures and a few highrise steel buildings would collapse. Computer models show the San Andreas is capable of producing a magnitude-8.3 quake, but

Giant tsunami waves are formed when the Earth’s crust violently shifts, displacing huge amounts of seawater. The larger the magnitude, the more these waves can race across the ocean without losing energy. The San Andreas is strike-slip fault, in which opposing blocks of rocks slide past each other horizontally. A big San Andreas quake can spark fires and other mayhem, but it can’t displace water and flood San Francisco. Hough said the movie got one aspect right: The tide suddenly ebbing out signals a tsunami is coming. More than 80—mostly small—tsunamis have been observed along California’s coast in

Firs rsstt hit rs

Major jolt

Finishing up

The first bump is the fastest of the seismic waves, called primary, or P, waves; if you are close to a quake’s epicenter, the first thing you might notice is a thunderous clap and rattling windows; this is P wave energy transferring erring into in the air and creating a sound wave

The next set of energy waves are usually larger, called shear, or S, waves; S waves pack the most energy and the most shaking

Surface waves are the slowest and usually come last. If a quake is close to the surface, these waves can be very large

Seismic energy waves

Energy transferred into sound waves makes windows rattle

S waves can be strong enough to knock people over

© 2010 MCT Source: U.S. Geological Survey, Caltech Graphic: Orange County Register

Setting up a field hospital Field hospitals are set up to provide emergency care when hospitals in a disaster zone are overwhelmed. Some considerations in setting up and operating a field hospital:

Facility

Storage

Existing structure, such as a school, is preferable, but a hospital can be built with tents

For medical supplies, drugs; refrigeration of vaccines

Isolation area For those with highly infectious diseases

Triage

In waiting area, doctor determines who needs most urgent care

Inpatient care

Each tent holds about 15 overnight patients who sleep on cots or mattresses

Outpatient care THIS February 16, 2000, file image from Nasa, acquired by the Shuttle Radar Topography Mission aboard space shuttle Endeavour and combined with a Landsat image, creates this perspective view to the northwest along the San Andreas Fault near the city of Palmdale, California (center right). NASA VIA AP

anything larger is dubious.

Will there be a warning?

IN the film, Lawrence Hayes, a fictional seismologist at Caltech (a real university), notices spikes in “magnetic pulses” that light up California like a Christmas tree, heralding a monster quake. Despite a century of research, earthquake prediction remains elusive. Scientists can’t predict when a jolt is coming and are generally pessimistic about ever having that ability. Every warning sign scrutinized—animal behavior, weather patterns, electromagnetic signals, atmospheric observations, levels of radon gas in soil or groundwater— has failed. “We wish it were as simple as the movie portrays. It isn’t. Researchers have scoured every imaginable signal trying to find reliable precursors, but nothing has panned out,” Hough said. The latest focus has been on creating early warning systems that give residents and businesses a few seconds heads up after a quake hits, but before strong shaking is felt. Japan has the most advanced seismic alert system in the world while the US is currently testing a prototype.

A tsunami in San Francisco?

UNLIKE the film, the San Andreas can’t spawn tsunamis. Most tsunamis are triggered by underwater quakes, but they can also be caused by landslides, volcanoes and even meteor impacts.

the past, triggered mainly by faraway quakes.

Will the East Coast feel it?

IN the movie, the scientist warned that shaking would be felt on the East Coast. Even the largest possible San Andreas quake won’t rattle the East Coast (Sorry New York). While seismic waves from great quakes can make the Earth reverberate like a bell, the ringing can only be detected by sensitive instruments because it’s so low. Historical accounts show shaking from the 1906 San Andreas quake was barely felt in western Nevada and southern Oregon, Hough said.

Drop, cover and hold on!

WHEN the ground starts to shake, the seismologist played by Paul Giamatti makes the ideal public service announcement: “Drop, cover and hold on.” Since 2008, millions of people in California and elsewhere have participated in yearly disaster drills in which they practice diving under a table and learn other preparedness tips. If you’re outdoors when the ground moves, experts recommend bracing against a wall, similar to what search-and-rescue helicopter pilot Ray Gaines, played by Dwayne “The Rock” Johnson, told scared survivors in the movie. “Having Paul Giamatti shouting, “Drop, cover and hold on!” and The Rock telling people to crouch against a wall if they can is one heck of a PSA,” Hough said.

Doctors see patients, dispense drugs; separate tents may be needed for men, women and children

Vaccination To prevent outbreaks of diseases, such as measles

Top health concerns Shock, trauma

Infected wounds

Respiratory illness

Epidemics, risk of vector-borne diseases Source: Doctors Without Borders Graphic: San Jose Mercury News

Water

From wells, or “bladder tank” of purified water

Latrines

Located away from patient areas, water supply

© 2010 MCT

Earthquake frequency and destructive power Left side of the chart shows the magnitude of the earthquake ke and rright side represents the amount of high explosi k e v ve required to produce the energy released b by the earthquake k . The middle of the chart shows the relative ke ve frequencies. v

Magnitude 10 9

Notable earthquakes

Energy equivalents

Energy release

(equivalent of explosive)

Chile (1960) Alaska (1964) Japan (2011) <1

123 trillion Ib. (56 trillion kg) 4 trillion Ib. (1.8 trillion kg)

PERSPECTIVE 8 7 6 5 4 3

Great earthquake; near total destruction, massive loss of life

New Madrid, Mo. (1812)

San Francisco (1906) Major earthquake; severe economic impact, large loss of life Loma Prieta, Calif. (1989) Kobe, Japan (1995) Strong earthquake; damage Northridge, Calif. (1994) ($ billions), loss of life Moderate earthquake; property damage

Light earthquake; some property damage Minor earthquake; felt by humans

2

Source: U.S. Geological Survey Graphic: Pat Carr, Tim Goheen

Long Island, N.Y. (1884)

Krakatoa volcanic eruption

3

World’s largest nuclear test (USSR) Mount St. Helens eruption

123 billion Ib. (56 billion kg) 4 billion Ib. (1.8 billion kg)

20

200

2,000

Hiroshima atomic bomb

Average tornado

12,000

100,000

Large lightning bolt Oklahoma City bombing Moderate lightning bolt

1,000,000

Number of earthquakes per year (worldwide)

123 million Ib. (56 million kg) 4 million Ib. (1.8 million kg) 12,300 Ib. (56,000 kg) 4,000 Ib. (1,800 kg) 123 Ib. (56 kg)

© 2011 MCT

B VG C

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Raoul Eduardo C. Romulo, San Miguel Holdings Corp. CFO, said they cannot conclude discussions for a possible official development assistance (ODA) package for the multibillion-dollar project, as lenders will ask many things that the company could not answer. “We are still going to put the financial group together. It doesn’t make sense for us to put that up right now. There are so many questions the lenders will ask that we cannot answer, like where will it end? Will the ridership be divided? Will MRT 7, 3 and 1 be together, or will they be separate? There

are rumors that they will be separated. We cannot confirm rumors, because we are not party to that,” Romulo said on Friday at the sidelines of the company’s bond listing on the Philippine Dealing & Exchange Corp. “We’re exploring a lot of possibilities but we cannot also commit with the institutions because there is nothing to commit in terms of many details. There are many moving parts. There will be an impact on costing, the details of which I have no details. But it will have an impact,” he said. S “MRT ,” A

HANDSHAKE FOR PEACE Thousands join hands in the Handshake for Peace at the Mall of Asia grounds in Pasay City. With the theme “Saving the World with Good Vibes,” the event celebrates the 70th anniversary of the end of World War II, and aims to bring people together to educate them about the effects of wars and how they can promote peace. ROY DOMINGO

‘Timta to help SMEs comply with BIR regulations’ N O matter the contentious points raised against certain provisions of the Tax Incentives Management and Transparency Act (Timta), the proposed legislation was seen to give wiggle room for small and medium enterprises (SMEs) to comply with stringent Bureau of Internal Revenue (BIR) regulations. In a recent hearing held at the House of Representatives on Timta, lawmakers and government agencies agreed on a six-month extension on the electronic-filing (e-filing) of income-tax returns (ITRs) to give room for SMEs to comply with the mandatory provision. The Timta, a transparency measure authored by Rep. Maria Leonor Gerona-Robredo of Camarines Sur, hurdled the committee level on Wednesday, but not without a struggle arising from the sharply

PESO EXCHANGE RATES n US 44.5100

contrasted viewpoints of the Department of Trade and Industry (DTI) and the Department of Finance (DOF). A significant provision on the Timta mandates all companies, not just large enterprises, registered with investment promotion agencies to comply with the BIR’s e-filing mandate by April 15 each year. On this point, Board of Investments (BOI) Gov. Lucita P. Reyes feared that the SMEs may not meet the e-filing deadline every time their limited resources and the supposed instability of the BIR’s online e-filing system. “We have been getting reports from small companies that have not been able to access e-filing, especially in the provincial areas. A lot of the companies registered with the BOI are in the provinces, [and are] having difficulty. That’s why we’re pushing

REYES: “We have been getting reports from small companies that have not been able to access e-filing, especially in the provincial areas.”

for a clause that will give some leeway,” Reyes said at the hearing. Ninety percent of companies registered with the BOI are SMEs. Reyes said that during an earlier private discussion—which was attended by Robredo, Internal Revenue chief Kim Jacinto-Henares, Finance Undersecretary Jeremias N. Paul Jr., Finance Secretary Cesar V. Purisima and Trade Secretary Gregory L. Domingo—trade officials pushed for

the inclusion of a clause declaring “that companies can be penalized for not meeting the e-filing, unless it is not the fault of the company in complying with the deadline.” In that discussion, however, Henares thumbed down the “unless” clause. The BIR wanted to make e-filing immediately enforcible by April 15 for all investment-promotion agency (IPA)-registered enterprises, or risk the forfeiture of incentives. The DTI, on the other hand, crafted an alternative deal: a sixmonth grace period after the April 15 deadline just for e-filing, to prevent smaller companies from being penalized that may bar them from applying for incentives. “The six-month period is important, since registered enterprises will have to apply for availment of the income-tax holiday [ITH] with

the BOI also after the deadline. And we cannot process, under the bill, if they do not have proof of e-filing. If we give six months for application of availment, the effect should be that the e-filing should also be extended,” Reyes explained. Robredo sided with Reyes, saying, “This bill will force enterprises to comply with e-filing. But, if the DTI is asking for a transition period to assuage the fears of SMEs in availing [themselves] of incentives, then I’m going with the suggestion of the BOI to extend a break period.” The point of the bill, said Robredo, is transparency through automation and migration to an electronic system. Reprieve must be given to smaller companies that may be adversely affected by the aim of the bill, she added. S “T,” A

n JAPAN 0.3677 n UK 69.7160 n HK 5.7410 n CHINA 7.1828 n SINGAPORE 33.3184 n AUSTRALIA 35.1053 n EU 49.4595 n SAUDI ARABIA 11.8693 Source: BSP (22 May 2015)


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