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Thursday, August 23, 2018 Vol. 13 No. 313

Inflation’s pain on poor spurs call for task force

By Cai U. Ordinario @cuo_bm & Butch Fernandez @butchfBM

HE poorest consumers lost as much as P14 per day in the January-to-June period due to the high cost of various commodities, particularly food items, according to Ibon Foundation.

In a forum on Wednesday, Ibon Foundation Executive Director Jose Enrique A. Africa said 50 percent of the poorest households already lost P1,159 to P2,596 in the first six months of the year due to inflation. Assuming there are 180 days in

Medal Tally As of 8 p.m.

Country

35 27 12

2 Japan

16 20 23

3 korea

10 15 19

4 indonesia

5 Iri iran

6 dpr korea

7 india

8 thailand

9 chinese taipei

10 Mongolia

11 Uzbekistan

12 KAZAKHSTAN

13 lebanon

14 MALAYSIA

15 MACAu, CHINA

16 PHILIPPINES

17 Jordan

17 singapore

19 vietnam

20 Kyrgyzstan

21 Hong kong

22 Turkmenistan

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D.O.F. VOWS ‘MORE JOBS’ UNDER ‘TRABAHO’ BILL, BUT OPEN TO P.5-B SAFETY NET By Bernadette D. Nicolas

@BNicolasBM

palengke, nararamdaman nila less ang kanilang nabibili ng kanilang hindi tumataas na kita. [(This is the reason) consumer’s pockets are hurting. It’s because, week after week, when they go to the market, they see that their stagnant income can buy fewer items],” Africa said. Africa said the independent think tank derived its estimates from the data presented by the Department of Finance at the Senate hearings on the Tax Reform for Acceleration and Inclusion (TRAIN) 1. The DOF presented the monthly income per decile per 2018. The income estimates were deflated by Ibon using the inflation estimates of the Bangko Sentral ng Pilipinas (BSP) over the course of the past few months.

LTHOUGH the Department of Finance (DOF) insisted that more jobs will be created in the long run under the Tax Reform for Attracting Better and High Quality Opportunities (or what the House now calls “Trabaho”) law, it is amenable to including in the law a fund that will serve as a “safety net” in case of job losses. Finance Chief Economist and Undersecretary Karl Kendrick T. Chua told reporters in a Palace briefing on Wednesday that the inclusion of the fund under the measure—referred to as the second package of the Tax Reform for Acceleration and Inclusion (TRAIN) does not mean that there will really be job losses. Nonetheless, he posed no objection to a safety net fund, but clarified in a chance interview that it was really Congress, not the finance department, that proposed it. “Actually we never proposed it. It’s Congress who proposed the fund just in case because I cannot guarantee 100 percent; but based on the reform we presented, it [job loss] doesn’t seem to be the case. At least we have something to offer, like a contingent fund, if ever there will be displaced [workers], if ever there will be because, if there is, you don’t [have to] wait for the next budget,” he said. Sought for clarification if there will really be job losses, Chua said: “Everything is possible, but it is improbable.”

Continued on A2

B Total

1 China

23 Myanmar

the first semester of the year, BusinessMirror estimates showed that this translates to a daily income loss of P6.44 to P14.42 per household. “[Ito ang dahilan] kung bakit umaaray na ang mga tao ngayon. Its because, linggo-linggo, pupunta silang

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Fish traders behind price spikes focus of BFAR

7-month NG deficit rises 36% to P279.4B

By Rea Cu

@ReaCuBM

HE national government has reported an P86.4-billion deficit for the month of July, with both expenditures and revenues posting doubledigit growth for the month, data from the Bureau of the Treasury (BTr) showed. The July deficit is bigger by 71 percent than last year’s P50.5 billion for the same month. It pushes the January to July 2018 deficit to P279.4 billion, up by 36 percent, from the P205 billion recorded in the same period for 2017. Revenues for the month grew by 24 percent to reach P241.7 billion, coming from theP194.6 billion last year. Broken down, tax revenues accounted for P217.8 billion, and nontax revenues, P23.9 billion. The July 2018 tax revenues from the Bureau of Internal Revenue (BIR) reached P164 billion for the month, higher by 19 percent from the P138.1 billion recorded in the same month for 2017. The Bureau of Customs (BOC) See “NG deficit,” A8

PESO exchange rates n US 53.3860

GOLDEN SMILE FOR A GOLDEN LIFT What a morning-after smile this is for Hidilyn Diaz as she wakes up on her bed at the 18th Asian Games Athletes Village in Jakarta on Wednesday morning with a gold medal in weightlifting. And who’s smiling back home? The entire Filipino nation. Thank you, Hidilyn. Story on C3. JUN LOMIBAO

House to resume hearings on 2019 budget By Jovee Marie N. dela Cruz

@joveemarie

FTER reaching a “compromise” with Malacañang, the House of Representatives has decided to continue deliberations for the 2019 national budget when Congress resumes its session next week. Accord ing to the schedu le

released by the House Press and Public Affairs Bureau on Wednesday, the allocation for the Department of Trade and Industry and Department of Education (DepEd) will undergo scrutiny on August 28. Due to issues hounding the country’s shift to cash-based budgeting system, the House Committee on Appropriations has temporarily

suspended the deliberations for the 2019 national budget. After discussions with the Palace, however, Majority Leader Rolando G. Andaya Jr. said the lower chamber will resume budget hearings during the two-week congressional break, which started on August 16. Still, no hearing was conducted during the break. See “Budget,” A8

HE Bureau of Fisheries and Aquatic Resources (BFAR) is looking at the possibility that a fish cartel could have contributed to the high prices of fish in recent months. In a forum on Wednesday BFAR Assistant Director Sammy A. Malvas said they have received reports that prices of fish tended to rise significantly after these are brought to shore. He said, as an example, if round scad catch would cost P100 per kilo from the boat, prices would increase to around P120 to P140, or even P160 per kilo, when it reaches wet markets. “We are looking at the interference of unnecessary layers,” Malvas said. “Maybe there are two or three more layers that are unnecessary. Fish catch is passed from one middleman to another until it reaches the wet market,” Malvas added, in a mix of English and Filipino. Malvas said removing unnecessary layers will bring down fish prices. Some traders, who do not have capital and actually just “whisper,” are often the cause of higher prices because they have higher profit margins. Malvas told the Lido Cocina Continued on A8

n japan 0.4841 n UK 68.8893 n HK 6.8013 n CHINA 7.7921 n singapore 39.0934 n australia 39.3401 n EU 61.7836 n SAUDI arabia 14.2344

Source: BSP (22 August 2018 )

News

BusinessMirror

A4 Thursday, August 23, 2018 A2

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Caap probes Xiamen landing mishap at Naia By Recto Mercene @rectomercene & Jovee Marie N. dela Cruz @joveemarie

embers of the Aircraft Accident Investigation Board (AAIB) of the Civil Aviation Authority of the Philippines (Caap) visited the landing site of the Xiamen Airlines passenger jet at the Ninoy Aquino International Airport (Naia) at midnight on Tuesday “to look at [the] reason the aircraft swerved to the grassy portion of the runway following touchdown.”

The Caap and A AIB are expected to file a recommendation on their findings before the black box and the f light recorder of the aircraft are brought to Singapore or Japan for data translation.

House probe

The House Committee on Transportation, meanwhile, has invited the pilots and officials of Xiamen Airlines to its inquiry following

the airport mishap. Committee head and Catanduanes Rep. Cesar V. Sarmiento said he had also summoned the reports of the Department of Transportation, Manila International Airport Authority, Caap and Civil Aeronautics Board on the incident. The House of Representatives has set on September 5 its inquiry into the current state of the country’s airports.

DOF vows ‘more jobs’ under ‘Trabaho’ bill, but open to ₧.5-B safety net continued from a1

This was after Act Teachers Party-list Rep. Antonio L. Tinio pointed out in a television interview on Tuesday that there is a provision in the bill for an annual P500-million structural adjustment fund for five years for workers who will be displaced by the rationalization of fiscal incentives. Tinio said this amount can be likened to a conditional cash transfer for workers. “Even the proponents foresee that there will be displacements over at least in the next five years if this bill is implemented,” Tinio said. Aside from this, the lawmaker noted provisions for a P500-million fund for retraining and P5 billion for upgrading the skills of business-process outsourcing (BPO) workers. Without giving figures, Chua stressed that instead of job losses, this bill will “massively” create many jobs for the economy as a whole, adding that there are only 3,000 firms receiving incentives right now. In contrast, there are 900,000 micro, small and medium enterprises with much more jobs that they can create or expand. These MSMEs will benefit from the bill, which will not just

Comforting the afflicted

rationalize the tax perks. Finance Assistant Secretary Joselito G. Lambino II also noted that the bill will reduce the corporate income-tax rate and with this, the MSMEs will have more money to improve their productivity and later on expand to hire more workers. He noted that 60 percent of Filipino workers are hired by MSMes. “That’s why our forecast on the balance is that the Trabaho bill will be jobs-positive, which is why Congress called it Trabaho [bill] in the first place,” Lambino said. The Trabaho bill seeks to lower corporate income-tax rate from 30 percent to 20 percent by 2029 and rationalize fiscal incentives. From the current 30 percent, the bill cuts the rate of corporateincome tax to 28 percent beginning January 1, 2021; 26 percent beginning January 1, 2023; 24 percent beginning January 1, 2025; 22 percent beginning January 1, 2027; and 20 percent beginning January 1, 2029. As for the fiscal incentives, the DOF said they want incentives to be performance-based, targeted, time-bound and targeted; and provide new fiscal incentives for deserving recipients.

Special Assistant to the President Christopher Lawrence T. Go visited Jomel Montes, an 11 year old from a marginalized family from Bohol, who had been diagnosed with leukemia, at the Vicente Sotto Memorial Hospital in Cebu City. A concerned citizen earlier posted Jomel’s medical condition on Facebook that went viral. When it reached Go’s attention, Jomel’s family got the attention that they needed. Go, who was in Cebu on Tuesday to accompany President Duterte in an event with the League of the Municipalities, assured the family that the government will take care of the expenses needed for Jomel’s treatment. He also gave cash assistance to the family, as well as a gift Jomel had been wishing for: a mobile phone to keep him preoccupied while undergoing treatment.

Chaos

Eastern Samar Rep. Ben P. Evardone said Xiamen pilots should make clear explanations, stressing the incident has stranded thousands of passengers. “We should look into the chaos that happened at the airport even after the removal of the plane from the runway. I personally witnessed the chaotic situation at Terminal 1 when my flight for Taipei was canceled. I thought that the situation would normalize already when the flights resumed, only to find out that there were more problems than when the airport was closed,” Evardone said. “While I understand the accident that happened, I cannot accept the lack of proper management and services to the passengers. Even simple flight monitors to indicate the gate assignments of airlines were not functioning, leaving the passengers guessing on the status of their flights. It was really total chaos and clear lack of efficient crisis management at the Naia,” the lawmaker added.

Downpour

The Xiamen Airlines’s pilot has initially told aviation probers that heavy rains obstructed his view of the runway during his first and second

attempt to land the plane. A Caap source said the voice recording between the air traffic controller and pilot of Xiamen Air flight MF8667 “indicated that there is no distress message, unusual conversation or any explanation from the pilot as to why he aborted his first attempt to land.” Their last conversation was recorded at 11:30 p.m., when the plane skidded out of the runway and ended at the grassy portion and got stuck in the mud. “All the technical details encoded on the flight data recorder will help in the analysis on the condition of the Boeing 737 plane when we bring it to Singapore or Japan, while the statement of the pilot and crew is vital to determine human factor,” a Caap official, who requested not be identified, said. The Naia control tower, it appears, was clueless that Xiamen Air 8667 had already overshot the runway from the time the clearance to land was given and was acknowledged by the pilot, an unofficial transcript of the conversation between the pilot of Xiamen Air flight 8667 and the tower air controller made available on YouTube indicated. “It appeared that the controller could not see the runway, which

should have been visible because the tower is now equipped with viewing video screen,” Senior Ramp Controller Alger Ramo said.

Tap the professionals

House Committee on Metro Manila Development Winston Castelo of Quezon City said the country could earn more revenues in the form of taxes from airports efficiently managed and operated by professionals from the private sector. “It’s a sad reality that the government is not really good in the airport business. We have been doing it for so many years, and yet we’re not getting any better with it,” he said “There’s a very good chance that we’ll have airports with global standards if we allow the expertise from the private business community to come in,” he added. Castelo said corruption still persists in the government and the Naia is not spared from it, as shown by the continuing incidents of pilferage in the facility’s systems. “Aside from hurting our coffers, this problem negates our efforts to promote tourism in the country. Tourists will have more fun and experience to share with the world if we allow privatization bring wonders to our airports,” the lawmaker said.

Inflation’s pain on poor spurs call for task force continued from a1

However, the estimates only accounted for the net effect of inflation on household incomes and did not isolate the impact of the weak peso, high oil prices and the TRAIN law. Nonetheless, this placed a spotlight on the problem of every poor household with the recent spikes in inflation. The poorest 30 percent of households are very sensitive to food-price hikes, since food accounts for about 70 percent of their consumer basket.

Counterinflation task force

Meanwhile, the chairman of the Senate Committee on Economic Affairs prodded the Duterte administration on Wednesday to promptly form a multiagency task force to deal with and quickly mitigate the impact of skyrocketing inflation. “I think the Department of Finance [DOF] can probably create a task force to address inflation,” said Sen. Sherwin T. Gatchalian, suggesting that it “can be a multisectoral and multidepartmental task force so that we can come up with a holistic approach to curbing inflation.” After the last hearing on the inf lationary impacts of the Tax Reformation for Acceleration and Inclusion (TRAIN) law, the senator had observed that, while many of the mitigating measures presented by the Duterte administration’s economic cluster could be implemented within 90 days, “these were a hodgepodge of different measures and different strategies.” Gatchalian indicated he “would really like to have a unified approach to this issue, and I think the right agency to do that is [the] Department of Finance, together with the Department of Budget and Management [DBM].” He recalled that, in the same previous hearing on the TRAIN and inflation, the Bangko Sentral ng Pilipinas informed the committee about the four major drivers for the July 2018 inflation: rising food prices due to weather conditions; higher excise taxes on sweetened beverages and fuel, the scheduled increase in excise tax of tobacco products; higher electricitygeneration charges and increase in water rates; and the approved provisional P1 jeepney minimum-fare increase in the National Capital Region and Regions 3 and 4.

Inflation not surprising

Laban Konsyumer Inc. President Victor Mario A. Dimagiba, for his part, said that the Ibon’s estimates on how inflation has gouged the poor house-

holds were not at all hard to believe, considering the higher excise taxes slapped on oil products, courtesy of the TRAIN, caused a 7 percent-to-8 percent increase in diesel prices. Dimagiba, guesting with Ibon’s Africa at the same Lido Cocina forum in Quezon City, said the new excise tax, which is an addition of P2.50 per liter, led to a P40-per-liter diesel price. This represented around a 7-percent increase in pump prices, the same estimate made by the Bureau of Internal Revenue. He also recalled that the recent price hikes have been extraordinary given that crude oil prices today are lower than in 2012 when inflation averaged only 3.2 percent. Dubai crude prices at that time stood at $109.08 per barrel. “Pwede sabihin na 40 centavos sa bawat piso ng taas ng oil products ay dahil sa TRAIN. Ang basis namin dyan, sa start ng taon, ang diesel ay P37.15, ’yan ang diesel price dito sa Metro Manila. From P37.15 na diesel sa umpisa ng taon, itong katapusan ng July umabot siya ng P44.65 [This could mean that 40 centavos for every peso increase in oil products is due to TRAIN. Our basis for saying that is, at the start of the year, diesel prices were at P37.15 in Metro Manila. From P37.15 in diesel prices at the start of the year, it increased to P44.65 at the end of July],” Africa said. Africa added it also does not make economic sense for the country’s economic managers to project a declining trend in inflation even if excise taxes are bound to increase in the coming years. He said excise tax will increase further to P4.50 in 2019 and P6 in 2020. “It makes no economic logic [for them to] say they will increase taxes, but prices are going to moderate.”

Weak peso, global prices

Africa conceded, however, that it was also true that inflation has been caused by the depreciation of the peso and the increase in international oil prices—which the government had no control over. Nonetheless, he said this must not prevent the government from acting on matters that it can control to improve the plight of Filipinos. This can be done through the implementation of taxes, particularly excise taxes. Dimagiba also urged the government to undertake six measures to strengthen the implementation of the suggested retail price. One of these measures is to deploy full time price monitors, in addition to regular employees. These price monitors will be deployed in all wet markets and supermarkets

in all urban centers in the country and saturate price and supply monitoring. This group of additional price checkers can even include high-school graduates who are able to fill up matrices. Dimagiba said this was done before when he was still at the Department of Trade and Industry (DTI). Reviving the practice will increase the visibility of the government in retail outlets to discourage profiteering and protect consumers. “’Yung proposal namin na ’yan, ginawa na namin before. Nandun pa naman ’yung mga directors, dati kong mga directors, they know how to do it, may template na ’yun. Maganda ’yun kasi, pag regular manpower, three people, five people, after two hours pagod ka na [Our proposal has been done before. The directors know how to do it, there’s a template for this. This is better because, if you do this using regular manpower, three people, five people, after two hours, you’re already tired],” he said. Earlier, local economists warned that the worst is still to come for millions of Filipino consumers, as inflation is expected to further increase in the coming months. This was after the Philippine Statistics Authority disclosed that inflation increased to 5.7 percent in July 2018. Some economists believe inflation could reach higher than 6 percent, which could force the Central Bank to raise interest rates anew.

Delayed mitigation

The Senate Economic Affairs committee was informed at the hearing about delays in the implementation of various social-mitigation measures, including the 10-percent discount on rice sold by the National Food Authority, the Unconditional Cash Transfer program and the Pantawid Pasada program. The NFA has admitted that it has yet to implement the 10-percent discount because no funding has been given by the DBM. This prompted Gatchalian to decide to convene more Senate hearings “as long as inflation is an ongoing concern.” He added: “We can see that this year has been very volatile in terms of the fluctuations in prices. As long as inflation is an ongoing concern, we plan to conduct several more hearings. These are the times that we should be very vigilant. These are the times that we should be really on the ball with monitoring, analyzing and enforcing inflation-mitigation measures.” At the same time, Gatchalian voiced hopes the concerned agencies would be able to come up and present concrete progress in the implementation of these measures at future hearings.

State workers to SC: Restore tax-free perk By Joel R. San Juan @jrsanjuan1573

OVERNMENT workers on Wednesday sought the Supreme Court’s reconsideration of its decision issued in July, which gives the Bureau of Internal Revenue (BIR) the go signal to subject their nontaxable benefits, such as allowances and bonuses, to withholding tax. The Confederation for Unity Recognition and Advancement of Government Employees (Courage) led other government workers’ groups in filing the motion for reconsideration of the Court’s decision that affirmed the validity of Revenue Memorandum Order (RMO) 23 issued by the BIR in June 2014. The order imposes up to 32-percent tax on allowances, bonuses, compensations for services and other fringe benefits of government workers. Courage President Ferdinand Gaite said that the SC ruling, if not reconsidered, would adversely effect government employees. “We are already reeling from the effect of high prices caused by the TRAIN [Tax Reform for Acceleration and Inclusion] law, oil price increase and the peso depreciation, and now this reduction on our ‘take-home pay,’ which is not even enough to take us home, will further aggravate our situation,” Gaite lamented. Aside from Courage, the petition questioning the validity of RMO 23-2014 was joined by Judiciary Employees Association of the Philippines, Sandiganbayan Employees Association, Sandigan ng mga Empleyadong Nagkakaisa sa Adhikain ng Demokratikong Organisasyon, Association of Court of Appeals Employees, Department of Agrarian Reform Employees Association, Social Welfare Employees Association of the Philippines-Department of Social Welfare and Development, Department of Trade and IndustryEmployees Union, Kapisanan Para Sa Kagalingan ng mga Kawani ng Metro Manila Development Authority, Water System Employees Response, Consolidated Union of Employees of the National Housing Authorities and the Kapisanan ng mga Manggagawa at Kawani ng Quezon Citty. Even the members of the Supreme Court Employees Association, through its president Erwin Ocson, asked the Court to reverse its ruling, insisting that it erred when it included all fringe benefits as taxable. The groups maintained that the assailed RMO widened the scope of taxable fringe benefits, which is not allowed under the National Internal Revenue Code (NIRC). In its ruling last month, the Court unanimously voted to affirm the validity of Sections 3, 4 and 7 of RMO 23-2014 issued by the BIR, which classified as taxable compensation income allowances, bonuses, compensation for services granted to government employees and other benefits that have been enjoyed by government employees for some time now without any tax deductions, except for the 13thmonth pay, in excess of P30,000 and the loyalty pay. Under RMO 23-2014, which took effect on July 7, 2014, all benefits received by government employees and officials will be subjected from 30-percent to 32-percent tax. In upholding the validity of Sections 3 and 4, the Court explained that contrary to the claim of the petitioners, there is no additional tax imposed as the sections merely mirror the relevant provisions of the NIRC of 1997 on withholding tax on compensation income. The Court stressed that despite the fiscal autonomy being enjoyed by the Judiciary, Ombudsman and Constitutional Commission, this does not give them immunity or exemption from the paying taxes imposed under the tax code.

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Lawmaker to NFA: Expedite rice distribution in Mindanao By Jovee Marie N. dela Cruz @joveemarie

awmakers on Wednesday urged the Nationa l Food Authority (NFA) to look into the reported price manipulation by rice traders in Mindanao, where the prices of the staple grain spiked from P55 to P70 per kilo. Zamboanga City Rep. Celso L. Lobregat and House Appropriations Committee Chairman Karlo Alexei B. Nograles of Davao City issued separate statements after receiving reports of “abnormally high” rice prices in Mindanao. Lobregat also asked the national government to direct the NFA to expedite the release and distribution of NFA rice to the affected areas to stabilize the soaring prices of local commercial rice. “We need to step up the distr ibution of NFA r ice in the region,” he said. “Agriculture Secretar y [Emmanuel F.] Piñol has v isited Zamboanga [ l ast Monday] to assess the situation,” Lobregat added. Reports reaching lawmakers indicated these prices of rice in Region 9: Dipolog, Zamboanga del Norte, P55 to P60 per kilo; Pagadian, Zamboanga del Sur, P55 to P60 per kilo; Ipil, Zamboanga del Sur, P55 to P60 per kilo; and Zamboanga City, P60 to P68 per kilo. They added rice prices are pegged at P60 to P70 per kilo in Basilan. NFA rice is priced at P27 a kilo and is the most affordable rice variety in the market. The NFA said the current scarcity of rice in the

country is due to the spate of bad weather, which has affected both rice production and the shipment of the food staple. Data released by the Philippine Statistics Authority showed that the average retail price of a kilo of regular-milled rice in the country is P42.26, while the average retail price of well-milled rice is P45.71 per kilo. For his part, Nograles said “even accounting for less than optimal weather conditions, the discrepancy of the prices in the Zamboanga peninsula is huge. Prices like these put a huge strain on the limited budgets of families who just want to have three square meals a day. The NFA should check if something illegal is going on.” “Some 120,000 bags, or 6,000 metric tons, of rice were allocated by the NFA for Region 9. This will help stabilize the soaring prices of local commercial rice since the consumers would have more choices of rice to choose from,” Nograles said. “What’s worse, the information relayed to me is that unscrupulous traders are hoarding more rice, thereby driving up prices further. They’re manipulating the market in their favor, but this is making probinsyano suffer. The NFA must find out if this practice occurs in Zamboanga City alone or in the entire Zamboanga peninsula,” he added. The lawmakers have also asked the NFA and Department of Agr iculture to update Congress regarding their inspections in various rice warehouses in the region.

Hefty PIT cuts under TRAIN fuel mall, fast food sales growth–DOF

@jearcalas

he price of broiler at the farm level has fallen below the P70-perkilogram (kg) level as production continues to outpace consumers’ demand, according to the United Broiler Raisers Association (Ubra). Ubra President Elias Jose Inciong said farm-gate price of broiler on August 21 was at P78- to P83-per-kg range with the lowest monitored at P70. Worse, in certain parts of Central Luzon, broiler is being sold below P70-per-kg quotation already, according to Inciong. “Demand is soft. Farm performance improved hence an increase in supply. It can still move much lower,” he told the BusinessMirror via SMS. “I don’t know how long this will last. Demand will be the decisive factor as supply continues to improve,” he added. Inciong said currently, there is a glut in supply, particularly on off-sized broiler, which weighs from 1.40 kg to 1.49 kg. The higher supply volume is driven by favorable conditions, as there were no disruptions at the production side, Inciong added. The Ubra chief said farm-gate price could have been even lower if the fish supply in the market is sufficient. Inciong added that the expensive retail price of chicken also reduced the demand for the meat. “It’s just that this time of the year demand overall is usually low. There is no shift [in demand]. In fact, if fish supply [in the market] were normal, broiler farm gate would be lower,” he said. “Expensive retail is, of course, a factor. The velocity of the product would be faster if retail reflects farm gate,” he added. Inciong said demand usually picks up starting in late-September, or worse, sometimes by late-October to earlyNovember. “Farm-gate [price] may not improve much as production conditions will be favorable,” he said. Earlier this week, Agriculture Secretary Emmanuel F. Piñol said the farm-

By Rea Cu

@ReaCuBM

he Department of Finance (DOF) on Wednesday asserted that the robust retail sales in malls, fast-food restaurants and other dining places can be traced to ordinary Filipinos having more money to spend, coming from the personal income-tax (PIT) cuts under the Tax Reform for Acceleration and Inclusion (TRAIN) law, which was implemented in January this year.

DOF Assistant Secretary Antonio Joselito G. Lambino II said that retail giants and fast-food chains like Robinsons Retail Holdings Inc., Philippine Seven Corp. and Puregold Price Club (Pgold), among others, have all reported more robust sales since this year’s implementation of the TR AIN, which had slashed PIT rates, benefiting 99 percent of all taxpayers. “The significant growth in sales reported by retail establishments and restaurants point to the fact that people now have more money to spend as a result of the hefty PIT cuts under TRAIN, which is now benefiting 99 percent of our taxpayers,” Lambino said. According to DOF estimates,

Glut pulls down farm-gate price of broiler to as low as ₧70/kg By Jasper Emmmanuel Y. Arcalas

Editor: Vittorio V. Vitug • Thursday, August 23, 2018 A3

“Demand is soft. Farm performance improved, hence an increase in supply. It can still move much lower,” he told the BusinessMirror via SMS. –Inciong

gate price of broiler started to decline since the Department of Agriculture lifted the special safeguard duty on imported chicken and chicken products a few weeks ago. However, Piñol said, the fall of farm-gate price was not reflected at the retail level as prices of dressed chicken remain unchanged due to profiteering. “This development confirmed what the stakeholders of agriculture and fisheries have been saying all along— t he increase in the prices of food commodities happens in the market and does not benefit the farmers and fishermen,” he said. “The problem is not caused by farmers and fishermen making more money from higher food prices, but by traders, middlemen and speculators who are riding on the Tax Reform for Acceleration and Inclusion law issue to justify their market and price manipulation,” Piñol added.

the implementation of TR AIN gave a combined P12 billion in additional income to the country’s individual taxpayers, most of them compensation earners. Under the TRAIN, taxpayers with a net taxable income of P250,000 and below are exempted from paying the PIT, with those earning less than P8 million annually also getting PIT cuts. Lambino explained that Robinsons Retail Holdings Inc. posted a 9.6-percent growth in its profits during the second quarter, with its net sales rising by 13.5 percent to P31.5 billion. The company, in its disclosure to the Philippine Stock Exchange (PSE), attributed the increased take-home pay of consumers under the TRAIN as

among the major factors contributing to its profit growth in the April-to-June period. Philippine Seven Corp., which l icenses t he 7-Eleven convenience stores, likewise, posted higher net income of P342 million, up by 18.9 percent from P288 million posted during the same period a year ago. Its second-quarter revenues rose to 19.2 percent to P11.55 billion, from last year’s P9.69 billion, Lambino pointed out. He said the 7-Eleven operator also pointed to the TRAIN’s benefits of lower personal-income taxes, which, in turn, led to additional income for taxpayers, as the reason behind the increase in sales of all its stores despite the price hikes.

In a news statement, Pgold said its net income grew by 25.6 percent in the first half of 2018 to P3.08 billion. Its consolidated net sales increased 13.2 percent to P64.03 billion. The company earlier was pointed to have claimed it benefited from higher consumer spending due to increased levels of takehome pay after the implementation of the TRAIN. President Duterte signed into law on December 2017 the first package of the Comprehensive Ta x Reform Program (CTRP), otherwise known as the TR AIN. The measure, which took effect this year, slashed PIT rates while implementing offsetting measures, such as increasing excise taxes on fuel and tobacco products, among others.

The significant growth in sales reported by retail establishments and restaurants point to the fact that people now have more money to spend as a result of the hefty PIT cuts under TRAIN, which is now benefiting 99 percent of our taxpayers.”—Lambino

TheBroa

Business

Thursday, August 23, 2018 | Editor: Dennis D. Estopace

By Elijah Felice Rosales

PPORTUNITY knocks only once and Trade Undersecretary Ceferino S. Rodolfo Jr. wants to tap on the door of the world’s second largest trader: the United States.

“This is how it is: all governments muscle in global trade what is beneficial to their [respective] country,” Rodolfo said after a fivesecond pause. “For us, we’re also taking advantage.” The trade official can’t be blamed for saying this, as the rattling of the trade saber by the US against the world’s largest merchandise trader, China, ended with a whimper. Nonetheless, it’s a tough question for Rodolfo: Should the Philippines bargain free trade with the US at a time when Washington is enacting protectionist measures here and there? Whether his belief doing so will work to the country’s advantage remains to be seen. What is certain, however, is that there is now no stopping the Philippines and the US from ironing out a bilateral free-trade agreement (FTA). Rodolfo said the primary objective of any FTA is to provide preferential duty rates for domestic exporters. This applies to the trade deal being worked out by Manila and Washington. “Our objective really in all FTAs is to provide an FTA cover for our exporters. It has two areas: trade and investments. From the trade perspective, [it is] to provide an FTA cover to our exporters to ensure that they will not be competitively excluded from any major market by way of less preferential tariffs,” Rodolfo told the BusinessMirror. “That really is our basic objective even before.”

Trans-Pacific Partnership

TALK of an FTA between the two Asia-Pacific economies was reactivated by President Rodrigo R. Duterte and President Donald J. Trump in November of last year. In a bilateral meeting that lasted for over 40 minutes, Duterte conveyed to Trump his desire to arrange an FTA with the US, which the White House leader reportedly vowed to study. Now the Philippines tops the US’s list of preferred terrain for a bilateral trade agreement, US Trade Representative Robert E. Lighthizer said in a congressional hearing in July. And why not, Rodolfo said, given the country’s longstanding aspiration to forge an FTA with a traditional ally. The only difference now, he pointed out, was that the US is determined to give it a go on a bilateral level, unlike before when it was bugging the Philippines to enlist in the Trans-Pacific Partnership (TPP)—now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—which Trump subsequently decided to abandon. “For the longest time the US has always been telling us to join the TPP, but with that change in strategy of the US we found an opportunity [to reactivate the possibility of an FTA],” the trade official said. “We said let us try again for the bilateral.”

Asia’s triumvirate

THE US is a major economic and security partner of the Philippines. It has always been one of the country’s top export markets and largest import origins. Last year total trade between the two economies amounted to $17.4 billion, according to data from the Philippine Statistics Authority (PSA). In 2017, Philippine exports to the US amounted to $9.66 billion. These were composed of semiconductor devices ($743.97 million), digital monolithic integrated circuits ($691.77 million) and ignition wiring sets ($554.06 million).

Top agricultural exports were coconut oil ($553.33 million), pineapples ($132.7 million), raw cane sugar ($130.25 million) and desiccated coconut ($92.66 million). On the other hand, Manila imported $7.78 billion of goods from Washington, topped by digital monolithic integrated circuits ($775.96 million), oil-cake ($659.35 million) and wheat and meslin ($628.53 million). Last year the US was the country’s second top export destination behind Japan and fourth largest import source behind China, Japan and South Korea. Ten years ago, however, it was a totally different picture. The US in 2008 was the Philippines’s top export market and largest import origin with a total trade value of $15.4 billion. The last time the US was listed as the country’s top export destination was in 2009, and the last time it became the largest import source was in 2012. From 2013 onward East Asia’s triumvirate took over Philippine ports and markets.

Liberalized market

RODOLFO said about 75 percent of Philippine exports currently enter the US market duty-free either by most favored nation (MFN) rates or under the Generalized System of Preferences (GSP). According to Rodolfo, the Philippines still has around 20 percent to 25 percent that are not zero. “Those are the critical products because those are labor intensive,” he added. “You have the garments, which the US levies the highest.” Rodolfo further explained that tariffs on garments can be substantial, probably 15 percent to 20 percent. “You also have the wiring harness, but that is just taxed 5 percent. You have the seaweeds and carrageenan, wrist watches and some coconut-based products.” Further, Rodolfo believes an FTA with the US could enlarge the country’s export pie. He said if the Philippines can strike a deal eliminating tariffs on all products, then local manufacturers can expand their offering to supply a liberalized US market.

Preferential treatment

IT is a sound move for Manila to seek an FTA and not rely solely on the GSP, argued John D. Forbes, senior advisor of the American Chamber of Commerce of the Philippines (AmCham). He said the Philippines, like any other GSP beneficiary, could lose its preferential treatment for a number of reasons. “The GSP is not permanent. The US Congress must reauthorize the program, and there have often been periods when it ended before being continued by passage of a reauthorization law,” Forbes said in an e-mail to the BusinessMirror. “Also, countries benefitting from the GSP may lose it for several reasons. One is when the country has been classified as a higher-income or upper middle-income country by the World Bank for three consecutive years.” Under the Philippine Development Plan 2017-2022, this administration is targeting to develop the Philippines into an upper middleincome country by 2022. Moreover, Socioeconomic Planning Undersecretary Rosemarie G. Edillon in April said this goal could be achieved as early as next year. If this be the case, Forbes said, “the Philippines could lose GSP status in 2022.” Last year the US imported $21.2 billion of products from 121 countries and territories under

the GSP, the Office of the US Trade Representative (USTR) reported. Its top purchases were motor vehicle parts ($1.3 billion), ferroalloys ($769 million), precious metal jewelry ($749 million), monumental or building stone ($552 million) and rubber tires ($475 million).

Too risky

THE Philippines exported $1.5 billion of goods to the US under the GSP last year, making it the sixth largest beneficiary of the trade privilege behind India ($5.6 billion), Thailand ($4.2 billion), Brazil ($2.5 billion), Indonesia ($2 billion) and Turkey ($1.7 billion). In computations made by the BusinessMirror, GSP products accounted for 15.52 percent of the country’s total exports to the US in the previous year. Former Tariff Commissioner George N. Manzano surmised this could be one reason Manila is working out a trade deal with Washington. Goods covered by the GSP make up a significant chunk of the country’s export pie; losing the trade privilege without an FTA to cover up for it is just too risky to ignore. “From the point of view of the Philippines—although with Trump we never know—in theory it [FTA] basically provides us an insurance to market access [because] if we have an FTA, then [the US] could not increase their tariffs,” Manzano told the BusinessMirror. Further, he said the US government has the prerogative to strip a beneficiary of its GSP status at any given time, even if it has yet to reach upper middle-income level. This is opposed to an FTA whose terms are agreed on and observed by two or more parties. “Whereas if you have an FTA it will be zero, [and] you have certainty that it will always be dutyfree if that is what is negotiated [under trade in goods]. The GSP is temporary whereas an FTA is more or less should be considered more permanent,” Manzano explained.

Uncertain future

THE Philippines has deeper motives in seeking a bilateral trade agreement with the US. Global trade is facing an uncertain future and the country has to study its cards, strategize its moves and play the best possible hand. Rodolfo argued an FTA could mean more than just duty-free trading with the US. He said the Philippines can utilize it to reduce imports from trading partners it has deficits with, particularly China, in a bid to balance its trade sheet. Last year the country imported $17.46 billion of goods from China, more than double the $8.01 billion of products it exported to the economic giant, according to PSA figures. “If we can divert some of our imports from other countries to the US and in the process gain preferential market access to the US, then it is a way for us to improve our trade balance,” Rodolfo said. “Say, for instance, instead of 100 percent importing this certain good from this country, we can slash it to 90 percent [and reallocate the] 10 percent to the US.” He added because of a trade surplus, Manila can afford to increase its imports from Washington. That’s a “win-win situation” for the two parties—the Philippines gaining additional market access and reducing trade deficit, the US improving its exports, Rodolfo said.

American vehicles

FORBES, on the other hand, posited Filipinos will have more options to choose from if American goods are permitted to infiltrate dutyfree the domestic market. Two products the US intends to bring to the Philippines in large numbers are automobiles and motorcycles. Washington has long lamented the tariffs Manila slaps on finished vehicles, which do not apply to car imports from Japan and Association of Southeast Asian Nations (Asean) member-states. In its 2018 National Trade Estimate Report on Foreign Trade Barriers,

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the USTR took note of preferential treatments that Japan and Asean countries enjoy through a regional and bilateral FTA, respectively. “The Philippines continues to apply high tariffs on finished automobiles and motorcycles, including a 30-percent tariff on passenger cars; tariffs of 20 percent to 30 percent on vehicles for the transport of goods; and tariffs of 15 percent to 20 percent on vehicles for the transport of persons, depending on vehicle weight,” the report read. The report alleged that “new vehicle imports from Asean countries and Japan benefit from preferential tariffs under the Asean Free Trade Agreement and the Japan-Philippines Economic Partnership Agreement, respectively.” “The Philippines continues to extend duty-free treatment to imports of capital equipment, spare parts and accessories by motor vehicle manufacturers and other enterprises registered with the Board of Investments,” the report added. Forbes claimed a trade deal will allow Filipinos to purchase popular American vehicle brands at cheaper prices. “With an FTA, Philippine car buyers will have more choices not only for the Big Three—Ford, Chrysler and General Motors— but also for US-made BMWs and Mercedes, [while] Philippine bikers could pay less for their US-made Harley-Davidson,” he said. In exchange Forbes said the US could become a darling market for Philippine garment makers. “Philippine exports of footwear and garments would increase if the current double-digit US tariff is eliminated, which would be great for Marikina [shoemakers] and lead to more firms investing in the Philippines in order to export to the US,” he argued. Clothing and textiles are the fourth and fifth product groups with the highest import duties in the US, according to data from the World Trade Organization (WTO). Last year the US imposed an average MFN rate of 11.6 percent on clothing and 7.9 percent on textiles.

ODS

a PHL-US bilateral free trade

Cuts costs

AS the old adage goes, everything comes with a price. Manzano warned the country will have to make the more drastic tariff cuts in FTA negotiations than the US. He said US tariffs are generally on the low—duty-free to 5 percent—leaving the Philippines much of the dirty work. “In terms of trade in goods, I think we will have to adjust our tariffs more than the US [will have to]. Given the profile of our exports to the US, a significant portion of [it] already enters the US duty-free, but only a number of US products enter the Philippines duty-free,” he said. Figures from the WTO’s World Tariff Profiles 2018 showed Manila still has five product groups that averaged double-digit tariffs last year. Animal products were slapped an average MFN rate of 20.5 percent; sugars and confectionery 18.9 percent; coffee and tea 15.7 percent; clothing 14.8 percent; and cereals and preparations 10.3 percent. On the other hand, Washington has four import categories protected with high duties, namely, beverages and tobacco (18.6 percent); dairy products (18.3 percent); sugars and confectionery (15.7 percent); and clothing (11.6 percent). However, the US applied low tariffs on 16 of the 22 product groups, while the Philippines applied the same low tariffs on only nine.

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Domestic factors

JOSE ENRIQUE A. AFRICA, executive director of nongovernment IBON Foundation Inc., argued that reducing tariffs will not necessarily result in lower prices of goods in the market as this theory turns a blind eye to domestic factors. However, what is certain is that the local agriculture sector will suffer from tighter, if not unfair, competition if the Philippines lifts import duties on American farm goods, he said. Africa added it will also expose the government’s neglect of its farmers. “Agricultural imports from

the US include products with no domestic substitutes, like wheat and soybeans, so tighter competition would not be an issue here,” Africa told the BusinessMirror. “It is different with imports of rice, corn, chicken and pork that are all produced locally.” According to Africa, “tariff cuts on these products, which are heavily subsidized in the US, should theoretically lower consumer prices.” “But whether this will actually substantially happen will depend on how local traders react,” he explained. “The more fundamental issue is actually the longstanding government neglect of agriculture—covering not just trade protection, but also production support—which underlies the sector’s lack of competitiveness.”

US protests

THE US has long been pushing for the liberalization of Philippine agriculture. In the same report on foreign trade barriers cited above, the USTR took a swipe at the country’s tariff and nontariff measures, including meat-handling regulations and import clearance. “The Philippines maintains a two-tiered system for regulating the handling of frozen and freshly slaughtered meat for sale in local wet markets,” the report read. “Under this system, the Philippines imposes more burdensome requirements on the sale of frozen meat, which is primarily imported, than it does on the sale of freshly slaughtered meat, which is only from animals raised domestically.” The US continues to press the Philippine government to remove unjustified requirements that treat frozen meat differently from fresh meat, according to the report. The USTR also protested the Department of Agriculture requirement mandating importers to obtain a sanitary and phytosanitary permit before the shipment of any agricultural product and to transmit the permit to the exporter. “This requirement adds costs, complicates the timing of exports and prevents the rerouting to the Philippines of products intended for other markets but not sold there for commercial reasons,” the report added. Labor and industrial relations expert Rene E. Ofreneo of the University of the Philippines agreed with Africa, and said an FTA with the US could spell the worst for local farmers and livestock raisers. “I think the FTA will exacerbate agricultural problems of the Philippines, especially the producers of livestock and corn,” Ofreneo said in an e-mail to the BusinessMirror.

Right, audacity

MANZANO, on the other hand, doubted if the Philippines has the right—and the audacity—to tell the US in FTA talks to minimize its agriculture subsidies. “I am not sure if the Philippines can tell the US to lift their subsidies on their farms, but in the WTO you can because you will speak together with many other countries that will request the US [to] have discipline when it comes to subsidy,” he said. The best recourse then, the former tariff official put forward, is to negotiate “a more generous timetable on our behalf” to provide domestic agricultural workers the leeway to improve their productivity, as well as competitiveness. This could come in the form of gradual reduction of tariffs on farm and animal products. “Either that or you need to have other ways in order to compensate or improve the productivity of our meat industry,” Manzano added. Even if an FTA includes a provision on investments, Manzano said no US-based multinational will take an interest in the country’s agriculture sector. “They [American firms] can invest in the Philippine meat industry, but I think their interest is simply to export made-in-the-US meat,” he explained.

Industrialization vision

FOR Africa, however, this dilem-

ma on whether the local agriculture sector can keep up with US farm imports only uncovers the elephant in the room. He said the government should first work on a national economic development strategy that will improve the productivity and efficiency of farmers and manufacturers before seeking FTAs with economic giants. “There are many potential gains from a good deal with the world’s largest economy. Export opportunities for Filipino producers could create jobs and foreign investments could give opportunities for local firms and be a source of new technologies to increase productivity,” he said. “The problem is that the prerequisites for these to materialize are absent. Absent government support and amid premature liberalization, domestic agriculture and Filipino manufacturers are weak, so the export response is limited,” Africa added. The IBON executive argued it is meaningless to talk of export gains from a bilateral trade agreement with Washington if Manila has no export capacity to begin with, made concrete by the gap between its import bill of $96.09 billion and export receipt of $68.71 billion last year. “Before negotiating, the Philippines has to articulate a vision of national industrialization. This means developing Filipino industry that harnesses Philippine human and natural resources for national development and is not to be confused with foreign TNCs [transnational corporations] and manufacturers located in the country,” Africa concluded.

Tread cautiously

MANZANO warned Rodolfo and his team of negotiators to tread cautiously in FTA talks with the US government, especially with Trump at its helm. As the larger economy, he said the US will certainly push its weight around on the negotiating table. “Trump wants to have bilateral [trade deals] because with a bilateral they can use their size,” Manzano said. “In general, they can use their size in order to get concessions that they want simply because they are a bigger buyer, a bigger market for us.” The trade war could also be a factor why Washington is scanning the Asian terrain to look for favorable economies where it can locate some of its production facilities—a move which can benefit either the US or China, according to Manzano. “If that is the case, then the Chinese investments can come to the Philippines, produce their products here and because you have an FTA they will ship their products [to the US] from the Philippines,” he said. “That is one way [to analyze it] if we have an FTA [with the US and] provided you satisfy what we call the rules of origin that the product should be made in the Philippines, then Chinese companies can use the Philippines as an export platform to the US.” The trade specialist added, “it could also go the other way,” because “the US companies can come here and export to China,” which will also be duty-free, as the Philippines is covered by the Asean-China Free Trade Area.

No fear

“WE are not scared of the United States,” Rodolfo declared with a chuckle, as if to ask who is nowadays. “We are engaging the US [and] what we are doing is leveling the playing field for them because our tariffs on their products are still relatively high.” The country’s top trade negotiator might soon find himself in Washington discussing a trade deal that could either be a boon or a bane for the Philippines. But until then he committed his team will consult all the relevant stakeholders, particularly farmers and laborers, in crafting the Philippine position on an FTA with the US. “What is critical here is the consultation with stakeholders, with the labor sector,” Rodolfo said. “We must make sure all sectors are involved.”

A6 Thursday, August 23, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Long-term solution to Naia’s problems

he country’s main gateway resumed normal operations on Tuesday after a four-day closure that tested the competence of authorities at the Ninoy Aquino International Airport (Naia) in handling a monstrous crisis that saw more than 100,000 local and foreign passengers stranded in Manila. Xiamen Air B737-800 caused the worst headache Naia officials had seen in decades when it skidded while landing in heavy rain close to midnight on Friday and got stuck in a muddy portion at the side, blocking the runway and preventing all other planes from landing or taking off. That it took authorities 36 hours to remove the damaged 66-ton aircraft from the mud says much about our readiness and capacity to handle such kind of emergency. The Department of Transportation, however, has a viable explanation: “Recovering a disabled aircraft is far different from towing a bus. There are technical protocols and intervening factors that all international airports observe in recovering a disabled aircraft. In the case of the Xiamen incident, please note that, in addition to its size and weight, there were also four tons of unused fuel at the wings that are highly combustible, necessitating extra care to avoid fire or explosion. Apart from passengers, we also think about the safety of the rescuers. One false move, the plane might explode.” Philippine authorities have announced they will slap an initial bill of P15 million on Xiamen Airways for damages and expenses incurred as a result of the accident involving one of its planes, which forced the cancellation of hundreds of local and international flights and the stranding of more than 100,000 passengers. The general manager of the Manila International Airport Authority, Ed Monreal, said: “The P15 million is just an initial estimate. We are still looking for other damages on the runway and penalties while airport operations officials are finalizing their report that will be submitted to me.” Monreal said other airlines may file separate cases against Xiamen Air to recover their own losses. Meanwhile, estimates are being made of the landing and takeoff fees forgone with the cancellation of more than 200 flights and the diversion of 17 others to Clark and Cebu airports. Transportation Secretary Arthur P. Tugade described the Xiamen incident as an “eye opener,” which should make the government revisit several regulations and protocols. There’s also a need to review equipment inventory and to evaluate the current facilities and capabilities of the airport. Avelino L. Zapanta, touted as one of the pillars of Philippine aviation, said losses incurred could have been lessened if only the government had adopted a twin-airport strategy. In such a scenario, he said both the Naia and Clark International Airport will be developed to handle higher volumes of traffic and address emergency situations like airport closure. “For a few years now, we have been pushing for dual airport operations. This calls for development of both Naia and Clark to share the volume of traffic in/out of the National Capital Region and Central Luzon to address situations like airport closure of either of the two, such as this Xiamen Air incident; and to address the needs of the air travel market segments,” he told the BusinessMirror. There’s a bitter lesson learned from the Xiamen incident. If one aircraft accident at the Naia can practically paralyze the country’s civil aviation sector, there’s obviously a need to build an alternative airport to the country’s main gateway. This is the best long-term solution to the Naia’s myriad problems. Since 2005

BusinessMirror A broader look at today’s business

Stock Market 005: Harsh PSE realities John Mangun

OUTSIDE THE BOX

he belief that all stock markets are created equal is a great misconception about the Philippine Stock Exchange (PSE). An example of this distortion is the use of the term “bourse” to describe the PSE. That word is applicable only to non-English speaking stock markets. But a bourse is a bourse…or something like that.

It is the same idea that compares the Philippines to Thailand, conveniently ignoring the 7,000 islands thing and being in the middle of the ocean. Apparently, those two factors do not have much effect on the Philippine economy and development. But the PSE is the oldest stock exchange in Asia. The problem is that not much has changed in the structure of the local “bourse” since then. Ignore for a moment the trading practices found in most markets like universal short-selling, margin trading, and official “Stop Orders.” That will not mean anything to you personally unless you have actually

invested and traded in markets with those practices. However, the PSE is actually three stock markets. To be listed on the New York Stock Exchange (NYSE), for example, you must qualify with a minimum: $100-million market value, $50-million stockholders equity and $2-million pre-tax income in the two preceding years. Almost any company can list on the Nasdaq exchange as long as the chairman’s family name is not “Ponzi” and the registered office is not a Post Office Box in a jungle. Note that Tesla and Facebook are listed on the Nasdaq. Microsoft and Amazon are also there because

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psychology and amount of work and monitoring. That three-day seminar where you learned all those financial evaluation methods will not apply to figuring out which company will be “the third telco.” I could tell you which one will be, but that would spoil all the fun. The influence that local stockbrokers play in our market is unique also. This must be the only exchange in the world where certain brokers are known to traders as “Tatay,” “Jap,” and the famous “Black Samurai.” If they buy or sell a particular issue, you must do the same. At least that is how the conventional wisdom goes. Back in the day, before computers and the Internet, even the huge NYSE broker—Merrill Lynch, with its 30,000 stockbrokers—never had the power to move prices the way some of our local brokers have. But always remember this harsh stock market reality: When your stockbroker makes money, it does not mean you are going to do the same.

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.

PHL communist insurgency, ‘the most brutal in the world’

✝ Ambassador Antonio L. Cabangon Chua Publisher

they previously could not qualify for a NYSE initial public offering. There are requirements for PSE listing but investors ignore differences for the “Main Board” and the “Small, Medium and Emerging [SME] board.” But, in reality, there are three “PSEs.” The 30 issues that make up the PSE Composite Index, while not necessarily the 30 largest by market value, are the “blue chip” stocks. Note, though, that most of these companies went public, not out of love for the stock market, but because they have substantial foreign investors and foreign lenders that want the legal transparency that listed companies provide. There are “second line” issues sort of like the economic “middle class.” However, just like in real life, there is “upper-middle class”; and “lower middle class” based on size, profitability and, maybe most important, stock market trading activity. Finally, there is the group variously known as “basura stocks,” “Rocketchips” and “third-liners.” The importance for you as an investor is that each of the “three PSEs” requires different strategies if you are going to make money. Each also requires a different investor

Divided and ill-trained military

HE once active Grand Alliance for Democracy, a Philippine opposition party, had revealed that “the Philippine military, which was then grossly divided, was failing in its task to contain the rising tide of communist insurgency.” Gen. Richard Stillwell echoed this observation, thus: “The members of the Philippine Armed Forces are ill-trained, undisciplined, divided and not motivated.”

Stillwell, former US defense undersecretary, added that “perhaps the most severe shortcoming is the absence of rigorous, systematic, indoctrination and training in the fundamentals of counterinsurgency. Periodic unit training is the precondition for effective operations, yet most battalions have not undergone a formal training. By ignoring training, the Armed Forces of the Philippines failed to imbue the average soldier with the imperative that he is the visible symbol of good government in the countryside.” Other equally serious problems identified by Gen. Stillwell are: 1. Personnel and logistic support are underfunded and inefficient. Maintenance, particularly of

mobility equipment, is poor by any standard; 2. Precise and timely intelligence about the enemy is sadly lacking, which contributes to the defensive mode of the military, who suffers disproportionate losses as they react to Communist initiatives and whose own initiatives are all too frequently set piece operations that strike into empty air; 3. There is no current capability to target the leadership of the Communist Party of the Philippines (CPP); 4. Functionalism and disgruntlement are also rampant within the senior ranks of the officer corps; 5. The recent presidential edicts impose stringent new requirements

and time limits for arrest and detention of the Communist infrastructure, while making rebellion a bailable offense, affect personnel morale and operating efficiency; and, 6. The Civilian Home Defense Force is in disarray.

The shadow government

IN a report, Gen. Richard Stillwell remarked: “But much larger and more dangerous than the visible New People’s Army [NPA] is the associated, and largely covert, political apparatus that has steadily increased in power in the countryside.” Stillwell added that the “CPP political apparatus benefited greatly from the almost complete disruption of the nation’s administrative structure that followed the Marcos overthrow. In 1986 President Aquino summarily removed all duly elected officials in the then 73 provinces [some 140,000 governors, mayors and municipal councilmen] together with most of their staff; and appointed temporary replacement. “Whether unwittingly or not, her first Minister for Local governments, Aquilino Pimentel [whom Vice President Salvador Laurel identified as a communist in his report to the Philippine Congress], put into key local positions a number of Communist and Communist sympathizers who have allowed the NPA to operate freely in their areas.” He also said that today the

CPP “has penetrated all levels of government and is increasing its base in the cities.” “The Aquino government’s problem about the growth of the insurgency movement was further compounded by the declaration of the communists made on December 26, 1987, at their 18th year anniversary of existence and fighting in the Philippines: ‘The Filipino people’s problem could only be solved through a people’s war and we are ready to wage it.’”

Foreign assistance to the Communists

Funds were not only being raised by the CPP through “local taxation” but also from foreign sources. The Red Alert Christian ministry in the Philippines reported: “In the past years the CPP, through the effort of its chairman Jose Maria Sison and Father Luis Jalandoni, received aid from communist countries amounting to $1.8 million. The CPP’s funds were deposited in various banks in Hong Kong and one of them is BPI International Finance.” On January 28, 1988, the Philippine Star reported: “Military intelligence had received reports that a Belgian organization has sent P1.87 million as foreign aid to the rebels.” The Star, quoting declassified intelligence reports, said the Belgian organization known as “Entraide et Fraternite” had been supporting the rebel movement through See “Arillo,” A7

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On Duterte’s second year, Words of Spirit and life traffic remains a nightmare Msgr. Sabino A. Vengco Jr.

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Val A. Villanueva

Businesswise

ne of the major factors that then-Davao City Mayor Rodrigo Duterte was able to win the nod of 16 million Filipinos in the 2016 presidential elections was his promise to solve in three months the traffic woes of Metro Manila. Such an audacious claim—bolstered by his image as a swashbuckling crime buster in his hometown, and replete with theatrics rivaling those of the late director and screen writer Sam Peckinpah’s explicit depiction of action and violence—must have convinced 38 percent of Filipino voters that they had finally elected the “right man for the job.” Tired and weary from their hellish, daily commute, they trooped to the polling precincts to hoist the fist salute for the controversial Davao City mayor, never mind if the economy was at its historic high, courtesy of the previous administration. Almost three years have passed, Edsa remains a humongous parking lot and high-blood trigger. What’s worse, the yet-to-be-seen improved traffic situation is just one of many campaign promises that President Duterte has yet to fulfill. His “best and brightest” in both the transportation and traffic management agencies have tried many palliative solutions to no avail. The latest, which the Metropolitan Manila Development Authority discontinued due to public backlash, was the so-called high-occupancy vehicle traffic scheme where a vehicle with only its driver as occupant is banned from navigating Edsa from 7 to 10 a.m., and from 6 to 9 p.m. The HOV’s main purpose was to supposedly encourage carpooling. But wasn’t this the very concept that the app-based transportation network vehicle services (TNVS) companies tried to introduce as a sustainable way of decongesting traffic? Sadly, the government has made doing business for Uber, Grab and Wunder, among others, excruciatingly difficult. Uber is dead, and Grab is slowly slipping away. I can’t help but suspect that the Land Transportation Franchising and Regulatory Board (LTFRB) played favorites here. For one, TNVS ate up a huge chunk of the business that fleets of dilapidated and perilous taxis owned by powerful people with deep connections to government used to enjoy. Harsh regulations and fines hounded TNVS. The concept of carpooling died a natural death. The decreasing number of TNVS cars in Metro Manila has resulted in a serious supply crisis. More and more passengers are waiting for longer hours and, worse, getting stranded on the road because they could not get a ride. The Philippines is said to have the lowest allocation rate in Southeast Asia. Our TNVS app providers’ ability to allocate cars within the first few tries is down to 40 percent, the lowest in the region. This means that vehicles are allocated to only four out of 10 passengers trying to book a ride. Due to the lack of authorized drivers, the matching of passengerand-driver trips is being compromised. Average pickup time (waiting time from booking confirmation to actual pickup of passengers) has increased in July to eight minutes from a January-to-March average of seven minutes. With a severe undersupply of vehicles—only around 35,000 available cars to serve about 600,000 daily passengers’ booking requests— TNVS providers could no longer manage the demand overflow by themselves. In January 2018 the LTFRB ordered a common supply base of 45,000 TNVS cars, less than a third of the 125,000, which were in operation at that time. The following month, the cap was raised to 65,000. Around the same time, LTFRB, with

the support of an independent party and data from Uber and Grab, created a list of 55,000 vehicles, which is currently recognized as the official master list in the processing of Certificates of Public Convenience (CPCs) and Provisional Authority permits (PAs). Since then, only 42,000 active vehicles were left in the system. Out of this number, merely 83 percent or 35,000 vehicles are active daily. When Uber pulled out of the Philippines in March 2018, an estimated 50,000 vehicles were active, with about 43,000 of them active daily (24,000 from Grab, and 19,000 from Uber). After the pullout, only around 11,000 Uber cars transferred to Grab. It was discovered during the transition that around 6,000 active Uber drivers were not part of LTRFB’s audited master list of TNVS drivers, and by LTFRB decision, were neither allowed to transfer to Grab nor to other transportation network companies (TNCs). As a result, the daily active base went down to 35,000 drivers. Aside from the fact that the LTFRB is limiting the number of partner vehicles that can be granted PAs or CPCs, there are fewer TNVS drivers vehicles now because of LTFRB’s move to suspend Grab’s P2-per-minute travel-time charge since April this year, which ultimately reduced the incomes of its partner vehicles/drivers. TNVS operators maintain that the P2-per-minute travel-time charge was legal since it was imposed before the Department of Transportation issued Department Order No. 2017-011 or the Omnibus Franchising Guidelines for Public Utility Vehicles on June 19, 2017, which authorizes the LTFRB to determine the fare structure of TNVS. Still, LTFRB Chairman Martin B. Delgra III insists on imposing a P10-million fine on Grab. The latest DOTR DO 2018 now gives LTFRB full authority to regulate TNVS fares. The suspension of the P2-perminute charge has greatly affected driver income and reduced the number of online drivers by 6 percent. Aside from allowing more vehicles to operate as TNVS partners, LTFRB should start realizing that the public needs and demands this service. These vehicles do not have fixed routes, and can therefore use the inner streets of Metro Manila, thereby decongesting major thoroughfares. Unless our government can assure both commuters and motorists of an efficient mass-transport system and implement no-nonsense and effective solutions to our traffic woes, it should give the riding public more options. Grab and TNCs have been asking LTFRB to open the remaining slots to increase the supply of cars, but the agency has opted to not take immediate action. LTFRB also does not have a structural mechanism to replace inactive and dormant drivers in their current master list. Why is the LTFRB focusing on other matters, such as pricing, when the real problem is supply? Following the imposition of a P10-million fine on Grab, the LTFRB is also questioning Hype and OWTO about pricing. Overregulation has already forced Uber out of the Philippines. To quote a proverb in Farsi, “When you can open a knot with your hands, you don’t have to open it with your teeth!” The solution is simple. The public wants these TNCs to continue operating. The more accredited vehicles and drivers there are, the better for the customers. For comments and suggestions, e-mail me at mvala.v@gmail.com

o conclude Jesus’ discourse on the Bread of Life, John proceeds with the crisis of faith on the part of the disciples (John 6:60-69). Silent till now in the discussions triggered by Jesus’ claims about being the bread of life from heaven, many disciples found hard to swallow His words that the one who eats His flesh and drinks his blood will have eternal life.

Hard saying for unbelieving disciples Without taking back anything, He said, Jesus pressed on His own followers even harder. “Is this shocking to you? What if you were to see the Son of Man ascending to where He was before?” Eating His flesh and drinking his blood is not yet the ultimate shocker. He would be lifted up—on the cross—in His ascent back to the Father (John 3:14). The cross would be the definitive scandal that needs to be surmounted for anyone to arrive at the faith that sees the crucified Jesus as the Son of God (Mark 15:39). Many of the disciples would not believe.

At first, when Jesus pictured His life—therefore eventually the disciples’ also—to be one of selfgiving, of sharing one’s very flesh and blood for the life of others, they murmured about it. Now he pushed them to the breaking point when He specified that His life-giving mission—therefore theirs also— entails the cross, actually dying. Many of his followers became disillusioned about him, just like the people who sought Jesus with their own agenda. Now clear in following Jesus is the contradictory ideas about life through the cross. At the Last Supper, Jesus would unequivocally connect giving His body and

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blood for the life of the world with His self-oblation in expiation for the forgiveness of sin (Matthew 26:26-28). The disciples who consequently walked with Jesus no more never really believed in Him, even as Jesus knew from the beginning who would not believe or betray Him. Now the grand vision about the bread of life in His flesh and on the cross is just too much, a dangerous combination and proposition.

We have come to believe

Very different from those followers who dropped off was Simon Peter representing the Twelve. Not coercing anyone to follow Him, Jesus asked: “Do you also want to leave?” Peter personifies faith, a faith that is akin to love, as earlier noted, inasmuch as it is commitment and entrusting one’s life completely to the other, because one is sure of the other, even as one may not be sure of oneself. “To whom shall we go? You have the words of eternal life.” “No one can come to me unless it is granted by my Father” is Jesus’ refrain. The Father who sent Him is the one who draws anyone to Him (John 6:44), and everything the Father gives Him will certainly come to Him and be welcomed by Him (6:37), for He is doing the will

The Derek Ramsay case–A discussion of the doctrine and its implications Atty. Jose Emilio M. Teves

Tax Law for Business

n interesting case that teaches us very important lessons about tax assessments is the case of Commissioner of Internal Revenue v. Derek Arthur P. Ramsay (CTA En Banc No. 1413). The Court of Tax Appeals (CTA), en banc, decided this. While it was not elevated to the Supreme Court, it still holds sway and, in fact, may be considered by the Supreme Court if, and when, a similar case makes its way into the dockets of the highest court of the land. The factual background: Mr. Ramsay was assessed with deficiency income and value-added taxes for the years 2006 to 2009. However, Mr. Ramsay claims that he was not served any assessment notices with the Formal Letter of Demand (the “FLD”). Furthermore, the FLD did not state a definite date of demand.

Upon the elevation of the case to the CTA, the Court in Division declared the assessment void for failure to afford the taxpayer his right to due process. The Bureau of Internal Revenue appealed the same to the Court En Banc. When the case reached the Honorable Court of Tax Appeals En

Banc, it affirmed the decision of the Court in division. The failure to serve the taxpayer the assessment notices with the FLD is a violation of a taxpayer’s right to due process. Section 1, Article III of the 1987 Philippine Constitution provides, thus: “No person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the law.” This cornerstone of the law is integrated in Section 228 of the National Internal Revenue Code, which states that the taxpayer must be informed, in writing, of the law and facts on which the assessment is made. Furthermore, Revenue Regulations 12-99, which are the rules to implement the NIRC, reiterate the importance of stating the facts, the law, rules and regulations, or jurisprudence for the assessment by pointing out that if there is a failure to do so, the formal letter of demand and assessment notice shall be void. Therefore, under the law and the rules, Mr. Ramsay should have been

of the Father that anyone who believes in Him may have eternal life (6:38-40). It is the heavenly Father who orchestrates the salvation and recreation of humankind through the Son in the Holy Spirit. In this divine plan, “It is the spirit that gives life, while the flesh is of no avail,” i.e., the supernatural is what counts even as the natural is precisely being vivified and sanctified. What Jesus has revealed about His flesh and blood as the food that extends to us eternal life is actually sharing His divine Spirit with humankind. “The words I have spoken to you are spirit and life.” Alálaong bagá, Peter’s declaration of belief is the original of our apostolic faith in Jesus as the Bread of Life: “We have come to believe and are convinced that you are the Holy One of God.” As the heart of Jesus’ discourse focuses in the beginning on the question of the origin of Jesus (“Is this not the son of Joseph?”), it now victoriously concludes with the statement of His divinity as the Holy One of God. If so, then Jesus is truly the giver of the Spirit and 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.

properly informed. Thus, the findings of the Court in Division must be sustained. The Derek Ramsay case is a useful reminder for everyone. For the taxpayer, he must be aware that, in case an assessment was never given to him, his right to due process must be upheld in case. He must keep in mind that the facts and legal bases must be laid out to him, as well as the date when the assessment is due. On the other side of the coin, the BIR must also ensure that the taxpayer’s right to due process is actually respected, else, they might not collect anything at all. The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm 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 josemilio. teves@bdblaw.com.ph or call 403-2001 local 150.

Kerala floods show Modi has his priorities wrong By Anjani Trivedi Bloomberg Opinion

he worst flooding in more than a century has left hundreds dead, hundreds of thousands homeless, billions of dollars of losses and the lingering risk of disease in Kerala, southern India. Blame the monsoon, or rickety infrastructure? Pinning down the cause of the disaster is important in assessing Prime Minister Narendra Modi’s spending priorities as he heads into an election year. India’s budget certainly needs an overhaul. While the Kerala downpours were unusually heavy, most of the damage was done after the sluice gates of brimming dams were opened to release water into parts of the southwestern coast that were already on the verge of inundation. The flooding itself is no surprise: Almost 15 percent of India’s

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huge amounts of financing coursed through nongovernment groups. These groups are reportedly communist front organizations.” “The governor of Samar reported to Mrs. Aquino that Russian ships have been sighted unloading tons of arms and ammunition in the town of Catarman in the island province

land mass is prone to floods, and every year, on average, as many as 2,000 lives are lost and up to 8 million hectares (20 million acres) affected, at a cost of 18 billion rupees ($258 million). Indian government agencies do investigate f lood management and control, but the findings tend to gather dust. Last year the Comptroller and Auditor General published a report for parliament that found that deficiencies in approving project designs meant most were out of date by the time funding was available. Of 219 planned telemetry stations, used to forecast floods, only one-quarter were set up. And of 375 existing stations, almost 60 percent were “nonfunctional after installation,” the report found. There are huge holes, too, in a decadesold system of checks and balances. Every Indian state is supposed to submit to the central government an emergency plan for each of its large dams. These help

predict areas that would be most affected by any break, and provide evacuation contingencies. Of almost 5,000 dams in India, only 7 percent had such action plans. For the 61 in Kerala, there were none. Because the monsoon is an annual phenomenon, watched by everybody from central bankers to farmers, the National Water Policy requires dam checks before and after the rains. Those inspections only happened in two states in the most recent year. Worse, when defects were pointed out, they weren’t fixed. The relatively small sums allocated to spending on dams are either unused or channeled to unapproved projects. Tragic as the Kerala floods are, they help underline how Modi’s largess can divert spending from necessities like infrastructure toward populist causes, especially agriculture. For example, the national budget for fiscal year 2018 to 2019 pledges a minimum price for farm

products that is 50 percent more than the cost of producing them. The central government has forgiven billions of rupees of farmers’ loans in several states. All told, New Delhi spends five times more on items like subsidized credit to farmers and crop insurance than it does on water resources. Only 3 percent of water spending is on flood management, and an even smaller proportion of that is in capital outlays. In this year’s budget, the government made no allocation at all for flood forecasting and management. The consequences of this neglect will broaden. In Kerala, the flooding is likely to wipe out many farmers and small businesses, and will hit banks’ ability to recover loans. Nationwide, banks’ exposure to the state is about 3 percent of total lending, according to Jefferies analysts, though it ranges from 41 percent for South Indian Bank Ltd. to 4 percent or less for the likes of ICICI Bank Ltd. and HDFC Bank Ltd.

of Samar on the Pacific side of the Philippines. Philippine newspapers quoted Mrs. Aquino as saying, ‘Just disregard the report.’” A California based Filipino newspaper, the Philippine Examiner, reported on August 4, 1988, that two submarines were seen at about 11:30 a.m. cruising in between Homonhon and Habuong Islands a few kilometers from shore, motor launch captain Danilo Espinosa told the military. Colonel Wilfredo Reotutar of

the Eastern Visayas constabulary said, when an army team arrived at Hinundayan, Leyte, the submarine had just left. He expressed concern that submarines could be from hostile forces out to smuggle in weapons and communication equipment for the NPA. The conclusion then of many observers is that the Philippines is fighting for survival against a determined communist rebellion, under a weak, divided and paralyzed national

leadership already controlled by the Communists. Gen. Stillwell warned: “The CPP is now in a stronger military and political position that were the Viet Cong in 1963.” There were then 24,000 full-time VC fighters, with an unquantifiable supporting infrastructure. To be continued. To reach the writer, e-mail cecilio.arillo@ gmail.com.

2nd Front Page BusinessMirror

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‘Don’t monopolize resources in WPS, or there’ll be war’

By Bernadette D. Nicolas

@BNicolasBM

FTER giving his top diplomat the go-ahead to proceed with talks with Beijing on a possible joint exploration agreement in the West Philippine Sea, President Duterte threatened war against China if it unilaterally struck oil and uranium in the resource-rich waters.

In a speech on Tuesday night, the President said a situation where the Asian giant decides to go it alone without the Philippines will not sit well with him, and even warned that Interior Secretary Eduardo M. Año may bring “a bolo to hack the Chinese” if Beijing, which has drawn widespread condemnation earlier for militarizing the Southeast Asian seas, will monopolize the natural resources. “If you will monopolize it, there will be trouble,” Duterte said before the League of Municipalities

Visayas Clusters in Cebu. “But… the uranium there…that will be difficult. The oil there, it will be difficult. We will have a difference there, you will see Año bringing a bolo to hack the Chinese.” Notably, the President’s statements came amid the government’s plan to push for a possible joint exploration deal with China in the West Philippine Sea. Foreign Secretary Alan Peter S. Cayetano earlier said the President has approved “in principle” the establishment of a technical working group on the joint exploration.

He said China was also ready with its own technical working group and is hoping that framework agreement between the Philippines and China could be signed in September. Duterte also reiterated in his speech in Cebu that one day during his term—but not now—he will assert the country’s claim in the West Philippine Sea. He has drawn flak for an apparently cozy relationship with Beijing to the extent that the Philippine government has not moved to assert its rights even after winning its case against China in a United Nations arbitral tribunal in 2016. Duterte in Cebu also recounted the time that he brought up to Chinese President Xi Jinping the Philippines’s claim in the West Philippine Sea and the country’s victory when The Hague-based Permanent Court of Arbitration issued the landmark decision invalidating China’s massive claim in 2016. Up to this day, China does not recognize the arbitral ruling. “Mr. Xi Jinping, we also have a claim. You know we have the award. But I will not insist on recovering

the award because it would result in a war, and it will be a massacre. I know. But please be it noted that one day during my term, I will assert,” Duterte recalled, telling the Chinese leader. The Duterte administration has been criticized for taking a softer approach when it comes to dealing with China on the maritime dispute. But in a speech last week, the President said China should “temper” its behavior in the South China Sea after the Chinese navy threatened a Philippine military aircraft and told it to stay away from China-held artificial islands. Former Foreign Secretary Albert del Rosario lauded the President for his statement, saying that “nine out of 10 Filipinos would be encouraged and inspired by this manifestation of the President’s positive leadership.” Beijing, however, issued a rebuke, reminding Duterte that remarks such as these do not help the relationship between the two countries, which have reached a new high under his and Xi’s respective leaderships.

Fish traders behind price spikes focus of BFAR forum in Quezon City that the BFAR will also determine how feasible it is for fishermen to bring their produce directly to wet markets to minimize the pass-on cost to consumers. Laban Konsyumer Inc. President Victor Mario A. Dimagiba said they received information that there are

seven market layers in the trade of vegetables. Dimagiba said these layers are the farmers, disposers, consolidators, middlemen, wholesalers and two layers of retailers. He said if a kilo of cabbage could cost P20 at the level of the farmer, this will increase by a peso to P21 at the hand of the disposer, and

further rise by P3 to reach P24 at the level of the consolidator. Once the kilo of cabbage reaches the middlemen, this will increase by P10 and cost P34; wholesaler, P5 to P39; retailer, P20 to P59; and the last retailer nearest the consumer such as a community wet market or talipapa, P10 to P69.

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“So nakita ninyo ’yung kawawang P20 na kilo ng repolyo or cabbage, abot na siya ng P69 [So you see the poor P20 per kilo cabbage ended up costing P69],” Dimagiba said. Meanwhile, in a statement, the BFAR said the decision of the Department of Agriculture (DA) to allow the importation of round scad will help stabilize market prices. T he DA-BFA R recent ly a llowed the importation of fresh/ chil led /frozen round scad to augment the local supply in the fresh markets. The 17,000 metric tons will be allocated for Metro Manila and will be composed of imports from China. However, the BFAR assured the public that the imported round scad will go through stringent Sanitary Phytosanitary measures. Malvas said the procedure involves sampling shipments and testing them for harmful substances, including formalin and mercury. “[The] general consuming public is assured that the imported round scad will be unloaded only in BFAR-accredited cold-storage facilities and will undergo thorough inspection to ensure that the fish commodity that will enter Philippine markets are safe and free of harmful substances,” the BFAR said. The importation of round scad shall take effect on September 1, 2018, and shall be in effect until 90 days thereafter. Cai U. Ordinario

NG deficit. . . Continued from A1

contributed P52.1 billion to the total tax revenues collected by the government, also expanding—by 49 percent—from last year’s P35 billion. “Strong enforcement and revenue enhancement measures, coupled with the weaker peso and higher oil prices, allowed the bureau to sustain its strong year-on-year growth for the seventh consecutive month of the year,” the BTr said. Other offices contributed P1.7 billion to the total revenues, which saw a 6-percent increase from the P1.6 billion collected last year. Under nontax revenues, the BTr posted a 39-percent growth with

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PHL URGED TO TAP $1-B INDIAN LOAN FACILITY FOR ‘BBB’ PROJECTS By Elijah Felice E. Rosales

@alyasjah

HE Philippines should consider tapping India’s $1-billion loan allocation for Southeast Asian countries aiming to put up bigticket public infrastructure, Indian A mbassador to the Philippines Jaideep Mazumdar said on Wednesday. Mazumdar told reporters in an interview that firms from India are always on the lookout for infrastructure projects they can finance and take part in. This is especially true for the Philippines, as Indian construction companies apparently want to take advantage of this administration’s “Build, Build, Build” program. “Indian engineering companies are already present here in the infrastructure areas. The GMR [Group] of India has constructed the Mactan-Cebu International Airport [MCIA] terminal. They have also now bought the contract for the expansion of the Clark International Airport terminal. They are looking at the Naia [Ninoy Aquino International Airport], as well,” Mazumdar said. In 2013 New Delhi-based GMR Group, along with Mega-

Budget. . .

wide Construction Corp., was named the highest bidder for the management and development of MCIA. It offered a bid premium of P14.4 billion to modernize the country’s second-busiest airport. Mazumdar also urged the government to utilize India’s $1-billion loan allocation for Association of Southeast Asian Nations member-states planning to build public infrastructure. “The government of India, in fact, has a $1 billion line of credit for Asean countries for any infrastructure projects that they may wish to do, especially in the area of digital infrastructure,” he said. Mazumdar added the Indian government will be “very happy to extend that line of credit for the Philippines to set up digital infrastructure or even physical infrastructure projects.” The top envoy’s pitch to take advantage of India’s infrastructure loan program was made at a time when representatives from 75 Indian firms visited the Philippines to net trade and investment deals. The companies were mostly in the business of smart manufacturing technologies, metal cutting machinery, industrial supply, industrial and electrical machinery, and sheet metal machinery.

Earlier, Andaya said the lower chamber is awaiting the original budget proposals from government agencies to find out the projects that were removed by Department of Budget and Management due to the shift to a cash-based budgeting system for 2019. According to Andaya, the lawmakers

wanted to figure out the reason for the budget cuts in the proposed National Expenditure Program, especially for the DOH and the DepEd. The DOH’s Health Facilities Enhancement Program and the DepEd’s Basic Education Facilities Fund were slashed by P30.3 billion and P69.4 billion, respectively. He noted the time constraints in fixing the national budget such as the scheduled break of Congress in October and the need to submit the proposed General Appropriations Act to President Duterte in November. Under a cash-based budgeting system, all projects are supposed to be completed in one fiscal year. Projects that are “not implementation-ready” will be removed from the proposed budget. In contrast, an obligation-based budgeting system allows agencies to allocate funds for a project that may surpass one year. Owing to the limitations of a cash-based system, the 2019 budget is P10 billion lower in absolute terms compared to the 2018 GAA, which reached P3.767 trillion. The proposed 2019 national budget is cash-based as opposed to the traditional, multiyear obligations-based budgeting. The DBM said the cash-based system is “more efficient” as it limits incurring obligations and disbursing payments for goods delivered and services rendered, inspected and accepted within the fiscal year. The obligations-based budgeting is the common budgetary practice in the Philippines. It allows appropriations and obligations until the next fiscal year, extending the validity of funds to two years.

P11.8 billion for the month, coming from P8.5 billion last year. Other offices also posted a P12.2-billion collection, reporting an uptick of 6 percent compared to the P11.5 billion collected last year. Total revenues from January to July this year hit P1.652 trillion, increasing by 21 percent, compared to the P1.371 trillion made in the same period last year. Expenditures for the month reached P328.1 billion, or 34 percent higher than the P245.1 billion last year. This pushed total expenditures for the seven-month period to P1.931 trillion, rising by 23 percent from the P1.576 trillion in disbursements made in the same period in 2017. “This already represents 57 percent of the P3.367-trillion full

year NG expenditure program,” the BTr said. Interest payments amounted to P44.8 billion for July, almost unmoved coming from P44.6 billion in the same month last year. The government’s interest payments for the first seven months of 2018 reached P210.4 billion, increasing by 7 percent from the P196.2 billion reported in the same period last year. The government’s primary deficit for the month reached P41.5 billion, rising by 606 percent, coming from only a P5.9-billion deficit in July 2017. From January to July, the government’s primary deficit reached P69 billion, rising by 687 percent compared to the P8.8-billion deficit recorded in the same seven-month period in 2017.

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According to Andaya, the Palace and the House of Representatives have agreed that the 2019 General Appropriations Act (GAA) will adopt a “hybrid” of cash-based and obligationbased budgeting system. The schedule released by the House also indicated that the hearings on the budgets of the Office of the President, Office of the Vice President, Department of the Interior and Local Government and the Department of National Defense will be held on August 29. Budget deliberations for the Department of Labor and Employment and Department of Foreign Affairs is scheduled on August 30. The budget hearings for the Department of Information and Communications Technology and Department of Health (DOH) are set on September 3; Civil Service Commission, Commission on Human Rights, Department of Science and Technology, and the Judiciary on September 4; and the Presidential Communications Operations Office and the Department of Transportation on September 5.

Budget cuts