Businessmirror december 21, 2017

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Thursday, December 21, 2017 Vol. 13 No. 71

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enate Minority Leader Franklin M. Drilon prodded Malacañang to certify the urgent passage of a longawaited measure that would rationalize the fiscal incentives being given to the business sector, noting that the bill would serve as the “equalizer” in the Duterte administration’s tax-reform program.

lights lit the garden of the Manor Hotel in Baguio City, attracting locals and tourists alike and just in time for the Yuletide season. ALYSA SALEN

laborem exercens

The irony, however, was the fiscal incentives rationalization bill did not become a law during the Aquino administration, when Drilon was the Senate President. Drilon called on President Duterte

By Catherine N. Pillas

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Palace to veto parts of 2018 budget

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Rene E. Ofreneo

The measure seeking to rationalize fiscal incentives granted to companies, filed by Sen. Franklin M. Drilon

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he framers of the SDGs have very ambitious goals: “End hunger” and “End poverty in all its forms everywhere” by 2030. The SDG framers, led by the economist Jeffrey Sachs, further envisioned a world where all people shall enjoy peace, prosperity and partnership in an environmentally secure planet Earth. The vision is very much Christmas-like. Continued on A12

Auto industry to feel TRAIN’s impact on sales, local production next year

manor ablaze A thousand

he Department of Budget and Management (DBM) has submitted to the Office of the President a memorandum containing items recommended for line-item veto under the General Appropriations Act (GAA) of 2018 and the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Can the SDGs slay hunger, poverty?

Senate Bill 229

Continued on A2

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Duterte told to make perks bill his tax-reform equalizer By Butch Fernandez

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According to Budget Secretary Benjamin E. Diokno, the DBM has submitted to the President a list of items under the GAA and TRAIN recommended for line-item veto, but has yet to receive a reply from the Office of the President. “We have submitted the draft of the veto message to the President,

PESO exchange rates n US 50.4620

and as of today have not received yet the veto message. Surely, there will be some items, although we cannot tell you now which items will be recommended for the veto. And that is also true for the TRAIN, there will be some items that will be vetoed,” Diokno told reporters See “Palace,” A2

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he auto industry is expected to feel the impact of the “disappointing” provisions of the Tax Reform for Acceleration and Inclusion (TRAIN) Act next year in terms of sales and domestic production, with the higher excise tax negating the benefits to be gained from incentives accorded to locally assembled vehicles. “What I can say is that sales in 2018 will be lower than this year. There will be no growth in terms of sales,” Toyota Motor Philippines Corp. (TMPC) President Satoru Suzuki told reporters on Wednesday. Suzuki added that the market leader will probably see a sales “reduction of maybe 5 percent to 10 percent from the sales this year.” TMPC, as of November, sold some 166,601 units and expects to close the year with sales of 180,000 units. Suzuki’s projection would translate to only 162,000 units in sales next year as the new excise-tax structure takes effect next month. The ratified bicameral committee report imposes a 4-percent

Suzuki: “There’s no advantage given to the locally manufactured segment like the Vios; the incentives are meaningless now.”

excise tax on automobiles with a net-manufacturer’s price of up to P600,000. There would be a 10-percent tax on those with a net manufacturer’s price of P600,001 to P1 million; 20 percent on automobiles with a net manufacturer’s price of over P1 million up to P4 million; and a 50-percent excise tax for vehicles priced beyond P4 million. According to Suzuki, he found the ratified version “disappointing,” as it did not include a differentiated treatment for locally produced cars, the very aim of the Comprehensive Automotive Resurgence Strategy (CARS) Program of the Department of Trade and Industry (DTI). “There’s no advantage given to the locally manufactured segment

like the Vios; the incentives are meaningless now. The Vios was given a tax increase just like the other segments, whether locally produced or completely built-up unit (CBU). We expected some benefit in the locally produced ones,” the car executive lamented. Suzuki also expressed dismay over the tax structure approved by Congress, as it shifted the brunt of additional tax burden on models carrying the P600,000-to-P1 million price tag, but reduced the structure applied on higher-bracket automobiles. Moreover, the higher tax imposition for automobiles will make TMPC’s participation in the CARS Program an uphill climb, he added. The carmaker, to note, committed to produce 230,000 units of the Toyota Vios locally in exchange for tax incentives to be given by the DTI. However, with the steeper tax offsetting the savings from the subsidies and likely to turn off buyers, the TMPC said it will still commit to produce the Vios, but at a lower commitment of 200,000 units. See “Auto industry,” A2

n japan 0.4472 n UK 67.5585 n HK 6.4566 n CHINA 7.6390 n singapore 37.4653 n australia 38.6690 n EU 59.7621 n SAUDI arabia 13.4566

Source: BSP (20 December 2017 )

A2 Thursday, December 21, 2017

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Duterte told to make perks bill his tax-reform equalizer Continued from A1

to “exercise strong political will” even as the senator noted that the administration made a company pay the unpaid airport fees of P6 billion. “He [Duterte] was able to collect from a cigarette company P26 billion. We applauded such political will. We would like such political will being applied in order to make the taxes more equitable,” he said. In a statement, Drilon decried the Duterte administration’s “continued inaction” on the fiscal incentives reform bill as “an affront to Filipinos who would be adversely affected” by the Palace-approved Tax Reform for Acceleration and Inclusion (TRAIN) law, under Republic Act 10963. The senator noted foregone

revenues from lowering of income-tax rates is compensated by the TRAIN by, among others, imposing steep taxes on fuel seen to trigger increase in the prices of basic commodities. “I urge the administration and Congress to start working on rationalization of fiscal incentives granted to companies so we can make our tax system more equitable,” Drilon said. According to him, the TRAIN law burdens the poor with higher fuel taxes. “It’s about time we review the incentives granted to companies to see if such incentives are necessary and continue to serve the purpose for which they are granted.” Drilon deplored as “utterly unfair that the poor would have to share the burden of raising revenues for

Auto industry. . . Continued from A1

Under the approved structure, the Vios falls under the P600,000-to-P1 million segment. Hence, these affordable, mid-market automobiles will be slapped an excise tax of 10 percent. “I’m not saying we’re not going to reach the 200,000 units that the government requires under CARS; I’m saying it has become a harder challenge,” Suzuki said, adding: “All the same, we will try to reach it.” The CARS Program gives a production per-unit incentive equal to $1,000 for participant carmakers Toyota and Mitsubishi. Investments of participant carmakers have began pouring in since late-2016. As envisioned by the BOI, the CARS Program is intended to make the country’s auto manufacturing

the government” under the TRAIN law, while the rich companies would continue to enjoy all forms of tax perks and tax holidays. “That is against the basic principle of progressive taxation, which dictates that, the higher a person’s income, the higher his taxes should be. It’s about time that Congress address this inequality in our current tax system,” he said. The senator suggested a review of the tax incentives given to companies, saying it is “long overdue.” In filing Senate Bill 229, embodying the proposed rationalization of fiscal incentives, Drilon expects the remedial legislation to be adopted in the second tax-reform package promised by President Duterte’s economic managers. “The government should review the various laws on the grant of

industry on a par with other regional manufacturing hubs like Thailand; through incentives, the program intends to localize key auto parts while making the participant vehicle models competitive versus imported ones in the Philippine market. The CARS Program was intended for three models but only got two takers due to its high production-volume requirement of 200,000 units for the program’s duration. Suzuki declined to give an estimate on the actual price impact on the Vios. Toyota will start producing the All-New Vios under the CARS Program in July 2018. Suzuki projects production volume in the second semester of 2018 to reach 35,000 units. Of this total, the All-New Vios variant will take a share of 20,000 units. The auto-company president said the company plans to implement countermeasures to shore up sales, such as beefing up marketing and release of new models.

Neda. . .

tax incentives and plug the leakages in our tax system.” He pointed out the Tax Incentives Management and Transparency Act (Timta) he earlier authored had “already provided the tools for transparency in the grant and management of incentives,” adding that the “next step would be to rationalize these incentives.” The Timta requires business entities to report all the incentives that they are enjoying— allowing the government to account for the amount of foregone revenues from various incentives given. Citing government data, Drilon further notes there are more than 186 laws on numerous fiscal and nonfiscal incentives and subsidies in the country, including income- tax holidays, deductions, exemptions, credits or exclusions

Continued from A12

Apart from these, Pernia considered the launch of the Philippine Development Plan 2017-2022 in June as among the key achievements of the government. He added that the crafting of the Public Investment Program 2017-2022, which lists specific programs and projects needed for the PDP’s strategies to materialize, is also important. Further, he said the Neda Board approved 20 project proposals—14 new projects and six changes in ongoing projects—this year alone. Most of these projects will be funded locally or through ODA. Counting last year’s approvals, the total is 36 projects. “The Duterte administration will be relentless and unflinching in directing its efforts toward infrastructure development, regional and rural development and human-capital development through 2022, to fight poverty and reduce inequality in our country,” Pernia said.

from the tax base. “According to previous estimates, the remedial measure, once enacted, could generate P30 billion in additional revenue annually,” said Drilon, whose bill will pave the way for a thorough review of the government’s system of granting incentives to business enterprises in the country to “ensure that grant of incentives promotes social and economic benefits to Filipinos.” Drilon asserts that reviewing the grant and administration of incentives to business enterprises will enable the Duterte administration to “assess the economic impact of these incentives.” Senators belonging to the majority bloc, however, would not readily commit support for the remedial legislation rationalizing fiscal incentives. “I will review it first,” Senate

Palace. . .

Continued from A1

in a news briefing on Wednesday. “I cannot give you the specifics, it’s a very long memo to the President,” he added. On Tuesday, President Duterte signed into law the P3.7-trillion national budget for 2018 and the first package of the Comprehensive Tax Reform Program or the TRAIN. According to the DBM, the 2018 budget “fulfills the President’s most sought-after promises”, such as free tuition, free irrigation, doubling of salaries of military and uniformed personnel and the rehabilitation of war-torn Marawi City. “There will be line-item vetoes. The Constitution says that, in the case of

Majority Leader Vicente C. Sotto III told the BusinessMirror. Sen. Sherwin T. Gatchalian, who chairs the Senate’s Economic Affairs Committee, also asked for time when asked if he will back passage of the measure saying in a text message that “I haven’t read that bill yet.” Sen. Juan Edgardo M. Angara, Ways and Means Committee chairman, said members on the panel still need to review Drilon’s proposal. “We will study the bill since I know that is a crucial component of package 2 of the tax reform alongside the lowering of corporateincome tax,” Angara said. He, however, added that senators “must first complete the second component of the first tax-reform package, and this is the general amnesty bill.”

budget, tax and tariff, the President can exercise his right for line-item veto,” he said. Diokno said that, once the President approves the items in the memo, changes can be included in the final publication of the GAA. The TRAIN provides for PIT exemptions for the first P250,000 of taxable income, along with other significant PIT cuts for other tax brackets, which also provides Filipino taxpayers with “muchneeded relief” after 20 years of no adjustment on the rates, according to the finance chief. According to Finance Secretary Carlos G. Dominguez III, the entire first package of the TRAIN will yield revenue gains at an estimated P130 billion, while the PIT reductions will enable the government to return around P150 billion in the form of tax relief to the Filipinos. Rea Cu

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Senate minority backs BBL despite tiff with Duterte By Butch Fernandez

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@butchfBM

espite being critical of President Duterte’s policies and actions for most of 2017, members of the Senate minority bloc said they are committed to “rise above partisan politics” to help ensure timely passage of the Bangsamoro basic law (BBL), which the bloc sees as the most viable route to sustainable peace and development in Mindanao. Senate Minority Leader Franklin M. Drilon conveyed this commitment on Wednesday as senators convened committee hearings on the draft BBL, even as he is keen to “examine everything” to ensure the legislation does not run afoul of the Constitution. “So far, from what I have seen, they seem to have addressed [the matter] and they were conscious of the constitutional limitations,” Drilon said. “We’ll see how it will actually be framed in the draft law. I haven’t read it in detail but from the presentation. It would appear that they were conscious of the limitations under the 1987 Constitution,” Drilon told reporters on the sidelines of the hearing called by the Subcommittee on the BBL, chaired by Sen. Juan Miguel F. Zubiri. As main author of the Senate version of the BBL bill, Senate President Aquilino “Koko” Pimentel III—himself a Mindanaoan—vowed the chamber will craft a measure that will pass constitutional hurdles. “I think we all want this [BBL], but we all want to pass a constitutional version,” he said. In opening the inquiry, Zubiri—whose family has been one of Mindanao’s most prominent political leaders since the 1970s—traced the long journey to peace as various regimes tried to deal with over four decades of strife. He said, “We have to seize this golden opportunity and time is of the essence.” For his part, Drilon sounded confident that

deliberations on the BBL would be smoother this time. Congressional discussions on the BBL, following the forging of a preliminary peace pact between the Aquino administration and the Moro Islamic Liberation Front (MILF), had stalled after the January 25, 2015, Mamasapano incident, when 44 elite police commandos perished during a 12-hour exchange with various armed groups, including the Moro Islamic Liberation Front, as they pursued a Malaysian terrorist. Referring to the possible constitutional questions from the latest incarnation of the draft BBL, Drilon said, “My initial observation is they have addressed it. We will rise above political partisanship in order to support this measure, because we believe we need the Bangsamoro basic law to provide stability.” To achieve stability and peace in Mindanao, he added, “We need a BBL that is acceptable to all. We in the opposition will cooperate and we will rise above partisan politics in order to pass this measure.” Zubiri, for his part, also made a vow with respect to complying with his own set timeline on processing the BBL through Congress. “I guarantee you that we will try to come out with a Bangsamoro basic law or basic bill that will be ready to plenary, hopefully by March. We’re going to do marathon hearings all the way in the first quarter of 2018,” Zubiri said in his opening statement. The senator from Bukidnon noted the “confidence-building measures” between the MILF and Moro National Liberation Front, on one hand, with the Armed Forces of the Philippines. These groups were reported to have aided the military in fighting terrorism in Mindanao, particularly during the Marawi siege, where certain MILF leaders proved vital in communicating with various parties in the conflict.

Editor: Vittorio V. Vitug • Thursday, December 21, 2017 A3

Palace declares holiday truce with communists

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By Elijah Felice E. Rosales

@alyasjah

resident Duterte has ordered the military to cease from conducting offensives against the Communist Party of the Philippines (CPP) and the New People’s Army (NPA) during the Christmas period in observance of the traditional holiday cease-fire with the CPP-NPA.

Presidential Spokesman Harry L. Roque Jr. said Duterte on Tuesday night decided to observe the Christmas truce with the communists. “The President announced Tuesday night a suspension of military operations [Somo] from December 24, 2017 to January 2, 2018,” Roque said in a news statement. He added the government’s declaration of a unilateral cease-fire is expected to lessen the apprehension of the public this Christmas season. He also said the government is hoping the CPP-NPA “would do a similar gesture of goodwill” by suspending its own guerrilla offensives. “Christmas holds a special place in the hearts of our countrymen. In the observance of this occasion, we hope that all Filipinos would stand together as one nation and aspire for peace in our beloved Philippines,” Roque said. National Democratic Front [NDF]

legal consultant Edre U. Olalia said the government’s declaration of a unilateral cease-fire is a welcome development in the peace process, which saw a string of setbacks in the past months, leading to the collapse of the peace talks. “As a human-rights lawyer keenly interested in a just and lasting peace, my quick personal take is we can welcome with abundance of caution the unilateral declaration of cease-fire by the Philippine government,” he said. However, he took note it is the CPPNPA that first expressed determination to declare a Christmas truce. “This declaration is not totally unexpected though, but it is especially curious because it comes on the heels of the rebel movement’s standing openness to declare its own even before the government has apparently stolen the thunder

to make it appear that the latter is magnanimous despite incessant vicious and outrageous words against the former,” Olalia added. He is also hoping the issuance of a Somo is not “just another populist gimmick” of the government, nor is it “another ruse to deflect its proven refusal and inability to genuinely address and resolve the roots of the prolonged armed conflict.” “While the declaration seems incongruous amid the unilateral termination of the peace negotiations, the terrorist tagging and demonization and the threatened crackdown on dissenters, it may, still and all, be considered a positive move for the sake of the people and the protection of their rights in this season of hope,” Olalia said. The President opted to declare a Somo in spite of strong opposition from his defense chief and security officials. Defense Secretary Delfin N. Lorenzana earlier said he will not recommend the government to declare a unilateral cease-fire with the CPP-NPA in the face of intensified attacks from the communist movement. “Because there have been…an order by their commanders to intensify operations against us. So, [if the government declare a Somo] and we will stand down, then they will attack us again,” Lorenzana said. He even went as far as saying he is willing to break the traditional holiday cease-fire with the CPP-NPA. “Well, that has been the tradition, so we can always break tradition,” Lorenzana said.

Economy

A4 Thursday, December 21, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

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House opposition bloc bewails ‘zero’ funding for pet projects By Jovee Marie N. dela Cruz

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pposition House members on Wednesday bewailed the “zero” infrastructure funding they received in next year’s General Appropriations Act (GAA) for being “critical of the Duterte administration.”

Rep. Edcel C. Lagman of the First District of Albay, a member of the opposition bloc dubbed as the “Magnificent 7,” said zero allocations are projected to “punish and silence opposition legislators even as it is their constituencies who are deprived of the benefits of infrastructure development.” “What would be adversely affected are the construction of roads and bridges; highways leading to tourism destinations; diversion roads to decongest traffic; flood protection like dikes and seawalls; and public buildings. What is worse is that highways and bridges for completion in 2018 would be left hanging and unfinished,” he said in a news statement. “Steadfast critical dissent and perceived ‘waywardness’ have left the respective constituencies of twodozen solons destitute of infrastructure projects under the 2018 General Appropriations Act,” Lagman added. He said members of the Mag-

nificent 7 opposition group, whose members, among others, suffered zero allocations. “Why punish citizens and communities for the earnest and valiant efforts of their representatives to maintain responsible dissent as the bedrock of democracy?” Lagman said. “The great majority of the deleted appropriations are not for so-called pet projects, but are for essential infrastructures intended for congressional districts in the 2018 National Infrastructure Program of the Department of Public Works and Highways [DPWH] under the ‘Build, Build, Build’ scheme,” he added. According to Lagman, the majority of the deleted infrastructure projects have already been bid out pursuant to the government’s advance bidding schedule pending approval of the GAA. “These were not even requested by the affected representatives and were included upon submission by the

DPWH in the President’s National Expenditure Program on which the annual general appropriations bill [GAB] is entirely based,” he said. Lagman added the discarded projects were in the GAB, which was approved on third reading by the House of Representatives but were surreptitiously deleted during the bicameral conference on the national budget. Rep. Teddy B. Baguilat Jr. of the Lone District of Ifugao said the unilateral removal of projects already approved by Congress “is an assault on democracy which rests on critical checks and balances.” “Exacting revenge on the genuine opposition solons by removing projects dedicated not to them but to their citizens shows their desire for autocracy, for dangerous dictatorship. The healthy exchange of opposing views is crucial in a democracy. It should not be quelled by going after elected representatives and their constituents whom the President, and this administration, must serve, regardless of their political persuasion,” he said. “My constituents in Ifugao are taxpayers, too. The allocations would have improved the national roads to the rice terraces and poor upland communities,” he added. Baguilat said the budget should be looked at objectively to make sure that taxpayer money goes where it is needed the most, and not used as a “reward for those who will blindly follow the administration’s wishes, whether right or wrong.”

We in the opposition are not in Congress to obstruct but rather our role is to raise a howl when wrong is being committed and give praise when it is warranted.” —Baguilat

“We in the opposition are not in Congress to obstruct but rather our role is to raise a howl when wrong is being committed and give praise when it is warranted,” he said. Party-list Rep. Tom S. Villarin said these retaliatory actions of the leadership “show unabashed disdain for democracy.” “Such withdrawal of projects without any basis and done treacherously after the bicam report on the General Appropriations Act was already approved in plenary is unprecedented and highly questionable. Any citizen deprived of such services can seek redress through our courts and the ballot,” the lawmaker said.

PSA allots ₧8.91 million for public, private-sector competition survey By Cai U. Ordinario

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@cuo_bm

early 2,000 private and public-sector entities will be tapped for a baseline study on competition in the private and public sectors next year, according to the Philippine Statistics Authority (PSA). In a statement issued on Wednesday, the PSA said the government has alloted P8.91 million to conduct a survey that will cover firms, government line agencies, government -owned and -controlled corporations (GOCCs) and local government units (LGUs). “The survey aims to gather baseline information on respondent’s knowledge, perception and attitudes on market competition, as well as their awareness of the existence of the PCC [Philippine Competition Commission] and its mandate,” the

PSA statement said. This will include a total of 1,200 enterprises from major industry groups in agriculture, industry and services, as well as 700 national government agencies, GOCCs and LGUs. The survey will be undertaken between January 15 to March 12, 2018, and the results will be released in May 2018. The PSA said major data items that will be collected from the survey are company profile, which includes number of employees and broad sector classification. The data to be collected will also include the respondent’s profile, particularly the tenure and position in the company. The PSA survey will also obtain information on the private and public sector’s knowledge, awareness, perception and attitude on market competition.

“We recognize that competition is a key driver of competitiveness. When real competition is in effect, the economy bears witness to the benefits of their efficiency and, by extension, their competitiveness. And with real competition comes more affordable goods and services and better choices for consumers,” PCC Chairman Arsenio M. Balisacan earlier said. The PCC said the country’s ranking in the World Economic Forum’s Global Competitiveness Index (GCI) improved to 56th this year out of 137 economies, from 57th out of 138 survey last year. The improvement, the PCC added, was partly due to the improvement of the intensity of local competition, where the Philippines scored 5.3 in the latest GCR, or global competition review, an uptick from 5.2 in 2016 and the highest since the 5 garnered in 2007. Two other indicators of goods market

efficiency are relevant to PCC’s mandate to promote competition, namely, extent of market dominance and effectiveness of anti-monopoly policy. The Philippines ranked 119th on the first and held steady at 106th place on the second. Other Asean member-economies that improved their standing were Brunei Darussalam, which jumped 12 notches to 46th place this year, while Vietnam went up five points to 55th place. The GCI is based on an annual survey administered by the World Economic Forum that factors in 12 categories, which, apart from goods market efficiency, also includes institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, labor-market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

Airport rush

A crowd consisting of overseas Filipino workers, balikbayan and foreign tourists alike queue for immigration clearance at the Ninoy Aquino International Airport Terminal 1 in Parañaque two days before Christmas eve. Airport authorities say they expect as much as 2 million arrivals during the holiday season. NONIE REYES

Provide addl perks to ecozone ventures, Peza urges LGUs T

he Philippine Economic Zone Authority (Peza) is urging local government units (LGUs) to give additional incentives for economic-zone developers in order to attract more investments in the countryside. Peza Director General Charito B. Plaza said LGUs may provide perks like free rental for 10 years for land properties to be used by developers in putting up new economic zones. “How much is the rent versus the development they [investors] can introduce and the job they can create?” she said. “We would like to add more incentives and motivate LGUs to give more incentives,” the Peza chief added. Plaza said that the investment-promotion agency eyes to establish two public economic zones per region to spur economic development throughout the country. The country has four public economic zones. “Public economic zones are more attractive to investors because the rent is very cheap,” she added. Meanwhile, Peza will be holding the first Global Economic Zone Convergence in April 2018, wherein the agency is inviting economic-zone developers to share best practices and also promote opportunities in the Philippines in establishing economic zones. Plaza said Peza aims to launch the country’s economic-zone map during this forthcoming international event next year. Previously, she said Peza eyes at least 300 new economic zones in the country in 2018. In the first 10 months of the year, Peza registered P203 billion worth of investments, up 89 percent from last year’s investment pledges of P107.3 billion. PNA

Palace orders DAP head to vacate post

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MAGICAL FRIENDS Kids and mall shoppers enjoy interacting with mascots and come-alive big toys at the Atrium of the SM City Masinag Grand Magical Parade in Marikina City over the weekend. The annual event is one of the biggest attractions of the mall giant. PNA/Joey O. Razon

resident Duterte has asked Development Academy of the Philippines (DAP) President Elba Cruz to vacate her post as her term had already expired in June 2017. The order was given through a letter signed by Executive Secretar y Salvador C. Medialdea on Monday. In the letter, Medialdea said Cruz was appointed by Duterte to the DAP on March 14 “to serve the unexpired term of office that began on July 1, 2016, and ended on June 30.” “Considering that your term of office [had] expired on June 30 and that you been serving in the DAP Board in a holdover capacity, we now wish to inform you that, upon instructions of the President, your service in such holdover status is hereby discontinued, effective immediately,” Medialdea said. “To ensure uninterrupted de-

livery, you are hereby directed to turn over all official documents, papers and properties in your possession to the proper office of the DAP,” the Executive Secretary added. The order came more than a week after DAP employees submitted a petition to President Duterte to fire Cruz for what they said were “transgressions detrimental to the interest of the DAP and its employees.” In the letter sent by the DAP Personnel Association, dated December 8, to the President, DAP employees called for Cruz’s removal, citing allegations of mismanagement, untoward attitude toward employees and frequent foreign travels. They also accused her of gross violation of civil-service rules and regulations, designation of employees with questionable background and civil-service standards, displacement of plantilla personnel,

procedural and administrative lapses and unclear leadership directions, among others. Cruz’s ouster from the DAP was met with rejoicing from the employees of the government’s premier research and training institution. In a news statement released on Wednesday, DAP employees thanked President Duterte for “finally terminating” Cruz, saying her termination is the “best Christmas gift” they can receive. Reports indicate, however, Cruz may not be ready to give up her post just yet, as she went to Malacañang on Wednesday to appeal her case before Medialdea and Special Assistant to the President Christopher Lawrence T. Go. A source said Cruz was contesting Malacañang’s decision to remove her, and was even joined by her legal counsel in trying to reach Medialdea and Go. PNA with Elijah Felice E. Rosales

Agriculture/Commodities BusinessMirror

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Editor: Jennifer A. Ng • Thursday, December 21, 2017

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DA sees farm output growing by 5%-6% despite typhoon By Jasper Emmanuel Y. Arcalas

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@jearcalas

GRICULTURE production for 2017 would still register an expansion of 5 percent to 6 percent despite the damages caused by Typhoon Urduja (international code name Kai-tak) in some provinces, according to the Department of Agriculture (DA). Urduja damaged nearly P370 million worth of crops, but Agriculture Secretary Emmanuel F. Piñol said he remains confident that full-year farm production would still grow by 5 percent to 6 percent. “The damage report as of the morning of December 19 reached P369.94 million. [The figure] is not much compared to the damages caused by previous typhoons,” Piñol told reporters in an interview on Tuesday. “I don’t really think it will pull down the growth of the agriculture sector.” Piñol said the DA expects a bountiful harvest in the fourth quarter, especially for rice, which would boost growth during the period. “Crops in Biliran are just on the vegetative stage. There will be no effect in the supply and we are already expecting a bountiful harvest this year,” he said. Based on initial reports of the DA, Urduja damaged 7,880 metric

tons (MT) of crops planted in 25,348 hectares. The typhoon affected rice, corn, high-value crops, livestock and poultry in Regions 5 and 8. The bulk of damages, or about 77 percent, was recorded in the rice sector. Losses incurred by rice farmers reached P286.08 million. The total affected rice area was 23,717 hectares, equivalent to 8.1 percent of the total standing crop of 291,746 hectares in the two regions. The lackluster performance of the livestock and fisheries subsectors slowed the expansion of the country’s farm output in the third quarter, based on the latest data released by the Philippine Statistics Authority (PSA). In its quarterly report, titled “Performance of Philippine Agriculture,” the PSA said farm-production growth in the July-to-September period settled at 2.32 percent. In the same period last year, output expanded by nearly 3 percent. From

April to June 2017, the farm sector grew 6.18 percent.

Paddy production

FAVORABLE planting conditions could drive the country’s unmilledrice production in marketing year (MY) 2017-2018 to reach 19 million metric tons (MMT), 2.43 percent higher than the 18.549 MMT recorded in MY 2016-2017, according to a Global Agricultural Information Network (GAIN) report. The GAIN report, which was prepared by the United States Department of Agriculture’s Foreign Agricultural Service in Manila, said the figure is also 6.87 percent higher than its earlier forecast of 17.778 MMT. “Increased output is expected as a result of favorable weather conditions and increased use of high-yielding varieties,” the GAIN report, titled “Philippine Grain and Feed Situation and Outlook” read, which was published on Wednesday. “There were noticeably fewer intense typhoons that passed through major rice production areas compared to previous years,” it added. The GAIN report noted that the delay in the passage of a law that would allow the tariffication of rice imports would prevent some farmers from planting other crops. Earlier, GAIN reports published this year indicated that the removal of the country’s quantitative restriction on rice would displace some rice farmers.

You are what you eat: Reflections on food, farming and inner healing

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OOD is political. What we choose to eat “It’s inspired by indigenous way of seeing things. reflects our world view—how we view Things are interconnected. We’re not separate from our bodies (“Nakakataba kaya ito?”), what the earth,” she said. we think is right or wrong (i.e., kosher and halal Queblatin added that working on the land is imfood), who we want to share it with, what values portant for internally displaced persons like those we treasure, how we were brought up. I also view who were displaced by the Marawi conflict, as land Prime Sarmiento is tied to one’s identity. food choices as a conscious decision to support a particular farming system. So whenever I check our “If you lose political status, you [also] lose [your] kitchen, all I can see is a mixed bag of choices and land and home. Having the tools [that will] enable contradictions. On one hand, our family chooses [you] to be self-sufficient and self-reliant is very imto support small organic farmers by buying brown rice and honey portant,” she said. sourced from farmers’ cooperatives. On the other, we value the Apart from its sustainability, what impressed me more about convenience and affordability of packaged snacks and canned food Green ReLeaf’s project in Iligan City is its emphasis on offering a made by industrial food manufacturers. more holistic model. This is because the project is based on the “reIt was this interest on the intersection of food and politics that generative” framework. spurred me to endure the two-hour commute from our house in “Regenerative design approaches is a change of perception. It’s Tondo to Ateneo de Manila University’s campus in Katipunan early changing the way we think on how we build and how we design,” last month to attend the Food for Peace forum organized by Arete, Queblatin said, adding that regenerative approaches always work Ateneo’s Fine Arts Department, Babai Women’s Network, Earth on four dimensions—social, cultural, economic and ecological. Kitchen, Gantala Press, Good Food Community, HIzon’s Catering, nnn Kritika Kultura, Me & My Vege Mouth and Saltwater Cinema. Billed Chef and economist Assad Baunto is, perhaps, one person who as a forum on food, empowerment and community healing, it feacan talk more on how food can be an instrument in recovering from tured several speakers who gave insights on how our personal dithe Marawi siege. etary choices can have a huge social impact. If there’s one thing that Assad remembered most about fleeOne of these speakers is Charlene Tan, founder of Good Food ing Marawi to escape the growing violence, it was his mother who Community—a social enterprise that helps smallholder farmers and was worrying that the rice she was cooking would be spoiled. But indigenous communities in Tarlac, Benguet, Mountain Province and it’s not merely because his mother was scared to go hungry, but Rizal reach out to their customers in Metro Manila. Based on the conmore because of what this food symbolized—sharing and living cept of community-supported agriculture, consumers subscribe to in a community. the harvest of farms supported by the Good Food Community in or“How you approach food tells me how who you are and how you der to get a weekly supply of fresh and organic fruits and vegetables. relate with your friends, you neighbors and your community,” he said. Tan said most farmers that she talked to were reluctant to sell Growing up, Assad has learned that food needed to be shared as this organic vegetables, as they believed consumers won’t pay for will strengthen ties with the local community. He recalled his father expensive produce. Consumers, meanwhile, go for their “default who often encourage Assad and his siblings to share their food with choice”—processed foods and crops grown with too much pestiother community members. He recalled his mother who often bakes cide, as they’re widely available. cake and offers them to their Tausug neighbors, hence diffusing a “With community-supported agriculture, these choices are intipossible ethic tension between Maranao and Tausug and offered mately linked. There’s now a way for you to choose what’s best for concrete proof that food can, indeed, be used in peacemaking. you and your family. There’s now a way for you to choose what’s But, most of all, Assad, who relished cooking Maranao dishes, best for the farmers,” Tan said. considers food as a way to find inner peace. Because while others nnn meditate, get a massage or perhaps resort to retail therapy to calm Another factor that encouraged me to attend the Food for Peace inner turmoil, Assad said he’d rather retreat to the kitchen, get his forum was its special focus on Marawi City, which is currently recovhomemade palapa—a staple Maranao condiment made of shallots, ering from the destruction wrought by a five-month-long armed chilies, ginger and salt—and whip out one of the dishes he learned conflict. As a journalist who has covered Asian agriculture and comfrom his grandmother. modities for more than 20 years, I was curious to know how food and “Food is very comforting. Preparing it is very peaceful,” he said. farming would play a part in Marawi’s road to recovery. Assad may just be talking about personal peace. In the context of My curiosity was partially sated by Sarah Queblatin’s, founder Marawi siege, we may equate peace with the end of war. But peace is of the Green ReLeaf Initiative, a nonprofit group that supports lodefined in so many ways, the same thing that there’s so many ways cal communities who are recovering from disasters and conflict. toward peacemaking. One of Green ReLeaf’s projects is codesigning a permaculture And as we approach the season of peace (and feast!), I would garden that can provide food, potable water supply and livelihood like to remember what Good Food’s Charlene Tan said on how she to over 500 people displaced by the Marawi siege and are now living personally defines peace. at the Ma’ha Al-Nor Madrasa in Iligan City. The garden has a simple Peace, she said, is about the sense of rightness, that all shall be composting system, a rainwater catchment storage and nursery well. I will expound on this idea further by saying that peace is about made up of edible and medicinal plants that were suggested by knowing and feeling that no matter how difficult your circumstances the community members. They started designing the garden in are, you are in a right path, that you are being guided by a power July and it was already operational by August. In October the garden higher than yourself. has already yielded some greens, which the community members May you all be well and may we all have that inner peace not only have harvested. this Christmas season but in the months to come. Merry Christmas! Permaculture, a portmanteau of permanent agriculture, was developed in the 1970s by Australian environmental designer David Prime Sarmiento is a longtime business journalist who specializes Holmgren and scientist/academician Bill Mollison. Permaculture is in food, agribusiness and commodities-trade reporting. Her stories a sustainable agricultural system that is based on the patterns and have been published in both local and international publications, features observed in natural ecosystems. Queblatin, a permaculture including Nikkei Asian Review, China Daily, Science and Development designer herself, said permaculture is design based on “knowing the Network and Dow Jones Newswires. patterns, the flows of an ecosystem.” Comments and ideas are welcome at prime.sarmiento@gmail.com.

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Business

Thursday, December 21, 2017

PHL journey to digital trans T

HE Philippines is well on its way to be a cashless nation, results of a survey claims. Findings from the PayPal study titled “Digital Payments: Thinking beyond Transactions” revealed about 175 of 700 Philippines-based people polled (25 percent) said that traditional (physical credit card, bank transfer/Internet banking, checks, etc.) and new methods are now their primary options of payment. “In fact, one-third of consumer respondents in the Philippines have already starting transacting without cash,” the survey said.

“Transparent tracking of money flow, improved transaction efficiencies, unlocking new business models and the creation of more economic channels are just a few ways digital payments drive economic opportunity for both consumers and businesses,” Rahul Shinghal, PayPal’s general manager for Southeast Asia, said. Shinghal believes that opportunity is specifically present among millennial consumers and small businesses.

Small biz

SMALL businesses lay claim to half of the world’s GDP and have a huge impact on sustainable economic growth, according to Shinghal. Citing an article from the university press affiliated with the Massachusetts Institute of Technology (MIT), Shinghal said these small businesses collectively employ two-thirds of the global workforce, forming the bedrock of any burgeoning economy. “Perhaps most ironically, their meteoric rise is the single most compelling threat to big multinational corporations these days,” he wrote for the BusinessMirror. “In Southeast Asia, one of the most entrepreneurial regions in the world and the fastest growing regional economy in the next century, we are also seeing a rise in small businesses and some 3.5 million self-employed.” According to Shinghal, PayPal is currently seeing a rise in the number of Filipinos starting their own businesses or embarking on freelancing work. “One of the main catalysts that have led to the rise of small businesses in this part of the world is the rapid proliferation of fintech [financial technology] that helps entrepreneurs to simplify and negate complex financial services in their pursuits of their business goals,” Shinghal said. “This is especially so for a market like the Philippines, where almost half of the country’s workforce are millennials.”

Access

ONE of these fintechs is Mynt, a subsidiary of Globe Telecom Inc. Albert Tinio, president of GCash, the micropayment service company of Mynt, believes that ordinary Filipinos can now avail themselves of affordable financial products and services like mobile banking, remittance, insurance, loans and credit as the use of technology and innovation continues to be more pervasive in the Philippines. “There is really a dire need for financial inclusion in the country since many Filipinos still do not have bank accounts as well as access to formal lending and credit,” Tinio said. “But due to fintech innovations, even those in remote areas can already take advantage of a wide range of financial services available in the market today.” According to Tinio, about 70 percent of Filipinos do not have bank accounts or any formal means

“There is really a dire need for financial inclusion in the country since many Filipinos still do not have bank accounts as well as access to formal lending and credit. But due to fintech innovations, even those in remote areas can already take advantage of a wide range of financial services available in the market today.”

to save money, while 90 percent of Filipinos do not have a credit score, making it difficult for them to secure a loan. It also forces some individuals to turn to informal lenders which charge interest rates of as high as 20 percent, he added. Moreover, 40 percent of cities and municipalities do not have physical banks, thus, residents have to spend a lot of time, effort and money to get to the nearest bank, Tinio explained.

Options

ACCORDING to PayPal, digital payments offer not just convenience and a more secure way to pay, but also provides consumers with more options. Most of the respondents (74 percent) in their research cited convenience as a reason to use digital payments. Another 57 percent said it was because of the lower processing and transaction fees they received when using digital payments. “Interestingly, 27 percent of respondents prefer new payment options because of the increased amount of promotions they received as compared to 23 percent who use traditional methods and 12 percent who use cash.” The study also revealed that digital payments have provided consumers with the tools to better manage their finances, particularly one of the most challenging financial issues faced by consumers: bill payments. Among those surveyed, 54 percent of consumers who rely on cash have difficulties managing their bills and credit payments compared to a smaller proportion (29 percent) of digital payments users. The ability to track payments, pay instantly, and the choice of payment methods can be a boon to managing consumers’ cash flow and their financial health.

Millennials

ACCORDING to Shinghal, the adoption of digital payments is led by young Filipinos or millennials. “Being digital natives, they are more open to leveraging new technologies to help them pursue their business goals,” he said. “Where businesses used to turn to their local bank for their transactions, technology has introduced various different options to help them to sell to the global economy safely and securely.” Shinghal cited as example the provision of hosted platforms such as Shopify and Shopee. These platforms, according to him, have allowed many small- and mediumsized businesses to set up shop and secure customers easily and costeffectively. “It is a timely stage of transformation in the way we do business. Coupled with the ‘always online’ culture in a mobile-first Philippines, there are plenty of new opportunities for consumers and merchants alike in the market,” Shinghal said. “With access to sophisticated fintech analyt-

ics tools that were only available to large businesses previously, a nimble smaller business can learn more about its customers’ purchasing patterns and get creative in the way it sells online to appeal to these consumers.”

Merchants

ACCORDING to PayPal, digital payments also offer a transformational solution for merchants because they increase convenience for consumers. “Additionally, merchants are able to reap large efficiency gains transitioning from cash to digital payments and moving away from manual to electronic financial tracking,” the PayPal report said. “The benefits to business owners range from reduced operational costs, convenience of transactions to allowing new business models, such as social commerce or ‘s-commerce,’ to solidify.” According to Shinghal, mer-

chants are also no longer limited by the people around them or their local infrastructure or business environment. “In fact, they have the entire population of the connected world at their fingertips. People with big ideas and good products can offer them directly to the world, and the smallest companies can seek customers in the farthest markets.” He said that over 70 percent of PayPal’s 16 million merchants, most of which are small businesses, have made use of increased connectivity to do business crossborder. Shinghal said the people behind these businesses operate “without worrying about the high transaction fees and compromised security.”

S-commerce

WITH social media moving beyond a networking platform to a digital marketplace, the adoption of digital payments is further

boosted with its ability to offer seamless payments between merchants and consumers, the PayPal survey revealed. Among merchant respondents in the Philippines, 88 percent have turned to selling on social media. “The growing trend of s-commerce, of which digital payments is a key transaction method, has been shown to have positive effects on merchants’ financial health,” the report said. “A substantial 96 percent of s-commerce respondents said it has improved their financial condition, and 88 percent mentioned that it helped grow their business.” For the Philippines, s-commerce is a viable opportunity for the significant rural population to tap into as a means to improve their economic well-being.

Drivers

THE positive impact that digital payments can have on the welfare

of individuals and businesses is significant, but the ripple effect on the economy is even more promising, PayPal said. Such is the case with online freelancers or social entrepreneurs. Financially healthy individuals spend their money at local businesses and start companies of their own, the company said. Financially healthy businesses create jobs that pay good wages and support the economic development of communities. “Technology innovations have forever changed business models,” Shinghal said. “There is now a world of possibilities for businesses to offer more services to a global audience of shoppers who are ready to buy online, at a fraction of the price of what it would have cost before, and to work closely with each other.” He added that technology innovations have allowed small businesses “to offer a differenti-

aderLook

sMirror

www.businessmirror.com.ph | Thursday, December 21, 2017

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sactions needs faster vehicles financial services is people empowerment at its finest,” Lito Villanueva, managing director of FINTQ, was quoted in a statement as saying. “This is our commitment to promote bottom-up inclusive growth initiatives that would address poverty.” According to Villanueva, they estimate that 69 percent of the population are unbanked and underserved. “Engaging and enabling them to have credit footprint will surely unlock economic opportunities leading to much better lives,” he said. “With the increase of selfrated poor in the third quarter of this year based on the latest Social Weather Stations survey, there is a need to have targeted, impactful and sustained public-private sector interventions.” KasamaKA, Villanueva said, is one of them. According to FINTQ, among the initial incentivized digital financial services currently included in the KasamaKA program are any digital loan from over 70 partner banks and institutions in the Lendr platform. To be also included would be digital payment transactions from eMoney wallet PayMaya. In his speech before some 1,500 local government officials who attended the recent 5th Regional Competitiveness Summit in September, Tinio said that being a subsidiary of Globe allowed Mynt to help address the concern by building a financially inclusive ecosystem. “Since telecommunications companies are in a unique position to penetrate even far-flung areas through mobile services, Mynt was able to leverage on the capability and infrastructure of Globe to offer fintech to anyone, anytime and anywhere,” he said.

MCPICS | DREAMSTIME

LGUs

ated business model, deliver an enhanced, personalized customer experience and tap into the power of digital to ensure end-to-end business value.” “It has never been cheaper to not only set up your business, but also expand it, while gaining access to partners and insights on consumers from around the world.”

Support

PAYPAL has cited what it calls “great strides” that the Philippine government makes in rallying Filipinos to adopt digital payments. These strides include the launch of the National Retail Payments System (NRPS) Framework, which seeks to create a reliable electronic payment system between banks and e-money accounts. Still, PayPal said the country is only scratching the surface of what it could be. Industry players and government regulators within the pay-

ment ecosystem need to collaborate to further drive adoption of digital payments and unlock the full potential of this new payment method, according to PayPal. “The role of digital payments is rapidly evolving. More than just a mode of transaction between sellers and buyers, digital payments has become the platform for its users to achieve better financial wellbeing and greater economic opportunity,” Shinghal said. “At PayPal, we work hard to understand the needs of consumers and businesses so as to ensure that the products and services we bring to market will improve their financial transacting experience and their financial health. Our collaborations with GCash and PayMaya are examples of how we have worked together with local providers to help Filipino freelancers and MSMEs move and manage their money in a more convenient and seamless manner.”

FINTQ

ANOTHER firm active in the fintech space in partnership with the Philippine government is FINTQnologies Corp. (FINTQ), the fintech arm of PLDT Inc. and Smart’s Voyager Innovations Inc. FINTQ said it is targeting to enable 30 million Filipinos to be financially included by 2020 through a collaboration with the Liga ng mga Barangay (Liga), the association of local government units with the largest membership representing barangays nationwide. The initiative is part of KasamaKA, the first-of-its-kind program that aims to accelerate financial inclusion in the Philippines. It combines financial literacy with an income opportunity builder that rewards responsible usage of digital financial services such as digital microsavings, lending, micro insurance, micro investments, payments and lay-away, among others. The initiative was launched

in September at the Bangko Sentral ng Pilipinas headquarters. FINTQ’s collaboration with Liga aims to expand its community livelihood and entrepreneurship initiatives through its existing and new educational programs. The partnership is a massive and sustained implementation to create millions of income opportunity builders. Barangay constituents, particularly the likes of ambulant vendors, farmers and self-employed workers who remain financially excluded, can learn more about available, accessible and affordable financial services. At the same time, they can also earn up to P300 additional income every time they use a service or successfully refer a relative, a friend or their regular customer.

KasamaKA

“BEING able to go down to the barangay level to enable access to

GLOBE Telecom said it is also aggressively working with LGUs. The company recently partnered with Makati City for the “Makatizen Card,” as well as with Davao del Norte for a similar citizen ID system. According to Globe Telecom, both projects provided the opportunity for the creation of a cashless ecosystem for payment needs and eliminate the old practice of face-to-face transactions and even old policies in disbursing allowances, wages, stipends and others. The citizen ID card functions as a valid government-issued ID card and can be used to avail themselves of various social services, transact with government and purchase goods and services. Fuse, another subsidiary of Mynt, meanwhile, can be used by individuals and micro/small businesses to secure a loan. “Our loans platform, through Fuse, creates credit scores for Filipinos using telco data, where the profile of a loan applicant can be determined to know if the person has the ability to pay for a loan,” Tinio said. He recalled that the first loan applicant was a fruit vendor in Cagayan de Oro City a year ago. Her loan application was approved in as fast as 24 hours, he said. Another layer in the Mynt financial platform hierarchy is the ability to give out insurance plans, with the support of expert insurance partners. “We want to create a marketplace for insurance that’s customized for Filipinos and paid through reasonable and fair premiums,” Tinio said. “Filipinos with some savings can invest it through Mynt using a platform that gives them the ability to do that in the easiest, most convenient and safest manner.” In order to cater to the financially underserved, Mynt and Globe Telecom partnered with Ayala Corp. and mobile payment services firm Ant Financial to build platforms built for scale. “Ant Financial already has

more than 450 million users, while ours is only at 4.7 million. Our dream is to become as big as that,” he said.

Adoption

THE rapid adoption of digital technologies among the population and the rise of fintech players are accelerating financial inclusion. However, the opportunities to bridge the digital financial access divide remain huge. Data from the World Bank reveals there are still 69 percent of Filipinos aged 15 and above who do not have a bank account. A big challenge is uneven access to services. Banks are nonexistent in 36 percent of cities and towns. As per BSP data, around 57 percent of banks are located in the National Capital Region, Calabarzon and Central Luzon. “Financial inclusion is definitely part of our capacity-building measures,” LNMB National President Edmund Abesamis was quoted in a statement as saying. Abesamis believes the answer here is KasamaKA. “Being at the grassroots, KasamaKA is an enabler so our over 42,000 barangays can be empowered to have greater awareness and access to inclusive digital financial services,” he said. “As a national movement for inclusive growth, it will surely have a ripple effect on economic growth and development.” According to FINTQ, the KasamaKA initiative supports the government’s NRPS and National Strategy for Financial Inclusion. It addresses the challenge of providing strong incentives for the unbanked and underserved consumers to try to access financial services, FINTQ said. At the same time, it also opens opportunities to banks and other financial institutions to expand their offerings to serve these segments, the company added.

Future

SHINGHAL believes “this is the greatest time to be an entrepreneur.” This is true, he said, especially when agile and relevant solutions can help passionate entrepreneurs live their dreams. However, he said there is a need for entrepreneurs to undertake partnerships and knowledgesharing. “We are not going to find a single solution that will remedy all consumer needs, but working together with partners, even if some may seem counterintuitive at first glance, can help us extend the value of our businesses and drive impact at a greater scale,” he said. “They can also work with a diverse set of mentors or industry veterans that can help clarify the next steps, set the right goals and perfect a plan.” While technology has presented many opportunities, the speed of innovation and reinvention also means greater competition for our small businesses, Shinghal added. “Their ability to cope with a shortened feedback loop as a result of greater connectivity determines their success and, by association, failure, quicker as well.” Shinghal also believes that for small businesses in the Philippines and Southeast Asia to succeed, “it is pertinent for entrepreneurs to be more savvy and discerning of changes in the industry to cash in on market opportunities.” “And this means data is now all the more important. In a time where markets are saturated with new ideas and competition, businesses that are able to keep their ears on the ground and leverage relevant data to customize customer experiences will thrive.” Nonetheless, Shinghal remains optimistic and gives this challenge to consumers and entrepreneurs in the Philippines now on the journey to digital payments: “Let’s set our small businesses on the route to success, because the best is yet to be.”

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Banking&Finance BusinessMirror

Thursday, December 21, 2017 • Editor: Jun B. Vallecera

www.businessmirror.com.ph

November BOP yields $44-M deficit By Bianca Cuaresma

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@BcuaresmaBM

he Philippines continued to spend far more dollars than it was earning in November, its balance of payments (BOP) position still in a state deficit during the period. Latest data from the Bangko Sentral ng Pilipinas showed the BOP yielding a $44-million deficit in November and attributed to payments made by the national government (NG) for maturing foreign-exchange obligations during the month in review. Although still bleeding in foreign exchange, the November imbalance was smaller compared to the $368-million shortfall posted the previous month and the $1.671 billion recorded in the same

month last year. The BSP said the imbalance in the BOP, effectively a summary of the country’s transactions with the rest of the world, could have been larger were these not offset by the net foreign-currency deposits of the national government and income from the BSP’s investments abroad. The $44-million shortfall in November also brought the aggregate BOP imbalance to a deficit of $1.78 billion for the January-to-November period.

This was a far worse performance compared to the $206-million deficit in the same 11-month period last year and the $420-million deficit in 2016. “The higher cumulative BOP deficit for January to November 2017 was brought about largely by the big reversal in foreign portfolio investments from $1.3 billion net inflow to $770 million net outflow for the first 10 months of the year,” the BSP said. The BSP earlier bared expectations of a bleaker year-end BOP performance as it projects the country’s external payments position to incur a $1.4-billion shortfall. For next year, the BSP expects the BOP to remain in deficit territory, likely at a lower shortfall of more or less $1 billion. The monetary authorities last reported a shortfall in the balance of payments in 2014, when the deficit stood at $2.86 billion. There was a similar BOP imbalance 10 years prior when, in 2004, the BOP deficit stood at $280 million.

Taiwan’s central banker leaves legacy of stability, sharp elbows

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hen Perng Fai-nan took over as Taiwan’s central bank governor, one share in Apple Inc. cost less than 80 cents, China’s economy was smaller than Italy’s and the Asian financial crisis was in full force. Since February 1998, Perng has been a quiet guiding force behind Taiwan’s economy as it overcame financial crises and tech bubbles, natural disasters and rocky international relations to double in size. One of the world’s longest-serving central bank governors, Perng is set to retire in February, with no successor yet announced, nor any official hints on who’s being considered. At least part of Perng’s success has been his willingness to enter the fray, such as demanding bankers not comment on the Taiwan dollar. And highlighting that no issue is too trivial, in 2012 the bank issued a statement denying a report in a local newspaper that Perng used an iPhone, saying that the governor doesn’t use a mobile phone at all. “This is Perng’s style,” said Shea Jia-dong, a former finance minister and deputy governor at the Central Bank of China. “He has his own convictions and he doesn’t let anyone challenge them.” The monetary authority did not respond to requests for comment on the issues outlined in this article. Perng, 78, was first appointed governor at a time of national tragedy. His predecessor Sheu Yuan-dong was among more than 200 people killed in a China Airlines crash on the outskirts of Taipei in February 1998. With the Asian financial crisis then roiling the region, Perng’s immediate task was to help shield the economy from the worst of the fallout. Since then, Perng, who holds a doctorate from the University of Minnesota, has retained his position through three subsequent presidencies. He has not been shy about publicly reminding people of the central bank’s

authority over monetary policy. With exports accounting for roughly three-quarters of the economy, Taiwan’s currency has always been a key focus—both to local authorities and a US government that discourages intervention by its trading partners. The US Treasury added Taiwan to its currency monitoring watch list in April 2016. Perng’s repeated analogy has been that Taiwan is a small boat in a vast ocean, making the currency’s managed floating regime fitting. Taiwan’s unique toolbox for enforcing that regime includes rules, window guidance and suspected intervention. Perng has overseen a fivefold surge in reserves and a more-than twentyfold jump in the current-account surplus during his tenure. In October the US government took Taiwan off its watch list for currency manipulation, handing Perng a major win as his tenure ends. Since then though, there have been signs that the central bank is entering currency markets. The bank denies claims of intervention. “A small economy’s room for monetary policy is limited, and FX policy has been

restrained by the US, so there’s not a lot of room to act,” said Chen Po-chih, a presidential economic adviser and former CBC board member. “Over the years Perng has managed to prevent large swings in the Taiwan dollar and major financial crises. He’s succeeded in defense already.” Taiwan owes a lot to the decisiveness of Perng’s monetary-policy decisions, said Ma Tieying, an economist at DBS Group Holdings Ltd., who has been watching the economy since 2005. Perng will chair his last board meeting on Thursday, where he is expected to keep the policy rate unchanged for the sixth straight meeting. President Tsai Ing-wen has yet to announce who will succeed Perng. Deputy chief Yang Chin-long was seen as his most likely replacement in a Bloomberg survey of economists conducted in August. Whoever takes over from Perng will have to carefully balance inflation with stagnant wage growth at home, navigate tightening monetary policy overseas, and fend off suspicions of currency intervention.

Case clippings

By Justice S J Ranada Jr.

BAIL–denial even if reasonable doubt exists Bail hearings before the Sandiganbayan are limited to the determination of whether there is a strong presumption of guilt. It is merely a preliminary determination, and the Sandiganbayan may deny admission to bail even when there is reasonable doubt as to the guilt of the accused. The prosecution can discharge its burden by proving that the evidence against the accused shows evident proof of guilt or a great presumption of guilt. Napoles v. Sandiganbayan GR 22416207 Nov. 2017 Reyes, J

Thailand holds key rate as economic-growth forecasts raised

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h ailand’s central bank kept its benchmark interest rate unchanged near a record low in the face of subdued inflation, and raised economicgrowth forecasts for this year and next. Monetary-policy committee members voted unanimously to keep the one-day bond repurchase rate at 1.5 percent, where it’s been since 2015, according to a Bank of Thailand statement on its web site on Wednesday. All 21 economists surveyed by Bloomberg predicted the decision. Thailand ’s economy is catching up with the economic boom in Southeast Asia, buoyed by a global trade recovery and supported by a flood of tourists from China. That’s being underpinned by an ambitious infrastructure spending plan, including on mass-transit lines in

Bangkok and a high-speed railway project with China, which the World Bank said will lead to expansionary fiscal policy well into 2022. The government is hoping for a pick up in investment and consumer spending to broaden the expansion in Southeast Asia’s second-largest economy, which remains export-reliant. Growth has strengthened this year despite a 9-percent appreciation in the baht against the dollar, among the best performers in Asia. The Bank of Thailand has fought off calls to ease monetary policy this year despite inflation remaining below the central bank’s target band of 1 percent to 4 percent. Economists at JPMorgan Chase & Co. and Standard Chartered Plc. predict policy-makers will follow global central banks and raise interest rates next year. Bloomberg News

Tax academy soon to open in Mindanao T he Department of Finance (DOF) has bared plans to open regional campuses of the Philippine Tax Academy (PTA) in rural areas following a request by the Bureau of Local Government Finance (BLGF) for the conversion of its Northern Mindanao regional office in Cagayan de Oro City into a PTA Center. Finance Undersecretary Gil S. Beltran said the DOF is also planning to open regional PTA campuses in the Visayas and Mindanao, with the main site in Region 10, in line with the request of the BLGF. The BLGF has requested a budget of P33 million to build a PTA Training Center and its offices in the bureau’s 1,064-squaremeter property in Cagayan de Oro City. The BLGF will soon start offering PTA training courses to local treasurers assigned in the Bicol region, according to the DOF. The planned PTA Training Center will provide provincial employees of the BLGF, the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) continuing professional education and training on improving tax collection, competence and efficiency. Earlier, the DOF said it will tie up with state universities and colleges (SUCs), such as the University of the Philippines (UP) and the University of Makati (UMak), in

setting up the first PTA in the country by January next year. Beltran told Finance Secretary Carlos G. Dominguez III the main campus of the PTA will be at the UMak in Makati City, while the UP College of Economics in Diliman eyes offering executive certificate courses for DOF employees. The Senate expressed interest in the PTA program and has tasked the Senate Tax Study and Research Office to submit a program for the training of all Senate employees and the solons’ technical staff handling tax matters, according to Beltran. The report also said consultants engaged by the US Agency for International Development (USAID) are now “onboard” to help develop the PTA curriculum. “The PTA shall develop and implement a curriculum that includes those pertaining to the technical aspects of tax collection, administration and compliance; and the career orientation and development for civil servants,” a provision under Republic Act 10143 read. Countries like Japan, China, India, Australia, Singapore and Malaysia have their respective tax academies that also train tax and customs authorities, as well as private individuals, in taxation and finance assessment and management. Rea Cu

Formula for success

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was in Dubai last week as one of the invited international panellists of the 1st Dubai Association Conference organized by the Dubai Association Centre (DAC), a governmentinitiated entity established by the Dubai Chamber of Commerce & Industry, the Dubai Business Events (part of the Department for Tourism and Commerce Marketing), and the Dubai World Trade Centre (DWTC). The conference, held on December 11 and 12 at the DWTC, drew over 300 attendees from around the world. It served as a platform for dialogue and education for associations interested in exploring opportunities in the Middle East and contribute to building an association community that drives the knowledge economy in the United Arab Emirates Themed “Building a Community: Dubai 360°,” the program was developed to see Dubai in its entirety—from business to culture to heritage and entertainment—and to bond with other associations, both local and international, as well as with academia, tourism and government agencies. I was in a panel of fellow CEOs representing “associations of associations” globally—the African Society of Association Executives (based in South Africa), the European Society of Association Executives (Brussels) and the American Society of Association Executives (Washington, D.C.), all CEOs of different associations in their respective countries. I represented the Philippine Council of Associations and Association Executives (PCAAE) and the Asia-Pacific Federation of Association Organizations (APFAO). T he panel topic was on sharing experiences, challenges and resources of associations of associations as they put together and engage in one platform all member-ser ving organizations in their jurisdictions. One of the questions asked was the resources needed to achieve success. I contributed the following formula: People (Good Board Governance + Effective Management + Volunteer Engagement) + Collaboration + Revenue Generation = Sustainable Association People—An association is only as good as its people resources—the board (governance), management staff (dayto-day operation) and volunteer members (committees and task forces). Able leadership on two levels—board and management—is essential to develop

Association World Octavio Peralta and implement programs and services to members. Engaged volunteer members provide additional help and resources to the organization. Collaboration—Partnerships and alliances are also resources that associations can tap to “multiply” what they are currently doing. Working together with like-minded institutions build a larger community and expand the “power of collaboration” to undertake more activities. Extending even further to creating a broader “ecosystem,” i.e., outside the association community (nonmember service users and customers, sponsors, academia and government) provide many more opportunities for associations to grow. Revenue generation—While associations are not-for-profit organizations, it does not mean that they should not have enough funds and reserves to sustain themselves during downturns and uncertainties. Diversifying revenues by not only relying on annual membership dues, as well as maintaining a reasonable surplus, are critical inputs for sustainability. I crafted the above formula based on my experience. It is also applicable to any association wanting to grow and be sustainable. As for Dubai, I think it has found the formula to build an association community through the Dubai Association Centre, which acts as a onestop facility to assist associations to come together in the emirate to meet, exchange knowledge and network T he column cont r ibutor, Oc ta v io “Bobby” Peralta, is concurrently the secretary-general of the Association of Development Financ ing Inst it ut ions in Asia and the Pacific (ADFIAP) and CEO of the Philippine Council of Associations and Association Executives (PC A A E). PC A A E enjoys the support of A DFI A P, the Tourism Promotions Board, and the Philippine International Convention Center. E-mail obp@adfiap.org .

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Editor: Efleda P. Campos • Thursday, December 21, 2017

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‘World class’ Clark airport terminal breaks ground By Ashley Manabat

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PRC deploys aid caravan to Biliran, area badly hit by Urduja

Correspondent

LARK INTERNATIONAL AIRPORT—A new airport terminal building with more than 100,000 square meters with an annual capacity for 8 million passengers broke ground here on Wednesday. The new terminal building, located in the northeast portion of this 2,300-hectare civil aviation complex, is described as the first of the Duterte administration’s hybrid infrastructure projects under the “Build, Build, Build” program. A hybrid model means the government will build the infrastructure using its own funds and then the operations and maintenance will be bid out to the private sector. Leading the groundbreaking rites were House Speaker Pantaleon D. Alvarez, former president and now Rep. Gloria MacapagalArroyo of the Second District of Pampanga, Executive Secretary Salvador C. Medialdea, Finance Secretary Carlos G. Dominguez III, Transportation Secretary Arthur P. Tugade, Pampanga Gov. Lilia G. Pineda and Tarlac Gov. Susan A. Yap, Sens. Richard J. Gordon and Joseph Victor E. Ejercito and Bases Conversion Development Authority President and CEO Vivencio Dizon. The hybrid project is considered the fastest to be implemented

by the national government since its approval by the National Economic and Development Authority board in June. Megawide-GMR won the bid to build the terminal after going through “a very stringent and transparent” bidding process monitored by the International Finance Corp. of the World Bank. Megawide-GMR bested four other bidders for the design, engineering and construction of the new Clark airport terminal building. On December 14 MegawideGMR submitted the lowest financial proposal for the airport expansion project at P9.36 billion. During his speech, Tugade noted there were heavy rains on Tuesday night, but good weather prevailed as soon as the sun came up in the morning, making it a beautiful day, which might well be the “blessing” bestowed on the new terminal building. Tugade said efforts requesting to start the improvement and renovation of the Clark international airport only fell on deaf ears in

Waze: Holiday traffic worst in PHL, especially in provinces By Roderick L. Abad Contributor

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ITH the onset of Christm a s r u sh , t r ave le r s should expect increased traffic away from Metro Manila, especially when spending their holiday hiatus in the provinces of Bicol and Pampanga. Based on the results of Waze Holiday Driving Data 2017 report, Naga and Angeles are the top cities with increased traffic volume—by 2.7 times and 1.8 times, respectively. Bottlenecks are likewise likely in the southern part of the country, the study revealed. Bacolod is the third-most heavy urban area, with 1.6 times more in traffic during this time of the year. It is followed by Batangas, 1.4 times; Iligan, 1.4 times; Iloilo City, 1.4 times; Cagayan de Oro, 1.4 times; Davao, 1.3 times; General Santos, 1.3 times; and Zamboanga, 1.2 times. Given the results, vacationers who plan to go through these areas are advised to schedule hitting the road earlier than usual or just go somewhere else to celebrate. Waze, the world’s largest community-based traffic and navigation app, collected the above-cited data for this report over the past year. It also came up with the date and the hours of the day when traffic is at its worst, thus, giving ideas for drivers on how to shorten travel time so families can spend more time together during the Yuletide break. In the Philippines December 22, which falls on a Friday this year, is the worst day to drive t h is sea son, espec i a l ly f rom 4 to 6 p.m. Since it is the time of giving, the country’s traffic situation could somehow contribute to the delay of delivering gifts everywhere.

This is evident in the Waze data that showed how slow it would take for Filipino users of Waze to race to the North Pole (NP) as compared to their counterparts abroad. Based on the locals’ average driving speed, it will take about 14 days to reach Santa’s house. In Asia Pacific the Philippines is 1,400 kilometers (km) closer to the NP than Singapore. However, Filipino drivers take eight more days to get there. Globally, Italian drivers are among the fastest in the race to the NP likely because everyone is driving Ferraris. As for the return trip to ring in 2018, Waze suggests travelers to shun hitting the roads between 3 p.m. and 5 p.m. on Sunday, December 31, especially if they hope to make it back home in time for New Year’s Eve. In a race based on Days to NP at 100 km per hour and Days Added Due to Region Speed, Waze ranked the Philippines, followed by Australia and Brazil, as the three slowest countries. The United States, Italy and France are t he t hree fastest nations to reach NP. Holiday-related traffic jams for Waze users are groovier as the road guide app tied up with Spotify earlier this year. With their integration in full swing, their collated data for the most popular songs that drivers usually listen to while away their boredom or madness over heavy traffic caused by holiday rush revealed that Mariah Carey has topped their favorite list with “All I Want for Christmas Is You.” This is followed by “It’s Beginning To Look A Lot Like Christmas” by Michael Bublé; “Santa Tell Me” by Ariana Grande; “Happy Christmas (War Is Over)—2010 Digital Remaster” by John Lennon; and “Last Christmas—Remastered” by Wham.

By Claudeth Mocon-Ciriaco Correspondent

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HOUSE Speaker Pantaleon D. Alvarez (center) leads other officials in the groundbreaking of the new Clark airport-terminal building in the northeast section of the 2,300-hectare Clark civil aviation complex in Pampanga on Wednesday. ASHLEY MANABAT

the past. But now it gives new life to the plans and the desires of the Capampangans from all over Central Luzon to have a premier international gateway here. Tugade added that no later than January 6, 2018, the government will mobilize to start the construction of the Tutuban to Malolos portion of the rail project and the entire stretch from Tutuban to Clark will be fully complet-

ed during the term of President Duterte. He said the rail project is tied to the full development of the Clark airport. He also said that before the end of next year, the government will start making a reality the rail connectivity between Clark and Subic. The third project connected to the Clark airport is the so-called New Clark City in Tarlac, which will augur well the development

and growth of the entire country. The CIA is envisioned to be Asia’s next premier gateway and is expected to help decongest the Ninoy Aquino International Airport in Manila. It is one of the high-impact projects under the government’s “Build, Build, Build” infrastructure program and compliments the Clark Freeport Zone, which is being developed as the next investment center in Asia.

91 Davao Norte farmers end campout in Manila By Jonathan Mayuga @jonlmayuga

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F T ER t wo mont h s, 91 f a r mers who st a ged a campout protest in front of the Department of Agrarian Reform (DAR) central office in Quezon City are now on their way home to Davao del Norte. The farmers agreed to end their campout protest on the promise of Agrarian Reform Acting Secretary John R. Castriciones that they will be installed in their governmentawarded lands. In a statement, Castriciones attributed the success of the “send-of f ” ceremony held on Monday night, December 18, to the teamwork of DAR officials, employees and other concerned agencies, with the help of the local government of Quezon City. The formal send-off of the protesting farmers was realized five days after Castriciones formally assumed the post of DAR acting secretary.

Before the farmers’ journey back home, a program was held where farmer leaders and members met and talked with the top officials of the agency. The farmers demanded the issuance of an installation order for the agrarian reform beneficiaries (ARBs) of the Tagum Development Corp. in the province of Davao del Norte. Castriciones assured the farmers the DAR will immediately look into their demands and directed the field operations and legal services units of the department to fast-track the resolutions of the above-stated appeal for the issuance of an installation order. He emphasized the importance of the processes the DAR must comply with regarding issuances and orders. During the program, he reiterated the thrust of the administration of President Duterte of accelerating the release of certificates of land ownership award of the ARBs and the provision of support

programs and services. The office of Quezon City ViceMayor Joy Belmonte took care of the food packs and the boxes of bottled water needed by the Mindanao farmers for their long journey home. T he far mers a lso received scholarship certificates from the Technical Education and Skills Development Authority through the office of Deputy Director Diosdado Padilla. Despite the heavy rains on Monday, the dismantling of the tents and camps previously set up by the farmers in front of the DAR central office went on. The Kilusang Magbubukid ng Pilipinas led by Antonio Flores condemned the DAR and Castriciones for taking advantage of the protesting farmers’ desire to go home to their families before Christmas, ending the twomonth protest with no guarantee that the farmers would be installed and start cultivating their government-awarded lands.

MID access dangers and difficulties, the Philippine Red Cross (PRC) deployed a humanitarian caravan that will provide much-needed assistance to Biliran province, one of the areas worst hit by Tropical Storm Urduja. PRC Chairman and CEO Richard J. Gordon said its staff and volunteers are working hard to bring water and relief items to affected communities in the province. He said a 15,000-liter water bladder was positioned strategically at the Biliran Provincial Hospital to provide water regularly to patients and health-care workers and residents nearby. The PRC is also providing anti-tetanus vaccines to injured individuals in the province. “I would like to commend our staff and volunteers who are working round-the-clock this Christmas season to ensure that families affected and displaced by the landslide will have access to clean water. The DSWD [Department of Social Welfare and Development] is also there now taking care of the food and water of those affected in Biliran,” Gordon said. The caravan consisted of ambulances, a 5,000-liter water tanker, six water bladders, five tap stands, water-treatment set and portable generator sets. The PRC also sent a six-wheeler truck loaded with nonfood items, such as hygiene kits, mosquito nets, blankets and jerry cans. Gordon added that PRC’s Cebu Chapter is also on standby for possible deploy ment of additional equipment, such as payloader, water tanker, truck, generator sets, deployment tents and communication kits. Since last week, the PRC has been on the ground providing humanitarian assistance to the areas affected by Urduja. So far, the PRC has distributed hot meals to 8,299 individuals in Northern Samar, Ormoc City, Surigao City, Leyte, Masbate, Eastern Samar and Camarines Norte. PRC volunteers and staff also provided over 300 food items and nonfood items, such as towels, plastic mats and blankets. The PRC also set up 13 welfare desks and provided psychosocial support to 169 individuals. Over 60 individuals were also rescued and transported for further medical attention. As the foremost humanitarian organization in the country, the PRC operates in 103 chapters across the country, together with an estimated 2 million volunteers nationwide.

NMP trains over 10,000 seafarers in 2017

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ACLOBAN CITY—The National Maritime Polytechnic (NMP), a government maritime training and research center under the Department of Labor and Employment (DOLE) trained a total of 10,327 seafarers, exceeding its target for this year. The trainees include aspiring seafarers, active seafarers, maritime instructors and assessors, and other allied personnel in the maritime industry. Mayla Macadawan, deput y executive director of NMP, said the number is beyond the 10,000 target for this year as stated under its commitment on the Office

Performance Commitment Review as part of the agency’s major deliverables for 2017. NMP, an attached agency of DOLE, has its head office in Cabalawan, Tacloban City with a sub-office in Metro Manila. Macadawan said as part of its commitment to prompt service, NMP trainees were able to receive their certification within two weeks after the successful completion of their course requirements. She added 99.55 percent of the respondent-trainees rated NMP trainings as good or better. “ T hese f ig ures ref lect t he NMP ’s untiring endeavors to

ensure the quality of its training offerings,” Macadawan said. She said additional courses related to Standards of Training, Certification and Watchkeeping for Seafarers (STCW) Convention are now in the process for accreditation at the National Maritime Authority, which will be offered on the second quarter of next year. “This would mean additional enrollees to be trained and certificated by the end of next year,” she said. NMP targets to train 12,000 seafarers in 2018. The STCW Conventions, which the Philippine

government ratified, sets qualification standards for masters, officers and watch personnel on seagoing merchant ships. Macadawan said the NMP also continues to upgrade its facilities and provide maritime trainings required pursuant to STCW, including value-adding courses toward improving the qualification of Filipino seafarers for their employment acceptability and enhanced competitiveness. It also regularly conducts maritime studies to come up with policies for the improvement of the manpower sector of the industry. Elmer Recuerdo

A10 Thursday, December 21, 2017 • Editor: Angel R. Calso

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editorial

Duterte’s legacy

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n the presence of his economic team and surrounded by the leaders of the House of Representatives and the Senate in Malacañang, President Duterte on Tuesday signed into law the Tax Reform for Acceleration and Inclusion (TRAIN). The new law, meant to accelerate government spending on muchneeded infrastructure, will simplify the country’s 20-year-old complex tax system. The President said the TRAIN, together with the P3.767-trillion 2018 General Appropriations Act, which he also signed, is the fulfillment of his campaign promise to institute fiscal reform that will be felt by more than 100 million Filipinos. Duterte said the TRAIN is the administration’s biggest Christmas gift to the Filipino people because starting next year, the new law exempts those earning an annual taxable income of P250,000 and below from paying the personal income tax. It also raised the tax exemption for 13th month pay and other bonuses to P90,000. The first of five tax-reform packages, TRAIN will generate P120 billion for the government, of which 70 percent will go to the administration’s “Build, Build, Build” infrastructure program. Even before it was signed into law, however, certain quarters have opposed the TRAIN’s alleged “anti-poor” provisions. They said the TRAIN imposes higher taxes on fuel, tobacco and some sweetened beverages. These new taxes, they said, would hike prices of basic commodities, which will burden the poor. The Department of Finance concedes that the new taxes may result in higher inflation in the short run. Based on government calculations, the new law may drive up inflation by 1.5 percentage point. With inflation now at a two-year high of 3.3 percent as of February 2017, higher excise taxes could mean higher inflation rates. However, Presidential Spokesman Harry L. Roque Jr. said 30 percent of the P120 billion that TRAIN will generate will be earmarked for public services and other measures for the poorest Filipinos who will be negatively affected by the new law. Roque said: “We have provided for mitigation, realizing that the poorest of the poor would need some kind of assistance as a result of TRAIN.” He explained that TRAIN allocates funds for cash transfers to the poorest 10 million families—P200 monthly in 2018, P300 monthly in 2019 and P300 monthly in 2019. The amount will be given regardless of the size of the indigent family. According to the National Economic and Development Authority, the TRAIN law will help boost the country’s GDP by as much as 1.1 percent by 2022. Socioeconomic Planning Secretary Ernesto M. Pernia said “the implementation of TRAIN is essential as it will increase the spending capacity of the average working Filipino, boost revenue-to-GDP ratio, and fund government’s infrastructure and human capital investment programs.” There’s a general consent among economic experts that the rollout of big-ticket infrastructure projects would make the Philippines more attractive to investors. On Monday the government announced that the Board of Investments (BOI) has approved a record P616.7 billion in investment pledges for 2017, surpassing the previous all-time high of P570.1 billion posted in 1997. The figure is 39.5 percent higher than last year’s haul of P442 billion. With the TRAIN taking effect next year, BOI sees at least 10-percent increase in investment pledges. All these, together with the government’s determination to roll out big-ticket public infrastructure projects, will spur economic growth that, hopefully, will help alleviate poverty and make the country an upper-middle class nation by the time the President leaves Malacañang. Since 2005

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That was the year that was John Mangun

OUTSIDE THE BOX

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very year gives us its own unique events and news. In fact, 2017 may be a champion in the “What Just Happened?” category.

The biggest story in my world is cryptocurrencies and, specifically, Bitcoin. I am taken back to my distant childhood, watching a television program—in black and white of course—that started with “It’s a bird! It’s a plane! It’s Superman!” In other words, no one was sure what it was flying through the sky. The same is true of Bitcoin. Some people say it is a currency. In 2010 10,000 Bitcoins could buy two pizzas, but it is now worth $100 million. That sounds like the Zimbabwean dollar from 2007 to 2009 in reverse. Sure, Bitcoin is a currency if you want to buy a Subway sandwich in Buenos Aires. A Wall Street Journal reporter just bought a pizza

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with Bitcoin. The total price including transaction charge was $76.16. Over the past two weeks, the cost to complete a transaction has skyrocketed from about $6 on average to $26. The Bitcoin network is struggling to process more than four transactions per second globally. Unless you want to wait several hours for the transaction to go through, you have to pay a high fee. Imagine going to the department store to buy a pair of socks and being told to wait four hours or pay a P1,300 transaction fee. Bitcoin is supposedly a storage of wealth like gold. But like gold, Bitcoin has no value other than its convertibility to “real money.” Also like gold,

that convertibility is available only at the mercy of the government. In 1933 the United States stopped US currency from being converted to gold. It was unlawful to own gold. What would happen if the government(s) shut down all the Bitcoin exchanges and made it unlawful to buy anything —except illegal drugs and guns— with cryptocurrencies? Speaking of Bitcoin exchanges, a small Korean exchange, Youbit, just shut down and reduced the value of Bitcoin by 25 percent as it was hacked for the second time this year. Hackers made off with nearly $70 million from a major cryptocurrency-mining service NiceHash. In August 2016 Bitfinex was hacked with $66 million stolen and the Parity Multisig Wallet hack took $32 million in July 2017. These are only the big ones. If these incidents happened with “real money” like the $80-million Bangladesh Central Bank hack, there would be international outrage. Bitcoin will be just as big a story in 2018. On the local front, the saga that led to the delisting from the Philippine Stock Exchange (PSE) of Calata Corp. is the winner. My sympathy for the investors that are still holding

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HE House Committee on Justice has passed a substitute bill consolidating six identical measures, creating a powerful charter for the Office of Solicitor General (OSG) and transferring to it the discredited Presidential Commission on Good Government (PCGG) created by former President Corazon C. Aquino.

The still-unnumbered charter will increase the OSG’s legal powers, expand its organization and simplify the prosecution and recovery of ill-gotten assets selectively and arbitrarily applied only on former President Ferdinand E. Marcos, his relatives, friends and cronies based on unqualified and inordinate generalizations of how civil and criminal case were allegedly committed. This willful procedure resulted in the prosecution of innocent people, while those actually guilty, including many who were strangely given immunity from civil and criminal prosecutions by the PCGG, went scot-free. The new charter also seeks to repeal Republic Act (RA) 9417, otherwise known as An Act to Strengthen the Office Of The Solicitor General By Expanding and Streamlining Its

Bureaucracy, Upgrading Employee Skills and Augmenting Benefits, and Appropriating Funds Therefor and for Other Purposes; RA 2327, otherwise known as “An Act to Declare the Position of Government Corporate Counsel Distinct and Separate from that of the Solicitor General, Provide for His Appointment and Salary and Appropriate the Necessary Funds Therefor, and for Other Purposes;” and Executive Order 1 and 2, S. 1986. Meant to ensure efficiency in the operations of the government and eliminate overlapping of functions and responsibilities, the new charter will also effectively address the expanding needs of governmentowned and -controlled corporations (GOCCs) toward the improvement of fiscal management and good corporate governance and concentrate on

government efforts for the recovery of ill-gotten wealth and properties. In a hearing on the bill last Wednesday, Rep. Vicente Veloso of the 3rd District of Leyte, chairman of the subcommittee on justice committee, said that the bill provides for the absorption of PCGG and GOCC officials and employees and resolves the issue of the retirement and separation benefits. The OSG, under the new charter, shall represent the government and the People of the Philippines in the Supreme Court, Court of Appeals and lower courts in all criminal and civil proceedings, which the government has been impleaded as a party or any government official sued in the lawful performance of duty. The OSG shall investigate, initiate court action or any other legal action against any person, corporation or firm for the enforcement of contracts, bonds, guarantees, mortgages, pledges or other collateral issues in favor of the government. The OSG shall appear in any court in any action involving the validity of any treaty, law, executive order, proclamation, rule or regulation when in his judgment his intervention is necessary or when requested by the court. It shall also conciliate, mediate, settle and adjudicate all disputes, claims and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the national government, including GOCCs.

shares is the same for an adult who blows off a couple of fingers with an illegal Super Lolo firecracker— not much. Forget about the stock manipulation from listing day. The share price went from P2.64 on August 5, 2016, to P4.08 on September 6, 2016, on the news that Calata was going to a joint venture on a Cebu casino project. When the deal evaporated, the price was back to P2.76 on November 14, 2016. In early-2017 we saw a move to P2.37 and, by May, the price was below P2. Considering that the stock market was up 8 percent, Calata was not exactly a candidate for the “Blue Chip Stock Hall of Fame.” Due to the controversy, the PSE has added a “suitability” requirement for approval of an initial public offering listing, defined as looking at the individuals behind the company. My reaction to that idea is probably best left unsaid. 2018 will be even more interesting than 2017. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Moreover, the OSG shall render opinion and advice on matters referred to it by the departments, bureaus, agencies and instrumentalities of the national government, including GOCCs. It shall also prepare, upon request of the President or other officers of the national government, rules and guidelines for government entities governing the preparation of contracts, making of investments, undertaking of transactions and drafting of forms or other documents needed for official use, for the purpose of facilitating their enforcement and ensuring that they are entered into or prepared conformably to law and for the best interests of the public. The OSG shall be headed by a solicitor general who shall act as the principal law officer and defender of the government with at least 50 legal divisions, each headed by an assistant solicitor, composed of at least 10 lawyers and such other personnel as may be necessary to effectively carry out its functions. Furthermore, the OSG will have Financial Management Service, Docket Management Service, Human Resources Management and Administrative Service and Budget and Planning Service, each headed by a director to be appointed by the President. To reach the writer, e-mail cecilio.arillo@ gmail.com.

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Motorcycle taxis bat for govt licence

Blessed and receptive Msgr. Sabino A. Vengco Jr.

Val A. Villanueva

Alálaong Bagá

ETRO Manila’s dreadful traffic gridlocks could only get worse, according to the Boston Consulting Group’s study “Unlocking Cities.”

mmediately before the celebration of Christmas, the fourth and last Sunday of Advent focuses our attention on Mary, the mother of the Child to be born. She represents to us the salvation from God that the birth of the Messiah wrought and the receptiveness that God’s people in response must have (Luke 1:26-38).

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In the next five years, more Filipinos would find the need to have cars that could choke Metro Manila’s main thoroughfares, create standstill traffic, or make travel speed (for want of a better word) at only 10 kilometers per hour by 2022. President Duterte himself lamented the deteriorating traffic in the capital and predicted that Manila would be a “dead city in 25 years.” The Japan International Cooperation Agency, meanwhile, forecasted that Metro traffic would cost us around P6 billion a day by 2030. In order to forestall such a terrifying reality, Filipinos should be encouraged to use public transportation modes. But this, too, is farfetched considering the sorry state and utter neglect of the country’s public transport system. Long-term solutions, such as developing potential urban hubs outside the metropolis to decongest Metro Manila, could prove to be such a long and painful wait, even as commuters are already forced to accept that snail-paced and stressful rides are but a way of life. Carpooling and other patch-up solutions have been put forward as possible reprieves. The Metro Manila Development Authority brought up the possibility of implementing a carpooling system on Edsa. Uber’s study estimates that road bottleneck during peak hours may be abridged by up to “88 percent” if such would be implemented. The catch, however, is that the move could lead to the proliferation of “colorum” cars. Ride-hailing service providers, such as Uber and Grab, have somehow made life easier for some motorists who have decided to commute and leave behind their respective cars, but the full benefit of this system has not been felt. The government, through the Land Transportation Franchising and Regulatory Board (LTFRB), has caved under the pressure of big taxi operators who have made business difficult for this kind of commuter service. Now comes Angkas, a motorcycle taxi that uses the same system as that of Grab and Uber. This system is, in fact, endorsed by Cebu City Mayor Tommy R. Osmeña who vowed to find a way to hire and operate Angkas, and allow it to continue its operations in Cebu. But as far as LTFRB is concerned, Angkas is illegal, citing that a twowheeled vehicle cannot be classified as a public-utility vehicle, and only

Congress has the power to categorize it as such. Angkas is arranging for all the necessary permits it needs to legally operate in Metro Manila, and has secured an audience with House Committee on Transportation Rep. Cesar V. Sarmiento of the Lone District of Catanduanes who has vowed to hear its side. In many countries, motorbikes as a mode of public conveyances are as common as a four-wheeled public transportation vehicle. They are inexpensive, use less fuel and have low upkeep costs. More important, the convenience of riding motorbikes would be most welcome in Metro Manila where traffic is tragically hellish. Motorcycle taxis have become ever-present in countries, such as Vietnam, Indonesia, India, Thailand, Japan, the United Kingdom, France, Turkey, Venezuela, Uganda and Kenya. The importance of motorbike taxis has not been lost even to companies in the transport network vehicle services (TNVS). Uber unveiled its experimental motorbike service in Thailand last year. It remarked that the new service is aimed at cities in emerging markets where traffic mobbing is at its worst. Similar commuter service can be found in Indonesia (UberMoto, GrabBike and Go-Jek), Thailand (Go Bike), India (Ola), East Africa (SafeBoda), Paris (Citybird) and Istanbul (Scotty). More than 20 million motorcycle taxis operate in more than 100 countries, according to the World Bank, which foresees an increase in their use by more than 50 percent in the next five years. The LTFRB says the law has to be amended to accommodate Angkas, but the latter insists otherwise. In a position paper, Angkas reasoned that the Department of Transportation has the power, “without a new law, to make new classifications which type of vehicles can be added as TNVS.” It cited Republic Act 4136 Section 7q, which states that “the Commissioner of Land Transportation may, in his discretion, allow the registration under this classification of motor vehicles, which do not conform to the foregoing described regular classification.” BusinessWise is going to take a short Christmas break, and will be back on the first Thursday of 2018. Thanks to all my readers who have followed this corner since day one. To you and all your loved ones: Have a blessed Christmas and a bountiful New Year! Cheers! For comments, suggestions e-mail me at: mvala.v@gmail.com.

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Rejoice, full of grace The annunciation by the angel to Mary is a statement of the mystery of salvation unfolding. The presence of the angel already indicated that what was happening, in the sixth month since the announcement of Elizabeth’s marvelous pregnancy, was part of God’s initiative. The opening greeting by the angel “Hail, full of grace! The Lord is with you!” forcefully recalls prophesies of restoration and renewal undergirding the entire account (cf. Zephaniah 3:14-17). Mary was greatly troubled by the greeting and pondered what it was all about. But rejoicing, not fear, should fill anyone favored by God,

even if it might exact great hardship from the one favored. Ma r y wa s e x t raord i n a r i ly graced; the Lord would be with her uniquely, in her womb. She had been chosen to be the mother of a son whose name would be Jesus (“God saves”), a savior, who would be great and called Son of the Most High, to inherit the throne of his father David, to rule over the house of Jacob forever, and of his kingdom there will be no end. All this good news, long promised and awaited and now to be fulfilled, indeed must bring ultimate joy. Mary was being invited to be a vehicle of salvation for the people of God.

Bloomberg View

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ho is the leader of the free world? Important as the question sounds, I’m beginning to wonder if it’s better left unanswered. The United States president is no longer the obvious choice. Even the new US National Security Strategy, filled with bombastic statements, such as “the whole world is lifted by America’s renewal and the reemergence of American leadership,” acknowledges growing competition among powers. And, of course, “America first” is the slogan of a national, not a global, leader. So who, if not Donald J. Trump, qualifies for the job? Let’s first consider its history. The origin of the term “leader of the free world” is somewhat uncertain. Dominic Tierney of the Atlantic tracked it back to a 1948 New York Times article,

in which British economist Barbara Ward called upon the US to lead the West in fighting the Communist threat. But a Google Books search suggests the title was first used during World War I and has made regular appearances in English-language books since the late 1930s. In any case, its use surged at the peak of the Cold War in the early-1960s (when Soviet leader Nikita Khrushchev began referring to “the free world” with heavy irony), declined toward the detente of the mid-1970s, then gained again through the Soviet Union’s collapse and up until its last peak in 2007, just before the global financial crisis. Typically applied to the US president, the title has acquired a bitterly ironic flavor since the election of Trump who, studies suggest, is broadly mistrusted in democratic countries. As a result, some pundits have been discussing whether a more globally respected politician, such as German Chancellor Angela Merkel,

A receptive servant Mary’s response to the announcement by the angel was not to doubt or question that what has been said would happen according to the divine will, but she was wondering how it would happen, her being a virgin. Though married to Joseph, they have not yet lived together as husband and wife. The angel’s explanation: God’s Spirit and power would overshadow her, recalling how the cloud settled upon the tent of meeting to indicate the presence of God in the midst of His people (Exodus 40:35). Mary’s conceiving Jesus would be God’s doing. A further assurance was given by the angel in the case/sign of Elizabeth also conceiving a son despite her old age and barrenness. “For nothing will be impossible for God,” echoing God’s words to Abraham assuring him of the birth of Isaac despite Sarah’s old age and barrenness (Genesis 18:14). Mary’s acceptance of the divine will portrays her as a good servant of the Lord in her own words because she received the Word of God with her whole being. In faith and humble openness, Mary received in her heart the Word of God in the words of the angel, then she received the eternal Word in her

womb. Like the rich soil where the seed/word of God fell, Mary hearing the word embraced it “with a generous and good heart” to “bear fruit through perseverance” (Luke 8:15). A hearer and doer of the Word, that is how Jesus Himself would later describe His mother (8:21). Alálaong bagá, for us, in Mary the waiting of Advent is over. She is the image for all times of faith that is open and accepting of God’s initiative and grace. As the mother of our Savior, Mary is the sign of hope that God makes possible the salvation of humankind in the face of the apparent impossibility of our conversion from sin and transformation into servants of the Lord, hearing and doing the words of life. With Mary’s “yes” to the divine will, hope has been reborn and history changed. There is now the unimaginable future for all people that comes from God, the future in God’s love and mercy, in joy and gratitude—a future with God that we behold in Mary, “full of grace.” Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on DWIZ 882, or by audio streaming on www.dwiz882.com.

How interest penalties will change under the tax reform Atty. Pierre Martin Reyes

Tax Law for Business

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onpayment or deficiency in the payment of taxes would always give rise to the running of interests. This is so since taxes are liabilities of a taxpayer to the government, which, according to the Supreme Court, are burdens to be borne by citizens for the preservation of the nation’s sovereignty, and to ensure revenue for the upkeep of security and defense forces and installation of public improvements, which are supposed to be provided by the government. Similar to a loan of money, unpaid taxes incur interests due to the time value of money: The value of money at present will be worth more in the future due to its potential earning capacity. Under the current tax code, two types of interests are imposed: deficiency interests and delinquency interests. A 20-percent deficiency interest is imposed when there is any deficiency in the tax due, such as when a taxpayer pays P1,000,000 in income taxes for the year 2016, but is found out to be liable for P1,200,000. A 20-percent deficiency interest per annum will then be imposed on the deficiency of P200,000, which will begin to run from the date prescribed for payment until full payment thereof. On the other hand, a 20-percent delinquency interest per annum is imposed when there is failure to pay, such as when you file a tax return but fail to pay the amount indicated therein, or when you did not file any tax return at all when you should have done so, or when the Bureau

of Internal Revenue (BIR) assesses you for taxes and issues a notice of assessment asking for payment. Such interests will run from the due date prescribed in the assessment notice until the full payment thereof. Thus, there will be a time when a taxpayer will be burdened by a massive 40-percent interest on unpaid taxes, which will run until full payment. In our example, the deficiency interest will run from the date when the P200,000 deficiency should have been paid, which in this case is April 15. Thus, from such date, deficiency interests will begin to run and will continue to run until full payment. If, for example the BIR issues an assessment notice demanding payment on May 15, then delinquency interests will start to run from that date until full payment. At this point, the

Maybe the free world doesn’t need a leader By Leonid Bershidsky

Thursday, December 21, 2017 A11

could take over the role. As recently as September, Hillary Clinton called her “the most important leader in the free world right now.” Merkel, however, probably doesn’t fit the bill. Weakened by the last election, she has found herself embroiled in the longest coalition talks in Germany’s post-World War II history. Even if she’s back on top by Easter, global leadership will be pretty far from her mind as she settles into what’s likely to be her last term in power. She doesn’t even have an obvious successor in her party. Besides, she has always shown much more interest in shaping the European Union (EU) to Germany’s benefit than in leading the world, free or otherwise. Other European leaders don’t qualify, either. Almost all lead precarious, painstakingly built coalitions with domestically-focused agendas, while others —mostly in Eastern Europe—aren’t interested in being part of any liberal

order. The only notable exception is French President Emmanuel Macron, mockingly called “Jupiter” and compared to the Sun King by his compatriots. But, at 40 and in his first year as an elected official, he’s unproven. Also, France has been in the doldrums for too long and has too many institutional and economic problems to be a credible global leader. Top EU officials could take a shot. The European project unites most established democracies, is the world’s biggest trade bloc and has a consistent track record of defending liberal values. But European Commission President Jean-Claude Juncker and European Council President Donald Tusk, besides being something of a comical pair, have proven powerless even to bring the European Union closer together. They’re negotiators and compromise makers, not leaders. And the EU, for all its economic power, is a peace project, so its role in resolving global

Though taxpayers are obligated to pay their taxes correctly and on time, we must keep in mind that we should not overburden them by making them responsible for interest at exorbitant rates, resulting in situations when the unpaid running interests are already more than double their actual tax liability. By introducing reforms to the interest penalties under the tax code, TRAIN is a step in the right direction.

taxpayer will be subject to 40-percent interest per annum since both deficiency and delinquency interests are already imposed. Clearly, the high interest rate and the overlapping application of the deficiency and delinquency interests are unreasonable, burdensome and confiscatory. How will the Tax Reform for Acceleration and Inclusion (TRAIN) change this? TRAIN amends the tax code by changing the interest rate from 20 percent per annum to “double the legal interest rate for loans or forebearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas [BSP].” In a circular issued by the BSP in 2013, the legal rate of interests for loans or forebearances of money, goods, or credit, and for judgment awards, has been lowered to 6 percent per annum, from 12 percent per annum. Thus, on January 1, 2018 when TRAIN takes effect, the interest rate for both deficiency and delinquency rate would be 12 percent per annum.

conflicts will remain minimal. One could make a case for Canadian Prime Minister Justin Trudeau. He’s a liberal favorite, branded “the free world’s best hope” by Rolling Stone. He acts the part, stressing his differences with Trump on immigration, climate change and gender equality. He has also boosted Canada’s military spending. But it wouldn’t be easy for Canada to emerge from the US shadow, and Trudeau isn’t particularly popular with Canadians (his approval rating just slipped below 50 percent). There still is a free world, in which citizens elect political leaders rather than tolerate authoritarian succession like in China or Russia. It doesn’t, however, appear to have a credible leader—one who would be both powerful and committed to clear, attractive values. Moreover, it’s hard to see where one would come from. The US will be eyed with mistrust after Trump. Its values

Further, TRAIN addresses the issue on the overlapping application of the deficiency and delinquency interest by stating that “in no case shall the deficiency and delinquency interest be imposed simultaneously.” This adopts the interpretation made by the Court of Tax Appeals (CTA) in one case (Liquigaz Philippines v. Commissioner of Internal Revenue, CTA EB 1117, September 21, 2015), where the Court held that the deficiency interest shall accrue from the date prescribed for its payment up to the deadline set by the BIR for payment of the assessed tax, while the delinquency interest shall run from the said deadline until the assessed tax is fully paid. Though taxpayers are obligated to pay their taxes correctly and on time, we must keep in mind that we should not overburden them by making them responsible for interest at exorbitant rates, resulting in situations when the unpaid running interests are already more than double their actual tax liability. By introducing the above-discussed reforms to the interest penalties under the tax code, TRAIN is a step in the right direction. The author is a senior associate of Du-Baladad and Associates Law Offices, a member-firm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at pierremartin. reyes@bdblaw.com.ph or call 403-2001 local 311.

are in flux and hard for outsiders to understand, and its military power is not necessarily relevant to modern conflicts, as Europe’s Middle Eastern refugee crisis has demonstrated. Germany, for its part, is weighed down by its history and held together by a rebuilt communitarian tradition, in which leadership-hungry politicians are unlikely to flourish. The question, then, is whether the free world needs a leader. Perhaps, the path forward requires collective decisions and compromises, inclusiveness and consensus, negotiation and civilized debate. It sounds boring, even weak, and the outcomes may often appear suboptimal, but freedom and strong leadership have always been a little at odds. Quiet, soft power as practiced by European nations, Canada and Japan might work better as an advertisement for democracy than US assertiveness has since the end of the Cold War.

2nd Front Page BusinessMirror

A12 Thursday, December 21, 2017

www.businessmirror.com.ph

Neda expands PHL’s Can the SDGs slay hunger, list of ODA sources poverty? T By Cai U. Ordinario

@cuo_bm

he Philippines was able to gain new sources of official development assistance (ODA) this year, according to the National Economic and Development Authority (Neda).

In a statement, Socioeconomic Planning Secretary Ernesto M. Pernia said these were among the achievements of the national government this year. Pernia said the Philippines was able to secure ODA funding for a number of its projects from countries like Japan, which now accounts for 36 percent of the country’s total ODA. “This year has also seen many new and renewed international partnerships,” Pernia added. “Apart from Japan, we have had fruitful bilateral talks with China, Korea, Germany, Austria and Italy, and Israel, on various development projects in line with our priorities.” Further, Pernia said the country continued to introduce reforms that would encourage more investors to do business in the Philippines through the easing of restrictions

36% Japan’s share in the official development assistance funding obtained by the Philippines

on foreign investments under the Regular Foreign Investment Negative List (RFINL). In a memorandum order signed on November 21 by Executive Secretary Salvador C. Medialdea, the President instructed the Neda Board to exert effort to lift or ease re-

strictions on certain investment areas with limited foreign participation. These investment areas include restrictions in private recruitment for both local and overseas employment; practice of specific professions, where the entry of foreign players will affect public benefit; contracts for the construction and repair of locally funded public works; and public services, except for public utilities, such as power transmission and distribution, water-pipeline distribution system and sewerage-pipeline system. The presidential memorandum also mandates the Neda Board to ease foreign participation in culture, production, milling, processing and trading, except retailing, of rice and corn; retail-trade enterprises; teaching at higher education levels; and domestic market enterprises. Under the 10th RFINL, culture, production, milling, processing and trading, except retailing, of rice and corn is listed under 40-percent foreign equity, while retail-trade enterprises with paid-up capital of less than $2.5 million are not allowed for foreign investors. “The revised list covers easing foreign investment restrictions on contracts for construction and repair of projects, practice of professions, telcos, teaching at higher education levels, retail trade enterprises and domestic market enterprises,” Pernia added. See “NEDA,” A2

Continued from A1

What are the SDGs? They are the Sustainable Development Goals adopted by the United Nations in 2015 to succeed the old Millennium Development Goals (MDGs). Under the old MDGs, UN member-states agreed to adopt eight “millennial” targets: 1) eradicate extreme poverty and hunger; 2) achieve universal primary education; 3) promote gender equality and empower women; 4) reduce child mortality; 5) improve maternal health; 6) combat HIV/ AIDs, malaria and other diseases; 7) ensure environmental sustainability; and 8) develop a global partnership for development. According to the UN MDG Monitoring Office, there were marked successes in meeting these global development targets, claiming that the MDGs “have saved the lives of millions and improved conditions for many more.” Several hundreds of millions were lifted out of poverty, mostly in surging China. At the same time, Wu Hongbo, the UN undersecretary for social and economic affairs, was frank enough to admit that despite some notable gains in the MDG program implementation, there were also setbacks. He wrote that “the poorest and most vulnerable people are being left behind,” mostly in Latin America, Africa and poor countries in Asia. The Philippines, through the Nedabased MDG monitoring group, reported substantial gains in MDG targeting and implementation, particularly in relation to achieving universal primary education, promoting gender equality and improving maternal health. Still, the country failed to meet its target of halving poverty by 2015 (from 1990 level). Gains came in minimal increments, as reflected in the modest decline of poverty incidence from 28.8 percent in 2006 to 24.9 percent in 2013. Incidentally, poverty estimates by the Social Weather Stations are virtually double those given by the Philippine Statistics Authority. Also, the first decade of the millennium witnessed several MDG-gutting developments. First, the 2007-2010 global financial crisis, like the 1997-1998 Asian financial crisis, made millions in both developed and developing countries dislocated, poor and vulnerable overnight. Up to now, certain countries in Europe, such as Greece, are still unable to recover from the crisis. Second, global efforts to forge global partnerships for development have become difficult with the increased rivalry for global leadership among big powers, for example, the United States versus China and Russia. There is also the rise of populist, sectarian and sometimes isolationist leaders around the world. And, yes, the emergence of Islamic fundamentalist terror groups is creating divisions in many parts of the world and whipping up religious and racial conflicts in some countries. Third, studies after studies are showing that inequality in the world and in individual countries has been deepening and widening. Oxfam claims that the wealth of the eight richest people is equal to the wealth of those owned by half of the world. Thomas Piketty, in his celebrated book Capital in the 21st Century (2013), explained that this happens because the rate of return on wealth has been consistently higher than the rate of growth in the United States and Europe since the Industrial Revolution of the 18th century. In the Philippines observers claim that 40 families virtually lord over the whole economy. In Riding the Wave (dated 2018), the World Bank warned that those in the bottom of the Philippine income pyramid tend to get stuck at the bottom. Further, there are

dangers that some of those in the slippery middle can slide to the bottom because of limited improvements in income distribution. Now the United Nations has replaced the MDGs with the SDGs from 20162030. The eight MDGs have become 17 ambitious SDGs. They are as follows: Goal 1. End poverty in all its forms everywhere. Goal 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture. Goal 3. Ensure healthy lives and promote well-being for all at all ages. Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. Goal 5. Achieve gender equality and empower all women and girls. Goal 6. Ensure availability and sustainable management of water and sanitation for all. Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all. Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. Goal 10. Reduce inequality within and among countries. Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable. Goal 12. Ensure sustainable consumption and production patterns. Goal 13. Take urgent action to combat climate change and its impacts. Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development. Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. Goal 17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development. The foregoing is a fairly long list of ambitious aspirations. But it cannot be denied that these goals, converging toward the building of an inclusive, equitable and sustainable global society, are precisely what the world needs. The problem is how can these goals be translated into actionable or doable programs at the national as well as global levels. Also, can the SDGs tame the Race to the Bottom, which has been raging in many parts of the world under economic globalization? The Race to the Bottom among big corporations and transnational firms competing in a borderless global economy is seen by trade unions and civil-society organizations as the root cause of exclusion for the many and the deepening inequality within and among countries. In the process of competition and in the name of growth, labor, human, community and environmental rights are often set aside. The Race to the Bottom is also at the roots of chronic or recurring regional and global economic crisis, which is traceable to a major contradiction: the global overproduction of goods created in low-cost production platforms or value chains organized by the transnational firms and the global underconsumption of the same goods and services because the mass purchasing power of the working people is eroded in an unequal labor market. Perhaps, it is time for the United Nations to convene, too, a global agreement on how to tame the Race to the Bottom and build a new architecture for a just, fair, inclusive and sustainable economic order.