Businessmirror August 09, 2018

ECON MANAGERS PITCH 5%TARIFF ON 4 items

By Bernadette D. Nicolas @BNicolasBM

T

HE economic managers have formally recommended to the President the reduction to 5 percent of the tariffs on fish, corn and meat, particularly chicken, and wheat imports, Budget Secretary Benjamin E. Diokno said on Wednesday.

Diokno said, however, what they proposed was a “uniform” reduction to 5 percent of tariffs on these food items, not zero, noting that the

A man tends to his meat stall inside the Balintawak Market, amid conflicting reports on whether meat imports will be included in a tariff-reduction plan as part of short-term measures to curb inflation.

BEVERLY DE LA CRUZ

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

tariff reduction can be done through an executive order by the President when Congress is not in session.

“The President can change the tariff if Congress is not in session so, if [they] want to do it, it has to be in coordination with Congress.

They have to declare a recess and, while they are in recess, the President can change it. We are moving toward that direction,” Diokno said.

Since Congress is in recess from August 16 to 27, Diokno told the BusinessMirror that “it is an opportunity for us to cut tariffs.”

He also said the President will “most likely” adopt their recommendation.

As for the specific food items that will be affected by the proposed tariff reduction, Diokno said the economic managers are still studying it. He also did not say directly if they recom-

mended a specific period for the imposition of tariff reduction, but added it could be for a couple of months or it could be “permanent.”

Fish imports in the country are levied a duty of 3 percent to 10 percent. A 35-percent tariff is slapped on corn imports within the minimum access volume, while those outside the quota are levied with 50-percent duty.

Both feed-wheat imports and wheat-flour imports are subject to a 7-percent duty, according to a Global Agricultural Information Network (Gain) report.

The Gain report noted that feed-wheat imports are exempted from the 12-percent valueadded tax (VAT). Milling and feed-wheat imports from signatories to the Asean-Australia-New Zealand free-trade agreement are duty-free.

See “Tariff,” A8

BusinessMirror

www.businessmirror.com.ph

A broader look at today’s business n

Thursday, August 9, 2018 Vol. 13 No. 299

Samurai bonds sale draws $1.39B for PHL

T

HE Philippine government successfully issued samurai bonds amounting to ¥154.2 billion ($1.39 billion) on Wednesday, with the offer being well received by both onshore and offshore investors.

“This successful return to the samurai bond market is the latest proof of the deepening investor confidence in the Philippine economy under the Duterte presidency,” said Finance Secretary Carlos G. Dominguez III.

The issuance marks the return of the Republic of the Philippines to the samurai market after an eight-year break, and the first time in almost 20 years that it has issued samurai bonds on a stand-alone basis.

The settlement of the samurai bond is on August 15, 2018.

The Philippines earlier targeted issuing $1 billion in the samurai market. In June the Philippines made a presentation on the domestic economy at the annual

“The strong response to this samurai float, following a similarly successful offering of panda bonds in China, underscores the international business community’s increasing interest in investing in the Philippine growth story.”—Dominguez.

Philippine Economic Briefing in Tokyo, Japan, with around 500 investors in attendance. According to the Department of Finance (DOF), the issued samurai bonds bore three-, five- and 10-year tenors. The issue size for the three-year tenor was at ¥107.2 billion; for the five-year tenor bucket, ¥6.2 billion; and for the 10year bond, ¥40.8 billion.

Continued on A2

Biggest rate hike in a decade on the cards for Philippines

business news source of the year

P25.00 nationwide | 6 sections 40 pages | 7 days a week

From CSR codes of conduct to binding rules on corporate behavior Rene E. Ofreneo

laborem exercens

U

nder globalization, big corporations operating across borders have lost their soul. Trade unions complain that transnational corporations are engaged in a global race to the bottom, a race characterized by the search for the cheapest malleable and nonunionized labor, which often leads to a squeeze on wages and suppression of workers’ rights. Civil-society organizations (CSOs) complain that the race means exploitation of the land and natural resources of a host country without regard to the environment and the disruptive and dislocating impact of TNC operation to the host community. This is a common lament of indigenous people affected by large-scale open-pit mining operations.

Continued on A7

T

HE question facing policymakers in the Philippines is not whether to raise interest rates for a third time in a row, but by how much.

A booming economy, surging inflation and pressure on the currency are setting the stage for a 50-basis-point increase in the benchmark rate to 4 percent on Thursday, according to most of the 17 economists surveyed by Bloomberg.

That would be the biggest hike since 2008 and follows a similar move by Indonesia as central banks in emerging markets take more aggressive steps to curb the fallout from rising US rates and a stronger dollar.

Continued on A2

2016 ejap journalism awards

Crop output pulled down Q2 farm performance

T People on their way to work pass by the Bangko Sentral ng Pilipinas building in Pasay City in this December 2017 file photo. NONIE REYES

PESO exchange rates n US 52.9220

HE lackluster performance of the crops subsector slowed the expansion of the country’s farm output in the second quarter to a paltry 0.07 percent, according to data from the Philippine Statistics Authority (PSA).

In its quarterly agriculture performance report, the PSA said agriculture output in the April-toJune period was slower than the 6.22-percent growth recorded in the same period of 2017. “[It is an] anemic turnout. [Farm growth was] pulled down mainly

by crops,” economist Rolando T. Dy told the BusinessMirror via e-mail when asked about his assessment of the country’s latest agriculture performance.

Dy, who is the executive director of the University of Asia and the Pacific’s Center for Food and Agri Business, noted that, out of the 21 components of the crops subsector, at least 13 crops posted declines in output. “[The agriculture performance in the second quarter was] not

n japan 0.4752 n UK 68.4917 n HK 6.7423 n CHINA 7.7510 n singapore 38.7934 n australia 39.2681 n EU 61.3948 n SAUDI arabia 14.1122

Continued on A2

Source: BSP (8 August 2018 )

News

BusinessMirror

A2 Thursday, August 9, 2018

www.businessmirror.com.ph

Govt forces slay two bomb couriers in North Cotabato

K

IDAPAWAN CITY—Police and Army forces shot dead two bomb couriers suspected of planning to carry out a bombing mission in the town of M’lang, North Cotabato province, before dawn on Wednesday.

A team of local policemen and personnel of the Army’s 7th Infantry Battalion manning a checkpoint in Barangay Sangat, M’lang, flagged down at about 3 a.m. three men on board a motorbike for a routine inspection, North Cotabato police spokesman, Supt.

Bernard Tayong, said.

However, authorities said the three men refused to stop and, instead, sped off past the checkpoint, prompting a pursuit that ended in a shootout that killed two of them.

“The one driving the motorbike managed to escape,” Tayong said.

It took more than an hour for lawmen to get closer to the slain suspects, as they were carrying a black sling bag that was later found to contain an improvised bomb.

Tayong noted that the bomb was incomplete, as it has no triggering mechanism, saying he believed the bombers were to put the triggering device once they leave the bomb in the t arget area.

Crime scene investigators identified the slain men through personal documents found in their wallets as Patrick Ali Saligan,

30, of Buluan, Maguindanao, and Nholds Saibo Ali, 29, of Datu Paglas, also from Maguindanao.

In a radio interview, M’lang Vice Mayor Lito Piñol said authorities were double-checking the identification documents recovered from the slain suspects.

“I would like to commend our police and the military for their vigilance,” Tayong said referring to authorities manning the Sangat checkpoint.

Capt. Arvin Encinas, spokesman of the Army’s 6th Infantry Division, said the suspects were killed by members of the 7th Infantry Battalion and M’lang Municipal Police Station.

“The bomb couriers are believed to be members of Bangsamoro Islamic Freedom Fighters, who are trying to plot a bomb terror attack in the province of North Cotabato,” Encinas quoted 6th Infantry Division commander Brig.

Cirilito Sobejana as saying.

The discovery of the improv ised e x plosive dev ice (IED) i n Ba ra ngay Sa ngat wa s t he fourth bombing attempt in North

Cotabato, three of which were i n M ’ l a ng a nd t he ot her i n Kidapawan City.

On Sunday an IED was found at 1 p.m. at the roadside in Barangay Poblacion, M’lang, which was later deactivated by police and military bomb experts.

An IED was also found on Monday morning in front of a variety store in Barangay Bagontapay, also in M’lang, by residents who said that two men on a motorbike left the black bag and hurriedly left.

In Kidapawan City, workers of the Gaisano Grand Mall found two grenades at the mall’s main entrance-exit door at about 7 p.m. on Monday. Bomb experts safely recovered the explosives.

Supt. Ramel Hojilla, acting Kidapawan City police director, linked the discovery of explosives at the mall to a conflict involving two agencies providing security services for the mall.

“There appears to be a misunderstanding between the two groups over who should take the lead role in securing the mall,” Hojilla said. Rene Acosta with PNA

Samurai bonds sale draws $1.39B for PHL Continued from A1

The issuance also marked a coupon rate of 0.38 percent for the three-year tenor, 0.54 percent for the five-year IOU and 0.99 percent for the 10-year tenor bucket, which posted a 25-basis-point, 35-basispoint and 60-basis-point increase, in terms of pricing compared to benchmark rates, respectively.

The Philippine delegation of presenters who wooed Japanese investors in Tokyo earlier included the secretary of finance, Socioeconomic Planning Secretary Ernesto M. Pernia, Budget Secretary Benjamin E. Diokno, Transportation Secretary Arthur P. Tugade, Public Works Secretary Mark A. Villar, Bangko Sentral ng Pilipinas

Governor Nestor A. Espenilla Jr., Bases Conversion and Development Authority President Vivencio B. Dizon, and Philippine privatesector leaders.

“And the strong response to this Samurai float, following a similarly successful offering of panda bonds in China, underscores the international business community’s increasing interest in investing in the Philippine growth story,” Dominguez said.

The Philippines in March had issued $230 million in yuan-denominated Panda bonds; and in January, its global bond issuance drew $750 million.

The issuances are part of the country’s financing strategy for 2018, especia l ly the massive

infrastructure program.

The DOF explained that Japanese investors were excited to hear about the Duterte administration’s ambitious “Build, Build, Build” program, which is envisioned to modernize domestic infrastructure to sharpen the country’s global competitiveness and attract more investments.

Philippine officials led by National Treasurer Rosalia V. de Leon also conducted a series of one-onone meetings with major fixed income investors.

“This year has been a trailblazing year for the Republic in the international capital markets. In March we issued our debut panda bond to tremendous investor endorsement. And with today’s

Biggest rate hike in a decade on the cards for Philippines Continued from A1

“With rising inflation and inflation expectations, the Central Bank will likely implement a more aggressive rate increase,” said Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore, who penciled in a half-point increase. “We also expect that they will leave the door open for more rate hikes.”

Facing criticism that the Central Bank was too slow to act, Governor Nestor A. Espenilla Jr. has been preparing the markets for more decisive action, saying he’ll take “strong” steps to rein in inflation after it climbed above 5 percent.

With data on Thursday set to show the economy sustained growth of more than 6 percent in the second quarter, a rate hike is all but sealed.

Despite the recent rate increases, the economy is expected to remain strong, supported by the government’s massive infrastructure program and robust consumer spending.

“There won’t be any significant spillovers to the growth cycle,” said Rahul Bajoria, a senior economist at Barclays Plc. in Singapore, who forecast a halfpoint hike this week.

The economy expanded a revised 6.6 percent in the first quarter from a year earlier, the statistics agency said on Wednesday.

Regional tightening

Other Central Banks in Asia are also tightening monetary policy. Indonesia has raised its benchmark rate by 1 per-

centage point since May, while India increased its policy rate a second time this year in August.

In the Philippines higher global oil costs, an increase in levies on fuel, sugary drinks and cigarettes and record rice prices boosted inflation to a five-year high of 5.7 percent in July.

Inflation is set to breach the central bank’s 2 percent-to-4 percent target band in 2018, with the peso’s more than 5-percent slump against the dollar this year adding to concerns. The peso was little changed at 53.02 per dollar on Wednesday, while the benchmark stock index gained 1 percent.

The Philippines is the only Southeast Asian economy to have negative real interest rates at -2.2 percent.

Bangko Sentral ng Pilipinas raised its benchmark rate by 25 basis points at each of its May and June meetings. The last time the Central Bank raised the key rate by more than a quarter point was in July 2008, when it hiked by 50 basis points.

Analysts will be closely looking at the Central Bank’s rhetoric on Thursday, with officials expected to maintain a hawkish stance.

“A neutral or dovish statement from BSP, even with a 50-basis-points hike, is likely to disappoint markets,” Chidu Narayanan, Asia economist at Standard Chartered Plc., in Singapore, said in a note this week. “We expect it to maintain a hawkish stance, reiterating its ‘commitment to take decisive action.’” Bloomberg News

samurai offering, we continue to expand and diversify our market access,” de Leon said.

Daiwa Securities Co. Ltd., Mitsubishi UFJ Morgan Stanley Securities Co. Ltd., Mizuho Securities Co. Ltd., Nomura Securities Co. Ltd. and SMBC Nikko Securities Inc. acted as Joint Lead Managers and Book Runners for the issuance of the Placement.

“The Republic has a track record of very tight pricing in US [United States] dollar markets, and we will be uncompromising in measuring against that benchmark in approaching new markets. Pricing on today’s offering is very compelling, and we were able to print the maximum deal size we were seeking,” the Treasurer added. Rea Cu

Pinoy OFWs in Afghanistan ignore DFA’s repatriation call

S

ome 1,500 Filipino workers inside American military bases in Afghanistan refused to heed the call Department of Foreign Affairs (DFA) to consider returning to the country due to the ongoing violence there.

Foreign Secretary Alan Peter S. Cayetano this week said “the Embassy is ready to repatriate those [who are] willing to go [back] home.”

He based his assessment on the situation in Afghanistan on Ambassador to Islamabad Daniel Espiritu’s warning of “violent and frequent attacks across Afghanistan by both the Islamic State and the Taliban.”

Ambassador Espiritu said that, based on t he records of t he nongovernment Civilian Protection Advocacy Group in Kabul, the number of civilian casualties in July alone has reached 545, with 232 dead and 313 wounded.

However, the overseas Filipino

workers (OFWs) in Afghanistan said they remain “happy” working inside the safe confines of the US bases.

“Most of us are in agreement that the US bases are much safer than the streets of Metro Manila with daylight holdup, bag snatching, drug-bust operations and the horrendous traffic,” some Afghanistan-based OFWs were quoted as saying.

The OFWs were recruited by international contractors for the maintenance and logistics supply of the US troops stationed in Bagram and Kandahar military airfields, according to recruitment consultant Manny Geslani. He said there was a sharp drop of OFW hiring by the United States in Afghanistan, “from a high of 7,000 from 2011 to 2014 until former US President Barrack Obama ordered the pullout of over 150,000 US military troops.” Recto Mercene

Govt bid to declare CPP-NPA terrorist groups hits legal snag in Manila court

By Joel R. San Juan

@jrsanjuan1573

T

HE Regional Trial Court (RTC) of Manila City has recalled the summons it issued against United Nations special rapporteur Victoria Tauli-Corpuz and several others compelling them to appear on the proceedings pertaining to the petition filed by the Department of Justice (DOJ) seeking to declare the Communist Party of the Philippines and the New People’s Army (CPP-NPA) as terrorist organizations.

A 14-page resolution issued by Manila RTC Branch 19 Presiding Judge Marlo Magdoza-Malagar said the summons were wrongly issued to Corpuz and other alleged CPP-NPA members and officers identified as former Bayan Rep. Satur Ocampo, communist consultant Rafael Baylosis and Jose Melencio Molintas, officer of CPP-NPA under the Ilocos Cordillera Regional Committee (ICRC).

The court held that the alleged CPP-NPA officers were not properly impleaded in the case, thus, prompting it to recall the sum-

mons issued against them.

The court pointed out that the subject of the prayed-for declaration is the CPP-NPA as an organization, association or group of persons, thus, neither Ocampo or Baylosis can be considered a party-respondent in the petition.

It also did not give weight to the argument of the DOJ that the inclusion of the names of Ocampo and Baylosis in the body of the petition and tagging them as officers of the CPP-NPA was because the organizations have no known addresses and have no juridical personalities and, therefore, can be served with summons through the two alleged officers.

Instead, the court gave credence to the denials of Ocampo and Baylosis that they have links with the CPP-NPA, either as members and officers. “In this case, Ocampo and Baylosis had done more than give notice of severance of their association with the CPP-NPA; they had denied being actually members or officers of said respondent-organizations,” the resolution said.

Crop output pulled down Q2 farm performance Continued from A1

within my expectations,” Dy said. “I was expecting [output would rise by] around 1.5 [percent] to 2 percent.”

The PSA said the crops subsector, which accounted for nearly 50 percent of the total agriculture production, registered a 2.08-percent reduction in output.

The subsector’s output value at constant prices reached P104.394 billion, compared to the P106.609 billion registered in the second quarter of 2017.

The country’s palay output in the second quarter declined by 1.44 percent to 4.090 million metric tons (MMT), from 4.149 MMT recorded a year ago.

The PSA attributed the decline in the production of country’s staple to the contraction in harvest area as farmers planted earlier than usual and shifted to other crops during the period. “[In] Cagayan Valley, there were reports of early plantings in some areas during the last two quarters due to sufficient water supply.

“Furthermore, the decrease in area harvested in the region in the second quarter was attributed to early harvesting as some farmers opted to harvest during the latter part of the first quarter this year to avail [themselves] of the good price being offered by traders,” it said.

“There were also reports of crop shifting to cassava and sugarcane. In Soccsksargen, harvesting was done earlier because of hot weather conditions. There was also a reduction in planting due to closure and rehabilitation of some National Irrigation Administration canals in

the region,” it added.

Palay output in the first half still recorded a minimal increase due to higher f irst-quar ter production. Production in the January-to-June period expanded by 1.68 percent to 8.713 MMT, from 8.569 MMT recorded in the same period last year.

Corn production in the second quarter shrank by 3.42 percent to 1.284 MMT, from 1.329 MMT a year ago, according to the PSA. Like rice, the reduction in corn output was attributed to the contraction in area harvested.

“There was a decrease in area harvested in Cagayan Valley during the second quarter of 2018. This was attributed to the early plantings, which took place in the latter part of 2017 due to government interventions on the distribution of hybrid and open pollinated variety seeds,” it said.

“In addition, crop shifting to ginger, tobacco, pineapple, banana and watermelon was noted in Cagayan Valley. Also, some areas in the region had been left in fallow. The reduction in area planted and harvested in Soccsksargen was due to insufficient rains during the first quarter of 2018,” it added.

However, corn output in the first half still grew by 1.75 percent to 3.76 MMT from 3.696 MMT due to higher first-quarter production.

Hog, chicken production

Data from the PSA also showed that the livestock subsector, which accounted for 16.67 percent of agriculture output, expanded by 1.88 percent in the second

quarter. This allowed the subsector to end the first half with a 1.95-percent production hike.

“Hog production made a turnaround with this year’s 2.81-percent gain in production. This was attributed to higher farm-gate price which encouraged hog raisers in Ilocos region, Bicol region and Northern Mindanao to dispose of their stocks,” the PSA said. “ The sustained demand in Central Luzon, Central Visayas and Eastern Visayas was noted while increases in live births and low mortality rate during the first quarter of 2018 resulted in more supply of fatteners in Calabarzon. Dairy production went up by 7.12 percent,” it added.

The country’s poultry subsector posted a 5.14-percent hike in output during the second quarter, bringing its first-half production increase to 5.19 percent. Poultry production accounted for 16.83 percent of the total agricultural output.

The fisheries subsector, which accounted for 16.85 percent of total farm output, continued its downward trend as it contracted by 0.05 percent in the second quarter. The subsector’s output declined by 2.14 percent in the first half.

The farm sector’s output in the first half slowed to 0.58 percent, from the 5.73-percent expansion posted in the same period last year.

“Improvements in production were noted in the livestock and poultry subsectors,” the PSA said. “However, the crops and fisheries subsectors recorded declines in output.” Jasper Emmanuel Y. Arcalas

Economy BusinessMirror

www.businessmirror.com.ph

GDP growth forecast for Q1 revised downward to 6.6%

T

HE Philippine Statistics Authority (PSA) has revised downward its GDP growth forecast in the first quarter of the year due to lower estimates for key economic sectors.

In a news statement issued on Wednesday,thePSAsaidthecountry’s GDP was slower at 6.6 percent in the January-to-March period, compared to the 6.8 percent it reported in May. “Major contributors to the downward revision were other services, manufacturing and agriculture and forestry,” the PSA said.

Data obtained by the BusinessMirror from the PSA showed that other services only grew 6.9 percent in the first quarter, a 1.9-percentagepoint reduction from the earlier estimate of 8.8 percent.

The PSA said agriculture and forestry, as well as construction also suffered reductions of 0.5 percentage points each to 1.9 percent and 8.8 percent, respectively.

Initially, the PSA estimated that the growth of agriculture and forestry as well as construction reached 2.4 percent and 9.3 percent, respectively.

Data also had manufacturing seeing a 0.4-percentage-point decline in growth estimate to 7.6 percent, from the initial estimate of a growth of 8 percent.

Further, the PSA said estimates for gross national income and net primary income from the rest of the world were revised to 6.3 percent and 5 percent, from 6.4 percent and 4.3 percent, respectively.

“The PSA revises the GDP estimates based on an approved revision policy [PSA Board Resolution No. 1, Series of 2017-053] which is consistent with international standard practices on national accounts revisions,” PSA said.

The PSA is slated to release official GDP growth estimates for the second quarter on Thursday, August 9.

It is the agency tasked to plan, develop, prescribe, disseminate and enforce policies, rules and regulations and coordinate government-wide programs governing the production of official statistics, general-purpose statistics and civilregistration services. Cai U. Ordinario

DOE seeks ₧2-B budget for 2019

By Lenie Lectura

@llectura

T

he Department of Energy (DOE) on Wednesday identified six regions with electrification levels falling below 60 percent.

There are four in Mindanao— Autonomous Region in Muslim Mindanao, 27.4 percent; Soccsksargen, 65.6 percent; Zamboanga Peninsula, 67 percent; Davao region, 68.2 percent; one in the Visayas—the Negros Island Region, 79.3 percent; and one in Luzon—Mimaropa, 79.9 percent.

DOE Undersecretary Felix William B. Fuentebella said the private sector could take over in these areas to ensure access to electricity for the communities that remain unserved and underserved.

“Yes, we will open these six regions to the private sector in partnership with the distribution utilities. If not, the NPC [National Power Corp.] can come in,” Fuentebella said.

The DOE, during the House Committee on Energy hearing on Tuesday, assured lawmakers that it is working very hard to energize 3 million households more at the soonest possible time through its

Total Electrification Program (TEP).

Based on the 2015 census, the December 2017 data of the DOE pegs the current household electrification level at 88.3 percent, with 21 million of the 24 million households in the country having access to electricity.

The goal is to achieve 100 percent electrification by 2022.

To help achieve this sooner, the DOE seeks the support of the committee to approve its proposed 2019 budget of P2 billion. Of which, 25 percent or P505 million is earmarked for the TEP. The agency said it will align all of its efforts on providing electricity services to about 14,320 households with the National Electrification Administration, the NPC, the distribution utilities and other key stakeholders in the energy industry.

“We are aggressively pursuing initiatives catering to the unserved and underserved areas of the country to promote inclusive growth.

This initiative supports AmBisyon Natin 2040—providing a strongly rooted, comfortable and secure life for all Filipinos,” Energy Secretary Alfonso G. Cusi said.

DA chief nixes zero-tariff proposal on corn imports

A

By Jasper Emmanuel Y. Arcalas

@BNicolasBM

P

r esident Duterte has signed an executive order (EO) modifying the rates of import duties on certain imported articles and pave the way for the implementation of the country’s tariff commitments pursuant to the freetrade agreement (FTA) between the European Free Trade Association (Efta) states and the Philippines.

EO 61, which was signed on August 2, listed in the Philippine Schedule of Tariff Commitments subject to the rates of import duties specified in the order.

“All goods originating from the Efta states, in accordance with the aforementioned Philippine Schedule of Tariff Commitments, entered into or withdrawn from warehouses or free zones in the Philippines for consumption or introduction to the Customs territory, shall be levied the rates of duties prescribed therein, subject to the submission of an origin declaration, in compliance with the Rules of Origin under the PH-Efta FTA,” a copy of the executive order released on Wednesday read.

The Philippine Schedule of Tariff Commitments under the

Philippines-Efta FTA was also approved by the President.

These includes the agricultural products and non-agricultural products originating from Efta member-states Switzerland/Liechtenstein, Norway and Iceland.

The Tariff Commission may also be requested to issue advance rulings on tariff classification of goods to confirm the applicable rates of duty of the particular goods, which are the subject of the order.

The lower duty between the Most Favored Nation rate and the applicable duty set out in the Philippine Schedule of Tariff Commitments in the order shall prevail according to the provisions of the PH-Efta FTA and its annexes.

Prior to the signing of the order, the National Economic Development Authority approved the Tariffication Schedule on various products covered by the Schedules of Tariff Commitments under the PH-Efta FTA. According to Section 1609 of Republic Act 10863 or the Customs Modernization and Tariff Act, the President shall modify import duties including any necessary change in classification and other import restrictions as required or appro-

@jearcalas

griculture Secretary Emmanuel F. Piñol is amenable to reducing the tariffs on corn imports as a measure to lower production costs of livestock and poultry sectors to eventually bring down the prices of meat in the market.

“It cannot be zero,” Piñol told the BusinessMirror when asked whether he is open to a proposal floated in the industry to allow tarifffree corn importation.

Piñol said he would only agree to lower the tariffs on corn if the revenues collected from the duties would go into a funding similar to the proposed rice competitiveness enhancement fund. And the tariff collections would be used to improve the corn sector’s productivity, he added.

“I would agree to lower it on the condition that we would also create a corn tariffication enhancement fund. All the revenues from the corn imports would go to the fund which would be used for the corn sector,” he said.

As for feed wheat, Piñol said the tariffs are already low but he did not give a categorical position on the possible reduction of duties on the produce.

The country slaps a 35-percent tariff on corn imports within the minimum access volume, while those outside the quota are levied with 50-percent duty.

Both feed-wheat imports and wheat-flour imports are subject to a 7-percent duty, according to a Global Agricultural Information Network (GAIN) report.

The GAIN report noted that feed-wheat imports are exempted from the 12-percent value-added tax (VAT). Milling and feed-wheat imports from signatories to the Asean-Australia-New Zealand freetrade agreement are duty-free.

PHL fulfills Efta free-trade commitment with new EO

By Bernadette D. Nicolas

Editor: Vittorio V. Vitug • Thursday, August 9, 2018 A3

priate to carry out and promote foreign trade with other countries.

The FTA between Efta and the Philippines was signed on April 2016 in Bern, Switzerland, and was ratified by the President on December 2017.

On March 2018 the Senate also concurred in the ratification of the PH-Efta FTA through Senate Resolution 93.

The PH-Efta FTA covers trade in goods, services, investment, government procurement, intellectual- property rights, competition and sustainable development, and applies to the trade and economic relations between the Philippines and the individual Efta states.

The said FTA also provides that the Philippines shall upon the FTA’s entry into force, eliminate import duties and charges having equivalent effect on import duties on nonagricultural goods originating from an Efta state except as otherwise provided for in the Schedule of Tariff Commitments on NonAgricultural Products.

Both parties shall also grant tariff concessions for agricultural goods originating from either party as specified in the Schedule of Tariff Commitments on Agricultural Products.

On the other hand, milling-wheat imports are exempt from tariffs, but are subject to a 12-percent VAT on the subsequent flour sales, payable at the time the wheat was imported, according to the GAIN report.

Budget Secretary Benjamin E. Diokno said the economic managers are keen on reducing the tariffs on corn and wheat to 5 percent.

Rising corn prices

Livestock and poultry industry stakeholders have disclosed that their production costs have been increasing due to more expensive raw materials, particularly in feeds, such as corn.

United Broiler Raisers Association (Ubra) President Elias Jose Inciong told the BusinessMirror that corn prices in the country have gone up to the vicinity of P19 per kilogram from P13 per kg.

“Our cost of production is really increasing due to higher oil prices, worsened by higher excise tax on fuel and weak exchange rate of peso. All of these contributed to higher costs of our inputs,” Pork Producers Federation of the Philippines Inc. (ProPork) President Edwin G. Chen told the BusinessMirror.

Chen said his group is backing the proposal of feed millers for a tariff-free corn importation to have access to cheaper raw materials.

“I called PAFMI [Philippine Association of Flour Millers Inc.] and they said they wrote a letter to [Agriculture] Secretary [Piñol] requesting permission for duty-free importation of corn from neighbor-

ing countries such as Indonesia and Malaysia,” he said.

“And yes, of course, we are supporting that proposal,” Chen added.

PhilMaize opposition

However, Philippine Maize Federation Inc. (PhilMaize) President Roger V. Navarro told the BusinessMirror that his group is vehemently opposing the proposed tariff reduction on corn imports as it is detrimental to local farmers.

“This is the start of the demise of the corn industry in the Philippines. We will see the ultimate death of the industry in the future,” Navarro said.

“We vehemently oppose this for reasons that the corn industry has been liberalized but no subsidies have been given to corn farmers,” Navarro added.

If the government pushes trough in cutting the tariffs, Navarro echoed Piñol’s position that the duties collected from the imports must be allocated and used for the development of the local corn industry.

However, for Navarro, the tariff revenues should go to the govern-

“Planting intentions will be zero.

And corn farmers would be forced to lease their lands to multinational for production of banana or pineapple,” Navarro said.

Nav a r ro a l so poi nte d out that there is also a disconnect between the farm-gate price of corn and its retail price. Farmgate prices are currently around P14 per kg.

Furthermore, Navarro said the production costs of corn farmers have gone up as well particularly their expenses on labor, fuel and other inputs.

Invest

Chen also urged the government to invest in the country’s livestock and poultry sectors if it wants to ensure lower prices of meat.

“Other countries are heavily subsidized. And that is what the government should also do if it really wants to bring down the prices of [goods], not only in fish and meat,” he said.

“The government should give support to livestock and poultry sectors which are driven by the private sector. The two subsectors

I would agree to lower it on the condition that we would also create a corn tariffication enhancement fund. All the revenues from the corn imports would go to the fund which would be used for the corn sector.”—Piñol ment’s Corn Development Fund (CDF) instead of establishing a new fund.

“For so long a time there is a sector being neglected [by the government] and that is corn,” he said. “If ever they are pushing with [tariff cuts] then put the revenues to the CDF.” The PhilMaize head warned that the possible influx of corn imports at reduced tariffs could discourage farmers to plant for the next cropping season, which effectively cuts the country’s local output.

account for 33 percent of the country’s agriculture production but budget allocation is only about 1 percent to 2 percent,” Chen added.

Piñol said he is also proposing that the tariff revenues from meat imports be pooled in a fund that would be used to develop the local sectors.

“One of the neglected sectors in the agriculture really is the livestock sector. So why not give the tariffs collected from meat products to the sector,” he said.

briefs d.a.r. mandates consultations on land-conversion applications Agrarian Reform Secretary John R. Castriciones has issued an order that mandates public consultations on the approval of applications for the conversion of agricultural lands for other purposes.

DAR Administrative Order 5, Series of 2018, mandates concerned regional directors to call for a public consultation before acting on an application for land conversion.

The conversion of agricultural lands may affect the public and the future generations of the Filipino people, Castriciones said in a news statement.

The holding of public consultations are necessary to ensure that any interested person may be given the opportunity to present comments or sentiments about the certain applications for land conversion, he said. Jonathan L. Mayuga

T.p.b. garners iso 9001:2015 certification The Tourism Promotions Board (TPB) has been certified as ISO 9001:2015 compliant following a thorough two-day audit conducted on June 5 and 6.

A news statement issued on Wednesday said the certificate was conferred to the TPB on July 11, and is proud to be an ISO 9001:2008 certified organization, passing its first and second surveillance audit in December 2016 and 2017, respectively, prior to its latest certification.

This is the third consistent recognition of TPB’s commitment to institutionalize Quality Management System (QMS) with a scope of service covering the design, development and provision of Philippine tourism marketing and promotion.

Both TPB’s ISO accreditation and certification are carried out by Certification International Philippines. TPB’s ISO 9001:2015 certification affirms its adherence to Executive Order 605, which requires the Institutionalization of QMS in the government. Additionally, the milestone honors the directives of the Governance Commission for Government Owned and Operated Companies and Corporations on the same matter.

c.a.r. minimum-wage earners get pay hike

Minimum-wage earners in the Cordillera Administrative Region (CAR) will start getting a P20 to P30 pay increase this month, after the new wage order of the Regional Tripartite Wages and Productivity Board (RTWPB)-CAR is scheduled to take effect on August 20.

Under the wage order, the new minimum-wage rate in Baguio and La Trinidad is now P310 and P320.

Meanwhile, the new rate for the areas of Tabuk City, Bagued, Bontoc, Lagawe, Banaue, Buguias, Bauko, Sagada and Tublay is now P305 and P315.

Workers from other parts of the CAR will be entitled to minimum-wage rate of P300.

The wage order was issued by the RTWPB-CAR on July 20, but was only published on August 5. CAR now joins the nine other regions, which already issued and implemented their respective wage orders this year.

Samuel P. Medenilla

2.3m voter applications for may polls The Commission on Elections (Comelec) received close to 2.3 million applications in the first month of the resumption of the continuing voter registration nationwide for the May 13, 2019, midterm polls.

Latest data from the Election and Barangay Affairs Department showed the poll body has already received 2,297,606 applications from July 2 to July 28. Of the total number of applications received and processed nationwide, 1,037,265 are male applicants while 1,260,341 are female.

It added that the number of application for registration were 1,054,067, while that for transfer of registration records numbered 895,246.

Applications for reactivation were 179,254; for change/ correction of entries, 168,326; for inclusion of record in the book of voters, 441; and for reinstatement of name on the list of voters, 272. Samuel P. Medenilla with PNA

A4

TheBroa

Business

Thursday, August 9, 2018 | Editor: Dennis D. Estopace

ROSES ARE RED; SO ARE THE BALANCE SHEETS OF BUSINESSES IN THE PHILIPPINE FLORICULTURE INDUSTRY

Climate change, land lack nip

SHOPPING for flowers at the Dangwa Flower Market on Dimasalang Road, Sampaloc, Manila. ALYSA SALEN

The industry reached its peak output with 23,618 MT in 2004.

However, general production has been on a 14-year-long decline since then, data from the PSA showed.

The lack of supply has placed an upward pressure on the prices of cut flowers, random interviews with vendors along Dimasalang Road, popularly known as Dangwa Flower Market, showed.

However, vendors in this area said high prices made it difficult for them to rake in sales. Like Wilma Eron, who told the BusinessMirror on July 24, she was selling chrysanthemum at P180 per dozen, up from the P100-per-dozen price tag it carried seven days ago.

Such price increase doesn’t cut with Wowie Juanson, a vendor and florist.

“It’s not okay because if the supplier wishes to increase it, they will do so,” Juanson said in Tagalog. “If they knew that the supply of flowers is declining, they will increase the price because they know that we have no choice but buy.”

Arrangements

A PAPER by Teresita L. Rosario at the Department of Agriculture (DA) website defines cut flowers as

“fresh flowers and flower buds that have been cut from the plant suitable for bouquets, wreaths, corsage and special flower arrangements.”

However, Angel P. Puentespina, managing director of Puentespina Orchids & Tropical Plants Inc. (Potpi), told the BusinessMirror the Philippines lags behind its neighbors in terms of cut-flower production.

“Aside from orchids, we are losing almost all the cut flowers.

We are losing to our neighbors,” Puentespina said. “Vietnam is turning out to be a good producer also. Soon, we might also be ending up importing from them. Ang Taiwan napakaganda na [Taiwan’s market is now attractive], also Malaysia and China.”

Agriculture Undersecretary for High Value Crops and Rural Credit Evelyn G. Laviña points to the absence of a nationwide program for the development of the country’s cut-flower industry.

Laviña said funds for a program are dependent on local government units.

Bloomfield

LAVIÑA said the DA is addressing the lack of a program by reaching

out to players in floriculture, or flower farming, so the DA can better assess the situation. She said doing so can help in the creation of an industry roadmap.

“It is just the first year that horticulture [a branch of agriculture concerned with garden crops] in the Philippines will be given importance under [Agriculture] Secretary [Emmanuel] Piñol,” Laviña said. “So now, progress will depend on the farmers because they have to give us the roadmap.”

According to Puentespina, establishing a roadmap takes three years to process and stakeholders must decide how this will be implemented.

Unfortunately, the industry is no longer organized, he noted.

There are no more associations and groups devoted to the cut-flower industry, Puentespina added.

“It is okay to have a roadmap, but how to do it is difficult,” he said. “But a review definitely is very important at this point in time.”

Challenges

INDUSTRY players like Puentespina acknowledge that the DA’s main focus is edible crops for food security. However, they feel as if the cut-flower industry, under ornamental horticulture, has been left behind.

One of the signs is the receding area for cut-flower production.

PSA data, to note, shows that overall area for cut-flower production has been in decline since 2011.

The PSA noted that cut-flower declined last year by 2.10 percent to 1,538 metric tons (MT) from 1,571 MT in 2016.

Arnold B. Andaya, president of Philippine Cut Flower Corp.

(PCFC), said the lack of availability of land suitable for floriculture is one of the reasons production is declining.

The “best” places to grow flowers have been turned into subdivisions due to their cool weather and scenic areas, he added.

Andaya specifically cited the Comprehensive Agrarian Reform Program as a factor in crippling the industry.

“Government took away land from the owners who are professional growers. [They] gave it to the small farmers but they didn’t really give the farmers the support that they need,” Andaya said. “In the end, agriculture died, these farmers no longer own the land because they probably sold it, and productivity is at its lowest.”

ALYSA SALEN

W

HILE the country’s production of chrysanthemums, orchids and roses remained stable, the latest report of the Philippine Statistics Authority (PSA) showed cut flowers posted a decline of 4.94 percent to 8,886 metric tons (MT), from the 9,348 MT recorded in 2016.

Debacle

ACCORDING to Puentespina, climate change is also a primary factor in the decline of overall production of most cut flowers in the Philippines.

“Climate change is a very big factor because the areas [that] used to be cool are warmer and if it’s warmer, there [are] more insects to deal with,” he told the BusinessMirror. “Mas malaki ’yung gastos sa insecticides [You spend more on insecticides].”

According to Puentespina, a number of the crops that Potpi grows, like orchids and chrysanthemums, “are grown under shade nets, not under nice greenhouses.”

“But because of the stronger winds, [that are] longer [in] range and more frequent, there’s a need to go into more smarter farming using covered greenhouses because quality is very important for flowers,” he added.

Puentespina believes addressing climate change can lure many investors in the floriculture sector.

The volume of investors is needed because, he added, “starting a cut-flower orchid project, [for one], requires a lot of capitalization

as the maintenance of specific use of fertilizers and fungicides or insecticides is quite high here in the country.”

Likewise, “large market and volume is not present in the Philippines, [which is why] there is [also] less investment in this sector,” Puentespina said.

He also noted that the cost of production is increasing especially for fertilizers and chemicals and, due to these, the cost of labor has also increased.

Entry

DESPITE the general decline in production, one cut flower has remained stable throughout the years: roses.

In 2017, production of roses rose by 8.55 percent with 2,423 MT from 2,232 MT, PSA data revealed.

Sadly, Andaya said there are no new players investing in rose production, which he blames on the high barrier of entry.

“Roses are not endemic to the Philippines. You don’t see naturally growing roses,” Andaya said.

“For this reason, rose production is

costly and highly specialized.”

He said the PCFC spent about P50 million per hectare when its farmland was being built.

PCFC pioneered the country’s cut-flower industry when it started the first full-scale rose production in 1983. Its 2-hectare farmland can produce about two-and-a-half million stems of roses each year.

The company harvests flowers every day, three times a day. These plants are cultivated for seven to eight years. When yield decreases, the plants are removed and replaced with a new variety.

In terms of growing roses, Andaya said the main challenge is the loss of land that is ideal for growing flowers.

“There in Tagaytay, [plots of land are] being converted into subdivisions [and for] commercial [use]. Like in Baguio, you won’t see much there,” he said. “You’ll have to plant at the sides of mountains because there are no more flat lands.”

Flowering

ASIDE from roses, orchids and

aderLook

sMirror

www.businessmirror.com.ph | Thursday, August 9, 2018

A5

p floriculture sector in the bud

chrysanthemums also showed stable production through the years.

PSA data revealed orchid production rose by 0.47 percent with 1,154.37 MT in 2017, from 1,148.96 MT recorded the previous year as reported in PSA data.

Last year, chrysanthemum production also rose by 4.89 percent with 2,404.53 MT from 2,292.36 MT in 2016.

Puentespina notes a steady demand in orchids and other ornamental plants because their business is mainly focused on catering to bulk orders for flower shops and institutional sales, e.g., hotels and restaurants.

The average price of orchids ranges from P200 per dozen to P250 per dozen, while the average price of chrysanthemum ranges from P100 per dozen to P125 per dozen. Potpi also sells mixed bouquets ranging from P750 to P1,500 each.

Puentespina told the BusinessMirror the demand for these cut flowers follows the tourism cycle peaks. All Souls’ Day, for one, is the holiday that has the highest demand, he added.

Andaya also notes a steady demand for roses during regular months in the country as there are always birthdays, weddings and anniversaries to celebrate. As expected, roses are especially popular during Valentine’s Day and Mother’s Day, he said.

Juanson, the Dangwa vendor and florist, said sales spike during Valentine’s Day as majority of their consumers are millennials.

“Kadalasan, mga estudyante na naka-dorm dyan sa mga susunod na street ang bumibili, kasi malapit kami sa mga malalaking eskwelahan katulad ng UST [Usually, our buyers are students who stay in dormitories at the next street because we are located near big universities

like UST],” he said.

Flow

BRINGING cut flowers to the market is also a challenge for PCFC and Potpi.

The increase in gasoline prices has placed an upward pressure on transportation costs. This leads to an equal pressure on logistics for Andaya’s and Puentespina’s businesses.

“It’s a challenge. It just makes you think more as a business owner—you have to be more creative on how to deliver the flowers and how to maximize the deliveries,” Andaya told the BusinessMirror.

PCFC partners with big courier companies to deliver flowers.

They market themselves as a nextday delivery service.

Due to traffic and airport congestion, some bouquets are delivered after 72 hours, sometimes compromising quality, according to Andaya.

Puentespina agrees, saying that logistics remains a challenge and the main hindrance is the capital investments involved.

“Logistics is a little bit challenging,” he told the BusinessMirror. “The prices of interisland shipping are high because [our product] is bulky and highly perishable; there is no other choice but to ship by air. The other cost of imports might be high but other crops and sectors would claim the same.”

Growth

ANDAYA believes that creativity and innovation are key to survive in the industry.

“We realized that maybe we [could] tap the market better, expand the market, [and] help the florists expand the market by retailing ourselves,” he said. “We competed directly so we did everything online.”

Island Rose, the corporation’s brand name, caters not only to Filipinos within the country but also those working or living overseas.

The company has an electronic-commerce site where overseas Filipinos can send flowers to recipients within the country’s borders.

“We also continuously improve the design of our flowers and the system we use to arrange them,” Andaya explained. They are currently trying a bouquet-making machine in the hopes that it can make the look of the arrangements more consistent.

But when it comes to growing and harvesting, Andaya believes humans are irreplaceable.

“There’s no machine that can harvest roses better than a human being. Every stem that we encounter will be in a different stage, at a different height. Every stem has a different area where to cut,” he told the BusinessMirror. “Only people can do that.”

Andaya urges the government to disseminate technical know-how on cultivating flowers throughout the country in order to produce more capable flower-farm workers.

Humans

ANDAYA also pins the declining cut-flower production to the low level of knowledge and skills of flower-farm workers.

Though colleges offer courses such as ornamental horticulture, students are often taught the basics, Andaya said. When it comes to specific flowers, they lack the knowledge of detailed cultivation practice, he added.

“In Holland, there’s a school that teaches just how to plant flowers [and] how to grow flowers,” Andaya said. “People specialize on certain crops, on certain roses or chrysanthemums; we don’t have

[that] here.”

Puentespina agrees, saying it is hard to venture in the cut-flower industry because it requires a lot of technology and availability of skilled people who have experience in cut-flower production.

He noted these were the factors present in the origins of Potpi.

The company started as a hobby in orchid growing by its founder Charita P. Puentespina in 1977. It grew to become one of the biggest producers of cut flowers in the country today, supplying products to major cities nationwide.

Aside from producing cut flowers in their farms, they also import from Columbia, and a few times, from Taiwan and Thailand.

The business moves toward integrating itself and, like PCFC, making more use of information technology as the firm now sells online.

Innovation

POTPI has also started to develop its own inputs. The company developed its own fertilizers as well as materials to protect plants against pests and disease.

“We are going strong in our nursery and we are not just expanding in horticultural crops but also on agronomic crops,” Puentespina said. “We are producing our own soil-less substrates using materials like rice and composts.”

He added the company is “also going stronger in the production of our own materials for plant nutrition.”

“So we’re coming up with a new division for this. We’re also increasing our production of foliage materials, like what I mentioned earlier, fillers, leaves [and] greens.”

Potpi’s production farms in Davao cover an area of approximately 18 hectares. The Malagos Farm is devoted to orchids and

ornamental plant production situated at a 330-meter elevation. Its second farm is at a 750-meter elevation devoted for chrysanthemum and gerbera production, while its third farm is at a 1,100-meter elevation where the oriental lilies and lisianthus are grown.

In the case of orchid production process, “You plant them, you let them grow to a matured stage, you maintain the plants, and then once they start to flower, you keep on harvesting the flowers.”

“You might be harvesting from it anywhere from five years or more,” Puentespina explained.

“Depending on the farmer, it’s either they will replant a new one or they will maintain the old one.”

Chrysanthemum, on the other hand, is less laborious compared to orchid.

“It’s a fast-growing crop, meaning, you plant them and then after three months, you harvest them. And then, you repeat the cycle,” Puentespina said, “Therefore, you need to maintain the plantation of what we call the ‘mother plants’ because you need to harvest the cuttings, and you use cuttings to propagate the plants.”

Juice

BOTH Andaya and Puentespina acknowledge the youth remains the potential market for the cut-flower trade.

The PCFC’s main market, to note, is composed of males aged 24 to 39 years old. However, those above the age of 40 are more consistent when it comes to buying flowers, which Andaya attributes to their more relaxed lifestyle.

“What we want to tap is the millennial generation,” he said.

“The buying capacity of the younger generation is higher than during my time. You cannot deny that there’s a big potential [in this] mar-

ket, especially online.”

Young people interviewed by the BusinessMirror expressed varied statements on buying flowers.

Miguel Sunga, 20, for one, said he always buys flowers when wooing a member of the opposite sex.

“Sometimes [I buy flowers] when Valentine’s Day is near; usually when I just want to make someone feel special and remind them that they are loved.”

“The first time [my girlfriend] got flowers from me, I saw how much she appreciated it,” Matthew Alunan, an incoming senior at the University of the Philippines, said.

“With their increased purchasing capacity, [young people] are capable of growing the market,” Puentespina said. “I think flowers’ appeal is universal and I also think movements like the organic movement, which is appealing to millennials, would be the same with flowers—giving away flowers compared to artificial ones.”

Those that instantly experience these consumer and business decisions are people like Juanson.

For Juanson, the floriculture industry is neither only about the flower nor its cost.

He admits flowers cost more compared to food, so owners of small flower shops like his at the Dangwa Flower Market need to step up to promote their valueadded proposition: flower arrangement.

“Kumikita ka sa bulaklak, kumikita ka rin sa pag-a-arrange,” Juanson said. “Kaya mas maganda ang pagbebenta ng bulaklak para sa amin [You earn from the flowers and also from arranging the flowers. That’s why, for me, selling flowers is a better proposition].”

Jenn Kiana Louise N. Cardeño and Monique Danielle A. Fernando

A6 Thursday, August 9, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Lotto players feel they are being cheated

T

he Philippine Charity Sweepstakes Office, which earned P52.9 billion from its lottery games in 2017, is poised to face new challenges this year courtesy of the harsh taxes brought about by the TRAIN (Tax Reform for Acceleration and Inclusion) law that didn’t spare the gaming agency.

For example, the PCSO increased prices of its lottery and other gaming tickets on July 8 as a result of the TRAIN law. Thus, lotto tickets that used to cost P20 now cost P24.

The PCSO conducts a uniform pick-six numbers for all of its five lotto games (Lotto 6/42 every Tuesday, Thursday and Saturday; Mega Lotto 6/45 every Monday, Wednesday and Friday; Super Lotto 6/49 every Sunday, Tuesday and Thursday; Grand Lotto 6/55 every Monday, Wednesday and Saturday; and Ultra Lotto 6/58 every Sunday, Tuesday and Friday).

All of these, the PCSO said, are pari-mutuel games wherein the prize pool is divided equally among the winners (if there are more than one jackpot prize winner). In the event that there is no winner for the jackpot, said jackpot prize shall be added to the computation of jackpot prize of the next scheduled draw.

If you are a lotto player, here are your odds of winning: For 6/42 lotto it’s one in 5,245,786 combinations; for 6/45 lotto, one in 8,145,060; for 6/49 one in 13,983,816; for 6/55 lotto, one in 28,989,675; and for 6/58 lotto, one in 40,475,358 combinations. Despite the high odds, lotto bettors nationwide happily part with their money knowing that they are helping the PCSO in its charity mission.

Recently, however, a lot of them were plainly frustrated, irritated and disillusioned. Their frustration stemmed from the fact that they feel cheated by the PCSO. Lotto bettors didn’t complain when lotto prices went up 20 percent last month. They complain about the “abolition” of the balik-taya. In lotto parlance, this means a bettor who gets three out of the six numbers right should be able to exchange his “winning” lotto ticket for a new bet as this has been the practice for the longest time.

That’s no longer the case. The PCSO has virtually ended the practice of balik-taya because bettors who get three numbers right are now paid P20 for the winning ticket. Their complaint: “We bought the lotto ticket for P24, so we should get P24 for the three correct numbers.”

This may look like a trivial issue, but it can explode in the PCSO’s face. We don’t want to make poor people vent their anger on the gaming agency for unknowingly neglecting the balik-taya system. We don’t want them to view the PCSO as insensitive. The PCSO must recognize that lotto players are its customers. It must try to understand their needs. It must put them first, not last, in every decision-making process.

While the language of business—market share, sales level, earnings growth—is not the language of the PCSO, we don’t want to see its virtual monopoly vanish. We don’t want it to lose its support base. Besides, it needs to measure its performance as a revenue-generating agency of government. And the best way to do this is to look at how the people —lotto players, in particular—support its various games. The PCSO needs all the support it can get from lotto bettors, but it must also try to hear their complaints and promptly address them.

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder Publisher Editor in Chief Associate Editor News Editor Senior Editors

T. Anthony C. Cabangon

OUTSIDE THE BOX

I

F you are going to play poker you must know the math to help determine the odds that make the winning hand. For the stock market, you need the factors that will determine the price of an issue.

Stock market analysis experts call the process the “price discovery.” This is a matter of looking at the variables that determine what is a good price. By The Book, “Buyers and sellers arrive at a transaction price for a specific asset at a given time.”

However, the idea that there is some sort of supply/demand factor based on—from The Book— “numbers of buyers and sellers, size of the orders, liquidity and valuation perceptions” does not entirely hold up.

Look at it this way. Walk into the t-shirt section at SM department store. You will probably find

500 shirts in your size. You could buy enough that you could wear a new t-shirt every Saturday for the next 10 years. Assume an average price of P300 and while P150,000 is real money, it is not like a choice between a “lifetime” supply of tshirts and a new car. From your view as a consumer, there is virtually an unlimited supply.

Based on the idea of supply and demand pricing, P300 might seem a little high.

But SM could be selling 1,000 t-shirts a day. True, but they sell those shirts one by one just as shares are in the stock market. Stock pricing comes down to one person hitting

Cecilio T. Arillo

database

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan

BusinessMirror is published daily by the Philippine Business Daily Mirror Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines.

Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025.

(Advertising Sales) 893-2019; 817-1351, 817-2807.

(Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila

the “buy” or “sell” button just like one person buying a t-shirt.

Having an unlimited supply of t-shirts, SM sets the price based on whether people are buying the product, the same way a seller of stocks will raise or lower the price depending on the buying interest.

Stock market investors go through mental gymnastics to get to the point of “valuation perceptions” as to whether the stock price is “worth it.” Using all the various fundamental analysis valuations, they conclude that the price is too high-avoid-or too low-buy and buy now.

The price-to-earnings ratio or PER is most popular as it values the company’s profits in terms of stock price. In simple terms, it is how many years of earnings to equal the current stock price. A PER of “15” means the company will take 15 years of earnings per share to equal the current stock price.

Here are some examples of PER at the end of 2017: SM Investments-36, Jollibee-38, Ayala Corp.-22 and Ayala Land-26. Which has the best “value”?

Then you should look at earnings growth.

But the reality is that the Japanese

stock market went from a PER of 20 and was still going strong when the PER hit 80. It topped out at 120. We see local issues that have not made any money for a decade and then deliver profit for two years selling at a PER of 600 with the stock price up 300 percent for 2018.

The rational is that there are positive expectations for the future. Of course, it often comes down to: “If it is the third telco” or “If the government allows casinos.”

Remember those SM t-shirts? All different quality, all different styles, and many different prices. So you decide based on how good your barkada think you will look in the shirt you finally buy.

You can do all the number crunching you want—and you should—just like you did with that t-shirt. But as with the shirt looking good, it comes down to answering one question: Which stock will I be able to sell to someone at a higher price in the future?

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

A US lawmaker and the Aquino regime spread fake news to destroy the Marcoses

Jennifer A. Ng Vittorio V. Vitug

Ruben M. Cruz Jr. Angel R. Calso

MEMBER OF

John Mangun

Lourdes M. Fernandez

Online Editor Social Media Editor

Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Stock Market 004: Pricing

Part Six

Salonga violated PCGG law

T

HE executive orders vesting the PCGG with vast powers without corresponding accountability and the designation of former Sen. Jovito Salonga as its first chairman led the PCGG to unlawful acts of omission and commission. Salonga, the legal luminary, has repeatedly ignored or violated the law as PCGG head.

For example, the Sandiganbayan on November 21, 1991, ordered the PCGG to release from sequestration 97 assets of the group of former Ambassador Roberto S. Benedicto.

The Sandiganbayan noted that of the 21 sequestration orders against the assets, only two were properly accomplished.

The other 19 orders had only one signature, that of Salonga, in violation of the PCGG rule that each order be signed by at least two

commissioners. Fortunately, Salonga’s overriding political dreams would led him out of the PCGG and back into the Senate when elections were held on May 11, 1987. But much of the damage had already been done. The early errors would be stubbornly repeated by succeeding PCGG officials. The Supreme Court, many times, had to uphold the Sandiganbayan or the Ombudsman in their orders dismissing various sequestration cases.

“To this day, the government has not won Forfeiture Case 0141, the main litigation to judicially and forever divest the Marcos Estate of its assets.

The government has failed to prove that the Marcos assets in question were stolen from the State. But this failure of the prosecution is more onerous on the part of the Marcoses, because for as long as the case drags on, they cannot recover their assets or enjoy even just the fruits thereof.”

Back in America, the RICO charges filed against the Marcoses failed to prosper. The Los Angeles District Court dismissed the case. The Aquino administration filed an appeal on October 3, 1986, with the US 9th Circuit Court of Appeals which dismissed the appeal on June 4, 1987. Another track was tried in 1988.

Presumably, it took the path of least resistance: get the Marcoses to freely surrender at least their gold assets, in return for the promise of

reentry to the Philippines. The deal would have to be done away from the glare of publicity, never mind all the talk about transparency.

Mrs. Imelda Romualdez-Marcos would recall later: “Two close relatives of Mrs. Aquino went to Honolulu to meet with us.

In essence, they wanted Marcos to reveal to them the location of the socalled Marcos gold, and the process of their availment and, consequently, they shall set up the mechanism for our return to the Philippines.

This was in 1988. Although they presented no written authorization for the negotiations, they said that Mrs. Aquino was fully informed of their mission.

“Exchanges of documents and talks continued from February to July of that year. A list of agreement points was given to Ambassador [Emmanuel] Pelaez for confirmation and transmittal, to which he added that ‘Marcos provide $5 billion to the Philippine government.’ On July 11, 1988, Marcos wrote to Mrs. Aquino, stating his desire to return home, offering reconciliation and support to her administration. She had no reply.

A few weeks later, Ambassador Pelaez See “Arillo,” A7

Opinion BusinessMirror

www.businessmirror.com.ph

From CSR codes of The bread from heaven conduct to binding rules Msgr. Sabino A. Vengco Jr. on corporate behavior

Alálaong Bagá

Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1

T

here are also complaints from governments that some TNCs leave the host country once local resources are exhausted and cheaper production platforms are found elsewhere. The phenomenon of “footloose capital” is amply illustrated by the experience of the Philippine garments industry. Many of the original garments investors in the 1970s to 1980s transferred to China in the 1990s and then moved to Vietnam and Cambodia at the turn of the millennium; some are now based in Myanmar, Bangladesh and Sri Lanka.

The above complaints are not new and have been aired by trade unions and CSOs in numerous global, regional and national forums for at least half a century. Yes, half a century. As early as 1972, there were formal resolutions filed in the United Nations seeking the adoption of a Code of Conduct to govern the behavior of TNCs. At that time, big national firms in developed countries had become global and began shaping a new international division of labor through their network of global suppliers and producers. These networks are now commonly referred to as the “global value chains” of TNCs. One notable outcome from the early campaign for rules was the adoption in 1977 by the International Labor Organization of the “Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.” The Declaration states that all Parties should “respect the sovereign rights of States, obey the national laws and regulations, give due consideration to local practices and respect international standards,” such as the International Labour Organization (ILO) Conventions on Freedom of Association and Collective Bargaining.

The main message of the Declaration: For the TNCs to observe “good practices” in employment, compensation, training, health and safety and industrial relations when they operate in developing countries. The Declaration states that the TNCs “should provide the best possible wages, benefits and conditions of work, within the framework of government policies.” Further, these wages and benefits “should be at least adequate to satisfy basic needs of the workers and their families.”

The 1977 ILO Declaration is fairly comprehensive in scope. The problem is that the Tripartite recommendations are nonbinding. A subsequent “Addendum” to the Declaration put it bluntly as follows: “In keeping with the voluntary nature of the Declaration all of its provisions, whether derived from ILO Conventions and Recommendations or other sources, are recommendatory…”

Being nonbinding, the Declaration has been ignored by many TNCs. There is no system for the filing and processing of any complaint or abuse. Nor is there any system of remediation or arbitration.

Meanwhile, the trade unions, CSOs, Church and consumer groups in the developed countries have joined the global campaign to curb TNC abuses by pressuring their own homegrown TNCs to stop violating labor, human and environmental standards in countries where the TNCs operate. The global campaign intensified in the 1980s to 1990s when Asia became the workshop of the world for the production of labor-intensive products such as garments, footwear, toys, furniture, semiconductors, transistors, etc. These products are usually manufactured in “union-free” exportprocessing zones under international outsourcing arrangements.

The campaign for TNC rules metamorphosed in the 1990s into a strong consumer movement in the developed countries. The power of the consumer movement was demonstrated in 1997 and 1998 when sales of Nike’s shoes collapsed in North America and Europe when an American TV channel exposed the anti-labor practices of Nike’s contractor partner in Vietnam. The business of some

American garment retailers was also affected when it was discovered that they were using Saipan as a base for low-cost production, using imported Asian workers housed in dingy dormitories and paid extremely low wages. There were other high-profile cases that were documented by consumer movements like the “NoSweat Campaign” in the United States and the “Clean Clothes” in Europe.

It is against the above historical backdrop that a number of TNCs began adopting their respective Codes of Conduct that contain guidelines on how TNC subsidiaries, contractors and subcontractors should behave in foreign climes. Thus, in the case of Levi Strauss and Co., its 1991 Global Sourcing and Operating Guidelines state: “We will only do business with partners whose workers are in all cases present voluntarily, not put at risk of physical harm, fairly compensated, allowed the right of free association and not exploited in any way.”

The phrase “corporate social responsibility” or CSR has also become part of the TNC vocabulary. A global cottage industry on CSR audit and monitoring of compliance with various Codes of Conduct has blossomed, led by institutions, such as Bureau de Verite and Societe General de Surveillance or SGS. Strange-sounding acronyms and terms have also crept into the corporate vocabulary—ISO 14000, SA 8000, OSHAS 18000, WRAP, GCI, ethical outsourcing, ethical consumption, ethical trading and so on. Today, every act of corporate kindness and generosity, such as contribution to charity, assistance to street children, participation in the habitat, cleanup of dirty canals, donation of old computers to impoverished schools and so on is considered CSR. However, these individual Codes of Conduct cannot substitute for a global binding standard to govern TNC behavior. In 2000 United Nations SecretaryGeneral Kofi Annan tried to promote a “Global Compact Initiative” that sought the commitment of TNCs to respect basic labor, human and environmental rights wherever they operate. But, like the 1977 ILO Declaration, the GCI was still nonbinding.

In 2011 the UN Human Rights Council adopted the Personality-Relatedness and Reciprocity Framework advanced by the UN Rapporteur on Business and Human Rights, Prof. John Ruggie. The framework declares that—it is the “Duty of States to Protect Human Rights,” it is the “Duty of Business to Respect Human Rights,” and it is the “Duty of All Stakeholders to Find Remedy” if there are violations of human rights. The UN HRC came up with 30 or so guidelines on how business, government and other stakeholders can satisfy the “three pillars.” But again, these are still recommendatory and nonbinding.

And now, the latest news: The UN is debating a proposed UN treaty on TNCs and human rights. The proposal, originally submitted in 2014 by Ecuador and South Africa, seeks to elaborate an international binding instrument to regulate the activities of TNCs and “other business enterprises.”

Will the UN be able to adopt this? Will the Philippines, mired as it is on humanrights issues at home, join the global community in voting for the adoption of this treaty? Or will everyone wait for another half a century before a binding one is finally adopted?

I

N His catechesis for the people following His miraculous feeding of thousands on the mountain, Jesus claimed to be the bread from heaven, the One Sent by God (John 6:41-51). This claim to be divine is the crux of faith in Him. The paradox of a sacrament, especially God’s primordial sacrament, the incarnate Son in His humanity as the manifestation of God’s presence in our midst, is that it hides even as it reveals.

Faith is necessary IN this “bread of life discourse” of Jesus, a circuitous discussion that progressively unfolds the revelation of Jesus, the indispensability of faith to connect with Him as the One Sent by God surfaced early on.

In last Sunday’s Gospel reading the people tentatively inquired, “What can we do to accomplish the works of God?” and Jesus went straight to His own point, “This is the work of God, that you believe in the one He sent” (John 6:29). The one thing pleasing to God and in accord with the divine plan is that we believe in

His Son. Jesus clarified, “Whoever comes to me will never hunger, and whoever believes in me will never thirst” (6:35). He is the divine answer to life’s deepest needs. This is the plan of the Father “that everyone who sees the Son and believes in Him may have eternal life” (6:40).

Jesus emphasizes, “Amen, amen, I say to you, whoever believes has eternal life” (6:47).

To relate to Jesus, faith is required. And faith in Him is a gift from the Father: “No one can come to me unless the Father who sent me draw him” (6:44). As the Son

Amusement tax Atty. Rodel C. Unciano

Tax Law for Business

W

ith the Filipinos’s penchant for singing, dancing and entertaining, it is no wonder that karaoke bars have sprouted like mushrooms all over the country. And the Bureau of Internal Revenue (BIR) has not lost sight on this, as it started chasing some taxpayers seemingly or likely engaged in these activities for a profit, in light of the provisions of Revenue Memorandum Circular (RMC) 18-2010, in relation to Section 125(b) of the 1997 Tax Code, as amended.

Section 125(b) of the Tax Code, as amended, authorizes the imposition of amusement tax from the proprietor, lessee or operator of cabarets, night or day clubs, among others. In implementing the mandate of Section 125(b) of the Tax Code, the BIR, under RMC 18-2010, defines night and day clubs as drinking, dancing and entertainment venues, which oftentimes serve food and provide entertainment. Cabarets, on the other hand, are defined as restaurants or clubs where liquor and food are served, with a stage provided for performances by musicians, dancers or comedians, including a venue for dancing by patrons/customers, similar to that of nightclubs. Other amusement places that offer the same pleasurable diversion entertainment and function, including

Arillo . . .

continued from A6

issued a press statement from Washington, saying: Marcos tried to bribe Aquino with $5 billion for his return.

Realizing that it was all a cruel trick, the Marcoses desisted from further negotiations with President Aquino’s regime or her relatives.

The RICO charges were refiled on October 21, 1988, under circumstances more favorable to the Aquino regime (the review of the Military Bases Agreement having started six months earlier).

Cory Aquino’s relatives in America

ON February 2, 1989, Vice President Laurel got a telephone call from Imelda in Honolulu, requesting him to come over for what could be the farewell message of the ailing President Marcos. The next day, Laurel flew to Honolulu; he was fetched from the airport and taken directly to Saint Francis Hospital. President Marcos was in the intensive care unit. Laurel remembered the message he was given:

Thursday, August 9, 2018 A7

leads all to the glory of the Father, the Father leads us to the life that is in the Son. Faith does not come from evidence or some irrefutable proof. It comes from the Father.

Borrowing from Isaiah (54:13), Jesus reminded His listeners of the promise that “They shall all be taught by God.” Attentiveness to God leads to Jesus: “Everyone who listens to my Father and learns from Him comes to me” (6:45).

Faith is a gift to all, though not everyone open oneself to it.

Unto life everlasting

Drawn to Jesus in faith given by the Father, Jesus promises the believer: “and I will raise him on the last day” (6:44). To be with Him on the last day is to share in His eternal life. Jesus has earlier given the assurance in connection with the will of the one who sent Him that, “I should not lose anything of what he gave me, but that I should raise it on the last day” (6:39). In the repeated contrast to the people of old who ate the manna in the desert but died, which gift from God the listeners of Jesus in their fixation on perishable food considered as their own ideal (6:30-31), Jesus points out that whoever eats the

Following RMC 18-2010, the terms cabarets, night and day clubs expressly include other amusement places, such as videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges, for the purpose of imposing the 18-percent amusement tax.

videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges, are included in the coverage of the 18-percent amusement tax under RMC 18-2010.

In CTA Case 9279, the BIR assessed a taxpayer for the 18-percent amusement tax following the provisions of RMC 18-2010. The BIR claimed that the taxpayer is an amusement place within the definition of night and day club and cabaret under RMC 18-2010 mainly because it serves liquor and food to its customers, with stage performances by musicians and dancers.

It is also a venue for dancing, which encourages prolonged stay resulting in more revenue from sales of food and drinks to customers. Being a place of amusement, the BIR argued that the taxpayer is subject

to amusement tax on its gross sales of food, refreshment, services and merchandise served to customers, pursuant to Section 125(b) of the Tax Code, as amended.

In disposing of the case, the Court of Tax Appeals cancelled the assessment on the basis that the taxpayer does not fall within the scope or coverage of cabarets and/ or night or day clubs under Section 125(b) of the Tax Code. For a business entity to be deemed a cabaret, or night and day club, it must be established that its operations involve dancing as the main business and customers patronize the place in order to dance either with their own partners or with professional hostesses engaged by the establishment for that purpose.

In this case, there is no indication that the taxpayer’s customers frequent the establishment to dance, either with their own partners, or with professional hostesses. The taxpayer provides entertainment to its customers through

“Please tell Mrs. Aquino to stop sending her relatives to me. They are proposing so many things. I have already established a foundation, and I am turning over 90 percent of all my worldly possessions to the Filipino people. Enrique Zobel has all the papers. He and the Papal Nuncio, Monsignor Torpigliani, will sit in the Board and see to it that 90 percent of all that I have are properly distributed to our people. That is much better than what Mrs. Aquino’s relatives have been proposing. I am leaving only 10 percent for my family.

“Lastly, and this is my only request for myself, please help me to be brought home. I want to die in my own country. I want to be buried beside my mother.”

Returning immediately to the Philippines, Laurel tried to see President Aquino, but was told that she was busy. All Laurel wanted were three minutes; he was bitter when he was told that Tom Cruise the American actor got an hour. He left a short note for Cory instead.

Her response, when it came, was for him to disclose the Marcos

message directly to the public. He felt that to do so would violate the confidentiality in which the message was entrusted to him. He wanted to give her the message first; then she could make the disclosure to the public.

He never got to deliver the message. Cory informed him that, on February 3, she received “a copy of the letter” of Ferdinand “Bongbong” Marcos Jr., on which she did not elaborate. If that letter contained the father’s message, as communicated to Laurel, Cory may have found the references to her relatives and their propositions unpalatable.

The prosecution had presented 95 witnesses and some 350,000 pages of documents, some of them provided by the Swiss government.

The proceedings filled 6,578 pages.

Cory even had the advantage of having Diane Nicholson, the wife of New York District Court Judge John Keenan, as a schoolmate at the College of Mount Saint Vincent in New York (Mrs. Marcos revealed this in March 1996).

The loss of the RICO case against

bread He gives “will live forever” (6:51). For the purpose of the bread come down from heaven is “so that one may eat it and not die” (6:50).

Total, intimate adherence of oneself to another person, and not just mental assent to his teaching, is nothing short of love. To really believe and to love go hand in hand.

To believe, like to love, is to allow oneself to be drawn and captured, to be seized. To believe in Jesus, to love Him, is to be drawn by the sweet taste of the heavenly bread, wrote Saint Clement of Alexandria late in the second century. It is to be attracted and charmed by love, truth, joy, justice, peace, everlasting life—all things Jesus Christ is.

Alálaong bagá, communion of love and life with God is possible for us in, with and through Jesus.

And the Father draws us in faith and love to Jesus, as He sacramentally makes Himself available to us until the end of time in the bread and wine of the Eucharist as our imperishable nourishment unto everlasting life.

Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on DWIZ 882, or by audio streaming on www.dwiz882.com.

live bands and singers, but these are incidental to the main restaurant business of providing food and drinks to its diners, and are merely for the purpose of advertisement and promotion of the restaurant business. Also, no tickets are sold by the establishment to its customers to view the live band, as it is but a part of the service to customers as they dine.

Following RMC 18-2010, the terms cabarets, night and day clubs expressly include other amusement places, such as videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges, for the purpose of imposing the 18-percent amusement tax. However, the tax court gave no weight to the provisions of RMC 18-2010 since, according to the tax court, it unilaterally changed and expanded or widened the scope or meaning of cabarets, night and day clubs under the contemplation of the 1997 Tax Code and existing jurisprudence.

The author is a senior associate of DuBaladad and Associates Law Offices (BDB Law), a member-firm of WTS Global.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at rodel.unciano@bdblaw.com.ph or call 403-2001 local 140.

the Marcoses in 1990 boded ill for similar major lawsuits in the Philippines, insofar as the prosecution depended basically on the same body of evidence.

The main difference is that, while the American judicial system took four years to reach an acquittal, many cases in the Philippines remain pending to this day.

What was noted in June 1999 in the book The Two Billion Dollar Human Rights Uproar still holds true: “To this day, the government has not won Forfeiture Case 0141, the main litigation to judicially and forever divest the Marcos Estate of its assets. The government has failed to prove that the Marcos assets in question were stolen from the State.

But this failure of the prosecution is more onerous on the part of the Marcoses, because for as long as the case drags on, they cannot recover their assets or enjoy even just the fruits thereof.”

To be continued To reach the writer, e-mail cecilio.arillo@ gmail.com.

2nd Front Page BusinessMirror

A8 Thursday, August 9, 2018

No tariff cuts on meat, says Arroyo, as House confirms resort to EO eyed

R

By Jovee Marie N. dela Cruz

@joveemarie

EAD their lips: No tariff cuts on meat imports are being planned, and no one in the Executive or Congress will champion that. Speaker Gloria Macapagal-Arroyo made this clarification, as she said other options to cut inflation are more well-studied and will not cause undue collateral damage.

She said she is not keen on tariff cuts on meat imports as it would hurt the country’s livestock sector.

As Arroyo once and for all ruled out cutting tariffs on meat imports, she acknowledged that talks are ongoing on the other measures seen to help arrest the rising inflation—hitting July at 5.7 percent—such as those having to do with rice tarrification, fuel prices and the peso.

House leaders, likewise, acknowledged that Congress’s brief recess on August 16 to 27 could be used to provide President Duterte the opportunity to step in and issue executive orders embodying the tariff cuts on certain items, in a bid to speed up the process.

E a r l i e r, A r r o y o ’s s p e c i a l

focal person for Counter-Inf lation Measures, Albay Rep. Joey S. Salceda said that the Speaker wants the President to consider reduce tariff on fish and meat imports to zero.

“Upon clarification with the Speaker, she clearly stated that she is not advocating for the importation of meat products at reduced tariff rates considering that there are other more substantive drivers of inflation as cited in the PSA [Philippine Statistics Authority] survey,” said a statement from Arroyo’s office on Wednesday.

In an interview with the BusinessMirror, Agriculture Secretary Emmanuel F. Piñol said Arroyo confirmed to him that she did not propose the tariff cuts on meat imports.

“Prior to the [last] Cabinet meeting, I talked with Speaker [Gloria Macapagal-Arroyo] and validated that proposal. And she said she was not the one who proposed it,” Piñol said. “It is only [for] the fish imports that she wants zero tariff.”

Reducing tariff on meat imports was among the measures taken up with President Duterte’s economic managers to address the rising inflation, Salceda had said. Another option eyed is to have the National Food Authority buy 500,000 metric tons of wel l-mil led r ice; and for the Bangko Sentral ng Pilipinas (BSP) to increase by an additional 25 basis point its key rates.

Salceda said the House leader also suggested the deferment of regulated price adjustments to the Department of Energy, Energy Regulatory Commission and water regulators.

While the House respects the independence of the BSP and its policy board (MB), Salceda said robust adjustments in the policy rates may be needed to address stubborn high domestic prices.

Salceda said with these vigorous economic measures, the government could reduce inflation to 4.4 percent by December.

Just brainstorming

Arroyo, in a press conference, said the recent discussion with economic managers was just a brainstorming, adding, “I’m not in the Executive; we had a meeting, we will brainstorm. [It’s] not my job to do all those things because I’m not in the Executive.”

Arroyo said the meeting with economic managers “was really off the record because it was a brainstorming thing.” Nonetheless, she added, “[But] I am glad that’s how Joey Salceda brought out in an organized manner, the points that were raised at the end of the day.”

T he Spea ker stressed that “those are only [proposals], it is going to be the Executive who will act on it.”

Arroyo confirmed that Piñol told her that reducing tariff on meat products “will be a problem for me; so we are not advocating that.”

Rice, fuel, peso

Arroyo, however, admitted that they are discussing the rice importation and tariffication, prices of oil and fuel, as well as exchange rates with the Central Bank to control inflation. “[We’re talking about] the rice

importation; another one is tariffication, another is the tariffs on fish; another one [has] something to do with oil and fuel. I think [Energy Secretary] Al Cusi will come up with an administrative order by the end of the day; and the exchange rates with central bank,” she added.

To address the soaring inf lation, the House of Representatives will be giving President Duter te “elbow room” to inter vene with measures aimed at lower ing pr ices of food and commodities.

Lawmakers said the legislative calendar was tweaked providing Congress a weeklong break starting August 16, which would pave way for the President to issue an executive order on tariffications.

House Committee on Ways and Means Chairman Rep. Dakila Carlo E. Cua of Quirino said there are some changes in the legislative calendar to make way for President Duterte to intervene with tariffication measures. “[This congressional break] will allow him to address the inflation by lowering prices of fish and rice and other commodities. So this break will allow him to have elbow room to fix the tariffs,” Cua said.

T

@ReaCuBM

HE Philippines risks its positive credit rating status if fiscal issues, in line with the shift to a federal form of

government, remain unaddressed, the Department of Finance (DOF) told legislators.

During a Senate Committee on Finance hearing on Wednesday, Finance Secretary Carlos G. Dominguez III told senators

the government is not willing to risk the country's positive credit rating status, which is important in terms of sustaining the growth of the economy. “[It means] a very large deficit.

Oh, [and] it [our credit rating]

will go to hell. [Then] everybody pays higher interest rates,” Dominguez said.

It was pointed out during the hearing that if issues surrounding the shift to a federal form of government are not addressed, the country’s fiscal status would remain uncertain, with such uncertainty leading to a possible credit rating downgrade.

Asked by senators what the economic managers think of the draft federal constitution from the President's Consultative Committee (Con-com), Dominguez described the draft as very confusing.

“As I said earlier, we are very confused by the draft. I don’t know [if it’s] much better; it depends on the final discussions and resolutions on the issues on federalism, it depends,” he added.

The revenue sharing for the national government and the local government units (LGUs) under a federal form of government, among others, should also be made clear in order to put up a more comprehensive budget plan.

“So I think there are a lot of issues that need to be worked out and it’s good that it’s being discussed publicly right now, and that’s just one of the issues that we see from the fiscal point of view. Again, Ernie [Pernia] is right, if we don’t manage this correctly, this can end up to be a fiscal nightmare. So I think the legislature in its wisdom can sort those issues out,” he said.

Not a n s wer i ng t he i ssues would could also lead to a derailment of the Duterte administration’s “Build, Build, Build” (BBB)

Tariff. . .

Continued from A1

On the other hand, milling-wheat imports are exempt from tariffs, but are subject to a 12-percent VAT on the subsequent flour sales, payable at the time the wheat was imported, according to the Gain report.

Meanwhile, tariffs imposed by the Philippines on meat products range from 10 to 40 percent.

Revenue impact

Asked during the briefing on the impact of revenues on reduction of tariffs on the imports of these food items, Diokno said he doesn’t think it will

Final draft for 3rd telco ‘beauty’ tilt released

By Lorenz S. Marasigan @lorenzmarasigan

T

infrastructure program, which is eyed to usher in the golden age of infrastructure in the country.

Although the Duterte administration’s economic managers have yet to issue their cluster’s official position on the matter of federalism, the finance chief explained that the Federal Constitution should clearly explain who pays for what.

“I’m happy that it is being discussed now because the original draft...from the fiscal point of view leaves much to be desired. During a meeting with the members of the commission, I asked who is going to pay for the national debt? Who is going to pay for the military?

Who is going to pay for the DFA [Department of Foreign Affairs] and the Central Bank, and if it needs additional capital, who is going to put that up? And the response was that the sharing with the LGUs of the states will be after those expenses. When I read the draft it doesn’t say so there, it just said 50 percent. So I said you know, that’s what you say, but how come it’s not in the draft?” he added.

The Con-com submitted its proposed draft Federal Constitution in July, with the document tagged as only “recommendatory,” since the mode of revising the Constitution —whether through Constituent Assembly or Constitutional Convention—has yet to be finalized.

Socioeconomic Planning Secretary Ernesto M. Pernia also pointed out that the cost of running a federal government may range from P120 billion to P131 billion, emphasizing that rushing to shift the system is not good for the country.

HE legal process for the selection of the third major player in the telco market officially started on Wednesday, when the Department of Information and Communications Technology (DICT) made public the final draft of the rules and regulations for the so-called beauty contest.

Eliseo M. Rio Jr., the agency’s chief, said the publication marks the 55-day timetable to craft the official terms of reference (TOR) for the selection process through the consolidation of comments, inputs and suggestions from stakeholders, experts and the public.

“We have started the legal process for the third telco selection, and it will go for 55 days. This means we cannot take shortcuts anymore,” he told the BusinessMirror via phone.

The agency published on Wednesday the final draft, the basis for the terms of reference for the selection process, which Rio calls a beauty contest. In July the agency adopted the terms of reference that favors the highest committed level of service over the auction model.

The rules is a points-based beauty contest that will judge third telco aspirants on the basis of their committed speed, coverage and capital.

Under the draft rules, third telco bidding participants should target to cover at least 30 percent of the population with a minimum speed of 5 Mbps through a P40-billion capital and operational expenditure program annually.

These minimum requirements are to be matched or topped to earn extra points for each criterion. The weight of each criterion varies from the first year to the fifth.

A public hearing—much like a congressional deliberation—has been set for August 23. It will allow the agency to enhance the draft terms, and publish the official TOR after two weeks of review and amendments—if any.

The official draft also removed a deposit requirement from the future third telco, but still required it to post a performance bond.

The selection process had been on a standstill before the finalization of its mode of implementation, as the Department of Finance raised valid points on revenue generation through an auction.

“The official TOR will be effective around the end of September. We will incorporate comments and suggestions in the final version and we will be publishing it in a law journal,” Rio said.

Once all these are done, the government will be ready to receive the offers from groups vying for the third telco spot.

“For sure, there will be a third telco by the end of 2018,” Rio said.

After the award sometime in December, the winner will have about two months to finish its incorporation process, including the securing of approvals from the privacy commission.

Filipinos can start using its services by mid-2019, at least that is the target.

The third telco is seen as a catalyst for change in the duopolistic telco market in the Philippines. Long dominated by Smart Communications Inc. and Globe Telecom Inc., the telco market in the country continues to lag behind its peers in the Asean in terms of speed, infrastructure and, in some areas, price.

Based on Ookla’s research, the Philippines ranked 97th out of 125 countries in terms of mobile data speeds, and 84th out of 135 in fixed broadband.

Tower infrastructure is likewise below par at only 16,000 towers versus the total demand of 70,000 towers.

Fifteen companies are looking to submit offers for the third telco spot.

be significant. “We’re leaning toward a uniform reduction to 5 percent. It’s not zero but 5,” he said.

“We want to make it five [percent] because it is simpler and uniform and if you have a standard rate like 5, it’s neutral in a sense that it doesn’t affect consumption of goods.”

He also said that they are also considering the importation of these food items, including rice, which they have yet to determine the specific volume to be imported.

Sought for comment on the possible negative impact to local producers of the planned tariff reduction and importation, Diokno said this is for the benefit of the consumers.

“If you want to protect local farmers, if the price is expensive, what a pity for consumers. Where will

you side? [It is] the greatest good for the greatest number,” he told the BusinessMirror.

Under Republic Act 10863, also known as the Customs Modernization and Tariff Act, the President has the power to increase or decrease rates of import duty. This power must also be exercised by the President when Congress is not in session and that the power may be withdrawn or terminated by Congress through a resolution.

July inflation was recorded at a new five-year high at 5.7 percent. This was higher than the June inflation at 5.2 percent.

The Development Budget Coordination Committee revised earlier its 2018 inflation forecast from 2 to 4 percent to to 4 to 4.5 percent.

Year-to-date inflation is already at 4.5 percent.

DOF: Unresolved fiscal issues on federalism imperil credit rating

By Rea Cu

www.businessmirror.com.ph