Businessmirror july 12, 2018

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Thursday, July 12, 2018 Vol. 13 No. 271

Sugar importers warned: Don’t hold on to supply

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By Jasper Emmanuel Y. Arcalas

@jearcalas

HE Department of Agriculture (DA) has delivered a stern warning to accredited sugar importers as tight supply has sent prices rising and the users complaining: Deliver the committed volumes to your buyers, or we will allow industry users of sugar to import directly.

“Do not play this game on us. Do not play with the situation to import sugar in the name of the companies and then you will hold back the supply just for the prices to increase.”—Piñol

Agriculture Secretary Emmanuel F. Piñol said on Wednesday that international traders participating under the Sugar Regulatory Administration (SRA) importation Continued on A2

@BNicolasBM

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GRICULTURE Secretary Emmanuel F. Piñol wants to perpetually earmark all the tariff revenues from rice imports for the sector once the quantitative restriction (QR) on the staple is scrapped.

“It should be all the tariffs [from rice imports]. We will be using those for our small irrigation projects and all the interventions [to make the sector competitive],” Piñol told the B usiness M irror on the sidelines of a forum at the Philippine International Convention Center on July 11. “And the duration [of the rice enhancement competitiveness fund (RCEF)] should be perpetual.”

Congress is racing to amend Republic Act (RA) 8178 to lift the QR by the end of the year, as Manila is

World Bank pushes for ‘social contract’ under globalization Rene E. Ofreneo

laborem exercens

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fter decades of advocacy for an unrestricted global free market, the twin sisters of global finance—International Monetary Fund (IMF) and World Bank—are now talking of the importance of the need to address the social dimension of globalization.

Continued on A7

Number of Filipinos with bank accounts just inching up

₧7/kilo

By Bianca Cuaresma

The expected decline in the price of rice once supply increases with the scrapping of the QR under pressure from its trading partners at the World Trade Organization to scrap the nontariff measure. The special waiver on rice granted by the WTO had already lapsed on June 30, 2017.

Economic managers are also keen on removing the QR to tame inflation, which has accelerated in recent months due to the implementation of the Tax Reform for Acceleration and Inclusion.

See “Tariff,” A8

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‘ALL TARIFF REVENUES MUST GO TO PERMANENT RICE FUND’

By Bernadette D. Nicolas

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@BcuaresmaBM

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A bank client withdraws from an ATM booth outside a Makati City bank on Wednesday. The Bangko Sentral ng Pilipinas survey showed what the BSP called a “modest” increase in the number of people with formal accounts. NONIE REYES

ESPITE the Bangko Sentral ng Pilipinas’s (BSP) efforts to raise the level of financial inclusion in the country, Filipino financial consumers apparently remain leery of putting their hard-earned cash in the vaults of banks with the number of account holders growing by less than 1 percent between 2015 and 2017, latest data from the Central Bank showed.

In its latest report on its 2017 financial inclusion survey, the BSP found out that the number of Filipino adults with a formal account is estimated at 15.8 million at the end of 2017.

See “Filipinos,” A8

n japan 0.4818 n UK 70.9895 n HK 6.8124 n CHINA 8.0512 n singapore 39.4045 n australia 39.8735 n EU 62.7988 n SAUDI arabia 14.2567

Source: BSP (11 July 2018 )

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Thursday, July 12, 2018 • Editor: Vittorio V. Vitug

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‘Pansol outing’ issue in VP Bicol cops arrest poll recount ‘far from over’ suspect in NE

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By Joel R. San Juan

@jrsanjuan1573

HE issue raised by the camp of defeated vice presidential candidate and former Sen. Ferdinand “Bongbong” R. Marcos Jr. against several revisors and staff of the Presidential Electoral Tribunal (PET) who were seen partying with the revisor of Vice President Maria Leonor G. Robredo at a resort in Pansol, Laguna, on June 22 is far from over.

This, after the camp of Robredo filed a counter-manifestation before the PET, through legal counsel Romulo Macalintal, seeking the release of the closed-circuit television (CCTV) footage that would purportedly prove that Marcos camp had prior knowledge about the event, and even delivered snacks for the participants days before the outing.

The legal counsel and spokesman of Marcos, lawyer Vic Rodriguez, on the other hand, issued a challenge to Robredo. “…We challenge Mrs. Leni Robredo to go ahead and produce such footage provided it is authentic and not another product of her many lies. The swimming party was held in Pansol, Laguna and not at the 4th floor of the PET building where the

CCTV footage they have requested are placed. We have shown pictures of how she has corrupted PET HR’s and pictures don’t lie. To date, all she has are alibis and more lies. Huling huli na nagpapalusot pa. [It’s too late for excuses],” Rodriguez said.

Snacks delivery

Macalintal identified Marcos supervisors Roderick Miranda as the one who delivered the snacks in the fourth floor of the PET’s office.

“Protestant Marcos and his revisors were well aware of the said outing as they were invited, as well.

Surprisingly, it is only after more than two weeks that protestant Marcos is asking for an investigation,” Macalintal said.

Macalintal noted that an investi-

gation has already been conducted, where some of the personalities involved were already meted with penalties.

“Protestant Marcos is asking for an investigation despite being fully aware that the Honorable Tribunal already conducted one. Worse, protestant Marcos feigns ignorance when by the actions of his own revisor, they were not only fully aware but acquiesced to the said outing by giving snacks,” he added.

The CCTV footage, according to Macalintal, would confirm that Marcos’s revisors were not only aware, but even donated snacks to the outing.

Marcos’s camp earlier filed a manifestation before the PET, expressing concern that the ongoing recount of votes for the 2016 VP race may already be compromised with the presence of Robredo’s revisor in the outing.

Robredo’s revisor has been identified as Osmundo “Ritchie” Abuyuan.

‘Infiltrated’

Marcos told the PET that “it is highly plausible” that Robredo’s camp already infiltrated the PET personnel “in order to manipulate, inf luence and/or control the revision proceedings and maneuver the revision results in her favor.” He claimed that their camp learned of the outing that took through the Facebook account of PET head revisor Maria

Palace fires 3 Duterte frat brods from DOJ; new appointees named

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R E SIDEN T D uter te h a s replaced three undersecretaries and an assistant secretary of the justice department who filed their courtesy resignation following the resignation of former Justice Secretary Vitaliano N. Aguirre II in April.

Undersecret a r ies Er ic k son Balmes, Rey nante Orceo and Reymundo Mecate and Assistant Secretary Juvy R. Manwong were replaced by lawyers Emmeline Aglipay-Villar, Adrian F. Sugay, Markk L. Perete and Neal Vincent M. Bainto.

Balmes, Orceo and Mecate are fraternity brothers of President Duterte in Lex Talionis fraternity, as well as Aguirre.

The new appointees, on the other hand, were recommendees of

Aguirre’s successor Justice Secretary Menardo I. Guevarra.

Villar was a law graduate of the University of the Philippines 2006 (Order of the Purple Feather Honors Society).

Before her appointment to the Department of Justice, Villar was a member of the House of Representatives and party-list representative of the labor sector with a national constituency.

She is the wife of Public Works Secretary Mark A. Villar, also an appointee of Duterte.

Sugay, on the other hand, graduated from the Ateneo de Manila University law school in 1993.

Since then, he has been in active litigation and was at one time a partner at De Borja, Med ia ldea, Bel lo, Guevar ra and

Serapio Law Offices.

Prior to his appointment as justice undersecretary, Sugay acted as special assistant to the corporate head at the Philippine Ports Authority immediately before his appointment.

A product of the UP College of Law, Perete worked as legal counsel in a large multinational company and taught various law subjects in several universities prior to his appointment.

Bainto obtained his Juris Doctor degree from the Ateneo de Manila University School of Law and was the recipient of the Evelio Javier Leadership Award in 2012.

Prior to his appointment, he served as a senior associate at the Villaraza and Angangco Law Offices. Joel R. San Juan

House bill proposes rating system for video games to stem ‘addiction’

By Jose Oscar Magpusao

Special to the BusinessMirror

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he AKO Bicol Party-list in the House of Representatives is pushing for the establishment of a rating system for video games in the Philippines.

Through the party’s proposed Video Games Act of 2018, or House Bill 7909, introduced by Reps. Rodel M. Batocabe, Alfredo A. Garbin Jr. and Christopher S. Co, the proposal covers all video games for arcade machines, computers, and smartphones sold and distributed in the country.

Due to the classification of videogame addiction as a disorder by the World Health Organization (WHO) in its 11th International Classification of Diseases, the bill seeks to mitigate unforeseen issues caused by the extreme popularity of video games across all age groups.

The WHO characterized “gaming disorder” as the impairment of

control over gaming, the increasing priority given to gaming, and continued or escalating gaming habits despite the occurrence of negative consequences.

“Uncontrolled gaming addiction definitely has a negative effect to children’s mental health, as was validated by the recent classification made by the WHO,” Batocabe said.

The bill expressed the need to ensure that video games do not cause harm and addiction, as well as regulate its availability to children to similar to the classification of movies and television shows.

“The extreme popularity of these video games, and the unregulated access to so many video games exposes our youth, especially very young children, to gaming addiction,” Batocabe said, adding that “as a parent, I understand the challenges in filtering what their children are exposed to.”

HB 7909 also mandates the Games and Amusement Board (GAB)

to establish and maintain a rating and classification system for all video games introduced to the Philippine market Additionally, GAB will have additional functions, including: the promulgation of rules and regulations; the review and examination of all public materials of video games; the ability to approve or disapprove the importation, exportation, sale and distribution of video games’ public materials; the classification of video games into categories similar to the international rating systems; the ability to close gaming establishments; assessment and adjustment of rate of fees in exercising its functions; deputation of representatives from associations in the video game industry; prosecution of violators; prescription of internal and operational procedures of GAB; and the ability to exercise its functions as necessary to the objectives of the act.

263,473 votes

VP Robredo’s margin over former Sen. Ferdinand “Bongbong” R. Marcos Jr. in the 2016 elections

Katrina Rosales, when she posted the photos of the “Pansol outing” on June 24.

He said among the photos posted were the 24 PET personnel together with Abuyuan.

Marcos asked the PET to conduct an immediate investigation of the PET personnel involded for possible violation of the Code of Conduct for Court Personnel and the Canon of Judicial Ethics.

Marcos has filed an election protest against Robredo for allegedly cheating her way to the VP post in the 2016 automated elections.

Robredo won the vice presidential race with 14,418,817 votes, while Marcos got a total of 14,155,344 votes, or 263,473 less than Robredo’s votes. The PET is currently conducting recount of votes covering three pilot provinces—Camarines Sur, Iloilo and Negros Oriental—with total of 5,418 clustered precincts.

After recount of these three provinces, the PET will decide whether to include 27 other provinces identified in the protest filed

by Marcos seeking recount of votes.

The provinces cover 132,446 precincts in 39,221 clustered precincts.

mayor’s gun slay

By Rene Acosta @reneacostaBM

suspect in the killing of Mayor Ferdinand Bote of General Tinio, Nueva Ecija, was arrested on Wednesday by policemen conducting a checkpoint in Camarines Sur. The arrest came two days after National Police chief Director General Oscar D. Albayalde said they already have a good lead into the killing, and that they were expecting to make arrests within the week.

Chief Supt. Arnel Escobal, Bicol regional police director, said the suspect, Florencio Suarez, 48, was arrested at a checkpoint along the Andaya National Highway in Barangay Cabasag, Del Gallego, Camarines Sur. Suarez yielded a .45 caliber pistol when he was apprehended at around 9:30 a.m., along with companion, Robert Gumacay, 35.

Escobal said Suarez, who is under investigation by the Del Gallego Police Station, had earlier been identified as among the “persons of interest” in the murder of Bote.

Bote was ambushed right

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outside the compound of the National Irrigation Administration in Cabanatuan City, Nueva Ecija, on Tuesday last week. Albayalde ruled out politics in his death.

He was among the three local officials that have been gunned down in a span of one week after assassins also killed Tanauan City, Batangas, Mayor Antonio Halili and Trece Martires City, Cavite, Vice Mayor Alexander Cruz Lubigan.

Escobal said a team of policemen, led by SPO4 Agusto Adulta, were manning a checkpoint when they flagged down a Toyota Avanza, bearing a lost plate number PGQ 134 driven by Suarez, with Gumacay as passenger.

He said the policemen also seized from Suarez a .45 caliber pistol, which was “seen [in] plain view on the left driver seat portion” of the vehicle.

Interviewed by a radio station in Manila, Escobal said Suarez was a person of interest in Bote’s killing.

He said follow-up operations were also being conducted by the police, possibly to arrest Suarez’s accomplice in the murder.

Sugar importers warned: Don’t hold on to supply program must ensure that the supply intended for bottlers and processors is delivered.

“For traders who won the CORR [certificates of reclassification rights], you have to make sure that the intended volume to supply the bottlers and processors must be delivered to them. Because if you don’t, then the government reserves the right and power to allow these bottlers to import directly,” he told reporters in an interview on July 10.

“And if we do that, you will lose profits because you will not be able to sell your imported sugar,” he added.

Pinol said the option of allowing industrial users to directly import the sweetener is always among the options being considered by the government.

“I am giving this warning to traders: that you better make sure that the volume you import in the name of bottlers and the processors go to them. We have to protect the interest of these companies by considering the option [to allow them] to directly import,” he said.

“Do not play this game on us. Do not play with the situation to import sugar in the name of the companies and then you will hold back the supply just for the prices to increase,” he added.

Furthermore, Piñol said they are reviewing the current reclassification rights system being imposed by the SRA in its sugar importation program.

Piñol wants to reform the system into a mechanism that ensures that royalties under the importation program really go to the planters.

Furthermore, the reclassification rights system defeats the purpose of bringing down the retail prices of sugar as it instantly puts a mark-up on the imported sweetener, according to Piñol.

“First of all, I made this clear during my meeting with stakeholders: that how sure are we that the royalty being given to planters and farmers association really filtered down to the individual sugarcane farmers?” he said.

“By the looks of it, is it our intention to bring down the cost of sugar by giving the allocation to planters and farmers associations? But them selling [their rights] to traders and

processors would already mean a mark-up for imported sugar— it defeats the purpose of why we should import sugar,” he added.

Under the Sugar Order 10, the SRA required traders to buy the CORR of planters and millers who produced “D” sugar, or those for export to the world market, to participate in the importation program.

The CORR contains the corresponding importation volume allocation of a specific planter or miller as computed by the formula provided in SO 10. The price of each CORR would depend on the negotiations between the trader and holder of the CORR. This system, the SR A noted, would allow them “to effectively regulate the importation.”

“The program shall require a certificate of reclassification rights in order to effectively regulate the importation; provided that any importation must be reasonably profitable to sugar producers, who have been experiencing low prices of sugar for the last two crop years as a result of importation of cheap subsidized high-fructose corn syrup,” the SRA said.

Coke in a bind

Piñol also disclosed that CocaCola Femsa Philippines (KOFPH) talked to Finance Secretary Carlos G. Dominguez III to directly import their sugar requirements. “They are saying that the local supply of sugar is unreliable and they will lobby to directly import their sugar requirements,” he said.

In a statement sent to the BusinessMirror, KOFPH said it has been coordinating with government agencies, including the DA and Department of Finance, to address its supply chain issues.

“We have expressed that, similar to the thrust of the government, we are seeking the immediate resolution to this issue, to ensure a robust and stable sugar supply in the local market,” KOFPH Corporate and Regulatory Affairs Director Juan Lorenzo Tañada said.

“In light of this, we have been working closely with the Department of Agriculture and our local sugar suppliers. We are very grateful for the guidance of the Cabinet secretaries for their assistance in

Continued from A1

this evolving situation, as both the government and the private sector work together to resolve this pressing concern,” Tañada added.

Arrival

SRA Board Member Roland B. Beltran told the BusinessMirror that consumers should expect the retail prices of sugar to decline in the next days as soon as the imported sugar arrives in the country.

Beltran added that the 200,000 metric tons (MT) of sugar allowed by the SRA to be imported have been fully allocated among traders.

“We are pleased to note that the 200,000 MT of sugar allowed to be imported have been fully allocated to different importers,” Beltran said.

“We thus expect that market forces will correct itself soon as the imported sugar starts arriving and brings the much-needed stability in sugar prices,” Beltran added.

Beltran said the SRA board will ensure that the imported volume of sugar will go to intended users.

The SR A has a l located the 100,000 MT of sugar to be imported for bottlers’ grade refined sugar, while 50,000 MT would be standard grade refined sugar and 50,000 MT raw sugar for domestic consumption.

“Bottler’s grade will go to industrials. The Sugar Board will not allow reclassification from C to B if there is no proof that the bottler’s grade sugar are sold to the industrials,” he said.

The SRA board has approved via referendum the import clearance for 2,000 MT of bottler’s grade which is expected to arrive within this week until next week, according to Beltran. Of the figure, about 750 MT will arrive this week, and the remaining 1,250 MT next week.

“We expect that more requests for import clearances of imported sugar will be forwarded to the Sugar Board for approval via referendum in due course,” Beltran said.

Beltran explained that the SRA board is approving import clearances via referendum to fast-track the importation program. “It means that requests for import clearance need not wait for the regular board meeting before it is acted upon.”

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DOF ‘sanguine’ on issuance of samurai bonds later this year

By Rea Cu

@ReaCuBM

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he Bureau of the Treasury (BTr) reported on Wednesday that the Philippine government’s planned issuance of samurai bonds later this year was met with encouraging feedback from Japanese investors during its non-deal road show in June.

National Treasurer Rosalia V. de Leon expressed optimism that the “healthy participation” of the Japanese market will be seen during the Philippines’s planned issuance of samurai bonds later this year, taking cue from the feedback it received during the road show for the bonds undertaken by government officials last month. “[We] had very encouraging feedback from the economic briefing and non-deal road show,” the national treasurer told the BusinessMirror in a text message.

Earlier in the month, Deputy Treasurer Erwin D. Sta. Ana told financial reporters that the BTr is looking to file its application for regulatory approval for the country’s planned samurai bond issuance to the Kanto Local Finance Bureau in Japan by end-July.

De Leon explained that the government is looking to float samurai bonds under mixed tenors, looking at the three-, five-, seven- and 10-year tenor buckets, with the final mix depending on market appetite and pricing levels.

“We will just be submitting our application by July 23, and then there’s a holding period of maybe around 15 days that we can announce whether we will issue or not....

We are still doing some due diligence...,” she added.

In June Finance Secretary Carlos G. Dominguez III confirmed that the Philippines plans to issue around $1-billion samurai bonds this year. The country’s top finance official issued the announcement before Japanese businessmen during the opening remarks at the Philippine Economic Briefing (PEB) held at the Imperial Hotel in Tokyo, Japan.

During the non-deal road show, five of Japan’s leading financial institutions also gave their full support to the Philippines’s first stand-alone yen-denominated

samurai bonds issue set in September or October this year.

In separate meetings with Dominguez in Tokyo, top officials of Japan’s five largest banks, namely, the Mitsubishi UFJ Financial Group, Nomura Holdings Inc., Mizuho Bank Ltd., Sumitomo Mitsui Banking Corp., and Daiwa Securities Group Inc., said they expect strong demand for the Philippines’s samurai bond float.

The finance chief further pointed out that investors have demonstrated high level of confidence in the Philippine economy under the Duterte administration with the tight spreads of the country’s dollar- and renminbi-denominated bonds issued earlier this year, which the government expects to be replicated with its upcoming sale of yen-denominated debt securities in the Japanese market in the latter part of 2018.

Tight spreads offer low interest rates, which indicate that the issuer has less chances of defaulting on its bond sale, while higher spreads mean that investors view the bond as having bigger chances of its issuer defaulting, and thus, high interest rates are offered to attract buyers of such riskier investments.

Dominguez said another factor that has contributed to the tight spreads of bonds issued by the Philippines in the offshore market was the fact that the government is now selling securities to raise funds for its infrastructure investments, rather than to cover a ballooning budget deficit.

The government’s “Build, Build, Build” program aims to implement infrastructure modernization in the country, consisting of 75 high-impact projects, with the government expected to spend around P8 trillion to P9 trillion for the program until 2022.

After President Duterte signed the Tax Reform for Acceleration and Inclusion Act into law in December 2017, the government’s issue of $2 billion worth of 10-year dollar denominated bonds the following month recorded a spread of just 37.8 basis points over the United States Treasuries, while its maiden Panda bond float of 1.46 billion renminbi in March had an even tighter spread of only 35 basis points over the benchmark.

Editor: Vittorio V. Vitug • Thursday, July 12, 2018 A3

DOE firm on proposed $2-billion LNG project despite ‘tepid’ investor interest

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By Lenie Lectura

@llectura

he Department of Energy (DOE) assured on Wednesday that the government is capable of taking the lead in the development of the proposed $2-billion liquefied natural gas (LNG) import facility in Batangas, even if no other company would endeavor to invest in it.

“They [investors] all expressed interest, but at the end of the day we can’t force them to invest.

We have no choice then but to find a way to do it,” DOE Assistant Secretary Leonido Pulido said.

“The perception is that the government is incapable of doing it. But we have to put this together because it is for capacity building.”

The DOE official issued the statement after Senate Energy Committee Head Sherwin T. Gatchalian cautioned the government about pushing through with the project.

“Personally, I am not confident if the government can operate it properly. We have [had] a bad history of operating [such facility] if you look at [the] MRT [Metro Railway Transit 3], LRT [Light Railway Transit 1 and 2] and airport[s]. As an observation, the government is not a good operator.

Do we have the technical capability? That’s one thing to consider.”

Gatchalian had also said that this could result in a monopoly since the government will construct the LNG facility and supply the gas.

“Inadvertently, we are creating a monopoly because we’re only allowing one entity to construct and to supply. In effect, he [the government] will now control the terminal. He will now control supply,” the senator commented.

Energy Undersecretary Felix William Fuentebella earlier said that two units of the Philippine National Oil Co. (PNOC) could be tapped to actually construct and operate the proposed LNG facility, even as the law does not allow the government to be involved in

the power-generation sector.

“There are two schools of thought with regards to that. There are those of the opinion that the government cannot totally come in under the Epira [Electric Power Industry Reform Act], but there’s also that school of thought that in the Epira, it only talks about Napocor [National Power Corp.] not going into power generation,” he said.

Fuentebella added: “A Department of Justice opinion, however, said that Philippine National Corp.-Renewable Corp. can come

But officials said this remains an option in the event that none of the interested firms pursue to invest in putting up an LNG hub in the country.

Pulido said the DOE is currently evaluating 13 to 14 applications from local and foreign firms that have expressed interest to put up and operate the LNG facility.

“We are waiting for them to actually file their applications. We’re confident that one to two entities will invest. This thought that the government will do it is just an option. It is better to be sure because we need the capacity,” he added.

The DOE earlier issued rules governing the Philippines Downstream Natural Gas Industry. Interested LNG investors have long waited for this policy meant to guide them in pursuing this capital-intensive project.

Department Circular 2017-11-0012 also outlines the issuance of permit on the construction, expansion, rehabilitation, modification, operation and maintenance of Downstream Natural Gas Facility.

T he DOE is bent on completing the planned LNG project before the expected

They [investors] all expressed interest, but at the end of the day we can’t force them to invest. We have no choice then but to find a way to do it. The perception is that the government is incapable of doing it. But we have to put this together because it is for capacity building.”—Pulido in because it is a renewable-energy corporation and a corporate arm of the DOE, and that the PNOC-Exploration Corp. can have that capability for power generation.…In any eventuality, we can pursue any of these options so that we can fulfill our mandate to provide quality, affordable and secure supply of energy,” Fuentebella said.

depletion of the Malampaya offshore gas find near Palawan island in 2024.

The Malampaya project currently supplies fuel to five natural gas plants with a total installed capacity of 3,211 megawatts (MW). This amounts to 21.33 percent of the installed capacity of the Luzon grid and almost 15 percent of the country’s total installed capacity.

Energy dept finalizes TOR for bidding of solar-powered charging stations

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Public Works Secretary Mark A. Villar (right, inset photo) undertakes an on-the-spot review on the structural plans of the Estrella-Pantaleon and Binondo-Intramuros bridges. Photo also shows the architectural drawings of the two bridges deemed vital to the government’s thrust to decongest Metro traffic. The two-year construction of the two bridges will simultaneously start next, and will be accessible by 2020, according to a Department of Public Works and Highways news statement.

DPWH to start construction of Estrella-Pantaleon, Binondo-Intramuros bridges by next week–Villar

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ublic Works Secretary Mark A. Villar has announced that the Estrella-Pantaleon and Binondo-Intramuros bridges will start its construction by next week.

The two China grant-aid bridges are financed by the People’s Republic of China through a bilateral cooperation with the Republic of the Philippines.

“The implementation of these bridges is scheduled to begin next week and will be accessible to the public by 2020,” Villar said.

The Estrella-Pantaleon Bridge will connect Estrella Street in Makati City and Barangka Drive in Mandaluyong City. It has a total road

length of 506.46 meters.

On the other hand, the Binondo-Intramuros Bridge will have a total road length of 734 meters, equipped with a four-lane carriageway and a 3-meter sidewalk along both sides. It will cross the Pasig River and will provide a new link between Intramuros and Binondo.

“These two bridges are a product of our partnership with the people of China. We are optimistic about this collaboration, as they will be providing world-class bridges that will truly be beneficial for us Filipinos,” Villar said.

“The construction of the Estrella-Pantaleon Bridge and Binondo-Intramuros bridges

is part of our master plan to decongest other existing bridges. As a major component of this initiative, we plan to further increase the number of bridges nationwide and rehabilitate the older bridges to ensure public safety,’’ Villar added.

The two bridges are part of the Metro Manila Logistics Improvement Network, a trafficmanagement plan composed of 12 new bridges crossing Pasig River, Marikina River and Manggahan Floodway. The alignment caters to about 1.3 million vehicles daily and to provide alternative linkages between major thoroughfares, such as Edsa and C-5.

he energy department is finalizing the terms of reference (TOR) for a plan to auction off the contract to develop solar-powered charging stations.

“For the construction of charging stations, we need to bid it out. We’re drafting the terms of reference for that. That’s going to take a while. We’re waiting for certain consultants to come in and help us come up with a plan and terms of reference,” DOE Assistant Secretary Leonido J. Pulido III said.

Funding for the charging stations will be sourced from the $4-million grant from Asian Development Bank’s (ADB) Clean Technology Fund. “We were also given the go ahead to use the clean technology fund [CTF] to put up solar charging stations. The consultant will help us with the criteria. It has to meet the objectives of the e-trike project,” the Department of Energy (DOE) official added.

The ADB earlier approved an extension of the expiration of the loan and grant agreements of the DOE Energy Efficient Electric Vehicles project. The loan facility was extended from June 30, 2018, to May 2019.

It can be recalled that the DOE has scaled down its e-trike project, deploying only 3,000 units at a cost of P1.73 billion.

Bemac Electric Transportation Philippines Inc. bagged the $30-million contract in 2016 for the supply of the 3,000 e-trikes.

Each e-trike was priced at P450,000.

The original project scope of the project involves the deployment of 100,000 e-trike units nationwide with a total project cost of P21.672 billion that required various

arrangements involving the government, the private sector and the ADB. However, there were very few takers for the units because the initial cost and maintenance was too steep for operators and charging stations in the targeted areas for deployment were still lacking. As such, the DOE decided to scale down the project, saying this was necessary in ensuring the viability of the project at a minimal cost to taxpayers.

The DOE was earlier called out by the Commission on Audit (COA) for its failure to distribute even a single unit of the e-trikes to the intended beneficiaries. As such, the DOE ordered the cancellation of the next production of e-trikes.

“Right now, the number of committed e-trikes is 1,600 or 1,700. Only 30 to 40 units were actually deployed. For the committed units, there are ongoing applications from different LGUs that we are considering. They have to fit the criteria and they have to commit to meet the documentary requirements and actions required by the DOF and the ADB,” Pulido said.

The e-trike program called “Market Transformation through Introduction of Energy Efficient Electric Vehicles [E-Trikes] Project” was signed by the government and the ADB on September 27, 2013.

The 3,000 e-trikes was planned to be initially distributed to local government units in Metro Manila, Region 4A and Region 4B to jump-start the shift to e-vehicles to reduce the country’s fuel imports and lessen annual carbon-dioxide emissions. Lenie Lectura

Environmental groups to Duterte: Strictly enforce ban on ‘destructive’ fishing

By Jonathan L. Mayuga @jonlmayuga

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nvironmental groups are urging the Duterte administration to enforce the ban on the destructive Danish Seines and Modified Danish Seines fishing methods as mandated by two Department of

Agriculture-Fisheries Administrative Orders (DA-FAO) to protect the country’s remaining healthy coral cover.

DA-FAO 246 issued in 2013 imposes the ban, while DA-FAO -1 outlaws the mere possession of Danish seine fishing gear, locally known as hulbot-hulbot and the Modified Danish Seine or buli-buli.

Agriculture Secretary Emmanuel F. Piñol signed on July 5 Fisheries Administrative Order 246-1, which updates FAO 246, authorizing the ban of seine fishing in Philippine waters.

Although the fishing methods were banned by the DA-FAO 246, the order was never really implemented, said Vince Cinches, Ocean

Campaigner of Greenpeace Southeast Asia-Philippines.

According to the Bureau of Fisheries and Aquatic Resources (BFAR), around 300 commercial fishing vessels that make use of this destructive fishing method continue to operate, Cinches said.

The leniency for hulbot-hulbot

and buli-buli operators, purportedly to cushion the economic impact of the ban on commercial fishing vessel worker, went on for five years, Cinches said, which is partly to blame for the current sorry state of the country’s coral areas.

“We believe they [hulbot-hulbot operators] have been given enough time

to find alternative livelihood for their workers,” Cinches said.

“What we want is for the DA to fully enforce the ban, hopefully, within the year. We are hoping that the DA can draw a timeline so that, by the end of the year, there will be no more hulbothulbot operating in the Philippines,” Cinches said.

A4

Business

Thursday, July 12, 2018

I

TheBroa

By Bernadette D. Nicolas | @BNicolasBM

F it ain’t broke, why fix it? This is a question some pundits posed when President Duterte started tinkering with the Constitution of the Republic of the Philippines.

The Chief Executive believes—he’s adamant—the country’s problem lies in the way government is formed. And, hence, Duterte advanced that abandoning the unitary form of government in favor of federalism would address perennial poverty and economic inequity.

Not so, say his critics. Some of these critics pointed to a middle ground: just tweak the Local Government Code (LGC) of 1991.

A federalism advocate, however, thinks doing so isn’t enough.

“The antidote is federalism because the essence of federalism is nonconcentration of powers,” retired Chief Justice Reynato S. Puno said in a speech to explain his vote on July 3, the day the Constitutional Committee (Con-Com) he headed for the past six months adopted the proposed federal charter. “In contrast to unitarianism, federalism is not just delegation of powers but equitable distribution of the powers of government between the federal government and the governments of the constituent regions.”

Puno said in an earlier interview with the BusinessMirror that amending the LGC will just perpetuate the unitary system, which he and the President believe provided excessive concentration of power to the national government.

The unitary government, the Con-Com chairman repeatedly said in his speeches, has failed to solve poverty, political dynasties, dominance of monopolies and oligopolies, corruption and lawlessness, among others.

This worldview is now being set in stone as Duterte approved the proposed draft federal constitution on July 9.

Federated regions

THE draft Charter proposed by the 22-member Con-com adopts a federal-presidential form of government, retaining the three main branches for federal government and the bicameral Congress.

The draft charter seeks a total of 18 federated regions: 16 regions that are symmetrical in character—including the Negros Island Region—and two regions that are asymmetrical in character, namely, the Bangsamoro and the Federated Region of the Cordilleras.

Each federated region will have its own regional government with executive, legislative and judiciary branches. This regional government supervises the local governments in the region.

There will be a regional governor and regional deputy governor per federated region. These regional government posts are elected as a team from within a regional assembly.

The regional governor heads the regional government, supervises the local governments, appoints executive department and bureau heads and formulates a Regional Expenditure Program. The regional deputy governor presides over the regional assembly.

Regional assembly

THE regional assembly is the legislative branch of the regional government. It crafts regional laws and approves the budget of the region, among others.

The draft Charter provides the Regional Assembly be composed of elected members. Half of the membership represents each province, highly urbanized cities and chartered cities, while the remaining half represents political parties through proportional representation.

The term limit for all these regional government posts was set by the Con-Com to four years. The draft Charter provides that the re-

gional governor and deputy governor serve for four years subject to one reelection, while the regional assembly members will serve for four years and shall not exceed two terms.

As for its regional judiciary, the regional assembly shall provide for a regional Supreme Court, regional appellate court, regional trial courts and such lower courts and special courts in component provinces, cities and municipalities. Their jurisdiction would be defined in accordance with the Constitution.

Exclusive powers

SINCE the Con-com believes that the regions deserve more than “trickles of power,” the federated regions were vested with 15 exclusive powers within their respective regional territory. These include: socioeconomic development planning, creation of sources of revenue, financial administration and management, infrastructure, public utilities and public works, economic zones, land use and housing, justice system, local government units, business permits and licenses, municipal waters, indigenous people’s rights and welfare, culture and language development, sports development and parks and recreation.

But since every federated region now must be economically viable and sustainable, the Con-Com decided to give them power to collect certain taxes and fees.

These include real property tax, estate tax, donor’s tax, documentary stamp tax, professional tax, franchise tax, games and amusement tax, environmental tax, pollution tax, and similar taxes, road users’ tax, vehicle registration fees, transport franchise fees and local taxes and other taxes which may be granted by federal law.

THE QUEST

FEDERA

Is it worth changi

Financial aid

FOR each region to have a steady stream of revenues, a share of not less than 50 percent of all the collected income taxes, excise taxes, value-added tax and customs duties shall be equally divided among them and automatically be released. The remaining 50 percent will go to the federal government.

Also, the federated regions shall be entitled to 50 percent of all net revenues derived from the exploration, development and utilization of all natural resources within their territory.

However, the Con-com admitted there will still be regions that might need financial assistance in their journey from unitarianism to federalism. Hence the committee decided to have an equalization fund equivalent to 3 percent of the annual General Appropriations Act.

The fund will be administered by a 15-man Federal Intergovernmental Commission based on the regions’ need but with priority to those that require financial support, the draft Charter proposes.

Additional finances from the national budget may be provided by the federal congress for the regions so that they will effectively and efficiently deliver government services to their constituents.

Too many

ATENEO de Manila University’s Ronald U. Mendoza notes that federalism is one way to build further on the decentralization under the LGC. “I believe the Con-Com has also considered federalism as a ‘grand bargain’ that could include deep structural and political reforms that have less to do with federalism, but will be necessary nonetheless for our democracy and our economy to thrive,” Mendoza

“Federalism distributing the economic pie from Metro Manila and giving it to the regions will not change how the pie is [as it is] too small to begin with. The bigger problem is the recipe for the pie, which is overreliance on market forces and on foreign investment.”

—Jose Enrique A. Africa IBON Foundation Inc. executive director

said in his e-mail to the BusinessMirror. “These include dynasty regulation, as well as reforms on the economic restrictions in our present Constitution.”

However, the AdMU School of Government dean also cautioned about having too many federated regions since it might defeat the objective “of developing new agglomerations that could produce new growth engines across the country.”

“If there are too many regions, it may not be too different from the present setup whereby the country has been parceled into very small pieces, making it difficult to reach economic critical mass and manage jurisdictions with some degree of financial sustainability,” Mendoza added.

But Puno is sticking with the Con-Com’s decision to adopt 18 federated regions since the shift

to federalism would be easier if they follow these administrative regions as they are currently constituted.

Albeit he did not discount the objection that a lot of these regions may not be economically viable and sustainable, Puno believes these weak regions can be properly assisted given the exclusive powers that were granted to them. The former Chief Justice also noted other facilitating factors, such as the revenues that were allocated to them coming from the federal government, including the equalization fund and their share on the development of their natural resources, among others.

He added they also included a provision in the draft Charter that gives flexibility to these regions to merge or to subdivide when necessary.

“But, of course, that [merger or subdivision] will be subject to referendum and plebiscite of the affected people.”

Foreign ownership

JOSE Enrique A. Africa, executive director of nongovernment IBON Foundation Inc., believes the Con-com’s draft charter is “not as bad” as the PDP-Laban Resolution 8 charter-change proposals in Congress. Africa believes the latter went overboard by seeking to institutionalize profit-seeking and the market as the main organizing feature of the country’s social and economic life.

A precious few of the committee’s proposals are welcomed by Africa, including the more explicit attention to social and economic rights.

But as a whole, the proposals still diminish the legal basis for responsible State intervention and regulation of the economy that is so necessary for sustainable and equitable development.

“It turns out that mass media, advertising and educational institutions are also opened for foreign investment liberalization [i.e., not

aderLook

sMirror

www.businessmirror.com.ph | Thursday, July 12, 2018

T FOR

ALISM

ing the Charter?

based Political Science professor emphasized the shift to federalism will not automatically mean or lead to economic development.

Encinas-Franco also noted she’s far from being convinced the country should shift to federalism as she noted there is no strong argument for federalism or changing the charter for that matter.

“[It is] because of the cost that it will entail and if we can afford the uncertainties that would be felt in this period when we are actually being touted as economically growing,” she said admitting, however, “there is no perfect constitution, of course.”

Encinas-Franco is also sure changing the 1987 Constitution is “going to cost a lot.”

And so the question is, “Where will we get the money?,” she added.

“Where will we get it given that we have ‘Build, Build, Build’ [infrastructure program] financed by TRAIN [Tax Reform for Acceleration and Inclusion] law and some loans.”

Encinas-Franco also doubts the country can transition to federalism by 2022 as claimed by Puno “because, by nature, the government acts very slow.”

Africa also noted it is probably “overoptimistic” to expect the transition to be completed by 2022. He believes what can be put in place that time would only be the formal federal structure at national and regional levels, “including probably the legal and administrative aspects.”

“It is a very different thing, however, if these structures down to the regional levels will have adequate capacity, whether they will already be able to function and interact smoothly, if citizens and enterprises will have adjusted and be operating normally and other such details,” he said. “The shift will be disruptive and more so if, as is possible, domestic and global economic conditions by that time are more volatile or difficult. We have our doubts.”

Africa added the basic question is: “What is this disruption really for and what will it achieve?”

ZDENEK SASEK | DREAMSTIME.COM

Validating costs

just natural resources and public utilities as in the leaked draft],” Africa said in an e-mail.

He added that creating a constitutional backdoor, especially for natural resources and public utilities, “will exploit these for shortsighted profit rather than develop them for long-term national economic development.”

To note, the Con-com decided to allow Congress to liberalize economic restrictions in these areas but maintained the prohibition against ownership of land by a non-Filipino.

However, Africa pointed to the removal in the Con-com draft of a provision in the 1987 Constitution that exclusively reserves investment areas to Filipino citizens.

“The creation of a new constitutional commission on competition is, on the face of it, welcome [as it could] be used against monopolies,” Africa said. “It is, however, biased against economic and administrative regulations that are

crucial for managing the economy for strategic development. [The body also] advocates ‘pro-competitive policies,’ which often mean anti-labor and anti-interventionist policies.”

Economic framework

SOME analysts told the BusinessMirror there is no correlation between the form of government and levels of economic and regional development.

But Africa said there is no reason to believe this argument for federalism, noting that the proposed changes to economic provisions even actually reduced the prospects for economic growth.

“The usual argument for federalism is fallacious,” he said, referring to the claim by federalism proponents that resources unduly concentrated in “imperial Manila,” if given back to the federated regions, will jump-start the latter’s development. The argument goes the federated regions will have

more resources and control over these resources.

“It is actually peculiar why people seem to think that increasing the power of regions to raise revenues will raise revenues in the aggregate,” he said. “Secondly, federalism distributing the economic pie from Metro Manila and giving it to the regions will not change how the pie is [as it is] too small to begin with.”

Bigger problem

ACCORDING to Africa, the bigger problem “is the recipe for the pie, which is overreliance on market forces and on foreign investment.” The direction of economic policy in the proposed changes is wrong, he added.

According to Africa, for nearly four decades, the country has become more and more marketoriented.

Sans providing his source of data, Africa said, “A narrow segment of the population has pros-

pered, but tens of millions of Filipinos are still in chronic poverty.”

“The trajectory of the economy is not development but persistent agricultural backwardness, industrial decline, stubborn unemployment, drastically worsening quality of work, and record numbers of Filipinos forced to find jobs overseas,” he said.

Africa believes the main problem is not the “over-centralization of power and resources in imperial Manila at the expense of the rest of the country.”

“The real inequity is between the few who have control over resources and opportunities and the many who do not; that is, between the oligarchs and elites who control the capital, land and markets in the economy and the workers, farmers and other poor who do not.”

Disruptions, uncertainties

UNIVERSITY of the Philippines’s Jean S. Encinas-Franco echoed Africa’s views. The Diliman campus-

ACCORDING to Rosario G. Manasan, senior research fellow at Philippine Institute for Development Studies, the government would also need to spend an additional P44 billion to P72 billion a year to shift to federalism.

However, it is worth noting that Manasan used the federal constitution proposals from the House and the PDP-Laban Federalism Institute as bases.

“That is the additional bureaucratic costs, meaning the salaries of the governors, vice governors of regions, salaries of regional legislators because there is another level of government that is not existing now,” Manasan said in an earlier interview with the BusinessMirror. “So it is additional: additional legislators, increase in the number of federal-level senators and, of course, each of those offices has additional staff.”

But Puno said the cost will not be a stumbling block in pushing for federalism.

“We have an idea of what will be the cost and we make sure that the stream of revenues of the regions will be more than sufficient to offset the cost,” he said, adding that the Con-Com is still validating with experts the real costs.

Still, he believes majority of the costs would be reduced when the government is reorganized.

The costs can be reduced by onehalf if that is the case, Puno said.

He noted the transition to full federalism could be slow but sure enough to make government run effectively.

Baseless fears

BUSINESS groups have earlier expressed their fears in a position paper on the planned equalization fund and also on the regions’ added responsibility of tax collection. These groups said in June that some regions will perform poorly, which may affect delivery of services.

They added they believe only a handful of regions will have the capacity to independently maintain

A5

strong production and trade that will support their respective constituents.

Puno, however, dismissed these as “baseless fears.”

“I don’t know whether those fears are based on scientific studies. I have read a lot of this literature and they are mere fears,” he said. “On the other hand, we feel that you give this power to the regions and given the innate capability of the Filipinos, these regions would not only be viable but they will be sustainable even in the long run.”

But Puno said he is “confident” the economic situation of the Philippines will improve and “be better than the status quo” if the shift to federal system takes place.

“When we federalize, certainly one result of that is to unlock the potentials of the regions and, as I said, in terms of capability of Filipinos to govern themselves, I would not entertain any doubt on that,” he said. “You know, a lot of Filipinos [are] helping these foreign countries as advisers on fiscal matters, economics and so on and so forth; so we will not go to the extent of underrating the capability of Filipinos.”

Political feasibility

MENDOZA, however, said he’s more concerned about the political feasibility of the Con-com proposals, adding that a constituent assembly (Con-Ass) might be convened to review and finalize these proposals.

“I have deep doubts as to the fairness of this approach, since many legislators that might be part of the Con-Ass may have deep conflict of interests [for example the dynasty regulation, which may affect up to three-quarters of Congress who are dynastic],” he said.

He added it is also not yet clear how this proposal by Con-com could survive the political process since it includes “bold reforms” which may affect Congress itself, particularly the antipolitical dynasty provision.

But don’t be naïve, according to Mendoza.

“It may be naïve to expect that a reform-minded President alone is necessary to push these difficult reforms through a Con-Ass,” he said.

“This is why I think truly meaningful reforms under this federalism initiative have a higher chance of making it through, if a Con-con [Constitutional Convention] is put together.”

People’s will

HOWEVER, Puno recused himself from expressing preference for a Con-con or a Con-Ass, saying each system has its own advantages and disadvantages. He, however, noted that the Con-con is more focused on its duty to revise the constitution.

Asked if the process of charter change through Con-con is faster than Con-Ass, Puno nodded.

“Yes, in that aspect, because that is just their work to revise the constitution; they are not bothered by other legislative duties like passing first the budget and so on and so forth.”

Nevertheless, Puno considers a “hurdle” the likely move that Congress would convene as a Con-Ass. “And I assume that Congress will really study all the provisions and see whether the provisions are appropriate to our circumstances today and there will be provisions there that may run against their political interest and I take it that they will not be accepting these provisions just like that,” he said snapping his fingers. “Of course they will resist the provisions that may affect adversely their interest.

That is normal.”

Puno, however, believes the public wouldn’t take things sitting down if Congress dilutes such provision in the Charter drafted by the Con-Com. “The bottom line is the public support. Congress is supposed to represent the people,” the former Chief Justice said. “If they see that the people [support] this change, if they see that this draft constitution is amenable to the people, then I assume they will follow the will of the people.”

A6 Thursday, July 12, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Revisiting PHL’s PCA victory

T

wo years ago today, the Philippines scored a decisive victory against China when the Permanent Court of Arbitration affirmed that China’s “historical maritime rights” over contested areas in the West Philippine Sea/South China Sea have no basis in international law. To recall, the worsening dispute between the Philippines and China over conflicting maritime entitlements in the region prompted Manila to bring its case to the PCA. At the center of the maritime dispute was the “nine-dash line,” Beijing’s claim that encircles as much as 90 percent of the ­contested waters. The line runs as far as 2,000 kilometers from Mainland China to within a few hundred kilometers of the Philippines, Malaysia and Vietnam. Beijing maintains it owns the territories ­contained within the line, based on vaguely defined historical maritime rights.

The Philippines contested China’s claim, arguing that the nine-dash line exceeds the limits of maritime entitlements permitted under the United Nations Convention on the Law of the Sea. Under the Unclos, a nation has sovereignty over waters ­extending 12 nautical miles from its land and exclusive control over economic activities within 200 nautical miles.

Manila won a near unanimous victory, scoring all but one of its 15 claims against Beijing in its PCA submissions. The court also ruled that China’s construction projects in the Spratly Islands, harassment and prevention of Filipinos from conducting fishing activities in Scarborough Shoal, and interference with oil and gas exploration at the Reed Bank blatantly violated Philippine sovereign rights.

Although China has said it does not recognize the ruling, the role of the PCA as an impartial legal institution in maritime dispute resolution in the West Philippine Sea/South China Sea cannot be questioned. As such, the PCA ruling invalidated China’s so-called “historic rights” over the West Philippine Sea/South China Sea, clarified our maritime entitlements and set a precedent for peaceful resolution of maritime disputes.

Before the PCA ruling, countries with overlapping claims in disputed areas either acted in accordance with their own interpretations of the Unclos or adopted neutral position on certain maritime issues. This prevented joint cooperation among claimant nations to thwart what was perceived as China’s expansionism.

To mark the second year of the country’s victory at the Permanent Court of Arbitration, independent think tank Stratbase ADR Institute (ADRi) is holding a forum today—“The South China Sea Arbitration Award 12 July 2016: Promoting a Rules-Based International System?”—from 8:30 a.m. to 1:30 p.m. at the Manila Polo Club in Makati City.

Stratbase ADRi President Victor Adres “Dindo” Manhit said the forum will highlight the need for a rules-based international system to resolve the regional conflict over the area. “Two years have passed since the Philippines scored a decisive victory against its northern neighbor. Yet, while the ruling should have transformed the strategic milieu in terms of maritime security and should have reshaped the state actors’ strategies and actions, there remains uncertainty on the future of maritime commons,” he said.

Invited key speakers include Vice President Maria Leonor “Leni” G. Robredo, acting Supreme Court Chief Justice Antonio T. Carpio and Foreign Secretary Alan Peter S. Cayetano. Also invited to provide key insights are Dr. Jay Batongbacal, Director of the University of the Philippines Institute for Maritime Affairs and Law of the Sea; journalist Marites Vitug, the author of the book Rock Solid: How the Philippines Won its Maritime Case vs China; Prof. Brahma Chellaney of Strategic Studies Centre for Policy Research in New Delhi; Prof. Makoto Seta of Yokohama City University; Prof. Go Ito of Meiji University; and Natalie Sambhi of Australian National University. Gregory Poling, director of Asia Maritime Transparency Initiative at the Center for Strategic and International Studies, will provide a video presentation.

Former Foreign Secretary Albert del Rosario, who is the chairman of Stratbase ADRi, said, “The fact that the issue of the Hague tribunal decision has been set aside, to be brought up on another day,” is disappointing. He explained: “At the end of the day, everyone, even a superpower like China, has to understand that if they have to be respected, they must follow the rule of law. And until they do that, they will not get the entire respect of the world.”

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OUTSIDE THE BOX

T

he two most pressing topics of discussion—the shift to federalism and the inflation rate—are dangerous swamps of misinformation that you venture into at your own risk.

Andrés de Urdaneta had an easier time discovering the sea route from Manila to Mexico than making it through the Makati mud to the Pasig River. The local environment often bogs us down when we try to seek out the truth, and that currently describes both federalism and inflation.

For the moment, it looks like those charged with figuring out how to bring the notion of a federal system of government to the Philippines started with a blank piece of paper.

Then they started a game of “let’s pretend.” Unfortunately, after at least 500 years of “modern” government from the tribal level, the Philippines is not a blank piece of paper.

Virtually all nations that are “federal” in form are the result of existing “states” being combined

together under a national government. For example, the Federation of Malaysia is made up of 11 states, each of which had been self-ruled for centuries. The “Federal Republic of Germany” includes the “Free State of Bavaria,” which was a duchy as early as the sixth century.

Even the Federative Republic of Brazil was created from the colonial divisions by Portugal into the Captaincies of Brazil, which were self-governing until joined into the United Kingdom of Portugal, Brazil and the Algarves in 1815. So is the federal United States of America, states that joined together that had a history of an independent government infrastructure.

The point is that existing “federal governments” were created taking

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a number of “independent states” and putting them together under a national government. What is being done in the Philippines is like taking a hammer to a block of ice, breaking it into a number of independent pieces.

If the Autonomous Region in Muslim Mindanao, “broken” away from the national government in 1989, is any example, after decades the ARMM is still dependent on the national government for its operating revenues.

Then you read that there will be an “equalization fund” that is “distributed based on each region’s needs with priority to regions that require support to achieve financial viability and economic sustainability.”

Further, “The Federal Congress may also provide additional finances from the national budget to effectively and efficiently deliver government services.” It sounds like “Imperial Manila” is maybe only going to have a name change to “Federal Manila.”

However, a federal system could have national economic benefits if officials in the federal regions get smart and decide to serve the people and if the national government stays out of the way. Those are big “Ifs.” Theoretically, the regions would compete with one another to attract economic opportunities, like providing local incentives for businesses to

Economic optimization risks tipping of important Earth system elements

Lourdes M. Fernandez

Ruben M. Cruz Jr. Angel R. Calso

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Filipino federalism

database

O

PTIMIZING economic welfare without constraints might put human well-being at risk, a new climate study argues.

While being successful in bringing down costs of greenhouse-gas reductions, for instance, the concept of profit maximization alone does not suffice to avoid the tipping of critical elements in the Earth system that could lead to dramatic change of livelihood.

Scientists at the Potsdam Institute for Climate Impact Research (PIK) used mathematical experiments to compare economic optimization to the governance concepts of sustainability and the more recent approach of a safe operating space for humanity. All of these turn out to have their benefits and deficits, yet the profit-maximizing approach shows the greatest likelihood of producing outcomes that harm people or the environment.

“We find that the concept of optimization of economic welfare might in some cases be neither sustainable

nor safe for governing modern environmental change,” said Wolfram Barfuss of the PIK in a study shared to Database.

“Economic optimization can be quite effective in reducing current greenhouse-gas emissions, and it certainly has its strengths. Yet, under human-made global warming, we face a world full of complex nonlinearities, namely the tipping elements in the Earth system. The ice sheets of Greenland and Antarctica might collapse at some point if greenhouse-gas emissions do not get reduced, or the great circulation

systems in ocean and atmosphere could fundamentally change. In such a setting, optimization can lead to dangerous side effects.

Even for relatively high risks, and even if profit-maximizing agents in our calculations are farsighted, they tend to accept the possibility of detrimental environmental and societal impacts,” said the PIK study.

Mathematical experiments

This is the result of mathematical experiments that the scientists performed. While governments worldwide agreed on ambitious targets, such as the 17 United Nations Sustainability Goals and the Paris Agreement, which aims to limit global warming to well below 2 degrees Celsius, there is no consensus on how to reach those targets.

The scientists identified and then analyzed three big concepts: economic optimization (act to maximize your expected profit, with discounted future), sustainability (act to always stay above a minimum standard of expected profit, with discounted future) and the safe operating space approach, relying on the Planetary Boundaries concept (act to always stay within the safe space for humanity to ensure the functioning of

move in. Companies and people are leaving the US states of California and Illinois because of high taxes and over-regulation, to states like Texas that are more economically friendly. That could happen here.

But the poorer far-flung regions are still going to have a hard time going up against the large Metro areas. Yet, it could work if the regions take advantage of their new independence.

There seems to be a proper and even generous revenue-sharing scheme between the national and regional governments. Fifty percent of “total taxes” including income, value-added tax, Excise and Customs duties are supposed to be shared with the regions equally. This could definitely be a windfall and beneficial game changer for the poorer areas of the country.

This revenue sharing will put more fiscal and ethical responsibility on the regional officials. It is going to be up to the people to make sure that this money goes for the greater good and not for larger corrupt bank accounts.

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the Earth’s life-supporting systems).

“Take the Atlantic Overturning Circulation, better known as the Gulf Stream System, one of the great potential tipping elements in the Earth system,” said coauthor Jonathan Donges, from PIK and Stockholm Resilience Centre.

“We know, both from our understanding of the physics and from observations, that it can be put at risk by global warming. But we cannot yet calculate the timing of a tipping, as well as the potential damages arising from it. Hence, it is clear that economic optimization of climate policy would normally not be able to count it in as future costs,” Donges said.

“From the safe operating space perspective, we’d have to cut greenhouse-gas emissions immediately to make sure the Gulf Stream does not get seriously disturbed. But you cannot say that ‘safe’ is always ‘best’ because, from a sustainability point of view, poverty reduction is one main goal. If we ended fossil-fuel use too abruptly, the costs of a transition to clean energy would be substantial and might, at least for a certain time, rise energy and food prices and, consequently, impede the povertyreduction goal,” Donges added.

See “Arillo,” A7

Opinion BusinessMirror

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The shrinking food table Prophets in mission Msgr. Sabino A. Vengco Jr.

Val A. Villanueva

Businesswise

I

don’t know where Sen. Grace Poe and other critics are coming from when they tossed the blame for the current state of the Philippine economy to the Bangko Sentral ng Pilipinas (BSP).

Senator Poe has conveniently glossed over the almost daily killings of perceived enemies of the state, and the profanities oozing out of the mouth of President Rodrigo Duterte as he lashes out at the Catholic Church with increasing intensity and frequency.

To be clear, the BSP is not really a member of the economic team. To put it more accurately, the government’s economic team is composed of members of the President’s Cabinet, with the governor there only by virtue of the BSP’s strategic role as central bank which is an independent institution.

Aside from external factors, the Philippine economy is sensitive to general perception. This is the area where the Duterte factor weighs in big time. In the eyes of local and foreign investors, a lawless Philippines is not exactly a palatable place to park their funds in. It doesn’t help that the country’s chief economic architect, Secretary Ernesto M. Pernia, recently said that the latest high inflation figure was “unexpected and could dampen economic growth.” During the deliberation of the tax-reform measure or the Tax Reform for Acceleration and Inclusion (TRAIN), it has already been established that some of its provisions were inflationary.

The country’s inflation rate reached 5.2 percent in June, from 4.6 percent the month before. June’s figure was the highest in five years, piercing the upper limit. Remember that the Department of Finance version, on which the inflation bearing was modeled, had no coal tax and was bereft of the lifting of the value added tax-free status of power transmission. This resulted in costly electricity bills. Whose fault was it?

The Senate did not foresee it and the President, busy with eliminating dissent, should have disallowed it to safeguard the reliability of the tax-reform law.

Looking back, however, the country is no stranger to high inflation rates. From 1993 to 2001, inflation was at 7.4 percent yearly. Between 2003 and 2010 it was at 5.5 percent, well above targets. And don’t forget that during BSP Governor Amando Tetangco’s time, inflation went past 6 percent several times. But why is it that only during Duterte’s reign did inflation seem to have shrunk our food table? Current financial difficulties are being compounded by political uncertainties.

Minus the Duterte factor, the inflation spike in 2018 is driven by the following supply-side influences: oil price surge; excise taxes under TRAIN, and food supply disruptions, especially on rice, corn, fish and vegetables. This was amplified by peso depreciation triggered by widening trade deficit due to fast growth and by capital outflows due to Fed normalization. Strong domestic demand also gave opportunity for business to pass on to customers, rather than absorb, their higher cost.

Governor Nestor Espenilla told BusinessWise that the BSP responded by guiding market interest rate upward, initially by “open mouth policy, then more recently by two sequential 25 basis point policy hikes.”

The move, in effect, dialed down

Arillo . . .

continued from A6

What’s suitable?

It depends on the circumstances whet her a sust a inable or safe approach is most suitable.

The only thing clear is that in a no-policy scenario of unmitigated

The country’s inflation rate reached 5.2 percent in June, from 4.6 percent the month before. June’s figure was the highest in five years, piercing the upper limit. Remember that the Department of Finance version, on which the inflation bearing was modeled, had no coal tax and was bereft of the lifting of the VAT-free status of power transmission. This resulted in costly electricity bills.

Whose fault was it? economic activity, thereby easing peso- depreciation pressure, and cooling inflationary expectations. He said that the BSP would “continue with this for as long as necessary to guide the deceleration of inflation back to within target 2 percent to 4 percent by 2019.” He admitted, though, that such target would no longer be possible for 2018, and that inflation should peak by August.

“We are measured and deliberate about rate hikes to preserve the momentum of economic growth. That is vital to continued market confidence,” he explained.

External developments, policy normalization in the United States, and tariff wars launched by US President Donald J. Trump have exacerbated exchange-rate pressures and added to monetary-policy burden.

The required rate of return (RRR) reduction is not inflationary because the corresponding liquidity released were all easily absorbed back. This is due to foreign-exchange operations to manage peso volatility (BSP dollar sales drain peso liquidity from the system). In addition, the BSP stepped up open market operations through term-deposit facility auctions.

Espenilla said that the BSP carefully monitors and regulates overall system liquidity so there is just enough—neither too tight nor too loose—to support the economy.

Many armchair analysts factor in only the obvious liquidity release from the RRR cut, but fail to consider the overall liquidity situation after considering countervailing factors, such as foreign exchange sales and term-deposit facility auction.

According to Espenilla, “Some people also stress about the decline in gross international reserve [GIR].

The truth is that we have excess GIR accumulated when there was a lot of capital inflow during Quantitative Easing [QE] period [An expansionary monetary policy to stimulate the economy. It typically involves the Central Bank buying short-term government bonds to lower shortterm market interest rates].”

He noted that this was dammed up in the GIR to prevent these from creating asset bubbles in the economy. “It was always the idea to use the excess GIR when the flows start reversing as is happening now. Before QE, normal GIR buffer level is only at a minimum three months’ worth of imports. Currently, we are at around seven months. So we have a buffer to use for stabilizing peso volatility due to external uncertainties. This is what the GIR is for, a stabilizer.”

Alálaong Bagá

A

fter the incident showing Jesus as a Prophet questioned and rejected by His own townmates, Mark proceeds with the narration of the sending of the 12 disciples (Mark 6:7-13). They were to be preachers of God’s Word on the go, prophets in mission, sharing in the prophetic task of Jesus to battle the reign of evil and facing always the possibility of rejection and persecution.

In total dedication Of special interest are the details of Jesus’ instruction to the 12 before takeoff. They were to take nothing for the journey: no food, no sack, no money and no second tunic. But they were to wear sandals and carry a walking stick, being expected to walk any distance in search of the people to preach to, and going beyond the ordinary limits of human endurance. They were not to be hampered or slowed down by concerns about food, upkeep, comfort or even appearance. The urgency of proclaiming the coming of the reign of God demands totality and admits no distraction and division.

What real-life situation could

have prompted the evangelist to paint such an allegorical admonition? Were the Christians beginning to be preoccupied with means in neglect of the objective? Were too much equipage and possession burdening the missionaries and taking from them the freedom of movement? Had imposing appearances and impressive resources become too important, displacing the missionary prophets’ own faith shaping their lives and determining their lifestyles as the necessary and potent instrument in heralding God’s reign?

As a Church of the poor

Anytime and anywhere, a Christian apostolic communit y in

Thursday, July 12, 2018 A7

continuity with the faith of the 12 directly continues the prophetic mission of Jesus. But not just anyway or anyhow, because we are the prophetic and missionary followers of the Lord. As baptized and anointed, we are the bearers of His message sent out on a mission to all people. Here in the Philippines we are supposed to internalize already this Gospel truth in the declaration of the Second Plenary Council of the Philippines that we intend to be a Church of the poor. We follow and imitate someone who became poor for our sake. To be truly configured with Jesus, we opt for voluntary poverty and simplicity, “poor in spirit” (Matthew 5:3) and detached from worldly possessions in a spirit of trust in God. To be a Church of the poor is an imperative of our prophetic task to proclaim Jesus as our Lord, especially for our ordained ministers and religious leaders, our spiritual teachers and models. One cannot be a mediator-priest and a servant-king without being also a prophet who is challenged to be poor and simple, as well as reviled and rejected by some. The authenticity of a prophet in this world establishes his actuality and potency as a servant-leader.

The paradigm of a suffering, poor prophet or bearer of God’s Word cannot be skipped to aspire at once to

be a king and a priest. Indeed, one who would be an idolized king or a pampered priest is loathed to be a disconcerting gainsayer of what to the world is convenient.

Alálaong bagá, in baptism we all share in the entirety of Jesus’ threefold function in carrying out His mission of salvation as Prophet, Priest and King. The primary mission of the Church, and therefore of her servant-leaders, is the proclamation of the Gospel of Jesus Christ.

Faith is from hearing the Word of God. And we powerfully share the Gospel of Life to others, not merely with the words of our mouth, but above all by the testimony of our life. A true prophet is personally identified with the message, a living testimony, totally configured with and dedicated to the Lord who sent him or her. Following Jesus as prophets in mission, how can we be seeking a life of luxury, or ambitioning for honors and power? Real evangelization here among us had been neglected for so long, we have a big backlog to recover from, to become no longer a Catholic country said to be “sacramentalized but not evangelized.”

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

World Bank pushes for ‘social contract’ under globalization Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1

I

N recent think papers, IMF officials have advanced the argument that the adverse social impact of any fiscal policy should be considered “macro-critical” by a member-state. This means the social consequence of an economic policy should be integrated in the macroeconomic programming exercise. For example, if a policy such as taxation deepens social inequality, this policy needs to be reassessed or reevaluated because the exclusionary impact of this taxation policy is socially unacceptable. The IMF, taunted by critics as the heartless fiscal policeman of heavily indebted countries, is trying to promote the image that it is a caring institution.

Because of the Bank’s position on labor flexibility, the Asia Monitor Resource Center of Hong Kong concludes that the 2019 WDR is promoting “dangerous informality and insecurity in the labor market” and subverting social protection, which the World Bank has been espousing as a flagship program.

For comments and suggestions, e-mail me at mvala.v@gmail.com.

The IMF managing director, Christine Lagarde, has been vocal about the IMF’s newfound advocacy for assessing fiscal and other economic measures through the macro-critical prism. In a number of forums, Lagarde even widened the concept of what macro-critical is. She declared, for instance, that women’s participation in the economy is of “macroeconomic” importance to all countries. Hence, she said the promotion of programs strengthening women’s role in the economy is now part of the IMF’s overall economic programming.

The IMF has also embraced “social protection” as part of its advocacy. It supports the cash-transfer program for the poor initiated by the World Bank. However, the IMF has expressed reservations on recent moves of the World Bank supporting the International Labour Organization (ILO) in the institutionalization of “universal” social protection in all countries. To the IMF, the system of “targeting” the poorest segments of society as beneficiaries of any social assistance is enough.

Of course, trade unions and civil society organizations (CSOs) worldwide favor universality. Limited social assistance targeting is even labeled as “social tokenism” and even

discriminatory to the “near poor,” who do not get any similar assistance.

Now comes the World Bank with its 2019 World Development Report (WDR) titled “The Changing Nature of Work.” In this report, the World Bank is pushing for the “progressive” realization of universal social protection.

But the Bank does more than this.

It is espousing a “new social contract” in a global economy that is witnessing rapid advances in technology and equally rapid changes in job generation and the way work is organized and managed.

The report is fully Keynesian, and is a virtual opposite of past WDRs (circa 1980s and 1990s) celebrating the imagined benefits from a free and borderless global economic order. The 2019 WDR cites lengthily how the interventionist government of Franklin Delano Roosevelt licked the massive unemployment problem of America in the 1930s, a product of the 1929 to 1933 Great Depression, and transformed the United States into a big economic power in the 1930s to 1940s. The Roosevelt administration launched huge public works programs, passed strict laws regulating bank operations, enacted protective labor laws, and organized various social assistance programs

for the poor, elderly and disabled.

The Bank bats for a broad “social inclusion” or “social contract” program that provides for “a socially acceptable minimum income and insurance” for all members of society. It explains that the ideal is to have a society that provides equality of opportunity to all, which means giving all citizens “an equal chance to attain economic and social wellbeing.” This cannot happen without the government intervening or doing nothing. The Bank wrote that equality of opportunity happens “if everyone has access to some minimum levels of health, education, and social protection.”

Part of the social contract is a comprehensive program for early childhood development. This means “access to prenatal health care, immunization, micronutrients, as well as parental outreach on the importance of breastfeeding and early stimulation,” on one hand, and access to “quality early learning during their ‘next 1,000 days,’” on the other. In the delivery of such services, the WDR cites Cuba (yes, the socialist Cuba), where “children’s growth and development are regularly monitored.”

The Bank also joins the global debate on “universal basic income” (UBI). This debate has divided the trade unions. Some readily embraced the proposed UBI on the ground that all workers, employed and unemployed, should have assurance of decent income and livelihood. Others, however, oppose the UBI based on the argument that it is the duty of governments to insure that everyone gets a decent job, which is essential in having a dignified and fulfilling life.

The Bank position is that a minimum income should be combined with a basic universal social insur-

greenhouse-gas emissions, a Gulf Stream System collapse would also have negative impacts on poverty reduction.

“It turns out that there is no master concept for countering environmental challenges,” said coauthor Jürgen Kurths, head of the PIK research department Transdisciplinary Concepts and Methods and

a pioneer of the complex nonlinear systems analysis applied here.

“Yet our analysis is a first step to provide decision-makers with better insights on which concept for achieving the climate and sustainability targets works and under which circumstances. Neither economic thinking nor good will alone suffice to deal with a world

full of complex nonlinear dynamics,” Kurts said.

The PIK, a member of the Leibniz Association, is one of the leading research institutions addressing relevant questions in the fields of global change, climate impacts and sustainable development. Natural and social scientists work closely together to generate

interdisciplinary insights that provide a sound basis for decisionmaking for society, businesses and politics.

Founded in 1990 and funded with €1.8 billion, the Leibniz Association, in Berlin, Germany, is a nonprofit scientific research organization comprising German non-university research institutes from various

ance. This concept of UBI is clearly not only an extension but also an expansion of the conditional cash transfer (CCT) program the Bank has helped develop in a number of countries, the Philippines included.

The Bank keeps citing widespread informality and the job uncertainties in the labor market as the primary reasons countries should strategize how to institutionalize the program of universal social protection.

And yet, the 2019 WDR, which departs radically from previous WDRs based on the Bank’s new or changing perspective on social protection, has been the object of intense criticism by a number of trade unions and CSO. The main criticism is focused on the Bank’s insistence on keeping the labor market flexible, in particular in “reducing the cost of hiring workers.” The Bank cites “legislated minimum wages, constraints on hiring and dismissal decisions, and severance pay” as among the factors that “make it too expensive for firms to adjust their work force.”

This position of the Bank on labor flexibility is precisely what the trade unions in the Philippines, as reflected in their anti-endo campaign, have been denouncing in the streets, mass media and various forums. The unions, in fact, have been pushing for policies opposite to those adopted or cited by the Bank.

In particular, unions seek higher minimum wages, security of tenure in hiring arrangements, tighter rules against employee dismissal and full employee compensation in severance situations.

Because of the Bank’s position on labor flexibility, the Asia Monitor Resource Center of Hong Kong concludes that the 2019 WDR is promoting “dangerous informality and insecurity in the labor market” and subverting social protection, which the World Bank has been espousing as a flagship program.

Based on the foregoing, it is abundantly clear that the Bank, in the eyes of the unions and CSOs, remains an unreformed neoliberal financial institution despite the Bank’s advocacy for universal social protection and, now, a new “social contract.” branches of study. In 2017 91 nonuniversity research institutes and service device for science belonged to the Leibniz-Gemeinschaft, with the Senate as its main organ. Its president is eminent Prof. Dr. Matthias Kleiner.

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

2nd Front Page BusinessMirror

A8 Thursday, July 12, 2018

www.businessmirror.com.ph

Alvarez eyes nixing 2019 polls in transition

T

By Jovee Marie N. dela Cruz

@joveemarie

O give lawmakers more time to study the draft federal constitution and for an easier transition to the proposed federal form of government, the leader of the House of Representatives on Wednesday said it would be practical for the country not to hold the 2019 midterm elections.

Speaker Pantaleon D. Alvarez told this to reporters after Consultative Committee chairman and former Chief Justice Reynato S. Puno, together with other members of the Con-com, handed over a copy of the 91-page draft Charter, titled “Bayanihan Federalism: Power to the People, Power to the Regions,” to the lower chamber.

“Practically, yes,” Alvarez said when asked if it would be easier to transition to a federal government if the 2019 elections will not be held. According to Alvarez, the lower chamber needs enough time to tackle the proposed Charter change.

Also, he said lawmakers will be busy in the next few months for the State of the Nation Ad-

Filipinos. . .

Continued from A1

This accounts for only 22.6 percent of the total adult population—what the BSP called a “modest” improvement from the 22 percent seen in the BSP’s maiden financial inclusion survey in 2015.

Among account owners, the top use case for their accounts is to save for

dress, the deliberations of the 2019 General Appropriation Act, the filing of the Certificates of Candidacy for 2019 elections, the holiday or Christmas break and the start of the campaign season for next year polls.

“How are we gonna arrive at a quorum here? Of course, the congressmen have to start campaigning; that’s elections, it’s survival,” Alvarez said.

“How are we going to make the proposal to revise the Constitution? If we want to finish it, for me that’s what we should focus on, the timetable,” he added.

Alvarez said if Congress should put its focus on Charter change, “If we really want to finish it, we need emergency, accounting for 42 percent of the group, while 31 percent was for saving for education and 29 percent for business.

At least 23 percent of account holders during the period, meanwhile, use their account for safekeeping while 12 percent consider it as a form of investment.

On the other hand, of the 52.8 million Filipino adults who don’t have a bank account, 60 percent cited not having enough money as the primary reason.

“How are we going to make the proposal to revise the Constitution? If we want to finish it, for me that’s what we should focus on, the timetable.”—Alvarez

to focus on it. It should not be done lightly.” Majority Leader Rodolfo C. Fariñas Sr. of Ilocos Norte said that members of the Con-com took about four months to finish their draft constitution.

“We’ll have to work on it, and then we’ll give you our timetable because, as of now, we haven’t read it yet, we have no idea what it looks like and how hard it will be,” Fariñas added.

“Do you think we can do it in two months? If so, it’ll be a rushed job.... If the leadership decides to enforce the proposal, we’ll work on it,” he added. However, the majority leader said the draft Con-com’s version and the House version of the federalism will be both considered by Congress.

The draft constitution was submitted to President Duterte for review on July 9. It was completed after several months of work by the 22-member Con-com handpicked by the President and proposes a shift from a unitary form of This is followed by the perceived lack of need at 21 percent, and absence of documentary requirements at 18 percent.

Other reasons cited are high cost (10 percent), lack of knowledge in account opening (9 percent), lack of work or employment (8 percent), and lack of awareness (8 percent).

Still cautious of banks While the survey showed that banks

government to a federal.

Once reviewed, and if the draft constitution is accepted by the President, he will then endorse it to Congress for deliberations.

Under the draft, 18 federated regions are given more powers and will get a share of not less than 50 percent of all collected taxes. The draft constitution also states that the President and the Vice President shall be elected as a team.

P.L.D.T. GIVEN TILL END OF JULY TO REGULARIZE 7,300 CONTRACTUALS

By Samuel P. Medenilla @sam_medenilla

Studying

P

Meanwhile, Alvarez said the House will now start studying the draft Federal Constitution submitted to them by the Con-com.

“Nothing serious [during the handover of the draft constitution]. We were given the preliminary draft, and then after that, we’ll have a series of meetings, however, we have the BBL [Bangsamoro Basic Law], and we can’t prioritize it yet. We’ll have to study it first,” Alvarez said.

But Fariñas said that the draft proposal of the Con-com is “recommendatory” in nature, and it is still the members of Congress who have the power to propose amendments to the Constitution.

“They [Con-com] are only advisory, and I hope we can make that very clear to the public…it’s the Congress that can propose amendments to the constitution,” he said.

LDT Inc. has until the end of the month to regularize its 7,300 workers or risk facing punitive actions from the Department of Labor and Employment (DOLE).

In a press conference on Wednesday, Labor Secretary Silvestre H. Bello III issued a clarification on the regularization order he issued to PLDT to absorb the concerned employees.

“This Office clarifies that, pursuant to existing laws, the regularization of workers as a result of the finding of labor-only contracting takes effect by operation of law, and is not subject to any condition,” Bello said in his clarificatory order.

“Any act or condition imposed that frustrates or tends to frustrate the order to regularize is contumacious and shall be dealt with in accordance with law,” he added.

With Kezhia Maglasang

Labor Undersecretary Joel B. Maglunsod said they issued the clarificatory order after getting reports that PLDT is requiring the affected workers to undergo screening before they could be regularized.

“This is an attempt to circumvent [the enforcement of ] our order,” Maglunsod said.

Members of PLDT Organization of Workers and Employees for Rights (Power) held a demonstration in front of the DOLE’s main office in Intramuros, Manila, to protest PLDT’s alleged misinterpretation of the order.

Power President Dan Joshua Nazario assailed the manner by which PLDT retrenched the affected workers then later required them to pass preemployment requirements to be regularized.

“PLDT must stop its four-step process for absorbing employees for regularization. The said process is a clear move to circumvent the DOLE Compliance Order stating that the Company must immediately consider their outsourced employees as regulars,” Nazario said in a statement.

continued to have a higher share in account penetration at 11.5 percent, compared to non-banks such as Microfinance nongovernment organizations at 8.1 percent, the BSP found out that from 2015 to 2017, account ownership actually increased in Microfinance NGOs but decreased in banks.

In particular, among those adults with savings, a significant drop was seen among the percentage of Filipinos who opted to keep their savings with banks.

Formal savings accounts with banks dropped from 14.1 percent in 2015 to 9 percent in 2017, despite the increase in the country’s overall savings rate of 48 percent for 2017 from 43 percent in 2015.

The shift was seen to Microfinance NGOs, which saw a jump in patronage from 1.8 percent in 2015 to 7 percent in 2017.

The BSP said the account in microfinance NGOs refers to compulsory savings—also known as capital build up— which is usually required as a portion of the microfinance loan.

Also in terms of loan awareness, 96 percent of respondents surveyed by the Central Bank are aware that loans are offered in Microfinance NGOs, a higher number compared to the 64 percent which identified banks as a source of loans.

Tariff. . .

Continued from A1

The government expects the increase in rice supply—with the scrapping of the QR—to cut the price of the staple by P7 per kilogram.

Piñol’s pronouncement comes after the Department of Budget and Management assured the Department of Agriculture (DA) that the government has a standby fund of at least P5 billion that could be tapped for the transition to a QR-less rice sector.

The DA chief met with rice farmers and other stakeholders recently to discuss the government’s plan for the sector once the QR has been converted into tariffs.

“The concern of the rice industry stakeholders is the safety nets during the transition period. Because there would be [RCEF] once the tariffs are already collected, but before the start of the program the industry said they need P5 billion,” he said.

“So I took this up during the [Cabinet meeting].

While there’s no provision on safety net amount for our final budget for 2019, Budget Secretary [Benjamin E.] Diokno assured me that there is a contingency fund, and the government will shoulder it [first],” Piñol added.

Diokno confirmed to the BusinessMirror on Wednesday that the government has committed to cover the first year of RCEF. “We are going to source it from 2018 funds so, instead of waiting for next year, we have already set it aside this year.”

“It is just to make sure that the farmers will

Landmark case

Palace directive Maglunsod said they are bent on implementing the directive for PLDT, since it will serve as the precedent for all their regularization orders.

Labor Assistant Secretary Benjo M. Benavidez said they consider it as

not be disadvantaged. I’m committed to look for the money just to assure them that there is such a standby fund,” he added.

Diokno said the amount is meant to “give the farmers confidence that there is money in case they need it.”

Sen. Cynthia A. Villar, chairman of the Senate Committee on Agriculture and Food, earlier said the government must shoulder the P10 billion for the RCEF that she had initially proposed.

Villar said she will incorporate a provision mandating the allocation of P10 billion to the rice sector every year in the Senate’s version of the ricetariffication bill.

However, Piñol said the P10 billion was pared down to P5 billion, as it was the only available amount.

Romeo Royandoyan, executive director of Centro Saka Inc., said the P5 billion is not enough to jump-start the RCEF, which seeks to make farmers competitive against their Southeast Asian counterparts.

“Definitely, [it is not enough] if you want to make rice farmers and the entire sector in general comparable to Vietnam, which can produce rice at around P6 per kilogram,” Royandoyan told the BusinessMirror. “This is crucial in view of the proposed rice tariffication.”

Royandoyan, who is also the vice chairman of the National Sectoral and Strategic Concerns Committee-Food Staples, proposed that the rice fund be established before the QR is converted into tariffs.

He said it would take the DA around four to five years and P40 billion to P50 billion annually to make the rice sector competitive.

landmark case since it is the first time the DOLE will defend a regularization order, which covers thousands of workers.

“This may be a long battle that may reach even the Supreme Court. This is a landmark case,” Benavidez said.

Bello assured members of POWER during a mandatory conference that the regularization order will take effect.

“This is to show that the state is not powerless against the most powerful,” Bello said.

Legal action THE Dole said PLDT only has 60 days from the issuance of the writ of execution for the regularization order to absorb its employees.

“This period is already about to end, so our sheriff would soon have to report on this,” Benavidez said.

He said the order could only be stopped through either a temporary restraining order (TRO) or injunction from the Court of Appeals (CA).

Bello said they are now studying their legal action in case PLDT fails to implement the order on time.

“We won’t tell them our legal strategies to address this apparent legal impasse...because I am sure their lawyers are listening...I hope they will listen this time,” Bello said.

Aside from the clarificatory order, the DOLE also announced on Wednesday that it would start paying the claims of 2,065 contractual workers who were underpaid by PLDT’s contractors.

DOLE-National Capital Region (DOLE-NCR) South Director Ana C. Dione said they will use PLDT’s P52million cash bond to settle the claims.

Last year, the DOLE-NCR found PLDT and its 38 contractors engaged in illegal labor-only contracting and violation of general labor standards.

It subsequently ordered it to regularize almost 8,000 contractual workers. PLDT appealed the case at the Office of the Labor Secretary in January and last April, but Bello decided to junk both petitions and ordered the telecommunications firm to regularize its 7,306 contractual workers.

PLDT and 23 of the contractors affected by the regularization order have questioned theDOLE’s decision before the CA. However, PLDT has yet to reveal if it was able to secure a TRO or injunction from the CA.

The RCEF is a provision in the tariffication bills that seek to amend RA 8178 to allow the removal of the rice QR. The RCEF would be used for programs that would improve the rice sector’s productivity, such as mechanization, distribution of high-yielding seeds and provision of credit facility.

The House version of the tariffication bill proposes that the RCEF should consist of all the tariff revenues from rice imports but will be earmarked for only six years.

“Our preference is to earmark all tariffs collected from rice imports for the sector, as indicated in the House version of the bill,” Raul Q. Montemayor, national business manager and program officer of the Federation of Free Farmers, told the BusinessMirror last month.

“The P10 billion is less than what is expected to be collected in just the first year. We basically support the House version but would prefer a longer earmarking period,” Montemayor added.

He said his group would recommend an effectivity period of 10 years for the RCEF, which could be reviewed to determine whether it should be extended.

Removing the QR on rice by amending RA 8178 would allow the government to generate P27 billion annually, according to a paper published by the Philippine Institute for Development Studies (PIDS).

The PIDS paper noted that the projected revenues would come from the importation of some 2.2 million metric tons of rice at a 35-percent tariff. Purchases of imported rice are expected to increase once the government removes the QR.

With Jasper Emmanuel Y. Arcalas