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A broader look at today’s business

Wednesday, August 29, 2018 Vol. 13 No. 319

BSP signals further rate hikes likely, ‘as needed’ 4.5% T By Bianca Cuaresma

@BcuaresmaBM

HE Bangko Sentral ng Pilipinas (BSP) telegraphed its strong hawkish guidance on Tuesday, repeatedly saying it was “keeping [the] door open” to further possible rate hikes on the premise that the economy is still strong enough to handle higher interest rates.

Medal Tally As of 8 p.m.

Country

B Total

1 China

91 63 45

199

2 Japan

43 38 60

141

3Republicofkorea 32 38 44

114

4 INDONESIA

24 19 29

5 iR iran

17 15 15

6 chinese taipei

13 14 19

7 dpr korea

8 Thailand

10 33

9 India

16 21

10 KAZAKHSTAN

11 Uzbekistan

14 12

12 Bahrain

13 Hongkong,china

12 16

14 Malaysia

15 qatar

16 UAE

17 singapore

18 Mongolia

19 Philippines

20 vietnam

11 13

21 Kyrgyzstan

22 Jordan

23 Kuwait

24 Cambodia

25 Saudi arabia

25 Macau, china

27 lebanon

28 Iraq

28 korea

“We [have and will] keep the door open to take further policy action as necessary based on the data,” BSP Governor Nestor A. Espenilla Jr. told reporters attending the Economic Journalists Association of the Philippines Economic Forum on Tuesday. “What’s most important, more to this, is to send a very strong signal to the whole community that we are very committed to returning the inflation path back to target,” he added.

The BSP started its tightening cycle in its May monetary-policy meeting, with a 25-basis-point hike in its main policy rate. This was followed by another 25-basispoint rate hike in June. In its latest meeting in August, the BSP delivered its most aggressive rate hike in a decade, increasing its main policy rate by 50 basis points. All rate hikes were made with the goal of pulling the soaring inflation back to the 2-4 percent target range for 2019. In the first seven months

The average inflation in first seven months of the year. All rate hikes were made with the goal of pulling the soaring inflation back to the 2-4 percent target range for 2019

of the year, inflation averaged at 4.5 percent. “The economy can handle it. We have to make hard choices. We can make those hard choices,” Espenilla said. Amid the rate hikes, the local economy, on the other hand, slowed to 6 percent in the second quarter of the year as agriculture output dragged overall growth during the period. “Sustained domestic growth suggests that the economy can accommodate monetary-policy tightening. This growth is broad-based, See “BSP,” A2

HOUSE, EXECUTIVE AGREE ON ‘HYBRID’ BUDGETING By Jovee Marie N. dela Cruz @joveemarie

@cuo_bm

HE current structure of the National Economic and Development Authority (Neda) is no longer responsive to the challenges being faced by the country, the current head of the central planning agency conceded, echoing the observation of lawmakers. In a statement delivered to

PESO exchange rates n US 53.4950

See “‘Hybrid’ Budgeting,” A8

By Elijah Felice E. Rosales @alyasjah

proposed Neda Act and accordingly endorse it. Rest assured that we in Neda will work even harder, as we have done in the past, with the authority granted to us by law, to help the country achieve self-sustaining and inclusive economic growth that empowers every Filipino to live a matatag, maginhawa at panatag na buhay [stable, prosperous and secure lives],” Pernia said.

ORMER Chief Justice Reynato S. Puno tried to sway doubters of federalism with an impassioned speech on Tuesday, but apparently could not shake business executives from their fears over the cost and risks of shift to a federal system. At the sidelines of a forum, Management Association of Philippines (MAP) President Ramoncito S. Fernandez said his group is standing by its belief that the fiscal cost of federalizing the country must be looked at. This came even as Puno, chairman of the Constitutional Committee tasked to review the 1987 Constitution, explained the salient details of the proposed new Charter. However, Fernandez made it clear that MAP has yet to issue an official statement on whether it is for or against federalism. The group is still conducting a series of forums with constitutionalists, present and former alike, and experts to discuss the nitty-gritty of the shift. “At this point, MAP still has not made an official statement on whether it is pro or against the change of government. What we have signified and made public statements [about] was our concern on the economic cost of the shift, which, according to [the former] Chief Justice, they will try to flesh it out with economic managers,” Fernandez said.

See “Neda,” A2

See “Puno,” A2

‘GOLDEN GIRLS’ Showing their medals from the Asian Games in Indonesia, weightlifter Hidilyn Diaz (second from right) and golfers (from left) Lois Kaye Go, Bianca Pagdanganan and Yuka Saso get a warm welcome at the Naia Terminal 2 on Tuesday evening. The athletes put three golds in the Philippines’s medal tally. ALYSA SALEN

Neda due for a retrofit, its head, lawmakers agree By Cai U. Ordinario

“We’ll work with them and cooperate to clear out misunderstandings. We have given each other the merits of our proposals, and we’ve agreed on it.... So, the so-called hybrid budget will push through,” Andaya said. Andaya said the hybrid system will give government agencies up to a six-month extension to accomplish a project and disburse the allocated budget. Meanwhile, Diokno confirmed on Tuesday Andaya’s claim that the House and Department of Budget and Management agreed on a hybrid budgeting system. However, Diokno refused to give further details on this kind of system. Almost two weeks ago, Andaya had claimed that a compromise was already reached with the Palace on the budget impasse through an agreed hybrid of cash-based and obligation-based budgeting system.

Despite Puno pitch, MAP holds verdict on federalism

@BNicolasBM

Continued on A8

“We’ve agreed to restore some cuts. We will help each other in finding areas where we can source these cuts.”—Andaya

HE leadership of the House of Representatives said on Tuesday that it has reached a compromise with the Executive Department for a hybrid budgeting system for the 2019 national budget, while there is also an agreement to restore the budget cuts of the Department of Education, Department of Public Works and Highways and Department of Health. In a news conference, House Majority Leader Rolando G. Andaya Jr. said the agreement was reached following a meeting with House Committee on Appropriations Chairman Karlo Alexei B. Nograles, Budget Secretary Benjamin E. Diokno, Finance Secretary Carlos G. Dominguez III and Executive Secretary Salvador C. Medialdea. Andaya said the legislative and executive departments will adopt a “hybrid” budgeting system for the 2019 national budget, which shall be a combination of cash-based and obligation-based budgeting system. He said they also agreed to work for the passage on third and final reading of the 2019 national budget by October 12, 2018, as he gave assurances that there will be no reenacted budget for next year.

By Bernadette D. Nicolas

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Inflation busters all set: Palace EASURES are to be put in place to curb inflation, according to Malacañang. This was after the Cabinet-level Committee on Tariff and Related Matters (CTRM) decided to thumb down almost two weeks ago the recommendation of economic managers to reduce import duties on select food items to ease inflation by 5 percent, noting that the tariff reduction is not a solution to inflation. Presidential Spokesman Harry L. Roque Jr. said in a Palace briefing that among the inflation-busting measures being taken include the authorized importation of

2016 ejap journalism awards

the Senate Committee on Economic Affairs, Socioeconomic Planning Secretar y Ernesto M. Pernia said it is throwing its support behind Senate Bill No. 1938, titled “ The Neda Act of 2018,” authored by Sen.Sherwin T. Gatchalian. Pernia said the proposed Neda Act will strengthen the oversight agency and improve its capacity to implement economic and development policies.

”Unfortunately, even with its high competency and quality outputs, Neda’s powers as an oversight body remains limited to coordinating plans and recommending policies.” —Pernia

“It is our fervent hope that this august Committee of yours, Mr. Chair, will find merit in this

n japan 0.4816 n UK 68.9818 n HK 6.8149 n CHINA 7.8485 n singapore 39.2739 n australia 39.3188 n EU 62.4768 n SAUDI arabia 14.2634

Source: BSP (28 August 2018 )

News

BusinessMirror

A2 Wednesday, August 29, 2018

Unmet infra goals, reforms imperil bid to reduce poverty

By Cai U. Ordinario

@cuo_bm

HE country’s poverty targets may not be met if infrastructure projects and other key reforms do not push through by next year, according to economists.

The government aims to cut poverty incidence to around 14 percent by 2022, from 21.6 percent in 2015. This means lifting around 6 million Filipinos out of poverty. This estimate was based on the attainment of a 7-8 percent GDP growth in real terms and increase per capita income to $5,000 by 2022 from $3,550 in 2015. “Yes the country is still on track to meet its poverty targets but it will depend heavily on what will happen after this year. If benefits of infrastructure project fail to kick in and short-term problems persist until next year, poverty targets may not be achieved or may not be reduced by as much as the target,” University of Asia and the Pacific (UA&P) School of Economics Dean Cid Terosa told the BusinessMirror. Given the challenges the economy faces, economists such as Calixto V. Chikiamco and former Socioeconomic Planning Secretary Romulo L. Neri expressed their doubts on government’s efforts to

meet its poverty targets.

Farm sector

This pessimism arose from the lackluster growth and development of the agriculture sector, which not only affects the incomes and livelihoods of farmers but also makes commodity prices, mainly food, expensive. Chikiamco said prices of copra, on which millions of poor coconut farmers depend, “collapsed” and overall agriculture growth has been flat. In the first semester, the farm sector only posted a growth of only 0.58 percent in 2018 from 5.73 percent in the same period of 2017. “Unless agriculture productivity rises, which I doubt given the populist and throw-money approach of [Secretary Emmanuel F.] Piñol, poverty levels may even rise,” Chikiamco said. Neri, for his part, said that as long as agriculture continues to be a laggard in the economy, food prices will continue to be high. This will especially be difficult for poor

6 million

The number of Filipinos who should be lifted out of poverty if the goal to cut poverty incidence to 14 percent by 2022, from 21.6 percent, in 2015 is met and near-poor households who are sensitive to price hikes. He said the poor spend as much as 55 percent of their budget on food. This problem is compounded by inflationary factors such as the weak peso, which is also putting more pressure on the country’s current account deficit. “[The poverty targets will not be achieved] as long as agriculture, where 70 percent of our poor depend on, has stagnant growth. Also it will make food prices high due to limited food supply from local sources,” Neri said. For Philippine Institute for Development Studies (PIDS) Senior Research Fellow Jose Ramon Albert, given the current situation of the economy, it would be difficult to say whether the poverty targets are achievable or not.

Social protection

Ideally, Albert said, the social protection extended by the government, such as the Conditional Cash Transfers (CCTs), are supposed to help the poor. But, he

said, the data that backs the program is “a static list of the poor” and, as such, could leave out some of the poor who deserves and needs the assistance. He said it is unclear how the CCTs can mitigate the impact of inflation on the poor and lowincome Filipinos, including the social pension since some of the recipients are not poor or from low-income households. “Short-term relief is important but so is long-term strategy,” Albert said. “We continue to adopt one-size-fits-all strategies, which, in the end, are not harnessed for development outcomes.” Terosa and Chikiamco believe the CCTs are insufficient in augmenting the incomes of the poor, especially with inflation increasing to 5.7 percent in July 2018. “At present, social protection measures don’t seem sufficient since prices of the most basic commodities and services have increased tremendously,” Terosa said.

Inflation

A number of economists also believe inflation has not yet peaked. This includes the Ateneo Center for Economic Research and Development, which expects inflation to average 5.1 percent this year. This means inflation could post a rate nearer 6 percent in the coming months. Albert said battling inflation is not enough. Efforts to find longterm solutions such as implementing radical measures like the Universal Basic Income (UBI) are in order, especially since people’s survival is involved. He said, however, that jumping into the UBI bandwagon without properly studying the impact of such a measure and the costs involved will be foolhardy. The UBI as implemented in Finland gave unemployed citizens aged 25 to 58 years old a monthly stipend of €560 a month. This two-year experiment was envisioned to cut red tape, povert y and unemployment. However, Albert said in some countries where the UBI was implemented, the programs were discontinued after a year of implementation because of the high costs involved.

Puno. . .

Continued from A1

“We have also scheduled a September 11 forum to listen to the other side with [former constitutionalist] Christian Monsod and [former finance chief] Gary Teves explaining the other parts of this change in government. We reiterate our concern on the potential high economic cost of the change in government,” he added. During the forum, Puno pointed out the shift will result in a better business climate, as it will decentralize the powers and wealth of Metro Manila to other regions in a bid to spur growth and development. However, MAP members raised their usual card that federalism might give local governments too much taxing power. This was parallel to a statement the group, along with five other business organizations, released in June, criticizing the autonomy of federated regions to increase taxes at will. The MAP members also grilled Puno over the fiscal cost of the shift, citing figures that such could amount to as much as P130 billion, per the National Economic and Development Authority. Fiscal deficit, on the other hand, could breach 6.7 percent, or way beyond the 3 percent objective of this administration’s economic team.

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Payment systems regulation bill gets Senate approval

HE Senate, voting 20-0, passed on third reading on Tuesday a bill authorizing the Bangko Sentral ng Pilipinas (BSP) to regulate all payment systems in the country, a move touted by proponents to “increase efficiency and lessen risks” in the Philippines’ financial system. Sponsored for plenary voting by Sen. Francis G. Escudero as chairman of the Senate Committee on Banks and Financial Institutions, the approved Senate Bill 178 was principally authored by Sen. Paolo Benigno A. Aquino IV. The bill, its proponents say, empowers the BSP with tools to “promote safe, secure, efficient and reliable operation of payment systems in order to control systemic risks and provide an environment conducive to the sustainable growth of the economy.” Escudero explained that the bill, once enacted into law, addresses the need to “ensure the soundness and efficiency of payment systems—so that the costs of settlement do not interfere with the effective clearing of markets, and so that the systems have the ability to be robust against risks.” He added that the proposed legislation would achieve its goal by linking financial institutions together for the purpose of “transferring monetary claims and settling payment obligations efficiently.” As provided in Aquino’s bill, the BSP would have the power to designate

BSP. . .

Continued from A1

thereby providing more opportunities across all segments of society,” Espenilla said. “Looking ahead, the BSP’s decisions on monetary policy will continue to be data-dependent and guided by our inflation forecasts,” he added.

What the BSP is waiting for

In terms of the specific data trajectory needed to firm up the BSP’s future monetary-policy decisions, Espenilla said they are looking to get more information in the fronts of inflation momentum, the level of second-round effects and the peso movement. In particular, the BSP chief said they hope to see a continued loss in inflation momentum. Espenilla said while the actual number is still going up as of July, the momentum of inflation has actually started slowing down in monthon-month terms. Latest inflation data show a 5.7-percent rise in the overall prices of consumer goods in July, compared to its year-ago levels. The BSP hopes that data will show no further broadening of second-round effects and that the

Neda. . .

Continued from A1

Pernia said the passage of the Neda Act is overdue given that the oversight agency was created through the 1987 Philippine Constitution and Executive Order 230, dated July 22, 1987, during the term of President Corazon C. Aquino. While the 1987 Constitution resolved to create an “independent economic and planning agency,” Pernia said no enabling law has yet been passed to exercise this function, which led to fragmented and uncoordinated policy-making. As a consequence, Pernia said, a number of the country’s plans, programs and policies have been delayed, discontinued and/or neglected. This prevented the attainment of long-term goals. “The current setup is no longer adequate for Neda to be able to fully exercise its oversight function,” Pernia said. “Unfortunately, even with its high competency and quality outputs, Neda’s powers as an oversight body remains limited to coordinating plans and recommending policies.”

any payment system as “posing or has the potential to pose a systemic risk, when such designation is necessary to protect the public interest.” It defines payment systems as “the set of payment instruments, whether tangible or intangible that enables a person to transfer funds.” According to Escudero, the payment system can be likened to “a bedrock upon which monetary stability and financial stability rest.” This means, he said, that payment systems could “become channels through which financial risks can be transmitted across financial institutions and markets.” Escudero noted that central banks are “keen in monitoring developments in the payment system to assess their impact on the demand for money, the influence of monetary policy transactions, and the efficiency and stability of critically related financial markets.” For instance, the senator cited the central banks of countries like Singapore, Australia, Indonesia, Cambodia and Myanmar that, he said, are empowered to “oversee and regulate payment systems either in their respective mandates or in special laws,” The senator stressed that the BSP, given its mandate and functions, must “take a proactive role in the development of a payment system and in ensuring that these systems operate in a safe and efficient manner.” Butch Fernandez

movement of the peso will be contained, as this feeds off inflation, particularly for imported goods such as petroleum. Economists earlier said the BSP’s still hawkish stance amid the 100basis-point rise not only addresses inflation but also keeps the local currency from falling further.

Déjà vu

While inflation has been tamed for years, Espenilla said the elevated inflation regime is not new to the country, as the economy has seen similar patterns in the past, particularly in 2008 when oil prices rose sharply, resulting in an 8.3-percent inflation rate before easing sharply to 4.2 percent in 2009. The governor said the BSP then kept its policy rates on hold and “accommodated” first-round effects, but when supply side pressures persisted and seeped through secondround effects, the BSP delivered “timely” and “decisive” action by raising policy rates by a total of 100 basis points between May and August in 2008. “We bring back history just to remind us that we have seen similar patterns in the past,” Espenilla said. Inflation has since remained below 5 percent from 2009. Pernia said among the salient points of the bill is the institutionalization of a “Planning Call,” which is similar to the Department of Budget and Management’s “Budget Call.” He said this will ensure timely and coordinated planning in government, as well as mandate agencies to actively participate in the process. The Neda chief added the bill also secures the funding for programs and projects in the MediumTerm Development Plan (MTDP), as well as the establishment of a LongTerm Development Plan (LTDP), which ensures that plans and programs are undertaken seamlessly across administrations. Pernia LTDP is similar to the AmBisyon Natin 2040 but, in order to adopt the long-term vision, the President still had to issue a separate executive order institutionalizing the long-term vision in the next four administrations. “Our stakeholders often express concern that this will suffer the same fate of other well-intentioned government initiatives if the Neda is not sufficiently empowered and effective as an economic manager and development leader,” Pernia said.

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The Nation BusinessMirror

ARMM-Bridge to provide relief, core shelters to 12,000 displaced families By Manuel T. Cayon

@awimailbox Mindanao Bureau Chief

AVAO CITY—The Autonomous Region in Muslim Mindanao (ARMM) has upgraded its package of assistance—from provision of relief to construction of core shelters—to some 12,000 families, who are either living in poverty or were displaced by violence. The ARMM said the 12,000 families were given regular relief assistance, many of them since last year, but a new program called ARMM’s Bangsamoro Regional Inclusive Development for Growth and Empowerment (ARMM-Bridge), or “Apat na Dapat” program, has finally put up allocation for core shelters. A core shelter would be constructed in a 120-square-meter lot area with water and sanitation, along electricity connection. The beneficiary family would continue to receive regular food supply for the next six months after relocating, and a family member would be given livelihood training. The ARMM Bureau of Public Information said the ARMM-Bridge has allocated P2.2 billion for housing, P94 million for water systems, P180 million for supply of electricity, P320 million for food supplies, P140 million for livelihood and P25 million for hygiene kit. From the total number of family-beneficiaries, 7,000 were identified this year, and 5,000 others were started to be enrolled last year in the ARMM anti-poverty program “to uplift the living condition of the poorest households

through the provision of basic needs.” Last week ARMM Gov. Mujiv Hataman led the groundbreaking ceremony of the housing projects and the distribution of food supplies in the towns of Matanog, Buldon and Barira in Maguindanao. He said the Bridge program would soon move the beneficiaries into secure homes. Also last week, Hataman attended the ceremonial breaking of the ground for shelter projects in Barangays Pura and Matuber in Datu Blah Sinsuat, also in Maguindanao. Meanwhile, another group of Moro students from Shariff Saydona Mustapha and Datu Salibo received their National Certificate II from the Technical Education and Skills Development Authority (Tesda) after successfully passing the required competency assessment for Driving NC II Course. The students were supported by the Payapa at Masaganang Pamayanan (Pamana) program in ARMM, as they went through technical vocational training at Darussalam Institute of Technology Inc. The schooling trained students in advanced skills in operating light motor vehicles, transporting passengers and loads, and performing minor vehicle repairs and services, the Office of the Presidential Adviser on the Peace Process (Opapp) said. Aside from the Tesda National Certification, the graduates received driving starter toolkits to prepare them for future employment and livelihood opportunities, the Opapp added.

Editor: Vittorio V. Vitug • Wednesday, August 29, 2018 A3

Priest says life in danger for criticizing Duterte

Roman Catholic priest who was one of the earliest critics of President Duterte’s deadly crackdown on drugs has gone into hiding due to what he says were signs he’s being targeted by motorcycle-riding hitmen. The Rev. Amado Picardal said on Monday that he has gone into a “more secure location” and out of the public view after workers in a Catholic monastery that he visits in Central Cebu city reported seeing motorcycle-riding men watching the compound, including a pair who asked for his whereabouts. “I couldn’t go out for biking, running, walking due to security concerns,” Picardal said in an e-mail in response to questions about his safety concerns, which he first disclosed in a personal blog. “I have left my hermitage in the

mountain and transferred to a more secure location to continue my life as a hermit far away out of reach from the death squad,” he said. The 63-year-old priest said that he helped document alleged extrajudicial killings under Duterte’s campaign when Duterte was still mayor of Davao City and that he would continue criticizing the killings despite his safety concerns. Picardal added that he is willing to testify if asked by the International Criminal Court, where a complaint

against Duterte in relation to the drug killings is being examined. Duterte has denied condoning killings under the crackdown, which, according to official police pronouncements, has lef t more t han 4,500 suspects dead since he took office in mid-2016. International human-rights watchdogs have cited far higher death tolls, which they said included innocent children and civilians. The tough-talking president has often cited the killings and wounding of many policemen in anti-narcotics raids as proof of the fatal risks that prompt law enforcers to open fire on drug suspects. Human-rights groups, which have looked into some of the killings, however, have reported cases where policemen killed unarmed suspects but later made them appear to have violently resisted. Presidential Spokesman Harry L. Roque Jr. said Picardal should file for a so-called writ of amparo “if there’s basis for his fears,” referring to a high court petition that aims to protect the human rights of anybody who feels threatened by state forces. AP

A4 Wednesday, August 29, 2018 • Editor: Vittorio V. Vitug

MEI reports 12% increase in online hiring in Q2 2018 By Cai U. Ordinario

@cuo_bm

espite a slower increase in online job hiring in the Philippines in the second quarter of the year, the Duterte administration’s infrastructure initiative under the “Build, Build, Build” program may improve the state of online recruitment in the second half of the year, according to Monster.com. In the Monster Employment Index (MEI), online hiring increased 12 percent in the second quarter of the year. However, on a quarterly basis, online hiring declined 3 percent. “The Philippines had an overall solid second quarter with year-onyear growth, but couldn’t exceed or match the strong performance exhibited at the beginning of the year. However, all signs indicate a healthy second half of the year when it comes to online recruitment,” Monster.com said. Based on the MEI, the retail industry exhibited the most notable annual growth, while businessprocess outsourcing/information technology witnessed the steepest decline in the second quarter. However, Monster.com said the government’s commitment to increase infrastructure spending boosts the country’s chances of improving online recruitment in the second half of the year and succeeding years.

It added that the high business optimism in the Philippines of up to 82 percent in the second quarter is a good indicator that firms remain confident about the country’s economic prospects, despite the slower economic outlook for the Philippines and the rest of Southeast Asia in 2018 of the Organisation for Economic Cooperation and Development. This outlook stems from weak exports and slower than expected implementation of infrastructure projects. “Although it may not meet the government’s [growth] targets, the Filipino economy is performing well and on a solid growth trajectory, which is reflected in a steady demand for talent and online recruitment activity,” Monster.com said. The MEI is a gauge of all online job posting activities in the countr y, recording the industries and occupations showing the highest and lowest growth in recruitment activity. It is a monthly gauge of online job-posting activity, based on a realtime review of millions of employer job opportunities culled from a large representative selection of career web sites and online job listings across Philippines. While the index does not reflect the trend of any one advertiser or source, it is an aggregate measure of the change in job listings across the industry.

Trade dept’s MSME development program faces huge ‘19 budget cut By Jovee Marie N. dela Cruz @joveemarie

he government’s program for the development of micro, small and medium enterprises (MSMEs) is likely to incur a huge budget cut next year, the Department of Trade and Industry (DTI) said. Following the 2019 national budget hearing of the agency on Tuesday, the DTI data showed the government has allocated P1.36 billion for the MSME development program for 2019. The fund is lower compared to this year’s P2.2 billion. The Shared Service Facilities (SSF) project, which is under the MSME development program, will face a big cut with only P62.71 million for 2019, from P1billion allocation this year. This after, the Congressional Policy and Budget Research Department (CPBRD), citing the 2017 annual audit report of the Commission on Audit, said the COA has called the attention of the DTI on the non-utilization or partial utilization of SSF equipment. The SSF project was implemented with project partners intended to improve the competitiveness of MSMEs by providing them with machinery, equipment, tools, systems, skills and knowledge under a shared system. The CPBRD, in its budgetary note, said beneficiaries of the projects are the actual and potential users of the SSF, which should be predominantly cooperatives, associations or groups of MSMEs, including MSMEs or individual entrepreneurs. Meanwhile, some of the proj-

ects under the MSME development program are the establishment of Negosyo Center with P512.38million budget for next year, One Town-One Product: Next Generation Project with P89.58 million, and the Rural Agro-Enterprise Partnership for Inclusive Development Project with P58.25 million. Before the budget cuts, Trade Secretary Ramon M. Lopez said his agency is seeking to double its funding for MSMEs to P4 billion next year to improve the department’s programs and services, particularly on microfinance, shared service facilities, exports promotion and consumer protection. Moreover, despite the budget cut for MSMEs, the CPBRD said there is a special provision in the 2019 national budget providing additional fund for DTI’s Micro, Small and Medium Enterprise Development Council Fund amounting to P21.32 million, which shall be used for the development of the MSMEs sector. The fund will be sourced from 90 percent of the total penalties collected by the Bangko Sentral ng Pilipinas from lending institutions. There is also budget for the “Pondo sa Pagbabago at Pag Asenso” or P3 program to improve the capacity of MSMEs. The P3 program is designed to giveMSMEseasyaccesstocredit,where they can borrow as much as P300,000 with a maximum interest rate of 26 percent per annum and no collateral requirement. It is also intended to veer themawayfromonerousloans,particularly the “5-6” money-lending system, which has a 20-percent interest per day, week or month charged by the lender.

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DOF chief sees ‘uphill climb’ for legislative passage of remaining tax-reform packages

By Rea Cu

@ReaCuBM

he Department of Finance (DOF) is confident that the remaining packages of the Comprehensive Tax Reform Program (CTRP) will be passed into law this year despite the holding of the midterm polls in 2019. Finance Secretary Carlos G. Dominguez III said during the second Economic Journalists Association of the Philippines forum on Tuesday held at the Bureau of the Treasury in Manila that the Duterte administration’s push to reform the country’s tax policy is crucial in terms of further sustaining the growth of the economy. “If we do not modernize our infrastructure today and if we do not modernize our tax policy this year, we cannot possibly sustain our pace of growth. We cannot become the dynamic and inclusive economy that is the norm for our region,” Dominguez said. He also expressed confidence that the remaining packages of the CTRP will be passed within the year, even if the election season starts as early as October this year with the filing of certificates of candidacy of election hopefuls with the Commission on Elections. “Yes I am [confident],” the finance chief said. Dominguez explained that the passage of the remaining taxreform packages into law will always come with challenges, but pointed out that the DOF always keeps its channels open to dia-

logue with the different sectors. “To be sure, we are facing an uphill climb in the effort to pass the succeeding packages of the Comprehensive Tax Reform Program. Some of these reforms run against deeply entrenched vested interests. It is always difficult to reform tax policies on the eve of an election year,” he added. When asked whether the DOF is amenable to a watered-down version of the tax packages, Dominguez pointed out that the version should not result to more than a 3-percent deficit in the end. “The deficit? It’s cast in stone. We will not prejudice the entire economy by exceeding 3 percent or around that area,” he said. Earlier in the month, the DOF has reported that it has submitted all packages under the CTRP to Congress, with the last two packages namely Package 3 and Package 4 already submitted to Congress in July. Package 3 of the CTRP, which focuses on reforming property taxation in the country to make the valuation system more equitable, efficient and transparent, was submitted on July 26, while

Package 4 focusing on the rationalization of capital income taxation was submitted on July 24. Finance Undersecretary Karl Kendrick T. Chua said the first CTRP package, which is the Tax Reform for Acceleration and Inclusion (TRAIN) law, was designed to provide hefty personal incometax cuts for 99 percent of Filipinos and, at the same, raise supporting funds to enable the government to spend big on infrastructure and human capital development. TR AIN, or Package 1A, was signed into law by President Duterte in December 2017 and was implemented starting January 2018. The other half of the TRAIN, which is Package 1B, including measures on the proposed tax amnesty program and adjustments in the Motor Vehicle Users Charge, was submitted in 2016 but was not approved together with TRAIN. Package 2 plus, which proposes to increase the excise tax on tobacco and alcohol products and increase the government’s share from mining, is currently pending in Congress. For the tobacco and alcohol tax, the DOF adopted Senate Bill 1599 introduced by Sen. Emmanuel D. Pacquiao, while

for the mining tax, which is House Bill (HB) 7951, was filed by Rep. Estrellita B. Suansing. Package 2, which was submitted in January 16 this year, is meant to fix the flawed corporate taxation system in the country that has generally favored a select group of corporations and barred both the national and local governments from generating a commensurate level of revenues from certain businesses and individuals. The House of Representatives has already concluded its technical working group meetings that consolidated 12 similar measures and inputs from stakeholders seeking to lower the corporate income-tax rate and modernizing investment incentives under HB 8083, which is now more popularly known as the Tax Reform for Attracting Better And High-Quality Opportunities (Trabaho) Act. HB 8083 is set for plenary interpellation and second reading when the House resumes session after the one-week congressional break. “So that’s our target…to have all the tax measures passed before the end of the year,” added Budget Secretary Benjamin E. Diokno.

To be sure, we are facing an uphill climb in the effort to pass the succeeding packages of the Comprehensive Tax Reform Program. Some of these reforms run against deeply entrenched vested interests. It is always difficult to reform tax policies on the eve of an election year.”—Dominguez

No current jobs threat yet from AI, automation in labor front–DOLE By Samuel P. Medenilla @sam_medenilla

hen it comes to doing business, companies still prefer to keep their operations labor-intensive. At least for now. The Department of Labor and Employment (DOLE) said it has yet to observe any game-changing shift in the local industries toward the so-called fourth industrial revolution with the mainstreaming of new technology like robotics and artificial intelligence (AI). DOLE’s Bureau of Local Employment (BLE) cited the absence of a new massive displacement in industries that are expected to adapt to such innovation like the manufacturing and businessprocess outsourcing (BPO). “Companies are required to report anything related to displacement. This gives us a signal [on any labor market movement],” BLE Director Dominique R. Tutay said, citing data from the Philippine Statistics

Authority (PSA). “So far, we have not monitored this trend [which could be attributed to automation],” she added. Cur rent ly, most d ispl acements are in the retail sector, which is mostly due to reorganization and downsizing. It is through this method, Tutay explained, the DOLE was able to identify in 2016 the 7,000 workers in the semiconductor industry, who were displaced after their previous positions were declared obsolete. She noted no such mass retrenchment that could be attributed to new technology has happened since then.

Grim outlook

THE DOLE issued the statement after Verisk Maplecroft released its annual Human Rights Outlook, which showed Philippines as among countries in Southeast Asia, whose workers are vulnerable to automation. “Over the next two decades, 56 percent of workers in the manufac-

turing hubs of Cambodia, Indonesia, Thailand, the Philippines and Vietnam will lose their jobs due to automation, the risk of slavery and trafficking appearing in supply chains will spiral,” Verisk Maplecroft said. The United Kingdom-based global risk and strategic consulting firm urged the aforementioned countries to provide the necessary skills upgrade and social security to the affected workers. Even the International Labour Organization (ILO) made a similar projection stating 89 percent of the million workers in the country engaged in simple voicebased BPO industry are likely to be replaced by AI. Tutay earlier said the government is now preparing contingency measures to address the said issue.

Still limited

The labor official pointed out the use of advanced technology in local firms remain limited because it

remains a costly proposition, and the country still lacks the necessary manpower for such operations. But she admitted, however, that this may happen in the near future. “This may happen by 2020 or 2022. By that time we may see more companies automating their processes,” Tutay said. She added the Department of Trade and Industry (DTI) is now mulling over putting up a training institution for AI to train people how to maintain such system. “They want to train people on that [AI] because there are few [institutions] which are offering it in the Philippines,” Tutay said. Nevertheless, BLE said, there are some factors which may encourage companies to fast-track the automation of their operations such as the government’s ongoing campaign against illegal contractualization. “If the policy eventually makes it cheaper for them to just automate compared to regularizing their workers they may do so later on,” Tutay said.

DOTr lists conditions for closure of toll-rate hike case with MPIC By Lorenz S. Marasigan @lorenzmarasigan

he Department of Transportation (DOTr) is amendable to pay for foregone revenues of the Metro Pacific Investments Corp. (MPIC) from the seven years worth of delayed toll-rate increase in exchange for complete lifting of the arbitration case that was lodged against the department in Singapore. Transportation Secretary Arthur P. Tugade said his group is willing to

settle the matter on the delayed tariff adjustments and claims with the group of Manuel V. Pangilinan outside the courts to hasten the process. “What we are asking is they withdraw the case in the arbitration court, and agree on the contractual provisions on increases,” the DOTr said during the Economic Journalists Association of the Philippines Forum on Tuesday. “If they will withdraw the case, we will have more means to pay for the settlement and the conflict will move on.” Tugade noted that there has been

an “agreement with lawyers and principals” on the case, but a few kinks still need to be ironed out. He noted that the government intends to implement the fare adjustments on a gradual basis, so as not to be a huge burden to road users of the Metro Pacific-operated expressways, namely: North Luzon (Nlex), SubicClark-Tarlac (SCTEx), and ManilaCavite Toll Expressways (Cavitex). “Remember, these toll rates are not for this year. It goes back from 2011, wherein there have been more contractu-

al increases listed. If we implement that in one go, we might choke the public. So we are asking for gradual implementation of the adjustments,” Tugade said. Metro Pacific Tollways Corp. President Rodrigo E. Franco noted that the two groups have yet to reach a “final form of agreement,” but said that his group supports the government’s position to “find a mutually acceptable way of settling the issue.” “We have also considered that if we implement the increase in one go, it’s not going to be acceptable to the

public, so we’ve already considered on agreeing on an adjustment on a staggered basis—that is the proposal we submitted,” he said. Franco added that the group is keen on wrapping the issue up the soonest possible time. “As long as there is away to settle this, we are committed to terminating the arbitration case,” he said. The toll regulator has not acted on the company’s three petitions for the rate increase for the Nlex, one filed in 2013, another in 2015 and one this year. The accumulated increase would

account to a 21-percent adjustment over the course of seven years. The concession that the Manuel V. Pangilinan-controlled company allows for toll adjustments every two years. Petitions for adjustments for Cavitex—spread across three years—likewise, remained pending. This has led to the government facing an arbitration case of over P7.5 billion due to the foregone revenues of tollways group. The amount continues to increase as long as the petitions for rate increase have not been acted upon.

Editor: Angel R. Calso | www.businessmirror.com.ph

The World

UN: China’s African swine fever outbreak could cross borders

EIJING—An outbreak of African swine fever in China could jump the border to neighboring countries in Southeast Asia or the Korean Peninsula, the UN’s Food and Agriculture Organization (FAO) warned on Tuesday. Outbreaks of the highly contagious, viral disease that affects pigs and wild boar have been reported in four different Chinese provinces over the past month. The FAO said the distances bet ween eac h outbrea k—up to 1,000 kilometers (621 miles)— highlighted the danger of the virus spreading to other Asian countries at any time. T he “ d iverse geog raph ic a l spread of the outbreaks in China have raised fears that the disease will move across borders to neighboring countries of Southeast Asia or the Korean Peninsula where trade and consumption of pork products is also high,” the Romebased FAO said in a news release. African swine fever poses no direct threat to humans but threatens to devastate China’s crucial pork industry. There is no effective vaccine to protect pigs from the virus. China is the world’s biggest pork producer, accounting for about half the world’s population of swine at around 500 million

head. The meat accounts for more than 60 percent of animal protein consumed in the country. China has culled more than 24,000 pigs and imposed strict quarantine and disinfection efforts in hopes of stamping out the virus. African swine fever outbreaks have also been reported in the Americas and in the European Union, chief ly in the Baltics, Poland and Romania. T he FAO sa id t he st ra in de tected in C h ina was sim i l a r to one fou nd in Russi a l ast yea r. W h i le invest igators have yet t o d e t e r m i ne t he s ou rc e of t he l atest outbrea k , t he v ir us’ spread t hrough China was l i kely due to t he movement of pig products rat her t ha n l ive a nima ls, it sa id, quot ing c h ief veter ina r i a n Ju a n Lubrot h. The FAO said it was working closely with authorities in China and neighboring countries to control the outbreak, but warned that a complete shutdown of the movement of pigs and pork products could undermine those efforts by encouraging illegal transportation methods. China’s agriculture ministry did not immediately reply to faxed questions about the most recent developments involving the outbreak. AP

Facebook bans Myanmar military chief, others to stop spread of hate

ANGON, Myanmar—Facebook said on Monday that it is banning Myanmar’s powerful military chief and 19 other individuals and organizations from its site to prevent the spread of hate and misinformation. The social-media giant was heavily criticized for permitting itself to be used to inflame ethnic and religious conflict in the country, particularly against minority Rohingya Muslims. It has been accused of being lax in fighting online misinformation and manipulation in many countries, but Myanmar is one where it has been most closely tied to deadly violence. Some 700,000 Rohingya have f led from Myanmar’s western state of Rakhine over the past year in response to a brutal counterinsurgency campaign by the military, which has been accused of massive human-rights violations. Critics accuse the military of carrying out ethnic cleansing, or even genocide, an allegation denied by the government, which says it was responding to attacks on security forces. Facebook said it also targeted pages and accounts that pretended to provide independent news and opinion, while covertly promoting messages of Myanmar’s military. It said it was deleting 18 Facebook accounts, one Instagram account and 52 Facebook pages. A separate report by investigators working for the UN’s top human-rights body, released on Monday, charged that “Facebook has been a useful instrument for those seeking to spread hate, in a context where for most users Facebook is the Internet.” “A lthough improved in recent mont hs, Facebook ’s re sponse has been slow and ineffective,” said the repor t by t he Fact-Find ing Mission on Myanmar, author ized by the U N Hu m a n R i g ht s C ou nc i l . “ T he extent to which Facebook posts and messages have led to rea l-world discr imination and violence must be independently and thoroughly examined.” Four high-ranking officers and two military units targeted by Facebook were also put on a US government blacklist earlier this month for human-rights abuses. The sanctions block any property

they own within the US and prohibit US citizens from engaging in transactions with them. The US already maintains restrictions on visas, arms sales and assistance to Myanmar’s military. In June the EU imposed similar sanctions on seven senior army and police officers, all of whom are on Facebook’s blacklist. Six officers on Facebook’s list were also named in the UN human rights report, which said Myanmar’s top leaders should be prosecuted for genocide. Those it recommended as “priority subjects for investigation and prosecution” included top commander Senior Gen. Min Aung Hlaing. In a statement, Facebook referred to the UN report, which it said “found evidence that many of these individuals and organizations committed or enabled serious human rights abuses in the country. And we want to prevent them from using our service to further inflame ethnic and religious tensions.” Discrimination against the Rohingya ran deep and wide even before the spread of Facebook. Faceb o ok h a s b e e n u nde r pressure for several months to take action on the problem, especially after civic and rights groups in Myanmar said in April that it had failed to adequately act against online hate speech that incited violence against the countr y’s Muslim minor ities, neglecting to effectively enforce its own rules. “The ethnic violence in Myanmar has been truly horrific,” Facebook said in its statement. “While we were too slow to act, we’re now making progress—with better technology to identify hate speech, improved reporting tools, and more people to review content.” “We continue to work to prevent the misuse of Facebook in Myanmar—including through the independent human rights impact assessment we commissioned earlier in the year. This is a huge responsibility given so many people there rely on Facebook for information—more so than in almost any other country given the nascent state of the news media and the recent rapid adoption of mobile phones. It’s why we’re so determined to do better in the future.” AP

BusinessMirror

Wednesday, August 29, 2018

Europe tries to avoid crisis as US-China trade war grows

n the shadow of an escalating trade war, momentum is picking up to protect the World Trade Organization (WTO) from turning irrelevant.

The European Union will host trade ministers from the US and Japan next month in Brussels, according to two officials with knowledge of the meeting. The gathering will be part of an effort to address China’s trade practices in a way that doesn’t marginalize the WTO, said the officials, who asked not to be identified because preparations are private. The meeting will precede about 10 high-level confabs around the globe over the next year aimed at calming trade tensions. The push to reform the Geneva-based WTO has gained urgency since Donald J. Trump became president, with his administration showing open disdain for the multilateral trade body and Trump himself saying, “The WTO is unfair to US.” The EU is working on a proposal to amend the composition of the WTO, as well as address about a half dozen American complaints. “The situation is serious,” WTO Director General Roberto Azevedo told reporters last month in Gene-

va. “There are many leaders in the world that already understand that we need to have negotiations, that we need to sit down and talk, that we need to find solutions.”

Rising China

The Trump administration, arguing that the WTO is incapable of addressing the problems created by China’s rapid economic ascent, has resorted to unilateral tariffs on $50 billion worth of Chinese goods. Beijing has retaliated in kind with duties on $50 billion worth of US goods and pledged to respond if Trump follows through with his threat of levies on an additional $200 billion of Chinese products. Washington’s decision to side-step the WTO has raised concern that the trade body could slide into obsolescence if steps aren’t taken to shore it up. In May—a day after President Emmanuel Macron proposed negotiations to refor m the W TO —the US, the EU and Japan met in Par is and reiter-

ated their concer n w ith some non-market-or iented measure of some partners. The trilateral group issued a joint statement citing the need to address “the t r a d e - d i s t or t i n g p ol ic ie s of third countr ies.” In addition to the Brussels meeting next month, the EU will soon unveil a plan to reform the WTO, seeking to make negotiations more flexible, reduce trade costs, make the dispute-settlement system more transparent, and to strengthen the trade body itself, according to a draft proposal seen by Bloomberg. Reforming the WTO, as well as addressing Chinese trade abuses, will be discussed at a host of meetings around the world over the next year, including an October gathering in Ottawa of about a dozen trade ministers. The topics will also be raised at a high-level Asia-Pacific Economic Cooperation meeting in Papua New Guinea in November; in December, leaders from the Group of 20 economies will bring up reform in Buenos Aires; French President Emmanuel Macron proposed discussions this fall in Paris; and there will be a ministerial meeting on the sidelines of the World Economic Forum in Davos. “The United States is gratified that an increasing number of WTO members appear to be heeding our call on the urgent need to make the

WTO work better,” Dennis Shea, the US Ambassador and Permanent Representative to the WTO, said in an e-mailed statement.

Sooner the better

The push comes as Trump announced on Monday that the US would terminate the North American Free Trade Agreement and sign a new trade accord with Mexico. The move could potentially leave Canada out of the trading bloc. As tensions between the US and China escalate, threats to the WTO are growing larger, making it difficult for its members to delay reforms any longer. Since August 2017 the US has blocked nominees to the WTO’s appellate body, say ing it has overstepped its mandate. In October the seven-member panel will operate with only three remaining members, which is the minimum number of panelists required to sign off on appeals cases. If the US continues its hold, the body will be paralyzed in late-2019 because it won’t have the three panelists required to sign off on rulings. “We don’t necessarily have a due date but we all know that we need to get the process right,” Mexico’s Undersecretary of Foreign Trade Juan Carlos Baker told Bloomberg Law during a press briefing in Geneva. “And for that the sooner we start the better.” Bloomberg News

France environment minister trumpets resignation on radio

ARIS—France’s high-profile environment minister, former TV personality Nicolas Hulot, unexpectedly announced his resignation live on national radio on Tuesday, lamenting a lack of decisive action on green issues. The move deals a stinging blow to the environmental credibility of President Emmanuel Macron. C l e a r l y e m o t i o n a l , Hu l o t made clear his frustrations at what he said was France’s slow pace of progress on green issues. T he long t ime env ironmenta l advocate told France Inter radio that he no longer wants to give the impression “that we’re up to standard on these issues, and so I have decided to quit the government.” Recruiting Hulot to his government had been a coup for Macron, who has sought to position France as a champion in the fight against environmental degradation and as a counterweight to the climate change attitudes of US President Donald J. Trump. Losing Hulot so suddenly, just as the government is resuming

In this October 11, 2017, file photo, Environment Minister Nicolas Hulot looks on as French President Emmanuel Macron delivers his speech during a meeting at Rungis international food market, near Paris, France. On Tuesday, Hulot unexpectedly announced his resignation live on national radio, dealing a blow to the lofty green ambitions of President Emmanuel Macron. AP/Francois Mori

work after France’s August vacation, is likely to force a ministerial reshuffle but also casts doubt on the strength of Macron’s commitment to “make our planet great again.”

Hulot damned Macron’s government with faint praise as he sprang his resignation surprise. “France is doing more than a lot of other countries. Do not make me say that it is doing enough. It

is not doing enough. Europe is not doing enough. The world is not doing enough,” he said. Never a career politician, Hulot accepted a role in Macron’s government in the hope that, from an inside position, he could make real progress on green concerns that he has long sounded the alarm about. But on France Inter, Hulot said short-term pressures were taking priority in government over the longer-term need to reverse environmental destruction. He described himself as “all alone” and said: “I have a bit of influence but I have no power and no means.” Hulot said he’d been mulling his resignation for several months but one of the last straws was a government meeting on Monday about hunting. Hu lot w a s d i s m ay e d t h at a hunting lobbyist was allowed to take part despite not being invited, seeing his presence as a symbol of lobbyists’ inf luence over French government. “I no longer believe,” Hulot said. AP

Iran asks UN’s highest court to suspend US sanctions

HE HAGUE, Netherlands— Iran warned on Monday that reimposed US sanctions would cripple its economy and plunge the volatile Middle East deeper into crisis as it urged the United Nations’s highest court to suspend the Trump administration’s economic pressure on Tehran. In a written statement about the case at the International Court of Justice, US Secretary of State Mike Pompeo called Iran’s claims “meritless” and defended the sanctions as a way of keeping Americans safe. The world court’s wood-paneled Great Hall of Justice in The Hague is the latest backdrop for Washington and Tehran’s high-stakes dispute about Iran’s

nuclear ambitions. President Donald J. Trump said in May that he would pull the US out of a 2015 agreement over Iran’s nuclear program and would reimpose sanctions on Tehran. Washington also threatened other countries with sanctions if they don’t cut off Iranian oil imports by early-November. Iran filed a case with the court in July challenging the reimposition. Tehran alleges that the sanctions breach a 1955 bilateral agreement known as the Treaty of Amity that regulates and promotes economic and consular ties between the two countries. The treaty was signed when the US and Iran were still allies following the 1953 revolution— fomented by Britain and the US—

that ultimately cemented the rule of Shah Mohammad Reza Pahlavi. Howe ver, d iplom at ic re l ations were severed follow ing t he 1979 Isl amic Revolut ion in Iran and takeover of the US Embassy and ensuing hostage cr isis. Despite that dramatic deterioration in relations, the treaty remains in force. Iran and the US have a history of litigation at the International Court of Justice, in cases covering crises, including the embassy seizure and the shooting down of an Iranian passenger jet mistaken by a US warship for a fighter jet. Rulings by the world court, which settles disputes between nations, are final and legally binding. However, it remains to be seen if

the US would abide by a court order to suspend sanctions on Iran. At Monday’s hearings, Tehran asked judges to urgently order a suspension of the sanctions while the case challenging their legality is being heard—a process that can take years. A decision on the urgent request for a suspension is likely to take weeks. Iranian representative Mohsen Mohebi told the court the US sanctions are a clear breach of the 1955 treaty because they are “intended to damage, as severely as possible, Iran’s economy.” He called Trump’s sanctions policy “nothing but a naked economic aggression against my country.” Mohebi also warned that the sanctions could exacerbate regional tensions. AP

A6 Wednesday, August 29, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

‘Scary’ coconut oil

year after the American Heart Association (AHA) issued an advisory discouraging people from consuming coconut oil, the country’s top agricultural export is back in the spotlight. In a recent lecture at the University of Freiburg in Germany, an epidemiologist at the Harvard TH Chan school of public health called coconut oil “pure poison” and should be avoided. The British daily, The Guardian, which published a story about the Harvard professor’s remarks on August 22, noted that the lecture has been viewed almost a million times on YouTube.

The article noted that Karin Michels based her warning on the high proportion of saturated fat in coconut oil, which could raise the so-called bad cholesterol, or low-density lipoprotein (LDL) cholesterol. Bad cholesterol is a major cause of artery-clogging plaque and consuming food with high saturated fat would raise the risk of contracting cardiovascular diseases. This led Michels to proclaim that coconut oil was “one of the worst things” people can eat. Coconut oil and other coconut products have been maligned in the past by so-called experts from Western countries. But calling it pure poison is a different matter altogether because the claimant is telling consumers to stay away from coconut oil as it is fatal to human health. This claim is deplorable and malicious. It does not only harm the livelihood of more than 3 million Filipino coconut farmers but may cause the demise of the entire coconut industry. The Philippine Coconut Authority (PCA) has clarified that such irresponsible statement was based on “old and flawed research.” It also appears that those attacking coconut oil have conveniently overlooked other studies that presented its health benefits. For one, the PCA noted in a BusinessMirror report (See “Pure baloney: PCA hits new smear drive vs coconut oil”) that coconut oil raises levels of good cholesterol or high-density lipoprotein (HDL), which counters the bad effects of LDL cholesterol. The PCA also said recent studies conducted abroad showed that dietary cholesterol is not the root cause of cardiovascular disease but inflammation. Citing Dr. Dwight Lundell, a world-renowned heart surgeon who has performed over 5,000 open-heart surgeries, the PCA said the biggest culprit of chronic inflammation is the overconsumption of simple, highly processed carbohydrates (sugar, flour and all their by-products) and of omega-6 vegetable oils like soybean, corn and sunflower that are found in many processed foods. The agency said the US National Library of Medicine, National Institutes of Health and the British Medical Journal are replete with overwhelming number of studies proving coconut oil to be one of the healthiest foods on Earth. The latest attack against coconut oil came at a time when promotions from health food shops and endorsements from celebrities, such as Gwyneth Paltrow, have boosted sales of coconut oil in the United Kingdom. According to The Guardian, consumer research group Kantar found that sales of coconut oil in the last four years surged to £16.4 million, from £1 million, as a result of said endorsements. In the United States, Kantar said sales peaked at $229 million in 2015. The revived attacks on coconut oil seem to have affected shipments in the first six months of the year. Data from the Philippine Statistics Authority showed that revenues from coconut-oil shipments fell by nearly 29 percent to $596.62 million in the January-to-June period, from $839.26 million. If the trend continues, Filipino exporters could end the year with a double-digit decline in earnings from coconut oil. If this is the goal of critics, then it appears that they are succeeding. Since 2005

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STL agents should get maximum medical assistance Florante S. Solmerin

FACT IS MIGHT!

mall Town Lottery (STL) agents—kubrador, kabo, rebisador— should get the maximum financial assistance for hospitalization and other medical-related needs. They fully deserve this benefit. Data from the Philippine Charity Sweepstakes Office (PCSO) shows there are more or less 320,000 agents of the current 82 Authorized STL Agents (ASA) operating nationwide. This is a big work force helping to generate income for the government. They are the reasons behind government’s capacity to fund health programs and free medical services to the indigents and poor Filipinos.

The majority of these agents cannot get decent jobs for lack of education. Many of them are senior citizens, and some are persons with disabilities (PWD) but still working hard every day to feed their families. Some ASAs, like the Batangas Enhanced Technology Systems Inc. (BETS), take care of their agents. Unfortunately, some of them don’t extend any health benefits benefits.

Oftentimes, I get calls from STL agents asking for assistance from the PCSO to pay for their hospital bills. Of course, there are some charges in a patient’s bill that the PCSO can’t shoulder, such as professional fee and room payment, unless the patient is an indigent. I talked to some BETS people and I learned about how this ASA takes care of its agents. The STL operator has its own medical group called AnaKalusugan and its own “Klinika ng Bayan” in Santo Tomas, Batangas. The clinic caters to all BETS agents who need medical attention for free. Every agent, doctors said, have their free maintenance medicines, especially the seniors suffering from hypertension, diabetes and other health problems. The PCSO does not have a maintenance medicine program except for free medicines for extreme cases such as cancer. Doctors of AnaKalusugan admitted they realized they were in a

community and they have to extend medical attention, too, to local people in need, not only to BETS agents and their dependents. These doctors want to share the good practices of the group to all ASA operating in the country. They want to bring AnaKalusugan to them and then eventually to the people in other communities. I suggest there should be a memorandum of agreement between the PCSO and all ASAs to ensure that all the agents who really work hard should get maximum medical assistance. Why am I proposing this? Because these agents collect every single peso from house to house, and from bettors everywhere. They are frontline personnel who are helping generate for the government more than P2 billion a month in STL revenues. This is the best way to practice the saying, “charity begins at home.” E-mail: fetad@yahoo.com

Vatican power struggle bursts into open as conservatives pounce

By Jason Horowitz | New York Times News Service

OME—Since the start of his papacy, Francis has infuriated Catholic traditionalists as he tries to nurture a more welcoming church and shift it away from culture war issues, whether abortion or homosexuality. “Who am I to judge?” the pope famously said, when asked about gay priests. Just how angry his political and doctrinal enemies are became clear this weekend, when a caustic letter published by the Vatican’s former top diplomat in the United States blamed a “homosexual current” in the Vatican hierarchy for sexual abuse. It called for Francis’s resignation, accusing him of covering up for a disgraced cardinal, Theodore E. McCarrick. With the letter—released in the middle of the pope’s visit to Ireland —an ideologically motivated opposition has weaponized the church’s sex-abuse crisis to threaten not only Francis’s agenda but his entire papacy. At the very least, it has returned the issue of homosexuality in the Roman Catholic Church, which many conservatives are convinced lies behind the abuse crisis, to the center of debate. Vatican intrigues and power struggles are nothing new, but they usually remain within the medieval walls or fly over the heads of the Catholic faithful around the globe. This battle, however, is being waged in an exceptionally open and brutal manner. It is fueled by a modern media age, the pope’s reluctance to silence critics, and an issue —child sexual abuse—that perhaps more than any other has prompted defections among the faithful.

The accusations in the letter remain unsubstantiated. Asked on Sunday night about their validity, Francis said he would not dignify them with a response. But they are serious, and the pope’s vague answer has only heightened public interest, particularly in the core accusation—that he was told about McCarrick’s history of sexual relations with seminarians and did nothing about it. “It’s a serious problem,” said Sandro Magister, a veteran Vatican observer at L’Espresso magazine, who said the remarkable public broadside was indicative of enormous frustration among conservatives toward Francis. He doubted whether Francis, who has essentially ignored such salvos in the past, would be able to do so this time. “With this issue,” Magister said, “the public impact is much stronger, and on this ground he is rather vulnerable.” Francis’s non-answer is in keeping with his reluctance to give oxygen to a small—if influential and noisy—group of conservative prelates and writers aligned with the author of the letter, Archbishop Carlo Maria Viganò, the former top Vatican diplomat in the United States. Francis has removed from office or sidelined ideological opponents

in the bureaucracy of the church, but he has also been more willing than his predecessors to allow open debate and even dissent. Many have challenged him, in sometimes coarse language, for his openness to making some church practices less rigid, among them the exclusion of divorced and remarried parishioners from receiving Communion. On Monday Francis’s supporters shrugged off the letter as another desperate attack from frustrated conservatives still unaccustomed to not getting their way. They expressed confidence that its accusations would be disproved. Some abuse survivors, who have been pressing Francis to take concrete action about the crisis instead of just offering apologies, however heartfelt, argued that Viganò’s letter exploited the abuse for political gain. The letter did not, they said, show particular concern about the plight of the church’s children. The child sex abuse scandal has riveted the attention of the world’s Catholics, but the shift in the church’s direction under Francis has enlivened his enemies. They believe that the pope’s message of inclusion is undermining long-standing church rules, and that it is leading to confusion and perhaps schism. The explosion of conservative Catholic blogs—many in the United States—in an era of lightning-fast modern media, as well as the strategically timed release of the letter combined to make a potent rearguard action against the 81-yearold pontiff. “Let us be clear that they are still allegations, but as your shepherd I

find them to be credible,” conservative Bishop Joseph Strickland of Tyler, Texas, wrote in an open letter to his diocese. “I will lend my voice in whatever way necessary to call for this investigation and urge that its findings demand accountability of all found to be culpable even at the highest levels of the church.” If Francis thought the debate over homosexuality in the church was behind him, the events of this week suggest otherwise. “The homosexual networks present in the Church must be eradicated,” Viganò wrote, arguing that it was the root cause of abuse. The abuse scandal had already set off a fierce debate in Catholic journals and across churches. Some critics of the church have blamed the vows of celibacy, arguing that suppressing the human libido can lead to pedophilia and rape. At the Conference of Catholic Families, a rival, conservative event to the Vatican’s World Meeting of Families in Dublin over the weekend, organizers found the pope’s recent condemnation of abuse unsatisfactory because he did not call out homosexuality. That, they say, has turned seminaries into “cesspits.” Cardinal Wilfrid Napier of South Africa has also blamed homosexuality for the scandal. And Cardinal Raymond Burke, a high-ranking Vatican conservative and a leading critic of the pope, has denounced what he says is “a very grave problem of a homosexual culture in the church.” The problem, he said, is not only among the clergy “but even See “Vatican,” A7

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Why not ‘congestion pricing’ to solve traffic woes? Michael Makabenta Alunan

on the contrary

o solve the horrendous traffic problem in Metro Manila, government can try “congestion pricing” through higher parking fees slapped on private cars. However, this has to be accompanied by innovative but common-sensical strategies. These measures are urgently needed in anticipation of the gridlock created with the “Build, Build, Build” program, which is the proverbial “wheels of progress” that will ironically slow down traffic further or even grind to a halt initially owing to the construction frenzy, worsened by the continuous yearly sales of four-wheeled vehicles now hitting over 400,000 a year. In short, traffic will get worse before it gets better, unless temporary solutions are done urgently. n What’s unfair with road charges. The road user’s tax may seem fair as the bigger vehicles that put stress on roads get higher road user’s tax. Conversely, smaller private cars pay much less compared to buses or trucks. However, volume-wise, private cars dominate 80 percent of road space in Metro Manila. In principle, because public roads are funded by public funds, priority must be given to public transport instead of private cars. For using public roads, vehicles are slapped a road user’s tax, but because this is captured only during vehicle registration, it could not regulate daily road usage as a pricing policy. Abuse of public roads gets worse in many side streets, where motorists transform them into personal garages. n Congestion pricing through parking fees. Many big cities the world over apply congestion pricing through higher parking fees for cars alone to reduce traffic. High parking fees discourage motorists from bringing their cars. Part of the costs of owning cars are the costs of maintaining garages and paying parking fees. Unlike the Tax Reform for Acceleration and Inclusion’s (TRAIN) excise taxes that are regressive as they indirectly affect the poor through higher prices, parking fees only affect motorists, or only those who park in public places. Although the TRAIN’s excise taxes account less for inflation compared to the effects of global fuel prices and the peso devaluation, the mass psychology triggered its own momentum, giving everyone in the supply chain an excuse to increase prices. Parking fees are also good sources of revenues, which only affect motorists directly, more so the wealthy who can afford higher fees. Singapore, for example, collects about $6 billion in parking fees. Such fees can help fund transport infrastructure, and can also be shared with local governments. Whatever it is, congestion pricing is one strategy to ensure private cars are taxed more for using public roads built from people’s money, thus giving public transport more priority to use public roads. n ‘Standing policy’ for buses? Motorists will likely oppose congestion pricing, claiming public transport being inefficient does not offer an alternative. Trains, buses or jeepneys are too jampacked and unsafe. Buses, in particular, contribute to traffic at bus stops, as it takes time for them to unload before they could even load new passengers through a single door as both entrance and exit. A simple solution is to remove seats, but keep a few for the handicapped. From the current 60 seats, at three-seater and two-seater a row,

Parking fees are also good sources of revenues, which only affect motorists directly, more so the wealthy who can afford higher fees. Singapore, for example, collects about $6 billion in parking fees. Such fees can help fund transportation infrastructure, and can also be shared with local governments. plus 10 to 20 standing along aisles, buses can possibly carry 100-120 passengers without seats. For easier ingress and egress, two doors can be installed, and two conductors hired. Better still, automatic fare-collection systems be installed to do away with conductors. With faster loading and unloading, and lesser time at bus stops, buses can make more turnovers, which is good for bus operators. If Metro Rail Transit/Light Rail Transit passengers are made to stand, why not bus passengers? If Singapore, with its smaller population, requires most bus passengers to stand, why not here? At 1.2 passengers per car on the average, based on a Japan International Cooperation Agency (Jica) study, against 60 bus passengers seated on a bus, plus 20 more on the aisles, one busload of car owners is equivalent to 50 to 60 cars of road space. Without seats, as many as 80 to 100 cars of road space are freed to improve traffic. n Odd-even better than HOV? The Metropolitan Manila Development Authority’s High Occupancy Vehicle (HOV) policy on Edsa is seen to be ineffective in spotting violators from a distance. An army of spotters and equipment to identify through tainted windshields may be needed but costlier. More effective will be distributing volume through time-sharing and spatial or space management. This is done by imposing an oddeven scheme on private cars alone during rush hours, say 6 to 7:30 a.m. for odd-ending numbers and 7:30 to 9 a.m. for even numbers, and similar system in the evening rush. Half of cars are removed from the roads during these hours, thus avoiding gridlocks. It is ironic that, for the same distance, what takes me 20 to 30 minutes before dawn from my place to the Naia, can become a three-hour trip during daytime. Motorists will therefore be free to use their cars, which is better than total ban coding, but just have to sacrifice and wait for their designated time. n Parking buildings as business? The Jica increased the estimated traffic costs from P2.4 billion a day to P4.1 billion in 2017, and before long this could balloon to P6 billion a day if nothing is done. It’s time local governments build parking buildings all over the metropolis, requiring those with no garage to park here for a fee. There are technologies now of multiple-layered carparks stacked through elevator systems. What is generated from congestion pricing can be invested here. At least congestion pricing will not hurt the poor, thus avoiding the far-reaching implications of regressive effects of revenues, such as excise taxes. E-mail: mikealunan@yahoo.com.

Regulatory relief Dennis B. Funa

INSURANCE FORUM

egulatory relief are measures effected by regulators to achieve administrative simplification or deregulation to reduce the burden of regulation due to some compelling reasons. Regulatory relief can take different forms for different regulatory activities, and for different objectives. Thus, it can take the form of a relaxed regulation, such as by providing exemptions from specific requirements. It can take the form of a total deregulation, meaning the suspension of certain regulatory requirements or the repeal of regulatory provisions, or the adoption of regulation that lessens the burden of regulation. To illustrate, in financial regulation, a deregulation removes regulatory constraints in order to achieve a greater efficiency. An example of an objective for regulatory relief is to reduce the amount of resources devoted to enforce obsolete or unnecessary regulations. A reduction in filing requirements, a reduction in duplication of requirement, simplification of procedures, elimination or modification of rules that are no longer relevant are often

examples of reasons for regulatory relief. It can also be by tailoring a requirement so that it still applies to certain entities but does so in a less burdensome way.

Regulatory relief in the Philippines

One form of regulatory relief is the adoption of regulation that lessens the burden of regulation. An example is the adoption of the Anti-Red Tape Act of 2007 (Republic Act 9485). Through the law, it mandated the processing of licenses and permits within a specified number of days. It also provided for the adoption of the “Citizens Charter.” These, in effect, provide relief for the general public from burdensome government regulations. In 2016 an initiative was launched

Wednesday, August 29, 2018 A7

to remove outdated and unnecessary government rules and regulations. The project focused on the repeal of outdated department orders and rules of attached agencies. It was called Project Repeal. Its objective was to reduce the cost of compliance for businesses and the cost of administration and enforcement for the government. The need for regulatory relief is most relevant, especially in overregulated industries. Indeed, while regulation is oftentimes necessary, excessive regulation can be self-defeating. In the insurance industry, strict regulation has been viewed as necessary for financial stability and increased protection for consumers.

In the Insurance Commission

The grant of regulatory relief is impliedly authorized under Section 437, paragraph 3 of the Amended Insurance Code. This provision, in effect, leaves the discretion up to the regulator itself. A question therefore is how much discretion should be given to regulator in granting relief. It is believed that relief can be given to a particular business establishment or to an entire industry. Some view legislation as unnecessary because regulators have already been authorized to tailor or provide exemptions under its rule-making powers. The Insurance Commission has lifted certain requirements in the

processing of claims during disastrous natural calamities. The objective being to expedite the payment of benefits. And insurance companies under conservatorship may be granted some form of relief to facilitate its rehabilitation.

When relief may be granted

IN granting relief, there is a need to gauge whether regulation is lacking or excessive; whether a regulation has become “unduly burdensome.” According to the Congressional Research Service of the United States, “the different objectives and potential benefits of financial regulation include enhancing the safety and soundness of certain institutions; protecting consumers and investors from fraud, manipulation and discrimination; and promoting financial stability while reducing systemic risk. The costs associated with government regulation are referred to as regulatory burden. The presence of regulatory burden does not necessarily mean that a regulation is undesirable or should be repealed. A regulation can have benefits that could outweigh its costs, but the presence of costs means, tautologically, that there is regulatory burden.” Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.

The ‘dating app phenomenon’ of digital platforms

This is important because people are more likely to join if there are many registered users, which increases the chances of getting a match. This is like speed dating, where the number of participants is key to the success of the service. In a sense, all digital platforms are a version of a dating app where the goal is to meet and match as many people as possible. In competition parlance, this is known as “network effects,” where the value of the platform increases with the number of users or participants. The classic example is the telephone line, where the value of the service increases with every additional subscriber since more people can call each other. When there are competing telephone service providers, a potential user is likely to choose the provider with more subscribers. As the first of its kind, the dating/ride-sharing app also has the unique opportunity of getting the lion’s share of potential users, until

a new app comes along. If most of the Edsa-passing single drivers and commuters have registered with this app, and the chances of getting a match are higher, then the registered users would see little benefit in switching to a competing app. The advantages of network effects are often available to the first mover, which can take on a “winner-take-all” position. Even if a new app comes along, users will not immediately bail out, if only because the new kid in town has fewer users, if any. The second thing that came to mind about this dating/ride-sharing app is that it should consider the relevant dating preferences to ensure there are sufficient options for any registered user. However, this is tricky. Assume for a moment that the registered users are heterosexual males and females. Apart from the natural imbalance in the population, males and females may also have different appetites for dating apps. If males are less likely to join such apps, it may be necessary to incentivize them to register. With too few males, females may no longer find it worth their while to register with the app. To keep the females, the app must keep the males. At certain points, the numbers may shift, in which case the app may have to tweak incentives to maintain an appropriate ratio. So, it is not enough to have many registered users. There must also be enough participants from both sides of the platform. This is true for other platforms. Ride-hailing apps like Grab and Uber require sufficient riders and drivers, while

AirBnB must have an ample number of hosts and guests. As I pondered on these issues, it is very tempting to be selfish and aim for capturing all the Edsa-passing singles in the dating/ride-sharing app and database. The appeal of cordoning them off against competitor apps is simply irresistible. The impulse to drive away any competition is so strong that it almost feels justified given the cost of innovation. The desire to be the only dating/ridesharing app for Edsa-passing singles cannot be easily ignored. These explain why digital platforms must be guarded closely. While they represent innovation that brings benefits once thought inconceivable, these can also create monopolies that harm consumers, especially involving products that are imbued with public interest. While rapid innovation is encouraged, the market must be kept open for competition, and winner-take-all situations must be avoided. As the dating app thrives on network effects, the digital economy must live by a brand of network effects where competition is present to inspire more innovation, which, in turn, spurs competition.

Italian bishops that, when it came to potentially gay seminary applicants, “if there’s even the slightest doubt, better to not accept them.” Even so, Viganò and his allies have argued that the pope and his supporters are too accepting of gays in the church and that they willfully ignore that the vast majority of victims of sexual abuse by priests are male. Most experts reject the conflation of homosexuality and pedophilia as a dangerous route to bigotry against gays. Outside the church, the belief has been widely discredited as retrograde. But it still has traction in the Vatican. Many here believe that an investigation by three cardinals after the 2012 Vatileaks scandal—based on the leaked memos of the same Viganò who wrote Sunday’s letter—revealed a gay lobby

working in the Holy See and that their report contributed to the retirement of Pope Benedict XVI. The report remains a closely held Vatican secret, but in his letter, Viganò included a slew of names and targeted allies of Francis who share the pope’s views. He said Cardinal Blase J. Cupich of Chicago was “blinded by his pro-gay ideology.” And he took issue with the assertion of Cupich, a past president of the Committee on Protection of Children and Young People, “that the main problem in the crisis of sexual abuse by clergy is not homosexuality, and that affirming this is only a way of diverting attention from the real problem, which is clericalism.” In an interview Sunday, Cupich said: “I think it is wrong to scapegoat gays and homosexuals as though there is a greater likelihood that

gay people are going to offend children than straight people. That data doesn’t bear that out.” The Viganò letter also lamented that the Vatican had brought on Jesuit priest James Martin, who has written a book on how to make gay Catholics feel more welcome in the church, as a consultor of the Secretariat for Communications. The church under Francis, Viganò writes, has “chosen to corrupt the young people who will soon gather in Dublin for the World Meeting of Families,” by inviting Martin to speak there. In an interview, Martin said, “The reason it seems like all gay priests are abusers is that there are no public counterexamples of healthy celibate gay priests, because most gay priests are afraid to come out in this poisonous environment.”

Atty. Amabelle C. Asuncion

Competition Matters

he proposed traffic scheme banning single-rider vehicles along Edsa during rush hour has generated mixed, mostly satirical, if not downright sarcastic reactions from single drivers and commuters alike. Social-network posts range from complaints about discrimination to a mad rush for a “partner” just so they can pass Edsa. Amid the controversy, a thought crossed my mind: Could this be a golden opportunity to invent an app to top all dating apps? Talk about a dating/ride-sharing app! The idea sounds flippant but is a half-serious attempt at offering a solution to the thousands of singles passing Edsa to and from work every day. As I toyed with the idea, two things came to mind. First, the app should have many registered users. The app is a digital platform—that is, a place where participants virtually meet and match. As a platform, its value rests on having many participants. In this dating/ride-sharing app, the participants are single drivers who need a “date,” as well as single commuters who need a ride along Edsa during rush hours. For the dating/ride-sharing app to be successful, it should entice as many of these single drivers and commuters to register with the app, within the shortest possible time.

Vatican. . .

continued from A6

within the hierarchy, which needs to be purified at the root.” In 2005 the Vatican stated that even celibate gays should not be priests, and instructed church leaders to reject seminary applications from men who “practice homosexuality, present deep-seated homosexual tendencies or support the so-called gay culture.” Critics of Francis believe that a meeting in Rome of bishops from around the world in October on the theme of youth could become a battleground. They want to make sure the church’s opposition to homosexuality is on the radar should the issue of sex abuse come up, as it now certainly will. In May Francis reportedly told

Before her appointment to the Philippine Competition Commission, Commissioner Asuncion was engaged in corporate and commercial practice and served as chief legal counsel of a top company and a corporate partner of a law firm. She was also previously involved in legislative, law and policy reform, advocacy and adjudication work. Commissioner Asuncion has a master of laws degree (with distinction) in international legal studies from Georgetown University Law Center in Washington, D.C., and is admitted to the New York bar.

2nd Front Page BusinessMirror

A8 Wednesday, August 29, 2018

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New DOT ‘More Fun’ campaign to get ₧500M By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

HE Department of Tourism (DOT) will be refreshing its “It’s More Fun in the Philippines” brand campaign with a new series of ads here and abroad at a cost of P500 million.

In an interview with the BusinessMirror, Tourism Undersecretary for Tourism Regulation, Coordination and Resource Generation Arturo P. Boncato Jr. said that, of the total brand campaign budget, P250 million has been allotted for the procurement of services of a creative ad agency, and another P250 million for the services of a media placement agency. “The creative agency will be producing radio and TV ads, TV commercials, print ads,” he said, including regional and Philippine tourism maps. The new series of ads may run for a year, until the end of 2019, he added. At present, only the “Anak” TVC is airing in select international broadcast media and some foreign markets after the DOT, then headed by Secretary Wanda Corazon TulfoTeo, canceled its P650-million advertising contract with the McCann Worldwide Group on issues of plagiarism. Since 2017 no new TVCs have been produced by the DOT.

Boncato said that, for the refreshed brand campaign, the winning ad agency will also be required to craft audio-visual presentations (AVPs) to promote the DOT’s “tourism products identified in the National Tourism Development Plan [2017-2022]” which include: Naturebased Tourism (Nature Recreation and Adventure); Cultural Tourism; Health, Wellness and Retirement; Meetings, Incentive Travel, Conventions, Exhibitions and Events, or MICE; Sun and Beach; Cruise and Nautical Tourism; Education; Leisure and Entertainment; Diving and Marine Sports; and Farm and Culinary Tourism. Based on the terms of reference (TOR) for the bid, the amount allocated for the creation of 40 AVPs on the 10 tourism products is P150 million. Key priority markets for the brand campaign will be Seoul and Busan in South Korea; the United States and Canada (including overseas Filipino communities in

‘Hybrid’ budgeting. . .

This is why, Andaya said, the lower chamber decided to resume budget hearings after temporar-

Continued from A1

ily suspending it due to issues on the country’s shift to cash-based budgeting system.

SOUTHWEST MONSOON AFFECTING NORTHERN LUZON as of 5:00 pm - August 28, 2018

₧150M The amount allocated for the creation of 40 AVPs on the 10 tourism products, based on the terms of reference for the bid

North America); Tokyo, Osaka, Nagoya and Fukuoka in Japan; Beijing, Shanghai and Guangzhou in China; Australia; Asia Pacific, including Asean counties, as well as Hong Kong, Taiwan, Macau, Indonesia, Singapore, Malaysia, Thailand and Vietnam; and major European countries, such as the United Kingdom, Germany and France; New Delhi and Mumbai, India; and Dubai, Abu Dhabi, Doha and Riyadh. The campaign will also be targeting second- and third-priority European markets, such as Russia and the Commonwealth of Independent States, Spain, Scandinavian countries and Israel; as well as Italy, Switzerland, the Netherlands and Turkey, respectively. Among the ad agency’s deliverables “may include a new country tourism brand logo and a campaign logo,” as per the TOR. Of the creative ad budget, some P32 million will also be allocated for 64 AVPs on the 16 Philippine regions; P15 million for three TVCready omnibus AVPs; P9.6 million for radio ads; P12 million for design and layout of “out-of-home” materials; P4 million for print ads; and some P27 million for the design Among the issues raised by the House were the budget cuts in various government agencies. This compromise as claimed by Andaya was, however, denied by Diokno, until before their meeting on Monday

DRIVER-ONLY BAN Metropolitan Manila Development Authority (MMDA) personnel at Edsa continued to monitor private vehicles bearing only the driver on Tuesday, the second day of resumption of the dry-run of their so-called High Occupancy Vehicle scheme, meant to keep out of Edsa during rush hours such vehicles, which the agency claimed account for over half of the cars on the main thoroughfare. The dry run was resumed pending the outcome of negotiations among the MMDA, the Metro mayors, and lawmakers and the Executive branch, after an outcry greeted the scheme, which critics said was imposed without public consultations. NONOY LACZA and production of tourism maps. The bid is open to award-winning advertising agencies, which have undertaken a similar advocacy campaign. Also, bidders should have been in existence for at least five years, and “must have an undertaken a nationwide campaign during the last three years,” which costs at least P125 million. Dead-

line for submission of technical and financial bids is September 17, 2018. “Out of delicadeza,” separate DOT sources said, “McCann will not be allowed to bid” for the creative ad agency services. Boncato said the objective of the P250-million bid for media planning agency is to “come up with

a comprehensive international media plan for 2018, as well as an implementation strategy” using different forms of media, including social media. The campaign aims to promote the Philippines “as a preferred tourist destination in view of DOT’s target of increasing foreign tourist arrivals to 12 million by 2022,” he added.

with the congressional leaders, noting that he did not know where the idea on the hybrid budgeting system came from. “It’s either obligation-based or cashbased,” Diokno said during the forum organized by Economic Journalists Association of the Philippines. He also stood firm that the cashbased budgeting system will result in projects being done much sooner. Under a cash-based budgeting system, the projects listed in the budget must be fully delivered, inspected and accepted by the end of the fiscal year. Payment should also be done within the fiscal year and up to a three -month extended payment period after the fiscal year for goods and services accepted by December 31 of the fiscal year. On the other hand, under an ob-

ligation-based budgeting system, contracts awarded within the fiscal year can be delivered even after the end of the year. Inspection, verification and payment can also be done within and beyond the end of the fiscal year. The proposed 2019 national budget is cash-based as opposed to traditional, multiyear obligations-based budgeting. The DBM has described it as the more efficient budgeting method since 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 common budgetary practice in the Philippines. It allows appropriations and obligations until the next fiscal year, extending the validity of funds to two years. Owing to the limitations of a

cash-based system, the 2019 budget is P10 billion lower in absolute terms compared to the 2018 General Appropriations Act (GAA), which amounted to P3.767 trillion. The House of Representatives on Tuesday resumed its budget deliberations after suspending it temporarily over cash-based budgeting system issues.

Restoration Moreover, Andaya said the lower chamber and the DBM agreed to restore the budget cuts of the DepEd, DOH and DPWH. “We’ve agreed to restore some cuts. We will help each other in finding areas where we can source these cuts,” Andaya said. For 2019, the DOH budget was cut by P35 billion; DepEd by P77 billion; and the DPWH by P95 billion.

With Bernadette D. Nicolas

Inflation busters all set: Palace Continued from A1

round scad (galunggong), temporary removal of special safeguard (SSG) duty on imported onions and chicken, close monitoring on the utilization of the minimum access volume quota for meat imports, regular inspection of commodity importers’ warehouses to determine the level of inventory for vegetable products like garlic and onions, and close monitoring of the arrival and distribution of National Food Authority (NFA) rice importations. “The Department of Agriculture [DA] held a consultative meeting with red and white onion traders and importers last week, August 23. The meeting resulted in an agreement that red onions will be sold at P55 per kilo in retail stores, while white onions will be sold at P65 in two weeks time,” Roque said. Agriculture Secretary Emmanuel F. Piñol earlier said that, due to the SSG, the retail cost of imported onion is high, as the landed cost of the spice is only about P33 per kg, way below the P74.21-per-kg trigger price level.

As for chicken imports, Piñol previously said the CTRM agreed to temporarily lift the SSG duty until the end of the year. With the importation of P17,000 metric tons of round scad, prices of local galunggong are also expected to go down, after reaching as high as P200 per kilo in the market depending on the size. Roque also assured the public that the government will not allow the importation of formalin-laced round scad. “We will only allow the importation of galunggong provided it is not preserved with the use of formalin,” he said. Earlier, fishermen belonging to the Pambansang Lakas ng Kilusang Mamalakaya ng Pilipinas warned that the importation may lead to the flooding of the market with fish laced with formalin to preserve freshness. Roque also noted the DA’s suggestion that putting NFA under its jurisdiction would facilitate importation and timing of importation so that this would arrive during the lean months when the rice is needed the most. He added that the government

wanted to assure the public that NFA rice will really be distributed to the people through close monitoring. “The problem today is that there is no shortage, since we have enough importations. The problem is the slow distribution, which led the rice to be infested with weevil,” he explained. Aside from these measures, the Palace also announced that the Pantawid Pasada Program fuel cards can already be availed of by publicutility jeepney franchise holders nationwide. The distribution of fuel cards was meant to provide jeepney drivers with fuel subsidies in a bid to mitigate the impact of the hike in fuel excise taxes as mandated by the Tax Reform for Acceleration and Inclusion law. July inflation was recorded at a new five-year high at 5.7 percent. This was higher than the June inflation at 5.2 percent. The Development Budget Coordination Committee revised earlier its 2018 inflation forecast range from 2-4 percent to 4-4.5 percent. Year-to-date inflation is already at 4.5 percent.