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Thursday, February 2, 2017 Vol. 12 No. 113
CASH-TRANSFER PROGRAM DRIVING PEOPLE AWAY FROM FARMING
Cash dole-outs new threat to farm sector T
By Jasper Emmanuel Y. Arcalas
@jearcalas
he farm sector is facing a new threat created by the government itself—the Conditional CashTransfer Program, now known as the 4Ps (Pantawid Pamilyang Pilipino Program)—experts said.
According to Dr. Rene E. Ofreneo, former labor undersecretary and dean of the University of the Philippines (UP) School of Labor and Industrial Relations, the cash dole-outs being given by the govern-
ment are driving farmers out of the agriculture sector, as they choose to be dependent on the financial assistance rather than engage in costly farming with low returns. This is because the money they
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10.985M The number of people employed in the agriculture sector in 2016, down 2.89 percent from 2015
are getting from the 4Ps is higher than what they are earning from farming. “The money they get from 4Ps is higher than what they earn in actual farming. Most of the farmers, especially the individual ones, don’t take into account their cost of labor in the total cost of production, Continued on A2
Tobacco excise-tax bill birthing great divide»A6-A7
America First:
Where is Trump leading the world?
Rene E. Ofreneo
laborem exercens
I
FIRE ROOSTER A colorful rooster lantern on display at the Lucky Chinatown Mall in Manila continues to attract shoppers after the Chinese New Year celebrations. 2017 is the Year of the Fire Rooster. NONIE REYES
No consensus yet on how to ease ownership rules By Butch Fernandez @butchfBM
C
ongress leaders have yet to reach a separate agreement with Malacañang on how to carry out a LegislativeExecutive Development Advisory Council (Ledac) consensus to ease by constitutional amendment existing curbs in foreign ownership. Senate President Pro Tempore Franklin M. Drilon clarified that Tuesday’s Ledac meeting
only agreed on “the what, but not on the how”. “The only consensus is the need to revise the Charter [limitations on foreign investments]...nothing else,” Drilon told the BusinessMirror. The senator added that the process will “require constitutional amendment, not simply legislation”. He, however, admitted there was no agreement on whether the process of amending the Constitution’s provision limiting to 40 percent foreign ownership of businesses in
PESO exchange rates n US 49.7570
certain industries would be done by Congress as a constituent assembly, or by elected delegates to a constitutional convention. “No consensus on mode,” Drilon said. Apart from easing Charter restrictions on foreign investments, the Ledac, likewise, firmed up an agreement to fast-track approval of the Palace-endorsed Comprehensive Tax Reform Program, as well as the amendments to the procurement law. The conferees agreed to front-
load efforts to modify and revise the law’s implementing rules in a bid to speed up the process of government procurements. Senate Majority Leader Vicente C. Sotto III confirmed the need for follow-up talks between the Palace and lawmakers to decide the preferred mode for amending the Charter to relax restrictions on foreign investors. “We have not discussed it yet,” Sotto said in a text message to the BusinessMirror.
n a major deviation from the traditional free-trade stance of American leaders, US President Donald J. Trump openly declared that his administration is pursuing America First policy. He has withdrawn US support to the Trans-Pacific Partnership (TPP), which his predecessor crafted as a strategic response to the growing Chinese trade dominance of the region. He has also called for an overhaul of the 1994 North American Free Trade Agreement (Nafta) involving Canada and Mexico, claiming that America has been a big loser under the said agreement in terms of jobs and exports. Trump also announced his administration’s resolve to build a long and expensive concrete wall to prevent Mexican labor and goods in flooding the US territory. Trump intoned: He wants more manufacturing jobs to remain and expand within the US under his America First policy. Yes, he will still continue trade talks, but this time on a bilateral or country-by-country basis. Trump’s America First is outright trade unilateralism, outright economic nationalism. The larger picture, however, shows that the US has always pursued an America First policy since its formal separation from the colonial mother country, Great Britain. George Washington and his Treasury secretary, Alexander Hamilton, were also the original proponents of economic protectionism or economic nationalism. After gaining independence from the British monarchy in 1776, Washington proceeded to build the foundation for industrial America based on Hamilton’s 11-point plan to build up “American Manufactures”. Hamilton’s four most important proposals are as follows: Continued on A10
n japan 0.4408 n UK 62.6242 n HK 6.4130 n CHINA 7.2302 n singapore 35.3162 n australia 37.7158 n EU 53.7276 n SAUDI arabia 13.2721
Source: BSP (1 February 2017 )
A2 Thursday, February 2, 2017
BMReports BusinessMirror
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Cash dole-outs new threat to farm sector Continued from A1
and if you add it to their inputs, they would even incur more loss,” Ofreneo told the BusinessMirror. Data from the Philippine Statistics Authority (PSA) showed that the total number of employed people in the agriculture sector declined by 2.89 percent to 10.985 million in 2016, from the 11.312 million recorded in 2015. Of the figure, 9.719 million workers are in the agriculture, for-
Unilever. . .
Continued from A12
Production Corp.; and Alexis Engelberto Aragon, owner of Delirium Manpower Services. Based on the complaint, Unilever and the event organizers failed to consider several factors, including the entry of illegal drugs, despite boasting of their “security master plan” and “code red scenarios”. “The proximate cause of the death…is attributable to the inexcusable lack of foresight in failing to perform an act anticipatory that illegal drugs are so prevalent in a rave party to the effect that, given the highest educational and scholastic attainment, professional achievement and degree of occupation, as well as their intelligence, the event’s master security and safety plan is silent and muted about illegal drug[s] aggravated by the fact that those called upon to enforce said plan,
estry and hunting subsector, while the remaining, or 1.266 million, are in the fisheries subsector, PSA data showed. Workers in the agriculture sector made up the second-largest segment, accounting for 26.9 percent of the estimated 40.8 million employed persons in 2016, according to PSA data. “The problem of the agriculture sector is it’s not only the sustainability in terms of environment, but also the sustainability in terms
of farmers—if there would be still a next generation of farmers,” Ofreneo said. “Another indication [of low employment rate in agriculture] is that fewer and fewer students are enrolling into agronomy,” Ofreneo said, citing the case of UP-Los Baños, where the number of enrollees in nonagriculture majors is higher than those in agriculture majors. Arze Glipo, executive director of Integrated Rural Development
like the 300 bouncers, lack the skill, expertise and experience to discriminate against said pernicious drugs,” the complaint filed by the NBI stated. The NBI also noted that the number of bouncers was inadequate to secure the event with a crowd of 16,761, adding that the event organizers also failed to consider the deployment of drug-sniffing dogs and the conduct of simulation exercise with the police. The NBI also noted that lack of proper coordination with the Philippine Drug Enforcement Agency that could have prevented the possible entry and abuse of illegal drugs prior and during the event. Furthermore, the NBI noted that Pasay City has an existing ordinance imposing curfew hours to youths below 18 years old from 10 p.m. to 4 a.m., which, the respondents failed to consider, notably on the possible violations of the ordinance in their advertisements. The complainant noted that
more than 800 attendees of the Close-Up Forever Summer 2016 were below 18 years old, based on a list provided by Activations Advertising Inc. “The above-mentioned respondents from Unilever-CloseUp, Activation Advertising and the others appear to be criminally liable based on the responsible officer doctrine for they held a position of responsibility and authority in their respective corporations and had the ability to prevent the unwanted incidents, but failed to do so,” the complaint added. Based on the autopsy and toxicological examination, the fatalities and victims tested positive for a designer drug known as methylenedioxymethamphetamine, or MDMA methylene homog and methylenedixy cathinone. These are new breed of drugs that are labeled as “dangerous”, but not illegal, as they are yet to be included on the list of prohibited drugs under the Dangerous Drugs Act of 2002.
Foundation said the government should distribute planting materials to farmer-beneficiaries under the 4Ps, rather than give them money. “Farming is not profitable anymore due to expensive planting materials from the seeds, fertilizer and even the labor,” Glipo told the BusinessMirror. “Instead of giving them subsidy in the form of cash, they should give seeds, fertilizers, planting inputs or machinery to the
CPP-NPA. . . Continued from A12
rebels but will maintain peace and order. The military does not recognize any area under control of the NPA, and will not allow guerrillas to move around with their weapons, he said. Presidential Peace Adviser Jesus Dureza expressed dismay at the decision, saying it comes after progress was made in peace talks last month in Rome, with both sides agreeing to discuss a bilateral cease-fire later this month. Dureza said he will recommend to Duterte that the government maintain its unilateral cease-fire. Even before the latest announcement, the military counted nine rebel attacks since Sunday, including an ambush that killed two soldiers in northern Isabela and a raid on an upscale resort in Batangas province, southwest of the capital, where the guerrillas carted away
farmers,” Glipo added. Glipo lauded the Department of Agriculture’s new loan program dubbed as the Survival and Recovery Loan program, which aims to give immediate aid to farmers affected by calamities for their sustenance and recovery of farms. “If the farmers don’t get any support from the government, then their numbers would continue to decrease,” Glipo said. Ofreneo said to boost employ-
ment in the agriculture sector, the government should implement programs that would help farmers become more involved in the whole value chain. “ Eve r y i nd i v idu a l f a r me r should be an agri-businessman or woman. To make money out of agriculture, farmers should master the whole value chain from seed preparation to supermarket shelves, because they remain poor if they are stuck in the production side,” Ofreneo said.
security guards’ firearms. The rebels said the government had not complied with its obligation to declare an amnesty for the insurgents and release about 200 rebel prisoners under an earlier agreement. Battle setbacks, surrenders and infighting have weakened the rebel group, which is considered a terrorist organization by the United States. Sporadic fighting has left about 40,000 combatants and civilians dead. Me a nw h i l e , A m ne s t y I n ternational (AI) said a majority of the thousands of killings of poor suspects under Duterte’s antidrug crackdown appear to be “extrajudicial executions”. T he London-based-humanrights group urged Duterte’s government to adopt an approach that respects human rights in its fight against drugs and crime, and called on the police and judiciary to ensure accountability and prosecute officers involved in unlawful killings.
After investigating the deaths of 59 people, and interviewing 110 witnesses, relatives of slain suspects, drug users, police officers and even hired killers, last November and December, AI said it had concluded that “the vast majority of these killings appear to have been extrajudicial executions.” AI said it’s “deeply concerned that the deliberate and widespread killings of alleged drug offenders, which appear to be systematic, planned and organized by the authorities, may constitute crimes against humanity.” There was no immediate government reaction, but Duterte, a lawyer and former government prosecutor, has defended the crackdown and says he and his top police officials have authorized law enforcers to open fire only when threatened by suspects. The deaths of at least 35 policemen and three soldiers prove that suspects have fought back during raids, according to the police. AP
Economy BusinessMirror
Editors: Vittorio V. Vitug and Max V. de Leon • Thursday, February 2, 2017 A3
DOE, ERC eye WESM power price-cap adjustment amid Malampaya shutdown
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By Lenie Lectura
@llectura
HE Energy Regulatory Commission (ERC) is currently evaluating if there is a need to adjust the price ceiling on power traded at the spot market.
This, after the energy department raised the possibility of further lowering the secondary price cap at the Wholesale Electricity Spot Market (WESM), the country’s electricity trading floor. “We are reviewing how to lower the secondary price cap in the WESM with the ERC,” Energy Undersecretary Felix William Fuentebella said last month.
The price cap is the highest offer that sellers could give when they sell their electricity to the market. When sought for comment, ERC Spokesman lawyer Rexie Digal said there is an ongoing review on the price cap, including the primary cap set at P32 per kilowatt-hour (kWh). “Given that the present offer price cap and secondary price cap were determined based on 2014 data, the
₧32/kWh The primary price cap at the Wholesale Electricity Spot Market
commission is already in the process of reviewing these levels using the most recent available input parameters and update them if necessary,” Digal said in a text message.
Price spike control
W E SM ’s pr i m a r y of fer c ap was lowered to P32/kWh from P62/kWh in a bid to prevent excessive price spikes. It can be recalled that WESM prices soared by P4.16/kWh in December 2013, as a result of the Malampaya natural gas-field shutdown.
The Manila Electric Co. (Meralco), which sources bulk of its power requirements from the gas facility, announced to implement recordhigh price increase. These rates include the P0.45/ kWh deferred increase for January 2014 billing period that Meralco wanted to collect over a six-month period. An earlier P4.15/kWh rate hike was also set to have been implemented in phases starting in December 2013, but was stopped by the Supreme Court. The ERC has yet to release the result of its investigation into the possible collusion or abuse of power allegedly committed by industry players, which resulted in an exorbitant rate hike in history yet. Besides the primary cap, the ERC also ordered the implementation of a secondary cap to further protect consumers from excessive price spikes
triggered by supply tightening. Called the price threshold mechanism, the P6.245/kWh secondary cap kicks in the market once an average threshold of P9/kWh is reached over a 168-hour period.
Colatilla
“Actually, the price caps were made permanent, but there is a colatilla that there will be a continuing review. There is a provision that there will be a review, so, depending on the situation, they will study it,” Philippine Electricity Market Corp. President Melinda Ocampo had said. PEMC is the WESM operator. Ocampo added that the Malampaya shutdown this year would not lead to a repeat of the 2013 incident, because existing mitigating measures are now put in place to prevent abnormal price spikes.
Senator seeks addl powers for NTC to ‘control’ telcos
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O better regulate players in the telecommunications industry, Sen. Sherwin T. Gatchalian on Wednesday proposed the need to grant the National Telecommunications Commission (NTC) with additional powers. Gatchalian, chairman of the Senate Committee on Economic Affairs, sought for the NTC’s additional authority to allow them to discipline erring or incompetent telecommunication companies. Gatchalian earlier filed Senate Resolution 213, which called on the Senate to look into the economic effects on consumers and the national economy of the present model of operation and regulation of the telco industry. He said this provision will be included in his committee report. “The NTC needs more teeth to better regulate the telecoms industry. I will make sure that it gets the same powers like the ERC [Energy Regulatory Commission],” Gatchalian, chairman of the Senate Committee on Energy, said. The NTC previously admitted having difficulty imposing drastic penalties against telecommunication companies that fail to deliver satisfactory services to consumers. NTC Deputy Commissioner Edgardo Cabarios said they failed to compel industry giants Globe and Smart to deliver the minimum speed of 12 Mbps in Internet connectivity as promised in their advertisements. Cabarios said since the NTC and the two telcos differ on the issue of whether data connection speed limits can be imposed, the NTC has opted to be silent on the issue “because of the limitations in the law.” He added that the P200 penalty per day for noncompliance to NTC regulations is, likewise, not a deterrent to the telcos. PNA
foot power A young mother takes a snapshot of her daughter while onboard a foot-powered metal rickshaw, locally known as pedicab, in Binondo, Manila. The count of foot-powered pedicabs in Metro Manila have shrunk considerably in recent years with the dominance of motorized tricycles, and even pedicabs powered by small gas-fed motors called kuliglig. Nonie Reyes
‘Right to disconnect’ choice of employees, DOLE’s Bello says
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he Department of Labor and Employment (DOLE) said it is up to an employee whether he or she will respond to work-related messages from their employers after office hours. Labor Secretary Silvestre H. Bello III noted that the “right to disconnect” or employees disregarding such, is, technically, a voluntary engagement between employers and their employees. “Answering or ignoring texts, emails from employers after working
hours is a voluntary engagement of an employee, and they are not obliged to respond. The right to disconnect is a choice of an employee,” he said in a news statement issued on Wednesday. Bello believed that the proposed measure before the House of Representatives might ease burnout and stress of the employees by drawing a clearer line between work and home. “Employees and employers know that there’s time for connection and so does a time for disconnection. It’s
always up to the employees to oblige themselves to work even after office hours,” the DOLE chief added. He noted, however, that completely disconnecting would not apply for certain jobs, and the employers must be the one to implement a policy in accordance with the standards of the Labor Code, which will benefit both parties. “It’s the employers’ own assessments and evaluations to reduce out-of-hours work. They either implement policy that will prevent their
employees to work after office hours or compensate them for extra workload,” Bello added. Quezon City Rep. Winston Castelo authored House Bill 4721, which aims to amend the Labor Code of the Philippines. The bill compels employers “to establish the hours when employees are not supposed to send or answer work-related e-mails, texts, or calls," and the conditions and exemptions in line with it, subject to rules provided by the DOLE. PNA
More agriculture workers in Metro Manila lose jobs in Q3 2016–PSA By Cai U. Ordinario @cuo_bm
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ayoffs in agriculture and industry-related firms in Metro Manila continued in the third quarter of last year, according to the Philippine Statistics Authority (PSA). Based on the Labor Turnover Survey (LTS), the PSA said employer-initiated separations were higher than employee-initiated separations or resignations in the agriculture and industry sectors. Layoffs in agriculture reached 4.64 percent, while those in industryrelated firms reached 3.6 percent. “Separation rate in establishments based in Metro Manila went up to 10.43 percent, or 104 workers per 1,000 employed who were either laid off or quit their jobs. Employment losses were observed in the agriculture sector,” the PSA said. Data showed that layoffs in agriculture was higher at 4.64 percent compared to the 2.24 percent employee-initiated separations in the second quarter of 2016. Employee-initiated separations were only at 1.47 percent in the third quarter last year. This was lower than the 1.98 percent posted in the second quarter of 2016. “Agriculture, forestry and fishing sector labor turnover rate was recorded at 0.83 percent. Accessions and separation of workers were reported at 5.29 percent and 6.12 percent, respectively,” PSA said. In the industry sector, however, the 3.6 percent employer-initiated separations was lower compared to the 5.29 percent posted in the second quarter of 2016. Employee initiated separations or resignations in industry was at 2.1 percent. This is significantly lower than the 4.02 percent posted in the second quarter of 2016. “Labor turnover rate in the industry sector was registered at 0.98 percent with accession rate placed at 6.68 percent and separation rate at 5.70 percent. Employment growth were noted in mining and quarrying, manufacturing and water supply,” the PSA said. Meanwhile, the services sector continued to expand and hire more Filipinos in the third quarter of 2016. Data showed that employeeinitiated separations reached 8.71 percent, while layoffs reached 2.34 percent. These are both lower than the 7.8 percent employeeinitiated separations and the 2.47 percent lay-offs in the second quarter of 2016. The PSA also said the services sector registered the highest accession rate of 15.08 percent and separation rate of 11.05 percent. This resulted to a labor turnover rate of 4.03 percent. “The high employment gain was primarily contributed by transportation and storage at 20.79 percent. On the contrary, growth in education slowed down by 0.44 percent,” the PSA said. The LTS is a quarterly sample survey of enterprises conducted by the PSA since the third quarter of 2002.
Lopez blames deforestation and logging for massive flooding in Agusan del Sur By Jonathan L. Mayuga @jonlmayuga
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nvironment Secretary Regina Paz L. Lopez on Wednesday said mining and deforestation caused the massive flooding in Agusan del Sur and other areas in the Caraga region, adding that the catastrophe had forced the evacuation of tens of thousands of residents to various evacuation centers. The entire province of Agusan del Sur is under a state of calamity, as the excessive rains over the past
several days caused the Agusan River to overflow, submerging low-lying areas and destroying millions worth of agricultural products. According to the Provincial Disaster Risk Reduction and Management Office of Agusan del Sur, four people died while more than 20,000 are still sheltered in evacuation centers. The excessive rain and floods affected all 14 towns in Agusan del Sur. An environmental advocate, Lopez affirmed her commitment to rehabilitate the country’s rivers, and said she had already met
with several groups, including church, non-governmental organizations and academe in Agusan del Sur. Caraga has been besieged by mining. Most of the mining operations in Mindanao facing suspension operate in the Caraga region, which is rich in gold, copper and nickel deposits. In a text message, Lopez vowed to “fix” the environmental problem caused by deforestation and mining that led to the disastrous flooding in Agusan del Sur. She added that she will also or-
der the DENR field officials to look into the status of the Agusan River Basin and areas affected by logging and mining concessions, and come up with plans and programs on how to address the problem. According to Lopez, the river basin will have to be improved to prevent disaster. She promised to intensify tree-planting activities in the area under the Enhanced National Greening Program to strengthen the community’s natural protection against calamities. The longest river in Mindanao, and the third largest in the coun-
try, Agusan River is the life vein of the Agusan River Basin, which covers 12,019 square kilometer of forestland and home to critical watersheds, key biodiversity and protected areas. It encompasses vast areas in the provinces of Misamis Oriental, Bukidnon, Compostela Valley, Davao Oriental, Daval del Norte, Surigao del Sur and Agusan del Sur. Among the critical watersheds within the Agusan River Basin are the Andanan, Gibong, Batuto, Simulao and Taguibo. Experts have also warned of the
degradation of the peatlands within the Agusan River Basin, particularly the Agusan Marsh. According to the River Basin Control Office, Agusan River Basin is besieged by poor involvement of institutions, local government units and other stakeholders; mining; and excessive resource exploitation that leads to deforestation; and other illegal extraction. Another major problem is inappropriate farming practices in many areas along the river that results to siltation and sedimentation, deforestation and soil degradation.
Agriculture/Commodities BusinessMirror
news@businessmirror.com.ph
Editor: Jennifer A. Ng • Thursday, February 2, 2017
A5
Exec lukewarm to ‘free irrigation’ as productivity tack DA consolidates lending schemes T HE Department of Agriculture (DA) said on Monday that it consolidated its existing lending programs in order to provide a more convenient and less complex lending schemes to farmers and fishermen. “The absence of financing for farmers created a monumental problem in agriculture in the past,” Agriculture Secretary Emmanuel F. Piñol said in a statement. “Time is essential, especially for farmers,” Piñol added. “A two-week delay in planting means they may not be able to harvest on time, especially before the typhoon season.” Piñol, who also serves as the chairman of the Governing Council of the Agriculture Credit Policy Council (ACPC), convened a meeting together with ACPC Executive Director Jocelyn Alma R. Badiola and other members of the ACPC Governing Council on January 31 to discuss the means on how to make
FILE PHOTO: NONIE REYES
S
By Jasper Emmanuel Y. Arcalas
@jearcalas
UBSIDIZING farmers’ irrigation fees may not be the lucrative answer in boosting farm productivity as irrigation is only a small part of the total cost of production, according to a highranking government official.
Undersecretary Maia Chiara Halmen Reina A. Valdez of the Office of the Cabinet Secretary said farmers may benefit more if the government would lessen the cost of other production inputs, such as fertilizers and seeds, rather than subsidizing irrigation. “Irrigation is only 3 percent of the cost of palay production,” Valdez told the BusinessMirror. “I mean, if you’re going to scrutinize it, in what aspect of their production do they need help the most and would benefit them more?” Valdez explained that irrigation is paid at a fixed cost. “It [irrigation] is being paid based on the total farming hectarage,” she said. “Maybe the challenge lies in the cost of inputs and the tech-
nique farmers employ in planting and postharvest periods.” In 2015 a Filipino rice farmer spent an average total cost of P47,470 per hectare, or about P12.18 per kilogram of palay, according to the latest data from the Philippine Statistics Authority (PSA). Of the total costs, P21,167 is paid in cash by farmers, while the remaining is comprised of expenses paid in kind and other imputed costs, PSA data showed. PSA data also showed that a Filipino farmer spent about an average of P578 for irrigation fees per hectare. Of the total amount, P434 is paid in cash, accounting to about 2.2 percent of a farmer’s average cash costs in palay production. PSA data further revealed that in
NFA begins building farm-support facilities
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he Nat ion a l Food Authority (NFA) said on Wed nesd ay it has started construction of a 100,000-cavan capacity warehouse to boost the agency’s stock capacity in Alangalang, Leyte. “The 100,000-cavan capacity warehouse will come to fruition within the 180-day construction period,” the NFA said. The NFA added that it has inaugurated a 2.5TPH multipass rice mill that can process 50 bags of palay per hour and has a milling recovery rate of 65 percent and 63 percent for regular-milled rice and well-milled rice, respectively. “These new facilities will answer the foodsecurity concerns of Region 8,” said NFA Administrator Jason Laureano Y. Aquino during the inaugauration of the new rice mill and groundbreaking ceremony of the new NFA warehouse at the NFA compound in Alangalang, Leyte. Jasper Emmanuel Y. Arcalas
terms of cash costs, famers paid the most in terms of hired labor, amounting to P8,632 per hectare, followed by fertilizers (P4,531 per hectare) and seeds (P1,354 per hectare). “So, we should really take into consideration those things. I mean, it’s fine to have free ISF [irrigation service fees], but we have to see if the mechanism would be really acceptable to our farmers this year,” Valdez said. She cited the case of the ISF during the administration of former President Joseph E. Estrada when it was abolished in 1998. The ISF was later revived when the National Irrigation Administration (Nia) adopted a socialized irrigation fee system. Last October the Senate approved the additional P2.3-billion budget for NIA to subsidize the agency’s ISF collection, particularly the salaries and expenses of employees in the NIA and irrigators’ associations (IAs). The additional allocation is on top of the P36.36billion budget of the agency under the proposed General Appropriations Act (GAA) of 2017. In an interview with reporters last December, NIA Administrator Peter Tiu Laviña said the agency is still studying and crafting the final guidelines and policies for the implementation of the government’s
“free irrigation” starting this year. Laviña disclosed that some IAs have raised concerns about the implementation of free irrigation as they benefit from the incentives in maintaining the operations of the irrigation systems. Laviña noted that as along as the NIA charter has not been amended, the agency will continue to rely on the national government, through the GAA to cover up for all the losses from not collecting ISFs. At present, the House of the Representatives has formed a technical working group to consolidate all the house bills filed in relation to the amendment of the NIA charter to streamline and materialize the government’s plan of providing free irrigation by creating a National Irrigation Development Program. Under Republic Act 360, or the NIA charter, the agency is mandated to collect ISFs from farmers as payment for irrigation water delivered by the agency. The agency attached to the Office of the President uses the money for the operation and maintenance of irrigation systems in the country. A g r icu lture Secretar y Emmanuel F. Piñol earlier said that, with the implementation of free irrigation, cost of palay production would be reduced to P8 per kilogram.
Hormel stops taking pigs from farm shown in video
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KLAHOMA CITY—Hormel Foods Corp. said on Tuesday it has stopped accepting hogs from a pork supplier in Oklahoma after an animal-rights group released undercover video from a farm the supplier owns showing pigs in crowded pens and being hit with gas cans. The company said it is investigating the facility owned by The Maschhoffs, one of the largest pork producers in the US. Hormel said third-party auditors would go to other Maschhoffs sites to check animalcare standards. “Animal stewardship, including the care and humane treatment of animals, is one of our most important values,” Austin, Minnesotabased Hormel said in a statement. The company said it would not tolerate violations of its strict policies on animal care and welfare. The video was released by Mercy for Animals, which said the footage showed abuse. The video, which the animal-rights group said was recorded in Hinton, Oklahoma, shows piglets in crowded pens and being hit with gas cans. It also shows male piglets being castrated—a common practice in hog farming. Mercy for Animals objected because it said the procedure was done without providing pain relief. Footage also showed the use of gestation
loan programs more accessible and available to farmers. The ACPC Governing Council is comprised of the heads of the DA, Bangko Sentral ng Pilipinas, the departments of Finance and of Department of Budget and Management, and the National Economic and Development Authority. The ACPC Governing Council agreed to trim down the seven existing loan programs of the ACPC to two to three credit facilities under the Program for Unified Lending in Agriculture (Punla), the DA said. With an initial funding of P200 million, Punla targets to boost the respective agri-fishery industries of the 10 poorest provinces in the country, according to the DA. “The program provides lending for farmers and [fisherman] groups with less stringent requirements, faster fund-releasing time and low interest rates,” the DA’s statement read. Jasper Emmanuel Y. Arcalas
LGUs cited for controlling spread of Panama disease
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HE Department of Agriculture in Region 11 (DA-11) announced it has rewarded the provincial governments of Davao del Norte and Davao Oriental for containing the spread of banana fusarium wilt in the region. Fusarium wilt, also known as Panama disease, is a soil borne fungus causing wilting of banana plants. In 2013 the DA-11 has identified at least 701,480 infected mats in the region, prompting the agency and banana stakeholders to implement quarantine measures and needed interventions to save one of the country’s leading dollar-earning industry, a statement said. The DA-11 conducted the search for the best-managed fusarium-infected farm as a rewards system for local government units (LGUs) that effectively implemented quarantine control measures and interventions, such as installation of foot and vehicle vats along entry points, issuance of local ordinance, disease-eradication activities and information drive. Under Category I (with more than 1,000 hectares of infected areas), the province of Davao del Norte has received P1.745 million as cash prize
crates, which keep pregnant sows confined. Hormel had already pledged to do away with the metal enclosures at its own farms. Gestation crates are too small to allow a pig to turn around. The pork industry began moving away from them following pressure from animal-rights groups and a shift in sentiment among consumers. Bradley Wolter, the president of Carlyle, Illinois-based Maschhoffs, said his company is also investigating and will re-train all its Oklahoma employees on proper production procedures. The company said it does not tolerate animal abuse. “We have launched a full-scale investigation in response to this video,” Wolter said in a statement for the family-owned company. “Any animal-care deficiencies discovered will be addressed in the quickest manner possible.” It’s not the first time Hormel—a publicly traded company whose brands include Spam, Jennie-O Turkey Store and Wholly Guacamole—has been linked to an undercover video. In November 2015 Quality Pork Processors in Minnesota, which supplies Hormel, disciplined three employees. One was captured on video paddling pigs and two were shown horse playing with what appeared to be a blood clot or blood-soaked paper towel. AP
under the DA-11’s search for bestmanaged banana fusarium infected farms in the region. The DA-11 statement said P1 million of the said amount will go to the provincial LGU. The municipal LGU of Santo Tomas, Davao del Norte, received P445,000, while the barangay LGU of La Libertad received P300,000, the DA-11 said. For Category II (with less than 1,000 hectares of infected areas), the province of Davao Oriental received a total of P1.25 million, of which P650,000 goes to the provincial LGU while the municipal LGU of San Isidro received P400,000 and its covered barangay of La Union received P230,000. Speaking during the awarding ceremony held in Davao City, DA-11 OIC-Regional Director Ricardo Oñate Jr. has cited the key role of the LGUs in keeping the incidence of banana fusarium wilt at bay. “This awarding ceremony is a manifestation of the effective collaboration of the DA and the LGUs, as well as our attached agencies in addressing the need of our banana industry. Our rewards system is also an indication of what we have done to contain the disease,” Oñate said.
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Asian advocates rap ex-NEDA Chief for ‘anti-SDG, pro-cigarette smoking’ view
Tobacco excise-tax bill By Cai U. Ordinario, Jovee Marie N. dela Cruz & Jasper Emmanuel Y. Arcalas
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RESIDENT Duterte is starting a new war—against cigarette smoking—as a proposed excisetax bill on tobacco is surprising many sectors on its zoom to nearing the Philippine Chief Executive’s approval. But the proposed bill that would upend the existing unitary tax system—imposing a uniform P30 tax per pack on all tobacco products—is making stakeholders dig their heels in. The donnybrook was caused by the bill principally authored by Party-list Rep. Eugene B. de Vera of Arts Business and Science Professionals, which was immediately sent by the Lower House to the Senate after three days of plenary deliberations. In contrast, a priority bill of the Duterte administration, the Comprehensive Tax Reform Package seeking to lower personal income-tax rates, still lingers in the House Committee on Ways and Means, chaired by PDP-Laban Rep. Dakila Carlo E. Cua of Quirino. De Vera filed the bill on October 19, 2016. Last November 7 the Committee on Rules referred the bill to the House Committee on Ways and Means for panel deliberation. After only two committee hearings, the Ways and Means Committee endorsed the measure for plenary approval. The bill was included in the House of Representatives’ official business last December 5.
Fast-track
A DAY after it was calendared, Cua sponsored and defended the bill at the plenary last December 6 and 7, before it was approved on second reading on the latter date. With 176-30-3 votes, House Bill (HB) 4144 was passed on third and final reading last December 13 and immediately transmitted to the Senate last December 14. The bill was coauthored by 52 lawmakers, including Cua, Deputy Speakers Fredenil H. Castro of Capiz (National Unity Party), Raneo E. Abu of Batangas (Nacionalista Party) and Eric D. Singson of Ilocos Sur (PDP-Laban). The departments of Finance, Health and of Agriculture, the Bureau of Internal Revenue (BIR), non-governmental organizations and various farmers’ groups are openly opposing HB 4144, saying the bill seeks to set back the revenue and public-health gains of the successful “sin” tax law. The Federation of Free Farmers and the PhilTobacco Growers Association (PTGA) are especially opposed to the “very high tax rates” under HB 4144. All cigarette manufacturers, except Mighty Corp., the leading producer of cheap cigarettes, also objected to the bill.
SEA voice
ONE of the most recent dissenting voices reverberated outside the country, as the Southeast Asia Tobacco Control Alliance (Seatca) reiterated the benefits of adopting a high unitary tax on cigarettes. In a statement, the Seatca expressed its disappointment that a former socioeconomic planning secretary of the Philippines would support a two-tier tax system and disregard its impact on the poor and the young. The Seatca said former National Economic and Development Authority (Neda) Director General Romulo L. Neri claimed in media reports that a unitary sin-tax system for cigarettes is “antipoor”.
“The Department of Agriculture supports the position of tobacco farmers. I will direct the NTA [National Tobacco Administration] administrator to explain why the agency is taking a position that is not supported by stakeholders.”— Agriculture Secretary Emmanuel F. Piñol
“Seatca is shocked that a former national economic development chief would claim that tax systems should be designed to allow the poor to maximize their income spent on cigarettes, as if cigarettes are a necessity similar to food, water, clothing and shelter,” Seatca Program Director Ulysses Dorotheo said. The Seatca said Neri should not overlook the link between tobacco and ill health. It added doing so goes against the aim of the Sustainable Development Goals (SDGs) of eradicating poverty and promoting well-being.
Health focus
UNDER a unitary sin-tax system, all cigarette brands are taxed the same rate, while a two-tier sin-tax system charges different rates for high- and low-cost brands, according to Seatca. With different taxes imposed on high- and low-cost brands, a two-tier system can still make lower-cost cigarettes accessible to the poor, Dorotheo said. He added that the Seatca believes the Philippines must focus on the aim of the sin-tax system, which is to discourage tobacco use and promote healthy lifestyles. The group said it continues to support the Philippines’s sin-tax reforms and declare it as a best practice in reducing tobacco use. “In the context of tobacco taxation, Brunei, Singapore and, since January this year, the Philippines are examples of international best practice with their unitaryspecific tax systems. In addition, all other Asean countries, except Indonesia, impose a unitary rate on cigarettes [whether ad valorem or mixed specific and ad valorem],” Dorotheo said. “Seatca, therefore, rejects Neri’s reckless misuse of information that misleads the public and supports a pro-tobacco position.”
Opposition
DUE to the bill’s main intent—a return to a two-tier tax on tobacco products—several lawmakers have voted against the passage of HB 4144. In explaining her negative vote, Deputy Speaker Pilar Juliana S. Cayetano of Taguig City said she voted against the bill, as “it will undermine both the health and revenue aspect of the Sin Tax Reform Act.” According to Cayetano, the unitary tax on cigarette products has proven to be more effective, as it is practiced in many countries, and is consistent with the country’s commitment under the Framework Convention on Tobacco Control of the World Health Organization to reduce smoking prevalence and allocate higher funds for health. Congress passed into law the Sin Tax Reform Act in 2012 and became a law in 2013 with a tax structure that is graduated to simplify the tiers for cigarette taxes: from the original five tiers down to two, and further down to just one by January this year. “HB 4144 is being touted as a measure that will provide muchneeded revenue to the government,” Cayetano said. However, Cayetano said she is countering this
A TOBACCO farmer prepares to transplant tobacco in Banna, Ilocos Norte. NONIE REYES
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l birthing great divide
Under a unitary sin-tax system, all cigarette brands are taxed the same rate, while a twotier sin-tax system charges different rates for high- and low-cost brands. With different taxes imposed on high- and low-cost brands, a twotier system can still make lowercost cigarettes accessible to the poor.
Cigarette vendor Rogelio Buenviaje, 64, carries a wooden box containing cigarette packs and candies as he walks along busy streets to sell his items in Manila on November 21, 2012. AP/Aaron Favila
proposition “with the fact that the tax scheme under HB 4144—at P32 [$0.64] per pack for cigarettes with a net retail price of P11.50 and below, and P36 [$0.72] for those priced above P11.50—is still very low.” “At present, the price of cigarette in the Philippines remains one of the lowest in our region and is currently the fourth lowest in terms of tax as percent of price in Southeast Asia,” Cayetano said. “If the intention is to get more revenue, it is more logical to simply increase to a higher rate the unitary P30 [P31.20 if adjusted to inflation] applicable to all cigarettes. Why not P40, P50 or more?”
Pro-farmer?
ACCORDING to its proponents, HB 4144 aims to protect the welfare of Filipino farmers from tobacco-producing regions. “All of us will agree that the welfare of our people from whatever region they may be residing is of paramount concern,” Cayetano said. She explained, however, what Cua confirmed during the period of interpellation that the bulk of tobacco produce is used by tobacco manufacturers as fillers regardless of whether it is for premium or lowcost products. “Thus, they are unaffected by the change in pricing,” she said. “In addition, the structural adjustment fund for tobacco farmers, in which 15 percent of sin-tax revenues are allocated to them has long been in place to assist the farmers to transition to a more sustainable source of livelihood.” According to Cayetano, from 2013 to 2015, the fund has amounted to P24.6 billion.
Big burden
TOBACCO farmers belonging to the PTGA and the Philippine Aromatic Tobacco Development Association have, likewise, expressed their opposition to HB 4144. The two groups, which represent 50,000 tobacco farmers in the Philippines, believe the proposed bill is a measure that will introduce a big increase in tobacco tax. “Why is the House proposing to hit tobacco farmers again?” PTGA leader Saturnino Distor told the BusinessMirror. “We just had another big 20-percent excise-
tax increase just this January, and we don’t even know [yet] what the impact of that will be.” Distor said in his text message that they are calling on senators “to seek proper consultation and complete impact assessment before proceeding with any changes to the tobacco sin-tax law.” Distor said the passage of HB 4144 would be a “very big burden” to tobacco farmers because in every increase in tobacco tax there’s a decrease in the production quota of the tobacco buyers. According to Distor, since the passage of Republic Act 10351, the sin-tax reform law took effect in 2013. “And that year, production was at 67.644 million kilograms,” he said noting that by 2015 tobacco production went down to 51.946 million kg.”
Fair share
IN a separate statement the PTGA issued days ago, Distor was quoted as saying that tobacco farmers have been giving more than their “fair share” of contribution to the national coffers as excise taxes contributed around P100 billion in 2015, up from P32 billion in 2012 and are now more than two-thirds of the sin-tax take. He said HB 4144 is being “rammed down the throats” of Congress, and that farmers have never been consulted about the proposed measure. The Department of Agriculture (DA) said it also thumbs down the two-tier tax system on cigarette products being pushed by HB 4144, as it would hurt local farmers. “The DA supports the position of tobacco farmers,” Agriculture Secretary Emmanuel F. Piñol said. “I will direct the NTA [National Tobacco Administration] administrator to explain why the agency is taking a position that is not supported by stakeholders.” The DA chief made the pronouncement, after the NTA, an attached agency of the DA, reportedly threw its support behind HB 4144.
Down-shifting
MEANWHILE, Siquijor Rep. Ramon V.A. Rocamora said HB 4144 only encourages down-shifting and does not really curb smoking.
“The potential for the poorer smokers to stop smoking is actually higher if we have a unitary excise tax on cigarettes,” Rocamora said. “A unitary excise tax is implemented in Australia, Japan, Ireland and Thailand, and is considered a best practice globally. Why must we deviate from such global standard, when the current sin-tax law has been heavily debated during the 15th Congress?” Liberal Party Rep. Edcel C. Lagman of Albay said he voted against the bill, because the one-tier taxation for all kinds and brands of cigarettes “is precipitately jettisoned in favor of retaining a two-tier regime of P36 for premium cigarettes and P32 cigarettes for value or lower-priced cigarettes.” “The efficacy of the unitary system scheduled [this year] has not even been tested on the ground,” he said. “Long and even acrimonious debates had preceded the enactment of [STRA], which eventually installed starting 2017 the one-tier system of taxation. All of these debates and inputs will be put to naught with the enactment of HB 4144.” Lagman added the proposed bill is “antihealth,” echoing Rocamora’s view that the majority of cigarette smokers will be encouraged to shift downward to lowerpriced brands, instead of quitting smoking, because they could not afford or patronize the higherpriced premium cigarettes. “Consequently, HB 4144 defeats the purpose of reducing the number of smokers, as smoking is the single biggest cause of cancer in the world,” Lagman said.
Defenders
NONETHELESS, Cua, de Vera and Singson have defended the smooth passage of HB 4144. Cua said he believes the bill is a health and revenue measure that will help the country’s tobacco farming industry and promote public health. “It’s just like an imported Mercedes-Benz and an owner-type— would you impose the same sin tax of P1 million for both types of vehicle?” Cua said. “The bill, whether languishing or being fast-tracked in Congress, will still be questioned.” De Vera said he believes the bill is needed to help the country’s
tobacco farming industry. “I do not see the relevance of HB 4144 vis-à-vis the tax-evasion probe of any cigarette manufacturer or company,” de Vera said in a text message to reporters. According to de Vera, he filed the bill to reduce smoking, raise revenues of the government and protect the livelihood of tobacco farmers. He said the estimated additional revenues from the bill is P14 billion per year. “Prices of cigarettes will surely increase due to additional taxes, thus, discouraging smoking,” de Vera said.
Protection
ACCORDING to de Vera, the authors believe the bill will also protect cigarette factory workers, investors and cigarette manufacturers. He explained that with the proposed bill, locally produced tobacco, whether high grade or low grade, would be 100-percent purchased. De Vera added that the shares of tobacco planters pursuant to two laws will be increased. The laws he cited are RA 7171, or “An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces,” and RA 8240, or “An Act Providing for the Excise Tax Structure for Cigarettes and Liquor.” For his part, Singson said the measure will protect tobacco farmers, particularly in his province. “Our position is two tier, so our tobacco farmers will survive,” Singson said. “Two-tier will also allow all tobacco companies to survive, as local manufacturers that produce lower-priced cigarettes can sell at a lower price.” He said he is challenging all members of the chambers of commerce to come to Ilocos. “We can go to field at the time farmers are tilling their lands and they will understand why we are pushing for two-tier,” Singson said. “This position has been our position for 30 years that I have been in Congress.”
Probe support
SINGSON said in his text message to reporters that “any unlawful act, like tax evasion and smuggling, is the concern of the agencies concerned, preventing such to occur and compa-
nies to comply with the law.” He was referring to the allegations of a scam involving fake cigarette-tax stamps. “It is an enforcement issue,” Singson said. “I hope this will explain simply the issue we are fighting for.” According to Singson, 75 percent to 80 percent of the market is currently “under those who sell highpriced or premium cigarettes.” “Remove Anglo cigarette and Mighty, we won’t have a single Filipino-owned factory,” Singson said. “Is this what they call fair?” Singson added that, “unfortunately, they are the buyers of lowgrade tobacco and they use for lower price, which is much cheaper than the high grades that they use for premium cigarettes that are more expensive.” He declined to name who the “they” he is referring to. Cua, meanwhile, welcomed the expanded investigation being conducted by the BIR into the widespread use of fake tax stamps on cigarette packs to cover all manufacturers and importers. “I support the BIR in all its efforts to combat tax evasion,” Cua said. De Vera added it is fair and meritorious for the BIR to check the foreign firms to address serious concerns that the government is losing billions of pesos in revenues yearly through the said-taxavoidance scheme. “It is the duty of the BIR to run after tax evaders, more so those who fabricate fake stamps on cigarettes to avoid payment of excise taxes,” de Vera said. “However, there should at least exist factual basis before any probe and issuance of ‘Letter of Authorities’ for audit and assessment.” He added that such policy “should be applied equally with no arbitrariness observing the sporting idea of fair play.” Party-list Rep. Rodel Batocabe of Ako Bikol, president of the Party-list Coalition, asked the BIR to expand its campaign on all cigarette manufacturers. “That is laudable, so long as the campaign is sustained, unrelenting and transparent,” Batocabe said. “But the BIR should not confine itself with the tobacco industry but also to other big industries, which have significant leakages.”
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Thursday, February 2, 2017
The World BusinessMirror
Editor: Lyn Resurreccion • www.businessmirror.com.ph
briefs
Abe looks to create US jobs after Trump hits Japan on trade
Many U.K. lawmakers signal they’ll back govt’s Brexit bill
LONDON—Dozens of British lawmakers said on Tuesday they will vote to authorize the start of European Union exit talks— signaling likely victory for the government on the vote it had fought in court to avoid. The House of Commons began a two-day debate on a bill that lets Prime Minister Theresa May trigger two years of divorce negotiations, as the government races to meet a self-imposed March 31 deadline to begin the process. The government was forced to introduce legislation after a Supreme Court ruling last week torpedoed May’s effort to start the process of leaving the 28-nation bloc without a parliamentary vote. AP
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U.S. watchdog offers bleak statistics for Afghan progress
KABUL, Afghanistan—A United States watchdog has issued a bleak report, its first to the Trump administration, saying the Afghan government controls barely half the country, its security forces numbers are declining and that drug production is on the rise while eradication is down. The report by the Special Inspector General for Afghan Reconstruction (Sigar) says the one bright spot is a noticeable drop in corruption when procuring goods and services. The 269-page report was released on Wednesday. John Sopko, who came to Sigar in 2012, said it was a good opportunity for the new administration to reflect on the $117 billion Washington has invested in Afghanistan’s reconstruction and security forces since 2002. AP
Mystery over Chinese tycoon’s disappearance from Hong Kong
HONG KONG—Mystery surrounds the whereabouts of a Chinese-born Canadian billionaire reportedly taken away from his Hong Kong hotel by mainland police, in a case that could rekindle concerns about overreach by Chinese law enforcement in the semiautonomous city. Chinese police officers escorted Xiao Jianhua from his suite at the luxury Four Seasons Hotel last Friday, according to overseas Chinese news sites that carry reports of political gossip and unverified corruption scandals. Xiao is the founder of Beijingbased Tomorrow Group, a wellconnected financial services company, and is worth nearly $6 billion, according to the Hurun Report, China’s version of the Forbes Rich List. It’s unclear why Xiao has been targeted. China’s Ministry of Public Security and Foreign Ministry did not respond to requests for comment on Wednesday, a public holiday in China. AP
Premier: Mosque shooting shows Quebec has its ‘demons’
QUEBEC CITY—Quebec’s premier acknowledged on Tuesday that his French-speaking province has its “demons” in terms of attitudes toward Muslims, but he said it is generally open and accepting, despite this week’s deadly attack on a mosque and long-simmering debates about religious accommodation. “Xenophobia, racism and exclusion are present here,” Premier Philippe Couillard said at a news conference. “We have to acknowledge that and work together.” Couillard was grilled by reporters two days after a man entered a Quebec City mosque and shot six people to death and wounded 19. French Canadian university student Alexandre Bissonnette, 27, has been charged with murder and attempted murder in the massacre. Bissonnette was a fan of French far-right leader Marine Le Pen and US President Donald J. Trump. AP
President Donald J. Trump shakes hands with Judge Neil Gorsuch, his nominee for the vacant Supreme Court seat, at the White House in Washington on January 31. Gorsuch was appointed to the United States Court of Appeals for the Tenth Circuit by George W. Bush. His wife, Louise Gorsuch, is at right. Stephen Crowley/The New York Times
Court pick sets up political clash as Democrats vow fight
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ASHINGTON—President Donald J. Trump on Tuesday nominated Judge Neil M. Gorsuch to the Supreme Court, elevating a conservative in the mold of Justice Antonin Scalia to succeed the late jurist and touching off a brutal, partisan showdown at the start of his presidency over the ideological bent of the nation’s highest court.
Trump announced his selection during a much-anticipated ceremony that unfolded in prime time in the White House. He described Gorsuch, a federal appeals court judge based in Denver, as “a man who our country really needs, and needs badly, to ensure the rule of law and the rule of justice.” “Judge Gorsuch has outstanding legal skills, a brilliant mind, tremendous discipline and has e a r ne d bipa r t i s a n s up p or t ,” Trump said, standing beside the judge and his wife, Louise, as an audience of White House officials and Republican lawmakers looked on. “It is an extraordinary résumé—as good as it gets.” But Democrats—embittered by Republican refusals for nearly a year to consider President Barack Obama’s choice to succeed Scalia and inflamed by Trump’s aggressive moves at the start of his tenure—promised a showdown over Gorsuch’s confirmation. Along with liberal groups who for weeks plotted an intensive fight against whomever Trump would select, leading Democrats signaled they would work to turn the Supreme Court dispute into a referendum on the president himself and what they contend is his disregard for legal norms and the Constitution.
60
The number of Senate votes Supreme Court justice nominee, Judge Neil M. Gorsuch, to overcome a filibuster for his confirmation
The announcement came at a particularly tumultuous moment in what has been an extraordinarily chaotic beginning to Trump’s presidency. Just a day earlier, he dismissed the acting attorney general when she refused to defend his hardline immigration order, after a furor across the United States over what critics condemned as a visa ban against Muslims. “Now, more than ever, we need a Supreme Court justice who is independent, eschews ideology, who will preserve our democracy, protect fundamental rights and
will stand up to a president who has already shown a willingness to bend the Constitution,” Sen. Chuck Schumer of New York, the Democratic leader, said in a statement. “The burden is on Judge Neil Gorsuch to prove himself to be within the legal mainstream and, in this new era, willing to vigorously defend the Constitution from abuses of the executive branch and protect the constitutionally enshrined rights of all Americans,” Schumer said. He said he would insist that Gorsuch meet the 60-vote threshold needed in the Senate to overcome a filibuster for his confirmation to move forward. That would either require eight Democrats to join the Senate’s 52 Republicans to advance the nomination or force Republicans to escalate a parliamentary showdown—as Trump has already urged them to do—to change long-standing rules and push through his nominee on a simple majority vote. Republicans and conservative groups signaled they relished a war over Gorsuch’s confirmation. “I hope members of the Senate will again show him fair consideration and respect the result of the recent election with an upor-down vote on his nomination, just like the Senate treated the four first-term nominees of Presidents [Bill] Clinton and Obama,” said Sen. Mitch McConnell, Republican-Kentucky, the majority leader. He noted that the Senate confirmed Gorsuch without opposition to his current seat on the 10th US Circuit Court of Appeals. Car r ie Sever ino, t he chief counsel for the Judicial Crisis Network, a conservative group t h at i m me d i at e l y s t a r t e d a $10-million campaign to defend Trump’s nominee, said the coalition would mount intensive campaigns in crucial states to “ force vulnerable senators to choose between obstructing and keeping their Senate seats.”
If confirmed, Gorsuch would restore the 5-4 split between conservatives and liberals on the court, handing Justice Anthony M. Kennedy, who holds views on legal issues on both sides of the political spectrum, the swing vote. At 49, Gorsuch (pronounced gore - s utc h) i s t he you n gest nominee to the Supreme Court in 25 years, underscoring his potential to shape major decisions for decades to come. In choosing him, Trump reached for a reliably conservative figure in Scalia’s mold but not someone known to be divisive. Trump, who recognized Scalia’s wife, Maureen, in the audience as he announced his choice, heaped praise on the “late, great” jurist, saying his “image and genius was in my mind throughout the decision-making process.” Gorsuch said he was humbled by his “most solemn assignment.” “I will do all my powers permit to be a faithful servant of the Constitution and laws of this great country,” he said. He also praised Scalia as “a lion of the law.” The announcement reopened the bitter wounds that dominated the political battle last year over Obama’s nominee for the seat, Judge Merrick B. Garland. Republ icans ref used even to consider—much less support— his nomination in the thick of a presidential campaign. A Colorado n at ive who w a s i n t he s a me c l a ss at H a r v a rd L aw Sc hool a s Oba m a , G or suc h i s k now n for h i s we l lw r it te n , me a s u re d o pi n ion s t h at a re nor m a l ly, a lt hou g h not e xc lu sive ly, conser vat ive. He holds a doctorate from Oxford University, where he was a Marshall Scholar, and a pedigree as a law clerk at the Supreme Court to Justices Byron R. White and Kennedy. President George W. Bush nominated Gorsuch to the federal bench in 2006. New York Times News Service
apanese Prime Minister Shinzo Abe plans to discuss creating jobs and building infrastructure in the US during a meeting with President Donald J. Trump next week to defuse his concerns over trade. Discussions between the leaders at the February 10 meeting in Washington should focus on the full range of economic ties rather than just two-way trade, Abe told a parliamentary committee on Wednesday. Upon taking office, Trump pulled out of an Asia-Pacific trade deal backed by Abe and called the trade imbalance with Japan on vehicles “unfair”. “The question is whether it’s enough to look only at the difference between exports and imports—I don’t think so at all,” Abe told the committee. “Through our close economic ties, we have both profited greatly,” he said, adding, “It’s important for us to share that perception.” Abe is anxious to maintain warm ties with the US, Japan’s only treaty ally that provides a “nuclear umbrella” to deter threats from a rising China and unstable North Korea. Abe signaled last week that he was open to a bilateral trade deal with the US, Japan’s second-largest trading partner behind China. Abe’s suggestions in parliament for improving ties included: creating employment in the US, including by Japanese companies; helping improve US industrial productivity and competitiveness; and cooperating on Trump’s infrastructure plans The Mainichi newspaper reported earlier that the Japanese government was preparing a package on economic cooperation to present to the Trump administration, including increasing purchases of US shale gas and investing in high-speed rail projects in California and Texas. Abe, this week, pushed back on Trump’s remarks that Japan had made it “impossible” for US manufacturers to sell cars in the country, telling lawmakers on Monday that a lack of advertising and dealerships played a role. On Wednesday he focused on the benefits Japanese automotive companies have brought to the US economy, saying they’ve directly and indirectly created 1.5 million jobs. Abe was set to meet Toyota President Akio Toyoda on Friday, prior to the trip, Kyodo News reported this week. Bloomberg News
China’s factory PMI shows stabilization carried into 2017
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hina’s official factory gauge started the new year on a robust note, giving policy-makers a buffer to transition to neutral policy settings as they prepare for potential trade tensions with a Donald J. Trump-led White House. Manufacturing purchasing managers i n d e x ( PMI ) w a s 5 1 . 3 i n J a n u a r y, compared with a median estimate of 51.2 in a Bloomberg survey of economists and 51.4 last December. Nonmanufacturing PMI w a s a t 5 4 . 6 ve r s u s 5 4 . 5 l a s t December. Numbers higher than 50 indicate improving conditions China notched a 6.7-percent fullyear expansion last year, with growth quickening to 6.8 percent in the last quar ter. Early private indicators for Januar y, such as readings based on satellite views, suggest manufacturing remained robust into 2017. The slight pullback from December 2016 may have much to do with seasonal effects as the weeklong Lunar New Year holiday typically weighs on the manufacturing reading in January and February. This year the holiday started on January 27, shutting factories across the nation. “We believe that the manufacturing sector will continue to underperform the services sector,” analysts at BMI Research, Fitch Group’s research arm, wrote in a note. “Weaker domestic demand and an uncertain external environment due to rising US protectionism will weigh on the former, while services will benefit from continued investment by the government and the private sector.” “It’s a good number,” said Iris Pang, senior economist for Greater China at Natixis Asia Ltd. in Hong Kong. She said the performance was most likely driven by new manufacturing sectors, such as industrial robots and new energy cars. At the same time, a reduction of excess capacity in the coal and steel industries is also helping. Bloomberg News
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Asean Community Vision 2025 Asean-EU Perspective
HENRY J. SCHUMACHER
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iven the Philippine Chairmanship of Asean in 2017 and the 50th Anniversary of Asean on August 8, 2017, it may be worthwhile to look at key points of the Asean Community Vision 2025, signed by the 10 Leaders of Asean on November 22, 2015, in Kuala Lumpur on the occasion of the 27th Asean Summit: We, the heads of state/government representing the peoples of the member-states of the Association of Southeast Asian Nations (hereinafter referred to as Asean), gather here on Wednesday at the 27th Asean Summit in Kuala Lumpur, Malaysia, to celebrate the formal establishment of the Asean Community 2015 and to chart the Asean Community Vision 2025. We recall the Asean vision of an integrated, peaceful and stable community with shared prosperity built upon the aspirations of and commitment to the Treaty of Amity and Cooperation in Southeast Asia, the Asean Vision 2020, the Declaration of Asean Concord II, the Asean Charter, the Roadmap for an Asean Community (2009-2015) and the Bali Declaration on Asean Community in a Global Community of Nations. We are pleased that the positive progress made since 2009 in implementing the Roadmap for an Asean Community comprising the Asean Political-Security Community, Asean Economic Community and Asean Socio-Cultural Community Blueprints, as well as the Initiative for Asean Integration (IAI) Strategic Framework and the IAI Work Plan II (2009-2015) and the Master Plan on Asean Connectivity has led us to another important milestone in Asean development, namely, the formal establishment of the Asean Community 2015. We resolve to consolidate our community, building upon and deepening the integration process to realize a rules-based, people-oriented, people-centred Asean community, where our peoples enjoy human rights and fundamental freedoms, higher quality of life and the benefits of community-building, reinforcing our sense of togetherness and common identity, guided by the purposes and principles of the Asean Charter. We envision a peaceful, stable and resilient community with enhanced capacity to respond effectively to challenges, and Asean as an outward-looking region within a global community of nations, while maintaining Asean centrality. We also envision vibrant, sustainable and highly integrated economies, enhanced Asean connectivity, as well as strengthened efforts in narrowing the development gap, including through the IAI. We further envision Asean empowered with capabilities, to seize opportunities and address challenges in the coming decade. We underline the complementarity of the United Nations 2030 Agenda for Sustainable Development with Asean community-building efforts to uplift the standards of living of our peoples. Asean 2025: Forging Ahead Together 14 Asean Political-Security Community. Our Asean Political-Security Community by 2025 shall be a united, inclusive and resilient community. Our peoples shall live in a safe, harmonious and secure environment, embrace the values of tolerance and moderation, as well as uphold Asean fundamental principles, shared values and norms. Asean shall remain cohesive, responsive and relevant in addressing challenges to regional peace and security, as well as play a central role in shaping the evolving regional architecture, while deepening our engagement with external parties and contributing collectively to global peace, security and stability.
Moving forward
IN order to achieve our Asean Community Vision 2025, we shall realize a community with enhanced institutional capacity through improved Asean work processes and coordination, increased effectiveness and efficiency in the work of Asean organs and bodies, including a strengthened Asean Secretariat. We shall also realize a community with increased Asean institutional presence at the national, regional and international levels. We, therefore, task the Asean Community Councils to fully and effectively implement the commitment contained in the Asean 2025: Forging Ahead Together and to submit their reports to the Asean Summit, in accordance with the established procedure. We pledge to our peoples our resolve to realize a rules-based, people-oriented, people-centred Asean of “One Vision, One Identity, One Community”.
Editor: Max V. de Leon • Thursday, February 2, 2017 A9
Indonesia hits Trump shift to protectionism
U
NITED States President Donald J. Trump’s trade policies could dash the hopes of emerging Asian economies seeking to emulate China’s early development, according to former Indonesian Finance Minister Chatib Basri. Signs that Trump is embarking on an era of American protectionism —heightened after he nixed the USled Trans-Pacific Partnership (TPP) pact and by his threats to start a trade war with China—are causing anxiety across Southeast Asia. Indonesia, which was not a party to the TPP but had said it would consider joining, is now focusing on an alternative Asia deal that China has begun championing. At stake for less developed, but relatively open, economies is the ability to sustain economic growth rates that for Indonesia at least have hovered around 5 percent, helping lift more of its people into the middle class and giving a large youth population access to jobs. Trade and investment from the US and China, alongside Japan, has helped propel that. “In the past, emerging markets could have relatively high growth because they could focus their strategy on industrialization and trade,” said Basri, who was finance minister from 2013-2014 and a former chairman of the country’s Investment Coordinating Board. “Now, with the Trump protectionism, they cannot go with trade again.” Japan, China, Korea, Taiwan and Singapore were aided in becoming industrialized nations, as the global economy was open at the time, Basri added. “The rest of the emerging markets probably cannot repeat the success story.” Facing other headwinds, including a rate-cutting cycle that looks to have ended, Indonesia is the world’s worstperforming emerging stock market since the election of Trump and the only developing Southeast Asian exchange to see outflows this year. Emerging economies, generally, will struggle in the face of Trump’s policy shifts, with Russia likely one of the few beneficiaries, according to a report from Nomura Holdings Inc. It warned that US protectionism and possible
retaliatory measures could intersect with geopolitical tensions, with “no shortage of potential flash points”, including the South China Sea and the Korean peninsula. While US fiscal stimulus would be a plus for emerging markets, a faster Federal Reserve rate hike cycle and a stronger US dollar expose such markets to capital outflows and credit defaults, it said. “Emerging markets’ economic starting positions already vary greatly and Trumponomics stands to further widen this chasm.”
Spotlight on RCEP
President Joko Widodo had been weighing whether to join the TPP, once seen as the centerpiece of US economic engagement in Asia. Its demise has thrown the spotlight on the Regional Comprehensive Economic Partnership (RCEP), a different deal that currently includes China and not the US and was initiated by the Association of Southeast Asian Nations (Asean). “If we’re considered as an exportdriven country then I believe with that situation, we would have to be a little bit anxious here about what is really going to happen, although,
In the past, emerging markets could have relatively high growth because they could focus their strategy on industrialization and trade.”—Basri
this is still in the early part of the administration of Trump,” said Ade Petranto, director for Asean economic cooperation with Indonesia’s foreign ministry. The immediate priority for Indonesia, Petranto said, “is that we would like to see the progress of the RCEP.” The next round of talks is planned for February in Japan. “We have a big expectation that there could be more progress within this year,” he said of the 16-nation pact that aims to levy tariffs and rules on the region’s supply chains, liberalize investment and introduce dispute-resolution mechanisms. Unlike the TPP, it wouldn’t require steps to protect labor rights or improve environmental standards. Still, even with progress on RCEP, and a fresh push on bilateral deals, momentum for free trade is at risk of slowing. And a potential trade war between the US and China could have ripple effects on Southeast Asia, even as President Xi Jinping speaks publicly about China’s
support for globalization. China is Indonesia’s largest trading partner. While Indonesia is one of the least trade-dependent economies among its neighbors, its exports surged almost 16 percent in December last year, with Southeast Asia’s biggest economy notching up a trade surplus of $8.8 billion across 2016. The recovery in both exports and imports was spurred by stronger commodity prices. Other Asian nations have been tracking a similar path, with Singapore’s exports climbing 9.4 percent last December from a year earlier. China’s economy, meanwhile, has been slowing—last year it expanded at its slowest pace in a quarter of a century—and could be hurt more if Trump slaps big tariffs on the country’s goods. For that reason Basri, who was in office for the initial stages of the Asean-led RCEP, said any trade deal that does not include the US “will not be optimal.” “The three largest locomotives of trade are the US—it’s the largest— the EU [European Union] and China. The EU is slowing down now, especially after Brexit. China is slowing down. So the only hope is the US,” he said. “But if Trump seriously implements these protectionist measures then this high economic growth in the US will not have a positive impact on Indonesia, because he will erect barriers.” Lurong Chen, an economist at the Economic Research Institute for Asean and East Asia, said globalization provided a reform-friendly environment for nations like Indonesia. “Any setback of this process tends to increase the difficulty in promoting domestic economic reform.” Bloomberg News
Thai military authorities seek return of political foes taking refuge in Laos
T
hailand’s military government wants neighboring Laos to send back about halfa-dozen Thai citizens who have reportedly taken refuge there to escape being arrested for insulting the Thai monarchy, a crime punishable by up to 15 years in prison. Gen. Thawip Netniyom, head of Thailand’s National Security Council, said on Tuesday the people being sought used social media to attack the monarchy. He said the Defense Ministry has assigned him to seek a meeting with Laotian officials and work out a deal, which could include the exchange of people sought by each country.
The wanted persons are associated with the Red Shirt movement, which opposes the military government that seized power in 2014 and generally supports former Prime Minister Thaksin Shinawatra, who was deposed by a 2006 military coup. Anticipating a crackdown, a number of highprofile critics of the military fled Thailand in the aftermath of a 2014 military takeover. The army said after seizing power in 2014 that protecting the monarch would be a top priority, and has scoured the Internet for lese majeste cases, pursuing many in military court. Critics charge that the law is being used to ha-
rass and punish the government’s political opponents. “Although Thailand and Lao PDR do not have an official agreement to extradite suspects, we can proceed in terms of mutually beneficial cooperation. If Laos wants a criminal who violated the law in Laos and is hiding in Thailand, they may ask Thai officials to make an arrest and send that person back,” Thawip said. Thai news reports earlier said Thailand had thanked Laotian authorities for shutting down an antimonarchy radio station, but it was unclear if it referred to overthe-air broadcasting or Internet radio. There are many web sites
and YouTube channels produced by opponents of Thailand’s military regime. Defense Ministry Spokesman Kongcheep Tantravich said the people being sought “are causing divisiveness to another country. They are smearing the government and smearing the institution, which is dangerous.” The monarchy is often described with respect as “the institution.” Kongcheep told The Associated Press that “They are not suspects, they are dangerous people.” “This is more of an exchange of prisoners between one country and another,” he said. “They have some and we have some. We are
exchanging information and we will see what we get out of it.” Laos, a single-party state governed by a communist party, tolerates no political dissent. The Red Shirts are a legacy of the 2006 coup against Thaksin that set off a decade of sometimes violent struggle for political power that reached its zenith in 2010, when the supporters of Thaksin took to the streets of Bangkok for two months to demand that a government run by a rival party step down. They were supported by a small number of armed men, dubbed “men in black”, for their attire and air of mystery.
The army violently crushed the demonstrators, with about 90 people—mostly civilians on the Red Shirt side—killed over the course of the two-month protest. Bangkok Criminal Court on Tuesday sentenced two men to 10 years’ imprisonment after finding them guilty of taking part in an armed attack by men in black on military forces who were trying to break up the protest, said Winyat Chatmontree, a legal aid lawyer who represented the defendants. They were convicted on charges of unauthorized possession of war weapons, while three other defendants were acquitted. AP
A10 Thursday, February 2, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
How PNP chief ‘Bato’ can carve his name in stone
A
T a news conference in Malacañang, President Duterte admitted widespread corruption in the police force that is waging his war on drugs. His admission gives credence to reports that more than a third of the 170,000-strong Philippine National Police (PNP) are engaged in illegal activities. Berating the antidrug officers who allegedly masterminded the kidnapping for ransom and murder of a South Korean businessman, the President fumed: “You are corrupt to the core. It’s in your system.”
The President named the head of the Anti-Illegal Drugs Group, Supt. Rafael Dumlao III, as the mastermind of the abduction of Jee Ick-joo, who was taken from his home in Angeles City, Pampanga, in October last year and killed inside the PNP headquarters in Camp Crame. Witnesses said Jee’s body was cremated and his ashes flushed down the toilet. The President has apologized to the Koreans for the incident and assured Jee’s widow, Choi Kyung-jin, that justice would be served. Following his admission that rogue policemen have taken advantage of his antidrug campaign to commit murder, robbery and extortion, the President ordered National Police chief Director General Ronald “Bato” dela Rosa to purge the PNP of misfits. Dela Rosa has already disbanded all police antinarcotics units and stopped the PNP’s war on drugs. “No more antidrug operations. We have to focus our efforts toward internal cleansing,” he said. How the PNP chief intends to cleanse the country’s police force plagued by corruption and allegations of abuses is anybody’s guess. We’re not saying the PNP chief can’t restore professionalism in the ranks to regain public trust. But the job of cleansing an extremely corrupt PNP is, indeed, a daunting task. First, the top cop needs to shore up discipline in the ranks and restore professionalism. To do this, there’s a need to stop the “fraternity mentality” within the organization, which had seemingly emboldened police officers to be involved in criminal activities. In other words, there’s a need for a massive purge of policemen involved in crimes. The formation of a counterintelligence task force to oversee the purge of the ranks and “police the police” is a good move. But the PNP chief must ensure that the task force members are beyond reproach to avoid another black eye for the PNP. The PNP chief must also listen to other voices that want to help in his fight against rogue cops. For example, the Volunteers Against Crime and Corruption (VACC) claimed that the reason there’s an “unlimited supply” of rogue policemen in the PNP, despite efforts to weed them out, is an alleged “recycling” in the National Police Commission (Napolcom). VACC said police officers with pending cases are being reinstated in exchange for a fee. This is a serious allegation that needs immediate action. To his credit, the President has ordered a review of PNP records to determine how rogue officers who had been dismissed managed to return to the service. Hopefully, the review of the reinstatements and of scheduled reinstatements, which will be done immediately, will also unearth the corruption at the Napolcom and at the Regional Appellate Board. Dela Rosa has said he wanted to spend his remaining 11 months at the helm of the PNP to restore the good name of the police. As we said earlier, this is a daunting task. However, Bato can carve his name in stone if he can banish the rogue cops from the PNP organization for good.
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BusinessMirror A broader look at today’s business
The decline and fall of the West John Mangun
OUTSIDE THE BOX
W
hile totally inappropriate, I take some satisfaction in seeing the West, and particularly the United States, imploding before our eyes. This is because it strengthens the premise that the economic and political cycle is moving the center of global power to Asia.
In his epic The History of the Decline and Fall of the Roman Empire, English historian Edward Gibbon attempted to make sense of why the longest, largest and strongest empire in history crumbled to dust. There are some interesting parallels between then and now. Gibbon postulated that, as Christianity took root with the belief in a better life after death, it created an attitude of indifference toward the individual making a sacrifice. Government is now the Divine Being that is expected to provide for all the
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ver content was virtually zero. The relative purchasing power of the US dollar in 1913 was 100 cents. Today it is 4 cents. However, as my good friend Ambassador “Teddy Boy” Locsin Jr. argues, the US and, by extension, the West has the strongest military in the world. Yet, the hard and large US military did not keep China from seizing the South China Sea. “Hard and large” did not prevent Russia from taking Crimea. And no, Russia is not part of the West. Gibbon also argues the Romans lost their “military sprit”, unwilling to wield the hard and large military power at their disposal. The cycles keep on turning toward Asia as the decline and fall of the West continues. The global political and economic center of gravity has always moved from ancient Persia 2,500 years ago and now once again back to Asia.
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America First: Where is Trump leading the world?
✝ Ambassador Antonio L. Cabangon Chua Publisher
peoples’ needs. With the movement toward a “guaranteed income” supplied by government, why would anyone make the sacrifice of a life of labor to build the nation’s economy for future generations? Prayers to the gods have been replaced by votes for the government officials. The once important and ancient concept of “civic virtue”—the dedication of citizens to the common welfare even at the cost of their individual interests —no longer exists in the West. The Roman Praetorian Guard is
seen by Gibbon as a cause of the empire’s initial decay and eventual collapse. Originally designed as an elite military unit to protect the empire, it evolved into a political force answerable to the emperor but also becoming so powerful as to select who should become emperor before any input by the Roman Senate. The Guard acted as the government’s secret police. Today when the government wants to monitor the people and their opinions and actions, it calls Google, Facebook and the cell-phone network providers. In return, government privacy laws are “flexible”, as those companies use your personal information in the hunt for profits. Where is the line between “big business” and “big government”? The fall of Rome tracked the debasement of the currency. As Martin Armstrong writes, “During the Republican days, 25 denarii paid 52 percent of the cost of his family’s annual needs for grain. By the 3rd century AD, it would take 6,000 denarii to create the same standard of living”. In 75 AD, the Roman Denarius was 95-percent silver; by 268 AD, the sil-
Continued from A1 n Application of duties on “foreign articles which are the rivals of the domestic ones intended to be encouraged”; n Prohibition of the “exportation of materials of manufactures”, meaning keeping within America materials needed by domestic industry; n “Exemption of the [raw] materials of manufactures from duty”; and n “The encouragement of new inventions and discoveries, at home, and of the introduction into the US of such as may have been made in other countries, particularly, those which relate to machinery.” As a result of the foregoing, America was transformed from an agrarian colony to an industrial power like Britain. At the turn of the 20th century, the US was using its industrial might to push for a redivision of the world, looking for developing countries to colonize or recolonize, such as the Philippines. It was only in the second half of the last century that the US start-
ed reducing its high protectionist walls. As Ha-joon Chang, author of Kicking Away the Ladder (Anthem Press, 2002), put it: once they were able to climb the higher rungs of the industrial ladder, the US and other developed countries embraced the free-trade ideology to become ardent proponents of economic deregulation and investment liberalization in all countries participating in trade agreements, such as those being implemented by the World Trade Organization. In short, the idea is to create bigger markets for American industries. Still America First. So, how come Trump is backing out of the TPP and Nafta and why is he building a US-Mexico wall? The quick answer is that Trump, the demagogic politician, has seen the impact of globalization on America’s industrial base. Instead of expanding at home, the big American companies treated the whole world as a production base under their global production networks (GPNs). Thus, instead of creating jobs in America, Apple allowed its GPN contractors and subcontractors, like Foxconn, to build the labor-intensive iPhone
President Trump saw the impact of globalization on America’s industrial base. Instead of expanding at home, the big American companies treated the whole world as a production base under their global production networks (GPNs). Thus, instead of creating jobs in America, Apple allowed its GPN contractors and subcontractors, to build the labor-intensive iPhone parts in China, not in the US.
parts in China, not in the US. Instinctively, the voters in the American “rust belt” chose Trump’s America First and rejected Hillary Clinton whose husband, Bill Clinton, expanded Reagan’s privatization program into a large-scale liberalization of the American economy in the 1990s. Of course, the reality is far more complex. Trump’s conglomerate has also been a major investor in hotel and real-estate business outside America, including the Philippines. It has also been importing clothing from Mexico and China to market the Trump brand. And some of Trump’s Cabinet nominees have been exposed as big outsourcers, like his Labor Secretary Andrew Puzder, who relocated Puzder’s help desk informationtechnology work in the Philippines. What is clear is that Trump is not prepared to abandon the global
capitalist system that has evolved under the Washington Consensus free-trade rules of the last four decades. Trump is simply trying to shake the system in a unilateral manner to reaffirm America’s leadership in the global capitalist order while placating America’s jobless by pressuring American companies to build more factories at home. Trump is also pushing for more bilateralism in trade relations because the US can easily dominate individual trading partners. It is also trying to rebuild an Anglo-American alliance in the wake of the British pullout from the European Union. In the meantime, the US is calling for sanctions against Chinese export dumping. Obviously, the world is at the throes of a new stage or phase of global capitalist development. The dogmatic neo-liberal economists must be squirming in their pants over Trump’s trade unilateralism. But in the meantime, what is the Philippines doing? Will the country’s economic technocrats remain committed to their idealized vision of a global free-trade order, which Trump is now unilaterally tearing apart? Is the look-toward-China policy a sensible strategic policy adjustment? Will they continue relying on more jobs being outsourced to the Philippines by our trading partners, or will they push for a more self-reliant economic development program to insulate the country from the blusters and unilateralism of the Trumps of the world?
opinion@businessmirror.com.ph
Opinion
Braving the Brexit blues
Salt of the earth
BusinessMirror
Ariel Nepomuceno
Msgr. Sabino A. Vengco Jr.
DECISION TIME
Alálaong Bagá
O
N June 24, 2016, the world was shocked and a bloodbath at the global stock market occurred when the Britons, after intense campaigning waged by both the leavers and those who wish to remain, voted to get out of the European Union (EU). The EU is composed of 28-member European states, like the United Kingdom, France, Germany and Italy, among others. It was created as a tool for unity, and one of its original objectives was to deter and prevent conflicts among aforementioned states. Through the years, it has effectively evolved into a group that seeks to advance the economic interests of each member-state while ensuring peace and amity in the region.
Early challenges But what started the UK’s jitters about being in the EU? Basically, large segments of the UK population felt that it was grossly unfair for the country to contribute more to the EU budget, because it was faring better than the others. Why should they suffer for the nonperformance of their neighbors? Another big issue, and an extremely emotional one, was the growing number of immigrants admitted to the UK, particularly from Eastern Europe, now competing for health, educational and other social services with local Britons. Crowded hospitals, jam-packed train stations, parks with numerous homeless foreigners and the increasing threat of terrorism have somehow created dissatisfaction among the populace about the disadvantages of EU membership. Some of the notable UK political leaders grabbed the chance to leverage on this sentiment to bolt out of the EU. And then June 24 happened.
Post-exit paranoia Soon after the referendum, financial, political and social analysts jumped on the matter and provided different perspectives, some even going to the extent of making doomsday scenarios, courageous predictions about the “end of the world” for certain jurisdictions that will directly get hit by a UK that is no longer hard-core European. The immediate effect of the Brexit vote was felt in the Philippines, when local stocks fell 1.29 percent, and about $2 trillion in value lost in the global stock markets. The peso was impacted as it depreciated to about 49.90 against the dollar during that fateful day. Local equities also heavily suffered.
Why worry about Brexit? The first concern is the domino effect of a full Brexit implementation to the international financial markets. If the latter plunges, the Philippine market may suffer, too. The second point is trading. Our exports to the UK have not been top heavy for the past two years. Brexit can make our export situation even worst. Third, and the most important of all, is related to our immigrants and overseas Filipino workers (OFWs) in the UK. We have about 200,000 Filipinos who are living there and remittances from our overseas Filipino workers in UK amount to close to 6 percent of the total OFW remittances in 2015. The backlash of anti-immigration sentiments will also affect our nurses, caregivers and professionals who earn well in that part of the world.
Reality on the ground But all these possible adverse effects may only be transitory. The Philippines’s strong economic fundamentals, fiscal discipline and consistently increasing domestic consumption can help it withstand Brexit. Our economy is still considered by the international financial community as one of the most resilient and rocksteady ones in Asia. According to economists and our Central Bank, higher spending on infrastructure, greater disposable incomes and regular OFW remittances would keep our competitive growth rate, despite Brexit. In fact, Budget Secretary Benjamin E. Diokno opined that our problems are largely domestic—the usual issues with infrastructure, doing business, agricultural productivity, and other related challenges should be the ultimate focus and not Brexit. The anti-immigration flavor of the Brexit initiative and Trump’s America for Americans are now being linked together. Again, this smells like trouble for some international observers. Will these events affect the Philippines in the long run? Vigilance and awareness is key. The world is, indeed, getting smaller every day. Trump or Brexit, our country must be prepared—for dire consequences or for opportunities.
For comments and suggestions arielnepo.businessmirror@gmail.com.
A
fter pointing out to His disciples the indispensability of the inner dispositions like poverty in spirit, cleanness of heart, hunger for justice, Jesus reveals to them their dignity and responsibility in society, therefore, as “salt of the earth” and “light of the world” (Matthew 5:13-16).
No mere flavoring The metaphor of being salt of the earth does not mean being merely like a flavoring for food (Job 6:6), but something that purifies persons and things (Exodus 30:35; Ezekiel 16:4; Judges 3:45). Salt fertilizes the soil (Luke 14:35) and preserves from decay. In reference to Christ’s disciples, it means some quality and ability contributing to the enhancement of humanity. To make a substantial difference in being of service to others is what is here emphasized. If salt loses its natural properties, i.e., if Christians are untrue to their own nature, they would be irrelevant to humanity, “no longer good for anything but to be thrown out”. To fail in
All About Social Security Part One
B
efore the end of 2016, the new Social Security Commission (SSC), the policy-making body of the Social Security System (SSS), had been appointed by the Duterte administration.
Under Republic Act (RA) 8282, also known as the social-security law, the SSC shall be “composed of the secretary of labor and employment or his duly designated undersecretary, the SSS president and seven appointive members, three of whom shall represent the workers’ group, at least one of whom shall be a woman; three from the employers’ group, at least one of whom shall be a woman; and one from the general public, whose representative shall have adequate knowledge and experience regarding social security, to be appointed by the President of the Philippines”. Under the present administration, appointed as chairman of the SSC is
the former dean of the University of the East College of Law and employer representative Amado D. Valdez; SSS president and CEO is former Insurance Commissioner Emmanuel F. Dooc. Also sitting in the SSC are Labor Secretary Silvestre H. Bello III as ex officio member; three labor representatives: Arthur L. Amansec, Gonzalo T. Duque and Anita B. Quitain; two other employer representatives: Diana Pardo-Aguilar and Jose Gabriel M. La Viña; and representing the public Michael G. Regino. Dean Valdez heads the governing board that is responsible in the governance of the SSS in terms of providing policy directions, monitoring
Children of light
Two Sundays ago we were presented Jesus as “the great light” that
shone on those living in darkness (Matthew 4:12-16), the messianic dawn and coming of the “light for the nations” making God visible to humankind (Isaiah 42:6; 49:6). Now the followers of Jesus are called through their baptism and confirmation to be bearers of this messianic light and to live as children of light (Ephesians 5:814)—like the moon reflecting the light of the sun. As the light of the world, they must not be hidden, just as a city on a hilltop cannot but be visible. Or like a lamp that is placed on a stand precisely to have it cast its glow on those in the house. The mission of Christians in this one world we are in is to be a source of light, however modest, radiating the needed light to others. The similes of salt and light bring out the ecclesial concern that Christians be true to their mission in the world all together. No one, however charismatic, can do it alone and be the light of the world or the salt of the earth. One isolated candle cannot cast much light, but individual lights burning in all the houses make a community built on the brow of a hill very noticeable, indeed, from afar. Numerous little lamps lighted
Taxing oil in economic zones is illegal
every Sunday, 5 to 6 a.m. on dwIZ 882, or by audio-streaming on www.dwiz882.com.
opposed by the FEZ locators, and the Supreme Court (SC) has sided with them. RR 2-2012 was recently struck down as illegal and unconstitutional (GR 210588, November 29, 2016). The SC upheld that by law, special areas are separate customs territories, i.e., the Clark FEZ and the Subic FEZ. In other words, they are foreign territories, by legal fiction. Thus, goods brought into and traded within an FEZ are generally not covered by internal-revenue taxes and customs duties enforced in the Philippine territory. This is consistent with the incentive granted to FEZs exempting the importation itself from taxes and duties. Therefore, according to the SC, the act of
law firm in Los Angeles, California. Valdez’s professional and civic involvement includes holding top positions, such as president and chairman emeritus of the Pamantasan ng Lungsod ng Maynila and Ospital ng Maynila; president of the International Association of Constitutional Law-Philippine Branch and the Philippine Association of Law Schools; member of the Board of Trustees of the Philippine Judicial Academy and Universidad de Manila or City of College of Manila; director of the Rotary Club of Manila, Philex Mining Corp. and John Hay Management Corp., and board member of the Metropolitan Waterworks and Sewerage System, among others. As president and CEO of the SSS, Emmanuel F. Dooc, who is a lawyer, is responsible for the overall planning, organizing, directing, controlling, monitoring and coordinating the activities of the SSS to achieve its overall objectives and targets. He is also responsible for defining the corporate vision, setting the tone and cultivating values appropriate to the SSS as a civil service and a government financial institution. He sits as the vice chairman of the SSC and is also a member of the Risk Management and Investment Oversight committees; and a
resource person for Audit, Governance, Organization and Appointments, Information Technology and Coverage and Collection committees. A Baldomero B. Aguinaldo awardee for 2016, Dooc was recognized for his pioneering leadership in the field of insurance, such as ensuring that millions of Filipinos are secured by inclusive and quality coverage, and helping raise the life-insurance coverage rate to 37.35 percent of the population through microinsurance, among many other achievements. The Baldomero B. Aguinaldo award is given by the Department of Finance (DOF) to outstanding officials of the DOF and its attached agencies. Dooc holds a Bachelor of Science degree in Elementar y Education from Mabini Colleges. He topped the teachers’ competitive examination in the school division of Camarines Norte, and even earned a Certificate on Teaching the Visually Impaired (graduate degree) from the Philippine Normal University—degrees that helped him as a public-school teacher for various special groups. He later earned his Bachelor of Laws degree from San Beda College. He started his corporate career as a lawyer at the Tax Division of SGV
and Co. He later moved to Hong Kong in 1988 to work as vice president for operations at the head office of American International Assurance Ltd. In 1997 he moved back to Manila to serve as first vice president and general counsel of Philam Life and General Insurance Co. Later on, he was appointed as chief compliance and governance officer for all member-companies of the Philam Group, before being promoted to senior vice president and chief compliance and governance officer of Philam Life and General Insurance Co. He was appointed by then-President Benigno S. Aquino III as acting insurance commissioner on January 5, 2011, a post he held until the passage of RA 10607, otherwise known as the Revised Insurance Code of 2012. He was reappointed to a fresh six-year term under the new Code on December 4, 2013. However, President Duterte later chose him to head the SSS, instead. Dooc’s professional accomplishments and vast experience in the insurance industry are expected to bring increased positive developments to the SSS’s efforts in continually improving its operations, services and finances.
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muggling of petroleum products has been rampant in the last couple of years. The value-added tax (VAT) and excise-tax exemptions of free-port and economic zones (FEZs) are being abused by enterprising individuals.
and overseeing management actions, and with powers and duties specified by Section 4 of the SS law. The chairman also performs quasijudicial functions through the decisions rendered in cases involving disputes on SS coverage, benefits, contributions and penalties, which fall under the exclusive jurisdiction of the SSC. He also chairs the SSC Risk Management Committee, and is a member of the Investment Oversight and Audit Committees. A legal luminary, an educator and a constitutionalist, Valdez served as the dean of the UE College of Law in 2000 and from 2005 to 2014. He was a director of the Bureau of Agrarian Legal Assistance and member of the Cabinet Assistance System during the term of President Corazon Aquino. In 2001 he served as government corporate counsel with the rank of presiding justice of the Court of Appeals. He was also a senior undersecretary at the Office of the President and concurrent executive director of the Presidential Commission on the Visiting Forces Agreement. Prior to this, Valdez was a general attorney at the Law Center of the US Naval Base in Subic Bay and was an associate of Martin, Davis & Lewis
Alálaong bagá, the Gospel proclaimed and lived wholeheartedly can set the world ablaze. The present-day gloom in many a de-Christianized nation in the world, where the lamps have been extinguished or allowed to flicker out, or where the light has not yet even been ignited, makes the baptismal vocation of every Christian urgent and vital. The work of evangelization is incumbent upon all believers in Jesus. It is by our lives in conformity with our faith, walking in the light of the Beatitudes, that we draw others to Jesus Christ. We must be “before others” and have our light shining brightly, so that others can see our witnessing and come to glorify God. Not in self-seeking and triumphalist ostentation (Matthew 6:1), we spread the Gospel in the authenticity of our Christian lives. Join me in meditating on the Word of God
happening in the FEZs because of the VAT and excise-tax incentives available to goods that are brought to it. It is true that some petroleum products pass through the FEZs and are eventually sold outside the FEZ. But the manner to curtail smuggling is not by formulating an administrative scheme that is unconstitutional. The SC said RR 2-2012 is unconstitutional, since it does not even refer to a specific Tax Code provision it wishes to implement. While it says its purpose is to craft administration measures for the collection of VAT and excise tax on the importation of petroleum and petroleum products, not once did it mention the pertinent chapters of the Tax Code on VAT and excise tax. Smug gling must be solved through proper enforcement of the law and prayers, lots of it.
Tax law for business
To curtail this problem, the Bureau of Internal Revenue in 2012 required the payment of VAT and excise tax on the importation of petroleum coming directly from abroad and brought into the Philippines, including FEZs, by issuing Revenue Regulation (RR) 2-2012. In the said RR, an FEZ locator must first pay the required taxes upon entry into the FEZ of a petroleum product and must, thereafter, prove the use of the petroleum product for the locator’s registered activity in order to secure a refund for the taxes paid. In other words, the locator must first pay the tax and prove that it was used inside the FEZ before a refund may be made. This government policy was
together can make a glow that overwhelms the surrounding darkness and shows the way to others. And, internally, one believer holding high his or her lamp can truly inspire the timid ones to also place their lamps on the stand.
bringing the goods into an FEZ is not a taxable importation. As long as the goods remain in the FEZ or reexported to another foreign jurisdiction, they shall continue to be tax-free. According to the SC, FEZ enterprises bringing goods into the FEZ should not be considered as importers subject to tax, in the same manner that the very act of bringing goods into these special territories does not make them taxable importations. The exemption from taxes and duties are granted not only to importations into the FEZ, but also specifically to each FEZ enterprise. When the law speaks of a tax exemption, it should be understood as freedom from the imposition and payment of a particular tax. Based on this premise, the Court ruled that the refund mechanism provided by RR 2-2012 does not amount to a tax exemption. Even if the possibility of a subsequent refund exists, the fact remains that FEZ enterprises must still spend money and other resources to pay for something they should be entitled to in the first place. This ruling of the court is a celebration of the true nature and purpose of FEZs. It is a tax haven introduced to attract foreign investors. It is recognized that smuggling is
Atty. Irwin C. Nidea Jr.
The new Social Security Commission Susie G. Bugante
their mission in the world to share with all the gospel of salvation in Jesus Christ is to be useless, the Greek word means literally “to be crazy”— to be despised and gotten rid of like the tree without good fruit (Matthew 7:19), or the worthless fish in the net (Matthew 13:48-50). If instead of announcing and witnessing to all the imperative of conversion to Christ, and instead of opposing the forces of evil the Christians themselves adopt the spirit of the world, they would be rejected by the very world they should have served to transform.
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The author is a junior 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 irwin.c.nideajr@ bdblaw.com.ph or call 403-2001, local 330.
To be continued
2nd Front Page BusinessMirror
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Thursday, February 2, 2017
Unilever execs, organizers face raps over Pasay concert deaths last year
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By Joel R. San Juan
@jrsanjuan1573
HE National Bureau of Investigation (NBI) filed criminal charges before the Department of Justice (DOJ) on Wednesday against officials of Unilever Philippines and organizers of a rave party in Pasay City last year for their “failure” to prevent the entry of party drugs in the event that led to the death of five persons.
Named as respondents in the complaint were Rohit Jawa, Unilever chairman and CEO and currently executive vice president for operations Southeast Asia; Jesus M. Canlapan, Unilever manager for workplace services and facility security; A lberto Curnelius Trinidad, marketing director for Close-Up; Joy Dalanon-Ocampo, country manager for safety, health and environment; proc u rement m a n ager Melissa Alcayaga; and Close-Up
Assistant Brand manager Bea Lagdameo. The NBI specifically charged them with criminal negligence and violation of the Corporation Code. Other respondents include Michelle Suzanne Claire Quintana, Anna Kristina Doctolero, Baby Majalia Ahamadul, senior accounts manager of Activation Advertising Inc.; Reginald Soriano, Eduardo Muego, John Paul Demontano, owner and president of HypeHouse See “Unilever,” A2
BDO LISTING BDO Unibank Inc. on Wednesday concluded its P60-billion stock-rights offering with the ringing of the bell on the trading floor of the Philippine Stock Exchange (PSE). Leading the listing ceremony are (from left) SM Investment Corp. President Harley T. Sy, BDO President and CEO Nestor V. Tan, BDO Chairman Teresita T. Sy, PSE Chairman Jose T. Pardo and PSE President Hans B. Sicat. NONIE REYES
www.businessmirror.com.ph
CPP-NPA set to end unilateral cease-fire
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he communist rebels said on Wednesday they were terminating their unilateral cease-fire after accusing the government of failing to release all political prisoners and encroaching on rebel-held areas. The Communist Party of the Philippines (CPP) and its military arm, the New People’s Army (NPA), said the August 28 cease-fire will expire on February 10. The rebels and the government had separately declared a cease-fire as they resumed their peace talks. The rebels said they continue to support peace negotiations. Founded in 1968, the rural-based guerrillas have unsuccessfully tried to negotiate an end to their rebellion and their inclusion in government with six Philippine presidents, including Rodrigo R. Duterte. Defense Secretary Delfin N. Lorenzana said the Department of National Defense will continue to enforce the government’s unilateral cease-fire unless Duterte decides otherwise. He added that troops will not carry out operations against the See “CPP-NPA,” A2