JULY RATE OF 5.7% NOT THE END OF INFLATION WOES By Cai U. Ordinario @cuo_bm & Samuel P. Medenilla @sam_medenilla
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HE worst is still to come for millions of Filipino consumers as inflation is expected to further increase in the coming months, according to local economists. This, after the Philippine Statistics Authority (PSA) reported on Tuesday that inflation increased to 5.7 percent in July 2018, nearing the high end of the Central Bank’s projected range of 5.1 percent to 5.8 percent. Some economists believe inflation could A vendor sells seafood at the Nepa Q-Mart in Quezon City on Tuesday. Prices of most food products, especially fish, have risen—as have concerns over inflation, which hit 5.7 percent in July. NONOY LACZA
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reach even higher than 6 percent in days to come, which could force the Bangko Sentral ng Pilipinas to raise interest rates anew. The BSP’s Monetary Board has set its next meeting on Thursday (August 9), at which the matter of key rates will be tackled. “More or less in line [with] our expectations of 5.8. It will probably still be high for August— around the same level or even higher if supply of basic commodities remain tight and utility rates go up,” Ateneo Center for Economic Research and Development (ACERD) Director Alvin P. Ang said. “[A 6-percent inflation rate is] possible but if government actions are coordinated and well executed, particularly in securing more supply of basic commodities, it will taper sooner. This is behavioral so you need to assure people. [The] Monetary Board will raise interest rates
more if it is beyond 6 [percent],” he added. Ang also said that, while inflation is expected to again track the government’s forecast of 2 percent to 4 percent next year, inflation will not fall below 3.5 percent. This may be due to expectations that inflation is expected to only taper off by mid-2019, according to Emilio S. Neri Jr., lead economist of the Bank of the Philippine Islands (BPI).
Oil prices Neri said the high inflation rate was largely due to oil prices. He said even if global oil prices will stay at around $70 per barrel, inflation will breach 6 percent this year. Inflation, Neri said, will peak at 5.9 percent to 6.3 percent this year on account of higher oil prices. See “Inflation,” A2
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Wednesday, August 8, 2018 Vol. 13 No. 298
DA rolls out measures to ease rising food prices
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By Jasper Emmanuel Y. Arcalas
@jearcalas
HE Department of Agriculture (DA) has decided to temporarily suspend the special safeguard (SSG) duty imposed on poultry imports to cut prices and help ease inflation, which surged to 5.7 percent in July. Ag r icu lture Secretar y Emmanuel F. Piñol wrote to Customs Commissioner Isidro S. Lapeña to request for the “temporary lifting”
of SSG duty on certain chicken and chicken products “to cushion the impact of rising prices and mitigate the impact of soaring inflation.”
“We will request for its re-imposition in the future should conditions warrant it,” Piñol said in his letter dated August 6, a copy of which was
“Congress goes into recess this month and that would be an opportune time to ask the President to sign an EO. I already mentioned this to him [during the last Cabinet meeting]. The President will always listen to the recommendation of the secretaries provided that it is a result of proper consultations.”—Piñol
obtained by the BusinessMirror. The letter was coursed through Finance Secretary Carlos G. Dominguez III, who oversees the Bureau of Customs. Both Dominguez and
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The root and solution to human trafficking Teddy Locsin Jr.
free fire Philippine statement delivered by Ambassador Teddy Locsin Jr., Permanent Representative of the Philippines to the United Nations, at the panel discussion on “Stop trafficking in children and young people: A dire need to find sustainable solutions,” in commemoration of the World Day Against Trafficking in Persons on July 30, 2018, at Conference Room 8, UN Headquarters, New York.
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he World Day Against Trafficking is a day we mark with loud indignation over a crime that is marked by silence; a day we mark with action—that is to say a complicit silence and action long delayed. And, we submit, unfocused. Although this is changing as this well-attended forum shows. Continued on A6
HOUSE OKAYS RICE TARIFF $1.5-B NayonLanding breaks ground amid lease fiasco BILL ON SECOND READING See “DA,” A2
By Elijah Felice E. Rosales
By Jovee Marie N. dela Cruz
@alyasjah
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& Bernadette D. Nicolas @BNicolasBM
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ANDING Philippines’s $1.5-billion integrated resort project in Parañaque City broke ground on Tuesday and is penciled to operate by the first quarter of 2022. The groundbreaking took place on the same day Malacañang announced the termination of all board members of Nayong Pilipino Foundation for a lease contract that President Duterte found “grossly disadvantageous.” The agency was responsible for securing the deal with Landing International Development Ltd., the parent company of Landing Resorts Philippines Development Corp. Landing Chairman and Executive Director Yang Zhihui said the resort, named NayonLanding, will generate more than 10,000 direct and indirect jobs, of which 95 percent the developer looks to employ from Filipinos. He added NayonLanding is estimated to add 2 million to 3 million tourist arrivals to the country. See “NayonLanding,” A8
Officials and guests view the scale model of NayonLanding, an integrated resort in the Philippines that will house a hotel, an indoor water park and a casino. Landing International’s $1.5-billion project broke ground on Tuesday. NONIE REYES
PESO exchange rates n US 53.0400
HE House of Representatives on Tuesday approved on second reading House Bill (HB) 7735, or the proposed “Revised Agricultural Tariffication Act,”which would lift the quantitative restriction (QR) on rice. Through viva voce voting, the lower chamber approved the measure, which would also put in place safety nets for Filipino rice producers and rice consumers. Rep. Luis Raymund Villafuerte of Camarines Sur, one of the authors, said the bill on liberalizing rice imports will not only pull down the price of the staple but also set up a huge support fund that will enable palay growers to raise their harvests while lowering their production costs. With the President’s endorsement of the rice tariffication bill, Villafuerte said it is “incumbent” upon both chambers to pass it “at the soonest” to provide immediate relief to Filipinos reeling from high rice prices. HB 7735, sponsored by House
₧3.40/kg The estimated price reduction on rice seen to be effected by the passage of the rice tariffication bill, as cited by President Duterte in his 2019 budget message to Congress
Committee on Agriculture and Food Chairman Jose Panganiban Jr. of AnacIP, is due for final plenary approval next week, while the Senate version authored by Sen. Cynthia A. Villar will reportedly be approved soon by the Senate’s agriculture and food panel, which she chairs. “The rice tariffication bill will hit two birds with one stone: it will help pull down rice prices and stabilize its supply, while helping our farmers become competitive through the establishment of a competitiveness enhancement fund that will be used to provide them cheap loans, training, scholarships and modern facilities, among other See “Rice tariff,” A2
n japan 0.4761 n UK 68.6656 n HK 6.7578 n CHINA 7.7409 n singapore 38.7804 n australia 39.1753 n EU 61.2824 n SAUDI arabia 14.1429
Source: BSP (7 August 2018 )
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A2 Wednesday, August 8, 2018
Neda: Manufacturing growth to stay robust in second half 20.6%
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By Cai U. Ordinario
@cuo_bm
he robust growth of the manufacturing sector is expected to continue for the rest of the year on the back of upbeat investor and consumer confidence, according to the National Economic and Development Authority (Neda).
Based on the Monthly Integrated Survey of Selected Industries (MISSI), the Volume of Production Index and Value of Production Index increased by an average of 20.6 percent for the January-to-June 2018 period, Neda said. In June 2018 MISSI data showed manufacturing volume grew by 18 percent, while production value grew 18.9 percent. “Robust domestic and higher external demand, increased
Rice tariff. . .
investments and overseas Filipino workers remittances, improved consumer confidence and stable business confidence backed this growth in manufacturing,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement on Tuesday. “The prospect for the second half of the year is bright. We hope to further climb this upward trajectory as we implement reforms positively affecting the
Continued from A1
benefits,” Villafuerte said. The Bangko Sentral ng Pilipinas (BSP) estimates that liberalizing rice imports through tariffication will lower the inflation rate by 0.4 percentage point. But the Department of Finance (DOF) and the National Economic and
Development Authority (Neda) said it would lower rice prices by as much as P7 per kilogram (kg). During his third State of the Nation Address on July 23, President Duter te has cer tified as urgent the rice tariffication bill. Also, in his
The average increase for the January-to-June period of the Volume of Production Index and Value of Production Index, according to the Monthly Integrated Survey of Selected Industries
industries and doing business in the country,” he added. Pernia also said the inclusive, innovation-led, industrial strategy, the Ease of Doing Business and Efficient Government Service Delivery Act, will help boost the manufacturing sector. He added the completion of ongoing infrastructure projects are expected to also contribute to the growth of major industries. “To further drive manufacturing growth, local government units can be capacitated more to attract 2019 budget message to Congress, President Duter te is pushing for its passage of rice tariffication bill as it will cut the price of rice by P3.40 per kg. If implemented in the last quarter of this year, he said it could reduce headline inflation by about 0.2 percentage point, and an additional 0.6 percentage point in 2019.
investments in manufacturing and manufacturing-related services outside Metro Manila,” Pernia said. The Neda said that, in June, the majority of subsectors posted high production indices, including food manufacturing, petroleum products and export-oriented products. Growth in the production volume of construction-related manufactures eased in June. However, net sales of cement, glass products and basic metals recorded double-digit growth at 10.1 percent, 15.8 percent and 29.8 percent, respectively. The Neda said the increased production of construction-related manufactures was in response to the continued demand for non-residential buildings, such as industrial, commercial and institutional buildings. MISSI is a monthly report that monitors the production, net sales, inventories and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.
‘Reject HB 7735’ Anakpawis Party-list Rep. B. Ariel Casilao called on farmers and the poor to reject HB 7735. Casilao also said the House leadership is “railroading” the bill. “Tariffication is nothing but abandonment and further liberalization of the rice industry, and it is doomed to fail to provide the poor with adequate and affordable rice, but will surely kill local rice farmers,” said the lawmaker after withdrawing his coauthorship of HB 7753. Casilao said the entry of more rice imports will not assure lower prices. He noted that the price of regular milled rice rose by a whopping 192 percent to P38 per kg, from P13 per kg recorded in 1994. He also blamed the government, especially the National Food Authority (NFA), for the “deteriorating” food security situation in the country. “The agency clearly failed miserably to do its mandate. It is also mandated to procure 10 percent of total palay production. The NFA failed to do this,” Casilao said. Lifting the QR on rice would only bring “economic woes” to rice farmers, according to Butil Party-list Rep. Cecil V. Chavez. “We believe that our rice farmers are not prepared to compete locally and globally, or, at least to maintain its present production capacity given the high cost of production and the lack of government support that would guarantee our rice farmers welfare,” Chavez said.
Inflation. . . Continued from A1
“Unfortunately we still see inflation rising further in August and September. We are likely to see a turn by October and a return to target only by around mid-2019. This is what happens when average annual global oil prices surge by more 30 percent, something hardly any analyst saw coming,” he said. Action for Economic Reform (AER) Coordinator Filomeno Sta. Ana III said oil prices are volatile and this makes it difficult to make forecasts. Sta. Ana also said inflation is most sensitive to food prices, particularly rice prices since it has the most weight when it comes to the Consumer Price Index (CPI) at over 30 percent. Apart from oil and food prices, University of Asia and the Pacific School of Economics Dean Cid Terosa also said inflation has not yet peaked on account of the typhoons that could enter the country’s area of responsibility in August and September. Terosa also said the weak peso and the continuation of “trade and political altercations between the USA and other economies” will also adversely affect commodity prices. “The pick-up in consumer demand toward the ‘ber’ months can conspire to push prices upwards in the coming months. I don’t expect the inflation rate to exceed 6 percent, though,” Terosa said. He added that to address inflation, Terosa urged the government to raise interest rates. Unionbank Chief Economist Ruben Carlo Asuncion said if the Central Bank hikes interest
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DA. . .
Lapeña’s office received Piñol’s letter on August 6. “The Bureau of Animal Industry has reported that there is already a demand for imported broiler chicks because of the Ber months, and we do no want to be caught in a bind,” Piñol told the BusinessMirror in an interview. Countries levy the SSG duty when the price of imports is below or at the trigger price. The current trigger price for poultry imports is P93.96 per kilogram (kg). Chicken imports are slapped with a 40-percent tariff. Under Republic Act 8800, SSG duty is slapped on imports outside the minimum access volume (MAV), while those within the quota are exempted.
law. We should go through a process because there are stakeholders involved,” he said. Under FAO 195, or “Rules and Regulations Governing Importation of Fresh/Chilled/Frozen and Fishery Aquatic Products,” the agriculture chief must certify first that there is a need to import fish to ensure the country’s “food security, fish price stability and enhance fishery resource conservation.” Piñol said he is also amenable to cutting the tariffs on round scad to 5 percent from the current 7 percent. “If tariff is at 5 percent the landed cost of galunggong would be around P73.50 per kg and it would retail at P120 per kg, which is lower than the prevailing price of P140 per kg.” The DA chief said economic managers are more partial to cutting the tariff on round scad as the government would lose revenues if it is brought down to zero.
More food imports
‘Scapegoat’
Continued from A1
Aside from the temporary removal of SSG on chicken imports, the agriculture chief said he is mulling over increasing the MAV for pork imports by 10,000 metric tons (MT). The proposal would still be scrutinized by industry stakeholders on Friday during a meeting called by the DA. If the proposal is approved by hog raisers and other stakeholders, then Piñol said he would recommend to President Duterte the issuance of an executive order to hike the MAV for imported pork products. “Congress goes into recess this month and that would be an opportune time to ask the President to sign an EO. I already mentioned this to him [during the last Cabinet meeting],” he said. “The President will always listen to the recommendation of the secretaries provided that it is a result of proper consultations.” Pork imports within the MAV are slapped with a 30-percent tariff, while those outside the quota are levied 40 percent. Piñol said meat processors would not be allowed to participate in the importation for the additional pork imports. But market vendor associations and farmer organizations may be allowed to participate in the importation of the additional volume to bring down the retail price of meat products. “I will ask my legal team if it is within my powers [to do so]. This is to ensure that the end-users are the market for the additional imports,” he said. “We are now at a critical point because our supply and demand for pork are nearly equal and we are nearing the Ber months when demand is usually high.
Imported ‘galunggong’ Piñol also said he would amend Fisheries Administrative Order (FAO) 195, Series of 1999, to allow the importation of round scad, or galunggong. “I do not want to run afoul of the rates by as much as 50 basis points, this could help stem inflation. Terosa added that there is also a need to reduce taxes on some food imports and monitoring the wholesale and retail distribution channels. “The increase in rice prices is a selfinflicted wound; if we want to bring down rice price soonest, give priority to immediate importation by lifting quantitative restriction. And revamp an incompetent National Food Authority; fire its head. That alone will bring down inflation by half a percentage point or even more,” Sta. Ana added.
Reduced income
Independent research group IBON foundation said on Tuesday the rising inflation rate has already greatly reduced the income of 60 million poor Filipinos nationwide. Based from its estimates using data from the Department of Finance (DOF), IBON said the country’s poorest lost about 12 percent of their monthly income because of the cumulative inflation rate in the first half of 2018 alone. It said this was particularly detrimental to the welfare of the said individuals since they have the lowest monthly earnings in the country. “Households in the poorest first decile with P7,724 monthly income have cumulatively lost P993 due to inflation, those in the second decile [P10,711 monthly income] have lost P1,377 and those in the third decile [P12,835 monthly income] have lost P1,650,” IBON said. Meanwhile, it added households in the fourth decile (P15,132 monthly income) have lost P1,945, those in the fourth decile (P17,309
United Broiler Raisers Association (Ubra) President Elias Jose Inciong slammed the DA’s move to temporarily remove the SSG duty, saying it would be detrimental to the local poultry sector. “Apparently the government needs a scapegoat and that is what we are. Whether the suspension of SSG will tame inflation and result in lower prices is a big question mark, precisely because of the big disconnect between the farm-gate price of broiler and retail prices,” Inciong told the BusinessMirror. “Certainly [lifting the SSG duty] would damage the poultry sector. The immediate impact would be on the farm-gate price. I’m sure [the removal of SSG duty] will not [bring down retail prices],” Inciong added. The Ubra chief also warned that any further moves that would be detrimental to the sector may cause them to stop producing broilers. “But if the government is just starting, then I will advise our members to prepare for a ‘storm.’” “Perhaps, we, especially the small and medium players, should look at the prospects in the medium and long term, if growing chicken is still viable. It is either we go out of business, or seek membership in Mita [Meat Importers and Traders Association],” he added. Mita President Jesus C. Cham told the BusinessMirror that the lifting of the SSG duty on chicken imports would surely entice traders to import more. “The ones without quota could now participate,” Cham said in an interview. Based on his estimates, the landed costofchickenlegquarterswithoutSSG duty is around P90 per kg, which could be sold at P120 per kg at the retail level, according to Cham. “The removal of SSG duty on chicken meat imports would have a bigger impact on retail prices more than the [possible additional] pork imports,” he said. monthly income) lost P2,225, and those in the sixth decile (P21,119) lost P2,715. IBON blamed the peso’s depreciation, rising global oil prices and the newly implemented Tax Reform for Acceleration and Inclusion (TRAIN) law for the spike in inflation this year.
Insufficient wage
Labor groups expressed concern over this trend since their current minimum wages can barely keep up with the surge in the cost of living. As of April 2018, Associated Labor UnionTrade Union Congress of the Philippines (TUCP) Spokesman Alan Tanjusay said the nominal value of the average daily minimum wage of workers nationwide rose to P330.47 after nine regional wage boards adjusted their wage rates. However, Tanjusay said, its real value or the buying power of the minimum wage with the effect of inflation is only P208.38 per day. He said this is significantly lower than the P1,400 prescribed amount of the National Economic and Development Authority for a family of five to live comfortably.
Price control
With no apparent government intervention to raise the income of workers, Federation of Free Workers Vice President Julius Cainglet appealed to authorities to at least regulate the prices of basic goods and services. “As much as we want to, it’s going to be difficult to control prices but now is the time for the Department of Trade and Industry to closely monitor traders against profiteering,” Cainglet said in a statement.
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Editor: Vittorio V. Vitug • Wednesday, August 8, 2018 A3
PNP, AFP: Natl ID system will unmask terrorists, criminals By Rene Acosta @reneacostaBM & Butch Fernandez @butchfBM
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he Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP) welcomed on Tuesday the signing of the national identification system by President Duterte, saying it will help in the campaign against criminals and beef up national security. Military Public Affairs Office chief Col. Noel Detoyato said the new law will unmask criminals and members of lawless groups, thus helping the government identify them, while restricting their movements. “The national ID [system] is a
very important aspect of national security. It removes the insurgents and criminals’ advantage of anonymity,” said Detoyato, noting that it came at a time while the AFP is in the middle of its campaign against the New People’s Army rebels and Moro terrorists. “It will also restrict their movement and will have an effect on their recruitment and extortion activities,” Detoyato added. On the other hand, PNP chief Director General Oscar D. Albayalde said the ID system will allow the police to share its crime record with the different agencies of the government. “With the PhilSys law now in effect, the PNP can look forward
to migrating our own National Crime Information System and the National Police Clearance System to a national database for sharing with other government agencies to optimize the operational potential of the entire national ID system,” Albayalde said. Albayalde said while the National Identification System Act (PhilSys Act) assures access by 106.6 million Filipinos to a wide range of government services and privileges, it would also keep the country at pace with global trends of technology in governance. “An efficient national ID system offers benefits to practical applications in census, taxation, election registration, banking, travel
documentation, social security, social welfare and other transactions with government agencies,” the PNP chief said. “All these government applications stand to benefit more than the quite limited law enforcement and internal security applications due to privacy and basic rights issues associated with gathering of personal information that need to be observed and upheld,” he added. Me a nwh i le, hu m a n- r i g ht s group Karapatan called the ID system as a “wolf in a sheep’s clothing,” as it feared it could lead to a “wholesale rights violations, primarily of the people’s rights to freedom of movement and pri-
vacy, right against surveillance and right to unhampered and nondiscriminatory provision of social services.” “The national ID system will be an underhanded maneuver to screen and monitor people. This law will be very much prone to abuse, considering that our bureaucracy is already littered with militarists and ex-generals who have proven their contempt for people’s rights,” said Kaparatan Secretary-General Cristina Palabay in a news statement. “With billions already funneled to intelligence funds, this law will further fast-track government monitoring and even harassment of its citizens,” she added.
Beneficiaries
The National ID system project, estimated to cost taxpayers P25-billion, is seen to benefit over seven million Filipinos with no birth certificates. Senate President Pro Tempore Ralph G. Recto on Tuesday said "that should be one of the outcomes" of the multibillion-peso project expected to be carried out soon by the Duterte administration. “If there will be a mass list-up and registration, then perhaps we can use this activity to end the plight of those without birth certificates,” Recto said. In a news statement, the Senator suggested that “we should use the national ID platform as an opportunity to solve the quandary of those who do not have birth documents.”
LGU shares from SBMA reach P1.65B in last 8 years briefs By Henry Empeño Correspondent
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UBIC BAY FREEPORT—Revenue shares released by the Subic Bay Metropolitan Authority (SBMA) in the last eight years to neighboring local government units (LGUs) have reached P1.65 billion, reflecting a vibrant business atmosphere here and providing a gauge of how local communities could potentially develop with such a steady source of funds. According to SBMA Chairman and Administrator Wilma T. Eisma, the Subic agency releases the LGU shares twice a year, with funds taken from the 5-percent corporate tax paid by business enterprises registered at the Subic Bay Freeport Zone. Three percent of the corporate taxes are remitted to the national government, while 2 percent are retained by the SBMA for distribution to LGUs affected by the declaration of, and contiguous to the zone. “Since the SBMA began directly releasing the shares to LGUs in 2010, we have paid out a total of P1,649,947,885.13,” said Eisma, who distributed the latest
LGU shares last week. “The cumulative total places the amount of shares that each of the eight LGUs covered by the benefit received in the last eight years at an average of P206 million,” she added. SBMA records indicated that, of the eight LGUs, Olongapo City has received the biggest chunk of shares at a total of P396.79 million in eight years. The municipality of Subic, Zambales, followed at P246.42 million; Dinalupihan, Bataan, at P206.39 million; and San Marcelino, Zambales, at P198.89 million. Meanwhile, Hermosa, Bataan, got P169.29 million; Castillejos, Zambales, P145.03 million; San Antonio, Zambales, P144.06 million; and Morong, Bataan, P143.05 million. Under Republic Act 9400, which amended RA 7227 or the Bases Conversion and Development Act of 1992, business enterprises within the Subic Freeport Zone only pay a 5-percent tax on their gross income earned within the zone. Eisma said the SBMA began directly releasing the shares to LGUs in 2010,
thus cutting the roundabout route of remitting the 5-percent tax to the National Treasury first, then having the Department of Budget Management release the 2-percent share to the LGUs concerned. The latest release gave Olongapo a total of P34,356,210.73; Subic with P22,438,000.32; Dinalupihan with P18,317,950.71; San Marcelino with P17,652,452.62; Hermosa with P15,292,064.02; Castillejos with P13,656,489.21; Morong with P12,776,665.57; and San Antonio with P12,664,679.21. Mayors of the beneficiary communities said the LGU shares are being treated as additional income, thus directly boosting the operations of the local government. “This assistance from the SBMA is a big help for us, especially for the small municipalities like us who often struggle with our budget,” said Castillejos Mayor Jose Angelo Dominguez. “So we have included the LGU shares in our annual budget projections, and these are used for various programs and projects for the community and residents,” he added.
‘no big thing’ about mocha’s federalism video–palace Malacañang said on Tuesday that President Duterte was “very cool” about Presidential Assistant Secretary Mocha Uson’s controversial video featuring a lewd “pepedederalismo” jingle in a bid to promote federalism, invoking the official’s freedom of expression. Although the President saw the video, Presidential Spokesman Harry L. Roque Jr. said the Chief Executive also did not give any instruction in response to the video. “The President was very cool about it. He’s a first and foremost a believer of freedom of expression, and he knows that [Charter change] has to be more serious… it’s not really a big thing,” Roque said. “[Rather] he [Duterte] found it unconventional to get the people’s interest into federalism, and in a way, I guess everyone’s talking about federalism,” the Palace spokesman added. Bernadette D. Nicolas
s.c. issues ‘show cause’ order to same-sex marriage advocates
THE Supreme Court (SC) on Tuesday issued a “show cause” order directing lawyer Jesus Nicardo Falcis III and his cocounsels to explain why they should not be cited in indirect contempt for their failure to file their memoranda in connection with their petition seeking to legalize same-sex marriage. Aside from Falcis, also ordered to explain were lawyers Darwin Angeles, Keisha Trina Guangko and Christopher Ryan Maranan of Molo Sia Dy Tuazon Ty and Coloma Law Offices. At a press briefing, SC Spokesman Theodore Te said the Court gave the lawyers 10 days from notice to submit their explanation on why they failed to comply with its order dated June 26, 2018. Te said the Court also junked the petitioners’ motion for extension to file memorandum for lack of merit. “The Court noted that the grant of additional time to file any pleading is a matter addressed to this Court’s sound discretion and that lawyers should never presume that their motions for extension of time will be granted as a matter of course, or for the length of time sought,” Te announced. Joel R. San Juan
Economy
DTI chief, biz leaders favor input-tariff slash By Elijah Felice E. Rosales @alyasjah
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educing tariffs on inputs will allow exporters to recover in the second semester in the face of spiking inflation, the country’s trade chief and top business leaders assured on Tuesday. In a text message to the BusinessMirror, Trade Secretary Ramon M. Lopez said he is in favor of slashing tariffs on goods needed to manufacture several of the country’s exports. This, after cost of production is seen to become pricey in the days to come, as inflation, or the general increase in commodity prices, ballooned to 5.7 percent in July. “That is why we are trying to bring down tariffs on inputs. [Also], a depreciated currency helps ex-
ports through better peso price,” Lopez said, when asked if exporters can still bounce back from their poor first semester performance. He cited fish feed, wheat and mechanically deboned meat as units he wants to have reduced tariffs. Lopez is pushing for a uniformed duty of 5 percent on these products. Sergio R. Ortiz-Luis, president of the Philippine Exporters Confederation Inc., agreed with Lopez, and added the government needs to reduce nontariff measures, such as bureaucratic procedures in ports, to improve trade facilitation. He said it will be a “big thing” if the Philippine Competition Commission acts fast on the Department of Trade and Industry’s request to review shipment cost, which businessmen have been complaining about for
alleged exorbitant rates imposed on imports and exports. “Well, that is true [tariff reduction on inputs can lead to better export performance], plus the government needs to cut red tape on certain products needed by our exporters,” OrtizLuis told the BusinessMirror in a mix of English and Filipino. For his part, George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry, said the business community is not concerned about the July increase in inflation. Businessmen are apparently of the view that inflation will decrease in the months to come. “I think the inflation, as what [Central Bank] Governor [Nestor A.] Espenilla [Jr.] said, it will taper off, and I think that is a fair statement. It will move down to about
4 percent to 4.5 percent,” Barcelon told the BusinessMirror. In an earlier interview, Senen M. Perlada, director of the DTI’s Export Marketing Bureau, argued inflation could temper exporters’ prospect of rebounding in the holiday season. Exporters are heavily banking on the approaching holidays to bounce them back from their declining performance in the first five months, wherein they were not able to post even a single positive growth. “On the downside, I have also heard feedback that domestic inflation is already eroding whatever competitiveness the Philippine currency depreciation is offering to our exporters. If creeping inflation persists, that again may d ampen second-semester e xports,” Perlada said.
briefs d.e.n.r. heeds oriental mindoro tribesmen’s plea Environment Secretary Roy A. Cimatu on Tuesday vowed to look into the concerns raised by a Mangyan tribe over a hydroelectric power project in Oriental Mindoro. Cimatu said he will he will look into the ongoing construction of a hydropower plant of the Santa Clara International Corp. (SCIC) in Barangay Malvar in the town of Naujan. The Mangyans earlier complained against the use of blasting dynamite by SCIC to construct a tunnel including a passageway to accommodate heavy equipment and large dump trucks transporting supplies to the plant. Jonathan L. Mayuga
3m expected to join b.a.r.-creation plebiscite
The Commission on Elections (Comelec) expects at least 3 million voters to join the upcoming referendum for the creation of the Bangsamoro Autonomous Region (BAR). Comelec Spokesman James Jimenez said this was their initial estimate of plebiscite participants from Mindanao. Under the Bangsamoro Organic Law, the referendum will cover areas, which are part of the now-defunct Autonomous Region of Muslim Mindanao; the City of Cotobato; and City of Isabela in the province of Basilan. Also included in the plebiscite are local government unit’s with a petition to be included in the BAR. Jimenez said they are still awaiting for the effectivity of the BAR 15 days after its publication before they could formally start preparation for the referendum. Samuel P. Medenilla
Senate OKs updated Corporation Code on third and final reading By Butch Fernandez @butchfBM
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he Sen ate on Tuesd ay speedily passed on third reading a proposed law updating the decades-old Corporation Code, an awaited remedial legislation billed to improve the country’s business climate. Fol low ing Senate Bil l (SB) 128 0 ’s u n a n i mou s approva l , Minority Leader Frank lin M. Drilon, its main author, promptly gave credit to the Senate’s bipartisanship “when it comes to needed legislation.” Taking the floor following the plenary approval of the bill, Drilon recalled what Socioeconomic Planning Secretary Ernesto M. Pernia cited as a key policy reform in accelerating the improvement of government process dealing with business.” “ This is precisely what this bill that we just approved today is,” said Drilon, adding: “ This is a tool to improve government process insofar as corporations and incorporating business are concerned today.” He voiced hope that, as soon as SB 1280 is enacted into law, the Duterte administration officials concerned “will exert effort in order to make successful a key reform agenda to improve our investment climate.” Under the proposed law, local business owners will no longer
“This is a tool to improve governmentt process insofar as corporations and incorporating business are concerned today.” —Drilon
need to resort to listing their “entire household” as incorporators to comply with the stringent requirement of the existing corporation law. Once enacted, Drilon said, the remedial legislation updating the Corporation Code is expected to streamline the process to keep in step with the “changing business landscape,” and promote the country as “an attractive investment destination.” In a bid to make the Philippines a more attractive investment destination, the senator said, the updated corporation law was crafted to streamline the process of incorporation to keep in step with changing business landscape. Among others, Drilon added, the updated Cor poration Code wou ld a l low t he “concept of t he one - person cor porat ion, simplif y the name-verification process and grant a per petual life as the default option for cor porations.”
A6 Wednesday, August 8, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
Boosting earnings from the tree of life
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he coconut palm is widely regarded in the Philippines as the tree of life because of its innumerable benefits and uses. The Philippine Coconut Authority (PCA) noted that coconut oil, its main product, supports one-third of the country’s population. The coconut tree also has many other by-products. As 68 of the country’s 81 provinces are classified as coconut areas, millions of Filipinos rely on this tree of life for their livelihood. While coconut oil remains as one of the country’s top dollar earners, the coconut industry is navigating against global headwinds. Export data from the Philippine Statistics Authority for the first five months of the year is discouraging. The latest PSA data showed that the value of coconut products shipped from January to May fell by 33.4 percent to $601.853 million, against last year’s $904.038 million. Dessicated coconut exports were also down by 40.7 percent to $74.978 million, from $126.431 million. Meanwhile, shipments of all agro-based products during the period slid by 26 percent to $1.609 billion, from $2.173 billion, according to PSA data. The dismal performance of the agro-based exports could be attributed to a number of factors, such as the competition posed by producers from other countries. It also did not help that coconut oil—the country’s top farm export—was the object of a black propaganda last year when an American group issued an advisory saying it is “unhealthy.” The group claimed that coconut oil raises low-density lipoprotein cholesterol, which is a big lie, as it is a healthy product, unlike saturated fats found in butter, beef fat and palm oil that raise LDL cholesterol. The black propaganda launched against the country’s top farm export should have challenged the government and the sector to develop and promote other coco-based products. The United Coconut Association of the Philippines noted the rising demand for value-added coconut products like flour and sugar in the international market. The group said that increasing consumer interests in health and wellness, antiaging products and the emergence of green movements are some of the trends fueling the demand for other coco-based products abroad. The proposed Coconut Farmers and Industry Development Act now awaits the signature of the President. Once the trust fund for coconut farmers is set up, the government and the private sector would no longer have an excuse to delay the expansion of the industry, particularly in the development of value-added coconut products. Part of the P105-billion trust fund should be used to promote more value-added coconut products. The PCA, which will get a budget of P10 billion from the national government, must also invest in research and development to help some 3.5 million farmers who rely on the miracle tree for income. These farmers are smallholders who own less than 2 hectares of land. Promoting and encouraging the production of value-added products would ensure that they will have a steady market for their copra. Industry stakeholders hope that the 32nd National Coconut Week, which will kick off on August 14, will help spark the production of high-value products. Proclamation 142, Series of 1987, signed by the late President Corazon C. Aquino, mandated the celebration of National Coconut Week every August. The event, hopefully, will give the public a chance to discover more business opportunities offered by the miracle tree. Since 2005
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The root and solution to human trafficking Teddy Locsin Jr.
Free fire Continued from A1
‘T
oday we recognize the victims of human trafficking whose sufferings are redressed firstly by silence; by doing the victims the favor, if you will, of keeping secret the identities of victims; as much to shield them from shame and harm, as—one suspects—to shield those who prey on them. So much so that brave women and girls have stepped forward to give faces to men’s greatest crime against the most helpless and deserving of their protection. Faces like those of our mothers, our wives and our daughters—and even of our small sons. “That is the favor we do them: to speak in generalities so the particular victims are spared disgrace,” in quotes, because of the nature of the crime they suffered. A crime that, in the course of its repeated perpetration, the perpetrator believes the victim comes to enjoy. Lie back and enjoy it, one diplomat said. If this were not the case, we might put faces on this disgrace to the male gender of the human race; because only women are its victims and never its perpetrators. In some countries and societies, the victims are killed out of a twisted sense of the honor wholly absent in that society. “No wonder a crime so easy to detect, and so much easier to stop and punish than any other, escapes punishment time and again; however large the scale in which it is committed. For as long as power in the world is held mostly by men, and the forces of law and order are staffed and directed by men, for so long will a crime—uniquely male in its commission, and uniquely female in its victimization—not be suppressed. And the reason is: this is a crime that answers to the male basic instinct for sexual violation. “It is no wonder that every spurious root has been attributed to this crime; except the only root that is truly attached to it; the root that draws the nourishment for its perpetration in the male desire to violate and indulge the native cowardice of the gender to pick on the helpless. And so we hear of the social and historical roots of the sex trade, as if it was a phenomenon that just occurs; rather than the repeated and deliberate misdeed of men. “It has been called ‘the world’s oldest profession,’ like it was a job rather than a violation of the most basic human right to physical safety and personal honor. As Ashton Kutcher said here at the UN, if
prostitution is the oldest profession, then why don’t we hear our daughters tell us proudly, ‘Daddy, when I grow up, I want to earn a living lying naked on my back and opening my legs. To which Ivy League college should I go to get it right?’ “Another alleged root is poverty, as though want is enough to make a young girl willing to be sexually abused by dirty old men and dirtier young men; as though women are so easy they will trade for a daily wage that which so deeply involves their personal honor and puts at such deadly risk their physical safety— indeed that which trashes what they keep for the love of their life: the gift of a promise of another life from their loved one. “The logical scientific solution derived from this historic-economic-sociopathic premise is that the only way to combat the sex trade is, holistically, to raise living standards all around so that women and girls will not succumb to letting themselves be traded. This solution will take forever to even get started. Did not Jesus Christ say that the poor shall we always have with us? This solution is an insult to our intelligence. No. SDGs by themselves will not stop human trafficking for sex; there will just be more money for the commodity. “The solution is clear to the cleareyed; and dim to the dimwitted: it is to get the traffickers by any means efficient; because it is easy to track the movement of their bulky cargo to ports and coastlines, and trace the route of their trade to the ports and in first class entertainment centers and seedy red light districts of every city in the world. “And by means permanent so they do not return. As Dostoevsky wrote in Crime and Punishment, ‘As a dog returns to its vomit so a murderer to the scene of his crime.’
The roots of human trafficking for sex are not historical, social, economic, cultural or any other generality: the root is male sexual hunger—as insatiable as it is varied in its taste for victims; who must, however, all share one characteristic: that they be women and girls—which is to say helpless and therefore that much more pleasurable to abuse.
But of course that is unthinkable because of the human rights of the traffickers; rights they do not technically violate when they subject their victims to a life of violence and humiliation. Only states and regular armies and security forces can technically violate human rights but never traffickers who are untouchable on that score. In fact, in failing to achieve the SDGs, it is state actors again who are to blame; and not those who take advantage of the failure of that undertaking. And even if the biggest supply of human trafficking comes from conflicts started and continued by non-state actors as in the Middle East, Africa, East and Southeast Asia. “Imagine if you will that we expanded the categories of culpability for human-rights violations to include non-state actors like syndicates and terrorists who first violate the commodities they trade, as if to test the quality of the goods before passing them off to the customers. Most violations of human rights in most parts of the world are committed by non-state actors today. “Now imagine, if you will, harnessing the power of the state to the suppression of non-state violators of human rights in human trafficking. The ferocity we expect from soldiers and security forces shall be directed exclusively at those who prey on the weak—rather than on the weak as human-rights advocates complain. If you can’t change armies, take them as they are and turn them on the enemies of the human race. That would work. But where would men get their satisfaction? “Here finally would be a jihad and a crusade about whose righteousness all men of goodwill cannot disagree; because we all love our children, we all honor our wives, and venerate our mothers. For their sakes and the sake of their gentle gender, there should be nothing we will not do. “Over 20 million people are trapped in sex trafficking, with over 2 million children traded, misused, and thrown away like used toilet paper. I think these figures are grossly understated. [Ms Rani
Hong, a child trafficking survivor, CEO Rani Voice, puts the figure at 40 million children trafficked. She was abducted at the age of seven in South India; she is married to a 9-year-old trafficking survivor.] “It is the biggest and fastestgrowing industry in the world, outpaced only by the illegal-drug trade. [Thomson Reuters, a data technology concern focused on financial crimes, confirms the lucrativeness of the business. Human trafficking is the third-largest criminal revenue generator—a $150-billion industry, a participant added during Q&A— there are more slaves today than when it was legal, he said. Thomson will coalesce with Rani Voice in the common fight. Human trafficking, among other organized criminal activities, is a deterrent to huge but responsible foreign investments, citing a $100 billion offer pending a cleanup of the government. Thank you to Thomson Reuters who emphasized the other aspect I failed to mention: greed. The cost of doing business is too low for a business so lucrative, he points out. Punishment does not fit the crime is how I would put it. But I would stand by my short-term solution because in the long term more victims will be violated in their bodies, broken in their spirit and ruined in their lives than we should tolerate in the short and long term. My perfunctory and punitive solution would make the cost of doing this business almost unacceptable; at least that is my hope.] “The only difference [between human trafficking and the drug trade] is that the commodity sextraded is each the size of a human being, whereas the commodity in the drug trade can be as small as a sachet and indistinguishable as baby powder. Therefore, the only reason the first is so much harder to prevent, stop, punish and eradicate is that law enforcement mostly turns a blind eye because men want it. For as long as it is men who have most to do with the suppression of this trade, it will not be suppressed. “The roots of human trafficking for sex are not historical, social, economic, cultural or any other generality: the root is male sexual hunger— as insatiable as it is varied in its taste for victims; who must, however, all share one characteristic: that they be women and girls—which is to say helpless and, therefore, that much more pleasurable to abuse. The same craving that nourishes the trade, caters to the other face of this instinct: the cowardice that marks most men. This is why medals of valor are so rarely awarded. Thank you.”
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Wednesday, August 8, 2018 A7
2017 Financial Inclusion Survey Coco techno breakthroughs can reverse copra-colonization Dennis B. Funa
INSURANCE FORUM
Michael Makabenta Alunan
on the contrary
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oconut farmers are among the poorest farmers due to centuries of what I call “copra-colonization,” but they can be liberated through coconut technological breakthroughs if funds from the much-awaited P105-billion coconut-levy trust fund will be used for this purpose.
“Kokonat over coconuts?” For centuries, coconuts were the “tree of life,” but colonial trade transformed the industry into a lopsided extractive system sucking the sap of the local economy as farmers remain poor, producing only copra and earning P10,000 to P20,000 per hectare per year. Coconut farmers are poor because no investments were made to help them increase yields and develop technologies, products and markets. We used to be the world’s No. 1 copra producer, but India and Indonesia have surpassed us. Worse, our yields are down to 46 nuts per tree/year, below India’s 250 nuts, Mexico’s 300 nuts and Brazil’s 400 nuts, said former Agriculture Secretary William Dar. Farmers harvest copra every 45 days and do nothing productive inbetween. We can imagine the magnitude of the problem when multiplied by 3.4 million hectares and 3.5 million farmers (now down to 3 million aging farmers as their kids moved to the concrete jungles of the cities). Unfortunately, investments in replanting and diversification remained meager, which translated to stingy little income (kokonat in Pilipino). The P105-billion coco fund is seen bringing welcome relief, but at P5 billion yearly releases over 21 years, equivalent to P1,470/hectare a year, no massive impact is expected. If done in phases, the last one on the list will wait for two decades. Moreover, funds are mostly invested in T-bills, which may show financial growth, but will not mean boosting job creation. Cracking the “coconut of poverty.” Records obtained from the Philippine Coconut Authority’s Zamboanga Research Center show that a meager investment of P2,400 in micro-nutrients increases net income from P20,000 to P57,600 per hectare/year. Adding a one-time hybrid technology investment of P2,500 increases net income to P125,100 per hectare. This could help us start wiping out poverty. Although 70 percent of coconut trees are now senile, yields can still go up if trees are surrounded by hybrid replantings, fertilized and irrigated. Owing to wide spacing in-between trees, some 2 million hectares are available for massive coconut replanting and intercropping, Dar said. Livestock and poultry can be added. In fact, 10 trees can already provide a year’s supply of coco- milk for a family of seven, thus helping eliminate hunger, said Jun Castillo, who operates the chain of Coco Houses selling scores of coco by-products. His ice cream outlets use coco-nectar, not dairy milk. P3M-P10M income per hectare a year? Castillo said farmers can potentially earn as much as P3 million
to P10 million per hectare, if they are organized and funded properly. For him, traditional copra only brought poverty. The process of making copra is wasteful, as almost 99 percent of coco water is thrown away. This, he said, is more nutritious than fresh (buko) coco water. Coco water can also be boiled to produce “coconot-soy” sauce and coco “patis.” Copra, often dried under the sun and exposed to parasites and carcinogenic aflatoxin, is sold to oil mills and refined and bleached to produce oil. Copra, coco oil and desiccated coconut are also exported and processed abroad for their higher multibillion-dollar value in coco chemicals, pharmaceuticals, cosmetics and confectioneries. The bigger local business is in “sweet coconut nectar” from the sap of flowering coconut seeds, similar to how tuba (coconut wine) is harvested, while still allowing nuts to mature. Two liters of nectar can be produced per tree a day. At farm-gate prices of P25 per 350 ml of nectar, or P75/liter, a farmer producing 1 liter per tree at 100 trees/hectare can earn P7,500/day or P225,000/month or P2.7 million a year. And that’s from raw nectar alone, which is retailed at P50 to P60 per 350 ml, although highend markets can pay more. Some raw nectar are processed into coco “honey” or coco sugar. Healthy coco sugar, priced at P200/kilo at farm gate, is produced by boiling and evaporating 85 percent of water, leaving behind 15-percent sugar. There are numerous other products like Virgin Coconut Oil and nondairy coco cream from nectar. Go loco with “coco beauty?” Dr. Jay La Madrid, for one, made techno-breakthroughs and is developing health and beauty products like soap, lotion, shampoo and balms that are rich in coco plant stem cells and protein extracts, which are effective in curing skin diseases like psoriasis, eczema, acne, pimples, ringworm, fungal infections, burns, small cuts and wounds. After a sophisticated process, the coconut proteins and plant stem cells can balance body and skin pH levels, thus enhancing the natural healing process. They help regenerate cells that need repair, thus delaying the aging process. Helping Dr. La Madrid develop the market for his products are friends Convince Navales and Richie CunetaMarquez, who believe the well-scented and high-heeled crowd can go loco over coco for beauty. Whatever products are developed, we need to get our act together over coco, otherwise the industry again will go loco.
E-mail: mikealunan@yahoo.com
T
he 2017 Financial Inclusion Survey is a national survey conducted by the Bangko Sentral ng Pilipinas (BSP) every two years to collect financial inclusion data. It is now on its second run with the baseline conducted in 2015. Its general objective is to measure financial inclusion in the Philippines. Data is collected through faceto-face interviews of 1,200 adults (defined as 15 years old and above) across the country. The questionnaire used was formulated by the BSP Inclusive Finance Advocacy Office and approved by the Philippine Statistics Authority. IFAO also serves as the secretariat of the inter-agency Financial Inclusion Steering Committee, of which the Insurance Commission is a member. The 2017 survey was conducted by Nielsen Philippines, a leading market research company in the country. This latest survey was conducted from December 2017 to February 2018. The full survey report may be downloaded from BSP’s web site. Demographics would show that, out of a population of 101 million Filipinos, 68.6 million are adults. In terms of marital status, 64 percent are married, 29 percent are single, 1 percent are separated and 5 percent are widowed or widower. In terms of employment figures, a surprising 54 percent are nonworking, while only 46 percent are working. In terms of socioeconomic class, ABC1
FACT IS MIGHT!
I
magine the billions of pesos gambling lords were pocketing monthly from illegal numbers games such as jueteng, which practically robs the government of millions of taxes that could be used to fund health programs, including free medical services for the poor. With the aggressive expansion of the Small Town Lottery (STL) in jueteng-infested provinces, specifi-
cally in Luzon, the STL has managed to expose the multibillion-racket numbers game, including masiao
Insurance ownership survey
When asked if a respondent personally owns insurance, 18 percent of the adult respondents or a mere 12.3 million of our adults answered positively. Conversely, it means that 82 percent of the adult population do not have insurance. Actual data and statistics, though, from the Insurance Commission would show a higher number in terms of insurance ownership. In terms of socioeconomic class, age, educational attainment and marital status, insurance acquisition is higher for the ABC class, aged 30 to 39, college graduates, married and working adults. This would seem to be the market for life insurance. Note that the same survey shows that a mere 3 percent of adults invest in stocks, bonds, Unit Investment Trust Funds mutual funds and other managed investment schemes. The 2014 Consumer Finance Survey shows that only 0.4 percent of households have investments (mutual funds, UITFs, stocks, bonds or any other type of managed
and high school (17 percent).
Low insurance awareness
AS for the types of insurance products purchased, life insurance is the most acquired at 38 percent. This is followed by health insurance (which includes health-maintenance organizations) at 30 percent, and microinsurance at 26 percent. For the nonlife sector, accident insurance is the most purchased at 13 percent. This is followed by the motor-vehicle insurance at 8 percent. Clearly, life and health protection are in the minds of the insuring public. Motor-vehicle insurance has been included perhaps because of its compulsory nature.
Financial awareness seems to be a key area of concern. There is a very low awareness for insurance agents (13 percent), as compared to awareness of banks (70 percent), automated teller machines (61 percent) and pawnshops (52 percent). Similarly, in terms of access points, Filipinos are more aware of remittance (52 percent), payments (51 percent) and cash in/cash out (46 percent) services. They are least aware of more sophisticated products, such as insurance (22 percent), foreign exchange (17 percent), investments (13 percent) and loading of e-wallets (13 percent). Interestingly, of the 6 percent that encountered problems transacting with access points, 95 percent did not contact the regulator for the reason that they did not know that the regulator can be contacted (40 percent). In terms of socioeconomic class, ABC class owns the most insurance at 39 percent, followed by D class at 19 percent and only 12 percent for E class. In terms of age, insurance acquisition seems to start at age 30 with 29 percent of insurance being bought by those aged 30 to 39. Insurance ownership seems to taper off at age 40 to 49 with 22 percent, and age 50 to 59 with another 22 percent. Insurance was also acquired more by those who had gotten married at 23 percent (including those separated at 24 percent), as opposed to those single at a mere 7 percent. As for educational attainment, those that completed college degrees own the most insurance protection at 43 percent than those that merely completed elementary (14 percent)
Awareness of insurance products
Barriers to insurance
Based on the survey, an astounding 82 percent of the adult population or 56.3 million Filipinos do not have insurance. A significant barrier seems to be financial with 66 percent of our adults saying that they simply do not have the money to buy insurance. A second and third barrier seems to be the lack of understanding of insurance, with 30 percent saying that they do not need insurance, and 23 percent saying that insurance is expensive. Others say that insurance provides a slow return (5 percent), and 4 percent say that they do not trust the providers, while 3 percent cited unemployment. A significant exposure of Filipinos to investment is through the Social Security System (80 percent), Pag-IBIG fund (30 percent) and Government Service Insurance System (5 percent). Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.
How to make the global economy work for all By Lawrence H. Summers Bloomberg Opinion
S
ince the end of World War II, a broad consensus in support of global economic integration as a force for peace and prosperity has been a pillar of the international order. Since the fall of the Berlin Wall a generation ago, the power of markets in promoting economic progress has been universally recognized. From global trade agreements to the European Union project; from the Bretton Woods institutions to the removal of pervasive capital controls; from expanded foreign direct investment to increased flows of peoples across borders, the direction has been clear. Driven by domestic economic progress, by integrative technologies such as container shipping and the Internet, and by legislative changes within and between nations, the world has grown smaller and more closely connected. This has proved more successful than could reasonably have been hoped. We have not seen a war between leading powers. Global living standards have risen faster than at any point in history. And material progress has coincided with even more rapid progress in combating hunger, empowering women, promoting literacy and extending life. Every single day since 1990 there were an average of 108,000
STL exposes multibillion jueteng racket Florante S. Solmerin
comprise a mere 2 percent, C2 6 percent, D 55 percent and E 37 percent.
investment account aside from pension or insurance plan).
and swertres in the Visayas and Mindanao, and other forms of illegal numbers game. STL is currently being operated by authorized agent corporations (AACs) and some of the players were former illegal numbers game financiers who opted to go legal because they heeded the call of President Duterte to contribute to national development. These gambling financiers are now remitting taxes to the government and providing funds for the administration’s various health programs. Ultimately, this benefits many poor people, especially the indigents who can’t afford any form of medical services. Data from the Philippine Charity
fewer people in extreme poverty. Since the beginning of the 21st century, global life expectancy has increased by more than four months a year. A world that will have more smartphones than adults within a few years is a world in which more is possible for more people than ever before. Yet a backlash against the current paradigm of global integration is reshaping politics and economic policy in a way that may plague us for years. The momentum toward global economic integration was stopped when the US repudiated the Trans-Pacific Partnership. As I write this, worries of a trade war between the US, China and other countries have materialized, leaving a wide range of industries and countries anticipating substantial losses. History with respect to the result of such trade wars—most notably the Smoot-Hawley Tariff Act—is not encouraging. The International Monetary Fund estimates that rising trade tensions between the US and the rest of the world could cost the global economy 0.5 percent of gross domestic product, or $430 billion, by 2020. The shift away from openness extends to immigration and capital flows, as well. The EU, notable for its commitment to the free movement of people, is shifting toward much tougher immigration policies. New immigration policies in the US have turned police officers into immigration-enforcement
agents and hurt business growth. Restrictions on foreign investment have been increasingly common as the US has taken to blocking Chinese investments, China has set unfair terms for US companies wishing to invest there, and Europe has increasingly favored domestic companies over foreign competitors. The backlash against global integration has many sources. Some of it reflects broader economic frustrations associated with slower growth and rising inequality. Some reflects the difficulties of maintaining harmony within multiethnic societies. Surely the speed and scale of China’s ascent has contributed. But what is most important is the growing suspicion on the part of electorates that globalization is an elite project that primarily benefits elites. Somehow branches for financial institutions in foreign countries seem to be a higher priority than protections for displaced workers. And protection of the intellectual property of global corporations is a more focal concern than preventing unfair competition from foreign companies that escape regulation. This must change if global integration is to maintain its political foundation in the world’s rich countries. Political leaders must connect global integration with tangible benefits for middle-class citizens, must show
that international cooperation helps to prevent exploitation of ordinary citizens by elites, and must assure that adequate social protections are in place so that those who must adjust to economic change are protected. In The Economic Consequences of the Peace, written after World War I, John Maynard Keynes asserted the primacy of economics, observing that “the perils of the future lie not in frontiers and sovereignties but in food, coal and transport.” His call for strong policies directed at promoting mutual prosperity and cooperation went unheeded, with catastrophic consequences. The understanding of this grim experience after World War II set the stage for the best 70 years mankind has enjoyed. Will the US and the global community turn away from the paradigm of global integration that has worked so well and back to the narrow nationalism that Keynes so powerfully and rightfully decried? Or will they find ways of promoting global integration that benefit all citizens everywhere? These might include major cooperative efforts to prevent global corporations from avoiding taxes, crackdowns on regulatory arbitrage, and stronger domestic programs to cushion the impact of structural changes on individual workers. These are the questions that may determine the history of the 21st century.
Sweepstakes Office (PCSO) shows that STL accounted for P12.3 billion of the P30.7-billion PCSO revenues for the first semester of 2018. STL is now contributing to the government more than P2 billion a month. Indeed, this is a record achievement for PCSO all because of good and transparent leadership. Under the current PCSO leadership, STL grew into what it is today, from 13 AACs in 2006 to 18 before Duterte became President in 2016. Now we have 79 AACs with a work force of more than 311,000 cobradores (collectors), cabos (sales agents) and resibisadores (sales supervisors). These employees are legitimate because STL is legal. For them, no more
“hide and seek” game with law enforcers; they are now earning honest money to feed their family. The money earned from STL is a big boost to PCSO’s Charity Fund that provides payment for hospital bills of thousands of patients every day; patients undergoing chemotherapy and radiation; people who need dialysis; those in need of implants and transplant operations, among others. PCSO General Manager Alexander “Mandirigma” Balutan is right—STL is a jueteng killer. But eliminating jueteng and all other forms of illegal numbers game can’t be done overnight. It is a painstaking crusade. But while he is waging
a serious battle against gambling lords and their protectors, he has to continue his war against corruption inside the agency. Keep up the good work Mandirigma! Again I will say this, the national leadership, local government units and all law-enforcement agencies, especially the Philippine National Police must support and protect STL and help eradicate jueteng, masiao, swertres and all forms of illegal numbers games in their areas of jurisdiction. If everybody seriously takes the fight against illegal activities, gambling lords will ultimately capitulate. E-mail: fetad@yahoo.com.
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House panel endorses ‘Trabaho’ tax package
T
By Jovee Marie N. dela Cruz
@joveemarie
HE House Committee on Ways and Means on Tuesday endorsed for plenary approval the second package of the Duterte administration’s Comprehensive Tax Reform Program, which is now called “Tax Reform for Attracting Better and High Quality Opportunities” or “Trabaho.”
This after members of the committee, chaired by Rep. Dakila Carlo E. Cua of Quirino, approved House Bill 7982, or the proposed Corporate Income Tax and Incentives Reform Act, which consolidates the various proposals filed in the House to modernize the incentives regime and reduce corporate income taxes. “Generating better opportunities
for Filipinos has always been our primary objective in this exercise. We are moving to an incentives regime that is biased to development outside of Metro or urban areas. We are also lowering the burden on businesses so that they can expand and provide more employment opportunities,” said Cua. He clarified: “Not that we [are]
depriving Metro Manila...but it already has investments.” According to Cua, the bill has several features for jobs creation. “It gives new investments outside urban areas an additional two years of incentives. At the same time, it gradually lowers the corporate income-tax rate to 20 percent by 2029,” he said. During the hearing of the ways and means committee, Finance Undersecretary Karl Kendrick T. Chua said lowering the corporate income tax would cost the government some P60 billion to P62 billion per percentage of reduction. From the current 30 percent, the bill said the rate of corporate income tax shall now be: ■ 28 percent beginning January 1, 2021; ■ 26 percent beginning January 1, 2023; ■ 24 percent beginning January 1, 2025; ■ 22 percent beginning January 1, 2027; and ■ 2 0 p e r c e n t b e g i n n i n g
January 1, 2029. The measure, however, provided that the President may advance the scheduled reduction in the corporate income tax when adequate savings are realized from the rationalization of fiscal incentives, as certified by the secretary of finance.
Incentives
The bill is in line with the President’s priority of reviewing and modernizing the current incentives regime. At the same time, the bill proposes ways to ease the impact of moving to a new regime. For the first two years, the bill retains the current set of incentives. This gives investors enough time to study the new regime and apply for new incentives appropriate to their respective activities. “It sends a signal that the government, by way of this current version of the bill, is not driving away investments. In the bill there is a transition period. We understand the clamor for a longer transition period, but given the facts that we
will allow the reapplication of incentives—the investors, as long as they want to expand their business...can continue to enjoy their incentives longer than the transition period, particularly those who are really performing and creating jobs,” Cua said. The bill said the measure shall cover all existing investment promotion agencies, and such IPAs shall maintain their functions and powers as provided under the special laws governing them, except to the extent modified by the provisions of the revenue code. According to the measure, registered projects or activities under the Strategic Investment Priority Plan (SIPP), which will be formulated by the Board of Investments, shall be qualified for any of the following incentives: ■ Income-tax holiday (ITH), which shall be granted for a period not exceeding three years; provided that after the expiration of the ITH, the following incentives may be applied for a period
not exceeding five years: ■ Reduced corporate income tax, with a reduced tax rate of 18 percent of taxable income. ■ Depreciation allowance of the assets acquired for the entity’s production of goods and services: 10 percent for buildings and 20 percent for machineries. ■ Up to 50 percent additional deduction on the increment of direct labor expense. ■ Up to 10 0 p e rce nt ad ditional deduction on research and development. ■ Up to 100 percent additional deduction on trainings incurred. Provided that it is given to the employees enganged directly in the entity’s production of good and services. ■ Up to 100 percent deduction on infrastructure development. ■ Deduction up to 50 percent for reinvestment allowance to manufacturing industry. ■ Enhanced net operation loss carry-over during the first three years from the start of commercial operations.
Average electricity price in PHL 2nd highest in Asia–think tank
By Lenie Lectura
T
@llectura
HE country’s average electricity price for residential customers is second highest in Asia as of January this year, according to a Perth-based consulting firm that specializes in providing power market advisory services in the Asia-Pacific region. Meanwhile, Meralco announced on Tuesday that power rates for August slightly went up by P0.0265 per kWh to P10.2190 per kWh as generation charge inched up during the July supply month. Based on data presented by
International Energ y Consultants Managing Director and lead consultant Dr. John Morris, the top 5 countries with the highest power rates surveyed in Asia are Japan (P12.31 per kWh); Philippines (P8.96 per kWh); Singapore (P8.83 per kWh; Hong Kong (P6.53 per kWh); and Thailand (P6.23 per kWh). “The price you pay is generally the second highest in Asia,” said Morris during a news conference held with Meralco (Manila Electric Co.) officials in Pasig City. Morris and Meralco officials pointed out, however, that other
countries included in the survey received subsidies from their governments. Electricity rates in the Philippines are not subsidized by the government. Morris said government subsidies continued to make power rates artificially low in markets like Thailand, Indonesia, Malaysia, Korea and Taiwan. In these five countries about 41 percent of their tariffs are subsidized at around $800 billion. These subsidies are in the form of cash grants, subsidized fuel or deferred expenditure. “Electricity tariff in Luzon will
further go down should investment in new power generation be made to meet rapid demand growth, and competition at retail level is promoted such that wholesale electricity cost reductions are fully passed on to customers,” Morris noted.
Slight uptick
Meralco said on Tuesday that the slight increase in overall electricity rates this month will result in an upward adjustment of around P5 in the power bills of a typical household consuming 200 kWh. Generation charge, which makes up bulk of the bill, increased to P5.3491 per kWh from P5.2651 per kWh. The increase is the result of an P0.6554-per-kWh rise in the cost of power from power-supply agreements (PSAs) due to lower aver-
NayonLanding. . . “NayonLanding is expected to employ approximately 10,000 job opportunities, of which at least 95 percent shall be local. It will attract an additional 2 million to 3 million international visitors to the Philippines when the resort is opened in 2022,” Zhihui said. According to Landing Philippines, the hotel, resort and casino will be in full swing by February 2022. The infrastructure will tower on a 95,700square-meter (sq-m) land in Parañaque City, and has a planned floor area of about 610,000 sq m. “We will continue to work closely with local enterprises when the resort is opened to drive employment opportunities and development of the country,” Zhihui added. The integrated resort will house an indoor cultural park and water park, as well as Asia’s first and largest themed movie theater. It will also offer at least 1,500 luxury rooms, a convention center with a 4,000-seater grand ballroom for large-scale events and conferences, a retail mall and a casino to be managed by an international gaming firm. NayonLanding is expected to boost Landing’s presence in Asia, after Jeju Shinhwa World, its integrated resort in South Korea, opened in March. The firm will leverage on the growing brand equity in Jeju Shinhwa World to entice more tourists in the region to swing by the Philippines.
Mass firing
As the groundbreaking was taking place, Presidential Spokesman Harry L. Roque Jr. said the President has fired all the board members and officials of Nayong Pilipino. In a news briefing, he claimed Duterte was angered over a lease contract Nayong Pilipino granted to a foreign firm that was “grossly disadvantageous” to the government. Removed Nayong Pilipino Chairman Patricia M. Ocampo was present at the groundbreaking, and still delivered a speech praising Landing for carrying out the project. “I have never met, in my whole life, an investor to our country that, in the entirety of this whole project and investment,
age plant dispatch and higher fuel prices. The share of PSA purchases to Meralco’s total requirement this month was 43 percent. Mea nwh i le, c h a rges f rom the Wholesale Electricity Spot Market (WESM) decreased by P1.1021 per kWh with the absence of yellow alerts in the Luzon grid this month. Despite higher Malampaya natural gas prices as a result of the quarterly repricing to reflect recent movement of crude oil prices in the world market, the cost of power from independent power producers (IPPs) decreased by P0.1690 per kWh due to an improvement in average plant dispatch. Power plants using Malampaya natural gas provided 58 percent of Meralco’s supply. The shares of WESM and IPPs purchases to Meralco’s total requirement this month were 12 per-
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decided to promote our country,” Ocampo said, referring to the Hong Kong-based firm. In a statement, Landing declared it will still push through with the construction of the integrated resort project, and said its lease contract with Nayong Pilipino is “valid and effective.” “From the group’s viewpoint, the recent decision of the Philippine government to replace members of the Nayong Pilipino board of trustees did not affect the validity of the subject contract of lease. “Landing clarifies that the term of lease executed between Nayong Pilipino and Landing Philippines provided for in its executed contract of lease with Nayong Pilipino is for a period of 25 years only commencing from the date of execution of the contract of lease. “Unless the lease contract is cancelled or nullified on legal grounds by the courts, Landing has [a] reason to believe it is a valid leaseholder and can legally proceed with its project. “Subject to and upon approval of Landing Philippines’s application with the Tourism Infrastructure and Enterprise Zone Authority, the term of lease shall be for a period of 50 years as provided for and specifically allowed by Republic Act 9593, otherwise known as the Tourism Act of 2009, as an incentive to encourage foreign investments in the Philippines,” the firm said.
‘No graft’
In a separate statement, Ocampo said she will adhere to the President’s decision to replace her, as well as her subordinates, but denied the board is engaged in illegal activities, especially in securing the $1.5-billion NayonLanding project. “In behalf of the board of trustees of Nayong Pilipino, I would like to thank the President for having been given the opportunity to serve the Filipino people. It is regrettable that it has come to this, but we understand that we serve at the pleasure of the President,” Ocampo said.
cent and 45 percent, respectively. Transmission charge of residential customers decreased by P0.0803 per kWh due to lower National Grid Corp. of the Philippines (NGCP) Ancillary Service charges. Meanwhile, taxes and other charges went up by P0.0228 per kWh this month. Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 37 months, after these registered reductions in July 2015. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP. Taxes and other public policy charges like the FIT-All rate are remitted to the government. “I strongly deny accusations that there was graft and corruption. On the contrary, the lease contract with Landing is above-board, and is highly advantageous to the government and to the Filipino people,” she added. Ocampo also claimed the lease contract with Landing Philippines is for 25 years from the date of its execution, and not 70 years as first alleged by Roque. Monthly rentals were pegged at P360 per sq m, and the advance rental amount was at P827.05 million, she added. Apart from this, the sacked official said Nayong Pilipino will receive an additional monthly rental equivalent to 10 percent of net profits from NayonLanding after taxes exclusive of the valueadded tax. “We negotiated what we believed then, and believe now, are most advantageous terms and conditions for the government and the people,” she argued.
‘Ridiculous’
President Duterte fired the members of the board and management of Nayong Pilipino over a lease contract which he said was “flawed” and “grossly disadvantageous” to the government. Roque said the President voiced out this sentiment during the Cabinet on Monday. Roque also said Duterte started the meeting by saying that corruption continues even in his administration. “He cited the case of Nayong Pilipino, which leased government property for a ridiculous long period of time of 70 years, beyond the lifetime of anyone; and he considered this as a contract which was grossly disadvantageous to the government,” Roque said. “The papers that will formally terminate the entire management and the entire Board of Directors of Nayong Pilipino will be issued in due course by the executive secretary,” he added. Roque also said in a statement that the President has instructed a review of the lease contract entered into by Nayong Pilipino Foundation Inc. with Landing Resorts Philippines Development Corp. Roque said the lease contract was flawed since it was entered into “without public bidding and was disadvantageous to the government.”