Businessmirror july 13, 2017

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Thursday, July 13, 2017 Vol. 12 No. 273

Rebuilding a damaged agricultural sector

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resident Duterte wants to allow foreign investors to own up to 70 percent of telecommunication firms and all public utilities, according to the National Economic and Development Authority (Neda), and this will probably be reflected in the updated Regular Foreign Investment Negative List (RFINL) due in August.

Socioeconomic Planning Secretar y Ernesto M. Pernia said this is in line with the President’s campaign promise to attract more foreign investors and give Filipinos better services. “The President’s preference is up

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Govt to allow 70% foreign equity in telcos, utilities 40% P By Cai U. Ordinario

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to 70-percent foreign ownership and 30-percent local ownership for utilities. [On] land, his preference is [to] lease up to 50 years, renewable for another 50 years,” Pernia said. “That is what he has said even during the campaign and he hasn’t made any

Rene E. Ofreneo

LABOREM EXERCENS “We’re a blessed nation because we can grow our own food and, therefore, we’re secure. A nation that can feed its people is a nation more secure.”—President George W. Bush, on the occasion of the signing of the US Farms Bill, May 13, 2002. The US Farm Policy, which provides massive subsidy to American agriculture, is renewed every five years.

The foreign-ownership cap mandated by the current RFINL for public utilities

changes yet on that previous decision.” The Neda is currently in the process of crafting the 11th RFINL, which limits foreign ownership and the practice of professions in the country. According to Finance Secretary Carlos G. Dominguez III, the economic managers will be coming out with Continued on A2

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uring the election campaign in 2015-2016, then- presidential Candidate Rodrigo R. Duterte never got tired of telling the voters that the Philippines became a major agriculture-importing country because of “failed agricultural programs”, as reflected in the nation’s heavy reliance on rice imports and smuggled agricultural products, such as garlic and onion. Quoting an Israeli expert, he said that our soil is so rich the country is even in a position to feed the world. Continued on A11

Piñol not settling for budget lower than ₧120B for 2018 A ₧213B griculture Secretary Emmanuel F. Piñol—with concern and discontent written all over his face—shared to the media on Wednesday that, of his proposed P213-billion budget for 2018, only P36.4 billion has been approved by the Department of Budget and Management (DBM), thus far. This is even lower than what the Department of Agriculture (DA) got for this year—P45.29 billion—and he is worried that the agency’s major programs to grow

BCDA’S ‘BUILD, BUILD, BUILD’ PLAN Bases Conversion and Development Authority (BCDA) President and CEO Vince Dizon presents the “Build, Build, Build” program, the Duterte administration’s boldest and most ambitious infrastructure plan, to senior-level attendees at the Asia CEO Forum held in Clark, Pampanga, on Wednesday. The plan includes BCDA’s big-ticket projects, such as the Clark International Airport New Terminal Building, Subic-Clark Cargo Railway and the New Clark City—a new metropolis that will rise in the Clark Freeport Zone. These projects are envisioned to solve the problem of congestion in the country’s main urban centers by creating an efficient mass-transport system that will generate millions of jobs and bring in huge investments, greatly benefiting Central Luzon. BCDA PHOTO

How to handle a disagreement on your team

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hen you manage a team, you can’t ensure that everyone will get along. Given competing interests, needs and agendas, you might even have people who vehemently disagree. What’s your role in a situation like this? Ideally, you can coach your colleagues to talk to each other and resolve their conflict without you, making clear that their disagreement is harmful to them and the organization. But that’s not always

possible. In these cases, it’s important to intervene—not as a boss, but as a mediator. You’ll be more effective in addressing everybody’s interests if you use mediation rather than authority. ■ Why rely on mediation? Your colleagues are more likely to own the decision and follow through if they’re involved in making it. If you dictate what they should do, they won’t learn anything about resolving conflict. Rather, they’ll become more dependent on you to

PESO exchange rates n US 50.7700

figure out their disputes. Of course, there will be times when you’ll need to decide how the conflict should be resolved—for example, if company policy issues are involved or all other avenues have failed—but those occasions are rare. ■ What if your colleagues expect you to step in as the boss? You might say that although you have the authority to impose an outcome, you hope that, together, you can find a See “Disagreement,” A2

The proposed 2018 budget of the Department of Agriculture

the sector would not get the funding they need. “How do we increase our dairy production? How do we increase onion and garlic production? How

do we increase our livestock production?” Piñol lamented. The agriculture chief did not disclose the reasons behind the agency’s 82-percent budget-proposal cut. He did mention, however, that he would definitely seek a reconsideration, especially since it was President Duterte himself who promised him that the DA would get a much higher budget. He would not settle for anything less than P120 billion. In an interview with reporters Continued on A2

DOT mulls over ‘crowdsourcing’ ads By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

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HE Department of Tourism (DOT) will be crowdsourcing its advertisements and TV commercials (TVCs) this year, as it hopes to put out more innovative and original promotion materials. In an interview with the BusinessMirror, Katherine De Castro, tourism undersecretary for the Office of Public Affairs, Communications and Special Projects said, “We are thinking of crowdsourcing our next ads and get the public to comment or vote [for the materials] so the public can own it.” The government agency, though, has yet to

We are thinking of crowdsourcing our next ads and get the public to comment or vote [for the materials] so the public can own it.”—De Castro

finalize the terms of reference for any bidding or crowdsourcing for the new TVCs. The DOT is also currently finalizing the award of a contract to a new web-site developer, said de Castro, who also chairs the government agency’s bid and awards committee (BAC). The cost of the “Development of the DOT Website Project” is about P17 million, according to DOT Undersecretary Benito C. Bengzon Jr., who now oversees the information-technology department of the agency. However, he failed to send details of the project, which were also not available on the DOT web site. T he site rout i nely

n japan 0.4457 n UK 65.2547 n HK 6.4988 n CHINA 7.4649 n singapore 36.7446 n australia 38.7578 n EU 58.2332 n SAUDI arabia 13.5390

See “DOT,” A2

Source: BSP (12 July 2017 )

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A2 Thursday, July 13, 2017

Govt to allow 70% foreign equity in telcos, utilities Continued from A1

the revised RFINL by next month. The list was last updated in 2015. Under List A of the RFINL, operation of public utilities and ownership of land have a 40-percent cap on foreign equity. This is based on Article 12 Section 11 of the 1987 Constitution. Based on this provision, public utilities can only be operated by Philippine citizens or corporations and associations where at least 60 percent of the capital is owned by Filipinos. While the Constitution does not define the term public utility, the Public Services Act of 1930 said these include public utilities, such as various kinds of transportation, ice plants, canals, irrigation systems, power, water and wire-based or wireless communication, among others. “There’s a move to revise the Public Services Act so that utilities and telcos can be redefined so that they will not be on the negative list.

Disagreement. . . resolution that works for everyone. You could also tell them that when the three of you are together, they should devote their energy to reaching agreement, rather than trying to persuade you which side should prevail. ■ Should you initially meet separately or together? There are pros and cons to both approaches. If you first sit down with your colleagues separately, don’t focus on how to resolve the conf lict, but rather on understanding the disagreement and convincing both colleagues that you are willing to listen and help them address their concerns. Initial separate meetings are more successful if the manager spends time building empathy. The risk in starting separately is that each colleague may think that the other is going to use the meeting to sway your perspective. You can avoid this by explaining that the

Public utilities are part of the negative list,” Pernia said. Earlier, Philippine Competition Commission Chairman Arsenio M. Balisacan welcomed the move to shorten the RFINL, saying it bodes well for promoting competition in the country. Balisacan believes competition is key to addressing the country’s development constraints and struggles to attain inclusive economic growth. He said that for one, millions of Filipino students are deprived of receiving topnotch education simply because the RFINL only allows a 40-percent foreign equity in this sector. Balisacan said this is the reason top foreign schools are locating in other Southeast Asian countries, like Malaysia. The RFINL contains investment areas/activities where foreignequity participation is limited by mandate of the Constitution and specific laws. It also consists of investment

Continued from A1

purpose is to understand both sides, not to form an opinion on who is right. Meeting jointly at first has its upsides, too. Giving both parties a chance to do some controlled venting may clear the air between them. You should check with them before proposing this approach to be sure that they can maintain their composure. Another good reason to meet together is that, ultimately, your colleagues need to own the resolution and develop the ability to talk to each other when future conf licts arise. Of course, the risk is that you cannot control the process and the meeting escalates the conf lict. Research suggests that building empathy separately and then moving to a joint meeting is more effective than starting jointly and then meeting separately. ■ What should you accomplish

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Piñol not settling for budget lower than ₧120B for 2018 Continued from A1

areas/activities where foreignequity participation is limited for reasons of defense, security, risk to public health and morals, and protection of small- and mediumsized domestic market enterprises. The amendment of the list is headed by the Neda Secretariat, as provided for under Section 8 of Republic Act 7042, or the Foreign Investments Act of 1991, which states that amendments may be made upon the recommendation of the secretary of defense or the secretary of health, or the secretary of education, endorsed by the Neda, approved by the President, and promulgated by a Presidential Proclamation. “In May the door opens, it doesn’t close in May, so that is when we started reviewing. [Our internal deadline is] about the middle of next month,” Dominguez told financial reporters. In May t he f i n a nce c h ief pointed out that once the economic managers finalize their position on the issue, they will

submit the recommendation to Duterte, who will then issue an executive order removing restrictions contained in the 10th RFINL. “We are waiting for the comments of everybody, and from there, we will move ahead with the revision of that negative list. We will determine it first among ourselves and then we will talk with the stakeholders, but we have to decide our position first,” he added. The DOF earlier pointed out that it seeks to lift restrictions on financial, education and massmedia sectors, among others, to open up the local market to foreign players. The lifting of some of the restrictions on foreign ownership can help double foreign direct investment in the country and push growth sectors. “The only limitation we have there is what is legislated and what is in the Constitution; that is the only limit, because we’re only reviewing those things that can be done administratively,” Dominguez added.

in April, Piñol said Duterte assured him of a budget level that is similar to those of the departments of Education, Public Works and Highways, and Health. What was approved by the DBM, however, thus far is the Tier-1 budget proposal of the DA, representing the money required to sustain the department’s existing activities, projects and programs. Piñol’s Tier-2 budget proposal— an additional P175 billion, which is the amount needed to fund the department’s new programs or to improve the existing ones—is still under deliberation. Piñol said he would discuss and make an “appeal” to Sen. Loren B. Legarda, chairman of Senate Committee on Finance, regarding the agency’s 2018 proposed budget, particularly its Tier-2 component. “Actually, I will still talk about that with Senator Legarda...the DA team will sit down with Senator Legarda because I will appeal the Tier-2 budget of DA.” The agriculture chief disclosed that he would only settle for a minimum budget of P120 billion next year. “From P220 billion that we requested, the worst-case scenario

in your first meeting? Explain that your role is to help your colleagues find a mutually acceptable resolution and ensure that it does not negatively affect the team or the organization. Make clear that deciding whether a particular agreement is acceptable requires their buy-in and yours. Establish rules—mutual respect and no interruptions, for example—before you begin. ■ What information do you need to draw out? In future meetings, you’ll need to learn from both people what their positions, interests and priorities are. Gather this infor mation by asking “why?” or “why not?” questions to uncover the interests that underlie their positions, listening carefully and reformulating what you hear about one colleague’s interests to ensure you understand and that the other colleague also hears them. ■ What are the pitfalls? Your colleague may try to convince you that his view of the facts is

correct, that his position is “right” or that he should prevail because he has more power. We call these facts, rights and power arguments, and they are detrimental because they distract everyone from seeking a satisfactory resolution. In a facts argument, both colleagues may have been at the same scene, but each remembers it differently. They both think that if they could convince you and the other person of their view of the facts, the conf lict would be over. But even if you had been there, it’s counterproductive to try to convince others of your view because they’re unlikely to change their minds. The best approach is to agree to disagree and move on. Arguments about rights may come in the form of appeals to fairness or past practices. But for every rights argument one colleague makes, the other can make a different one. If they start to invoke fairness,

su g gest t h at t he d i sc u ssion be put aside while you jointly sea rc h for i n for m at ion t h at might help resolve the conf lict. Power arguments are essentially threats. Being threatened makes people defensive and distrustful and, therefore, more reluctant to share information about their positions, interests and priorities. If one person issues a threat, repeat the ground rules and what you’re tr y ing to accomplish. ■ How can you move toward an agreement? Finding potential settlements may be easy if it becomes clear that the conflict was just a misunderstanding or that there is a way forward that respects both parties’ interests. But if their interests are as much in conf lict as their positions, finding a settlement may be more difficult. There are several ways to facilitate an agreement in this situation. Often, parties can simply agree on how they are going to

DOT. . .

Continued from A1

lists requests for proposals and bids for materials, supplies and projects. Nor was it on the Philippine Government Electronic Procurement System, the government portal that lists down all available government projects for bidding. “The bidding was posted on the Philgeps web site in the first quarter of the year,” said de Castro, for her part. “There is a lone bidder but they will present to us yet. If it passes the evaluation of the BAC, then we will award,” she added. In November 2016 the DOT web site (www.tourism.gov.ph) was deactivated for a few days, after its cover page (www.itsmorefuninthephilippines.com) went off line due to the suspension of its account. (See, “Stakeholders ‘mourn’ death of DOT site”, in the BusinessMirror, November 2, 2016.) Frequent users also often complain of the DOT’s site unsightly and boring graphics, as well as information that are not updated. Meanwhile, still being played in the country’s tourism source markets abroad is the “Anak” TVC, where a foreign traveler is seen interacting with a host Filipino family against the backdrop of the Blue Lagoon, a famous local destination in Surigao del Sur. The mother in the family, repeatedly calls him

is that our budget would only be P120 billion. That’s the budget that I will fight for because that was the commitment of the President as a support to the DA,” Piñol said. “That’s the minimum that will make me happy.” If the DBM would allocate P120 billion to DA next year, then it would be the biggest funding allocation of the department, excluding the budget for its attached agencies, according to Piñol. Piñol said one of the DA’s priority programs next year is its financing program, dubbed as Production Loan Easy Access, which the agency is asking for a P50-billion funding. “We are asking for P50 billion for that. But we can split that to P25 billion, but we will decrease the maximum amount that the farmers can borrow,” he said. Other priority programs of the DA for 2018 include: irrigation systems, livestock program and garlic production, according to Piñol. The DA is seeking a budget of P200 million for its garlic-production program to boost the country’s output by 50 percent within five years. For 2017 the DBM approved a P45.29-billion budget for the DA, which was 7.46 percent lower than the agency’s 2016 budget of P48.94 billion. Jasper Emmanuel Y. Arcalas

interact or address the issue in the future. This can be tricky, though. Sometimes one might be willing to engage in a futurebased agreement but not trust the other to follow through. In those cases, fall back on these types of agreements: ■ Limited duration. Instate the agreement as a trial and evaluate before continuing. ■ Contingent. This agreement depends on a future event not happening. If the event does happen, an alternative agreement takes effect. ■ Nonprecedent setting. This protects against risk because the parties agree that the settlement will not set a precedent in the event that a similar conflict arises later. The New York Times News Service

Jeanne Brett is a professor of dispute resolution and organizations at Northwestern University’s Kellogg School of Management. Stephen B. Goldberg is a professor emeritus at the Northwestern Pritzker School of Law. “anak”, as she offers him food. The traveler then asks his tour guide what anak means, and is told that it is “my child” in English. The TVC ends with a quote from travel blogger and model Jack Ellis: “When you’re with Filipinos, you’re with family.” It also carries the hashtag #WhenWithFilipinos, which is hoped to go viral the way #ItsMoreFunInThePhilippines brand campaign did when it was launched in 2012. But the DOT has stressed the “It’s More Fun…” slogan is still the country’s brand campaign. A new T VC is immediately needed as the “Anak” run is expected to wind down by September. It was launched during the Miss Universe 2016 beauty pageant, held in January. It would be recalled that advertising agency McCann Worldwide Group had recently produced a TVC for the DOT, titled “Sights”, showing a blind Japanese tourist enjoying the tourism destinations in the North, such as the sand dunes of Paoay and Calle Crisologo in Vigan. A social-media outcry, however, followed the airing of the ad by the DOT as it had glaring similarities with a tourism ad by South Africa. The DOT had asked McCann to publicly apologize for the oversight but the advertising firm did not. The DOT canceled the P650-million contract of McCann, which was awarded last year.

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Govt forces rush to end Marawi violence before July 24 Sona By Rene Acosta

@reneacostaBM

Duterte renews strong warning against ‘irresponsible’ mining

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he military said it would work to meet the deadline set by President Duterte for the soldiers to end the siege in Marawi City by the Maute-Islamic State (IS) group, although it said the Commander in Chief knew the “complexities” of the operation. “The Armed Forces of the Philippines will do its best, as it has been giving its level best, to crush the rebellion of the Maute-IS group,” Military Public Affairs chief Col. Edgard A. Arevalo said on Wednesday. “The 15 days is a period within which the President hopes the crisis in Marawi to end,” he added. Duterte earlier said he was looking forward to the military’s clearing of Marawi City within two weeks. But Arevalo also said Duterte is fully aware of the challenges accompanying the ongoing operation. “The Commander in Chief is aware of the complexities of the ongoing operations because he is being briefed regularly,” he said. “Your government security forces’ resolute desire to accomplish the mission remains undiminished,” Arevalo added. The military had earlier set a deadline of June 12 to crush the resistance put up by the terrorists, but the target was not met. Defense Secretary Delfin N. Lorenzana also set three deadlines, but they, likewise, failed. Lately, he said he was hoping the conflict would be over before the President delivers his State of the Nation Address (Sona) on July 24. Lt. Col. Jo-ar Herrera, spokesman of the Joint Task Force Marawi, said 54 more buildings were cleared of IS-inspired terrorists at the main battle area. Earlier the military said the terrorists are still holed up in some portions of four barangays in downtown Marawi City. “Yesterday [on Wednesday] we have cleared 54 buildings,” said Herrera, who earlier said the area being occupied by the terrorists is composed of around 800 buildings.

Missing students, teachers

A Department of Education (DepEd) official, meanwhile, said about 22,000 students and 1,411 teachers in Marawi City have been displaced due to the ongoing armed conflict between the Maute-IS group and government forces. In an interview, DepEd Assistant Secretary and Spokesman Tonisito M.C. Umali said, as of July 10, some 21,457 out of the 22,000 have been tracked down in various areas in the country. Some of the displaced learners are enrolled in Region 1 with 34 students. The highest number of Marawi displaced learners are in Region 10, with an estimated 12,663 students. The DepEd found some of the learners in Lanao del Norte with 4,889, wherein 4,027 are in Iligan City. In Lanao del Sur there are about 4,049 students, and in Lanao del Norte, 3,206. For the learners absorbed in various divisions, he added, the DepEd has provided interventions, such as psychological first aid. Tents and temporary learning spaces have been set up in areas that can no longer accommodate students in regular rooms. “We provided learning kits. Same thing with our teachers, we provided them teaching kits, hygiene kits...all the necessary things for them…particularly in Region 10,” he said. With PNA

Editor: Vittorio V. Vitug • Thursday, July 13, 2017 A3

By Elijah Felice E. Rosales

@alyasjah

resident Duterte on Wednesday vented his antimining sentiment yet again, this time, warning mine owners he will cut their heads off and plant it on the soil as “payment” for all their alleged devastation to the environment.

In his speech at Camp Aguinaldo,

study group Students of Manila High School in Intramuros, Manila, browse on books they borrowed at the moving library parked in front of the Manila Cathedral. The Book Stop Project, dubbed as a “traveling open library”, in Manila, is open to all who are interested to borrow and donate their books. NONIE REYES

Piñol bans 43 garlic and onion importers By Jasper Emmmanuel Y. Arcalas

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@jearcalas

he Department of Agriculture (DA) will ban 43 importers, following their failure to utilize their sanitary and phytosanitary import clearances (SPS-IC) to bring in some 50,000 metric tons (MT) of garlic to the country this year. Agriculture Secretary Emmanuel F. Piñol made the pronouncement after Sen. Cynthia A. Villar, chairman of the Senate Committee on Agriculture, warned that she would file charges against Bureau of Plant Industry officials for failing to crack down on cartels accused of manipulating the prices and supply of garlic. “We are going to ban 43 importers of onion and garlic because after a recent meet of importers with Undersecretary [Ariel] Cayanan, we learned that these importers did not import despite [issuance of] SPS during the time that they are expected to import because of the market need,” Piñol said in a news conference on July 12. “They should import even at the times when their profit is slim and not only during when they are earning more,” he added. Piñol said the ban will come in the form of an administrative order, which would also seek reforms in the issuance process of SPS-IC for garlic importers. Documents given by the DA to reporters showed that from January to June this year, it issued a total of 1,420 SPS-ICs to the 43 garlic importers. The total issued SPS-ICs covered an expected total volume importation of 70,100 MT. However, the 43 garlic importers only utilized 438 SPS-ICs, or 30.84 percent of the total issued permits, bringing in 19,252.2 MT of imports during the six-month period. The agriculture chief admitted that a cartel exists in the market that is primarily responsible for the manipulation of the importation and retail price of garlic today. “At the time that we needed to import, they did not import. This is a sign that there is a cartel,” Piñol said. “Yes”, he added, when asked if there are garlic cartels in the market.

However, when asked if whether employees from the DA are involved in the cartel, Piñol said, “No, and I am sure of that.” “Absolutely, there’s no involvement among any DA officials [in the cartel]. I will not tolerate any connivance between DA employees and importers,” he added. The agriculture chief said they would placed the sole authority to issue SPS-IC for garlic under his office. Piñol added they would also review the remaining accredited garlic importers of 111, after suspending the 43 ones. “For new importers, we will review again the list and will be sending our intels to really check on the actual existence of these importers, and not only by papers being used as front by smugglers,” Piñol said. Piñol added the country’s per-capita garlic consumption is at 1.43 kilograms, while the annual demand is pegged at 143,000 MT. The agriculture chief said the local production, which amounts to about 7,469 MT annually, could only satisfy less than 7 percent of the total demand. “We have to produce more. At least 50 percent of the demand can be locally produced,” he said. “We don’t have a competent volume output [against cartel]. So, how can we fight the manipulation if our production is only at 7,000 MT level?” he added. Piñol also noted that the lack of cold storage and limited financing for garlic farmers stunted the country’s annual production of the crop. “The cartels control these storage and lend them to other during off season, so the farmers cannot store their produce for longer of times and that complicates their situation because they can only plant or harvest once a year,” he said. The DA is now seeking a P200- million budget next year to kick start its five-year garlic industry development road map, Piñol said. Under the road map, the government is eyeing to boost the local production by 50 percent by expanding harvestable areas and establishing cold-storage facilities. “We have to plant at least 20,000 hectares of additional land to garlic to achieve this,” he said.

Duterte said he is just awaiting for the dust to settle in strife-torn Marawi City, Lanao del Sur, before he carries out his implementing executive agenda, one of which is cracking down on irresponsible mining. “I will institute the reforms after all my troubles in Marawi City [are finished]. I have to solve the mining impasse,” he said. Duterte has publicly expressed his disapproval over mining, handing over the environment portfolio to fellow antimining advocate Regina Paz L. Lopez. The feisty Lopez, however, was forced to relinquish her post after the Commission on Appointments rejected her appointment as environment chief. “[On the] mining impasse, I’m warning the rich. I have watched the documentary of [Ted] Failon and that of Gina [Lopez]. I really saw that mining is destructive,” the Chief Executive said. Duterte took a swipe at mining firms who “do not even plant a single tree” to at least compensate for the damages left behind by their operations. “I saw the fields near the mining sites. It’s ravaged. And I do not even see a single tree planted. The devastation in the farms, it’s so extreme farmers cannot make use of it anymore. And their fish pond, it’s all poisoned,” he said.

To resolve this, Duterte said he will soon call for a meeting between the miners and the affected residents. Taking a cue from his populist tendencies, the Chief Executive said he will reprimand the miners for allegedly destroying the livelihood of the marginalized. “You ruined their fields, how will they [farmers] survive? You keep on digging their lands for how much? 25 percent of taxes? [The government] gets about P70 billion a year [from the mining industry] and that’s it,” Duterte said. Duterte added “this cannot go on” and miners should begin paying the affected residents by the income they lost due to the mining operations. He said they must also rejuvenate the areas their operations disturbed through tree-planting activities. Should the miners opt not to follow his order, Duterte had one warning: “If you don’t, I will cut your heads and plant it there. There are so many injustices here that we have to correct.” Duterte has previously mulled over implementing a total mining ban. However, the most extreme his government can roll out was to shut down a number of mining operations and suspend a number of mining permits during Lopez’s stint in the environment department.

DOE sets new target date to restore power in Samar, Leyte and Bohol By Lenie Lectura

@llectura

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he Department of Energy (DOE) is anticipating a delay in the transmission of 160 megawatts (MW) of powergenerating capacity to be delivered to Samar, Leyte and Bohol. DOE Undersecretary Felix William Fuentebella said 120 MW of electricity that was supposed to be transmitted to the three provinces on Wednesday, July 12, will instead happen on August 1. “The transformer of the Ormoc substation is not working, according to the NGCP [National Grid Corp. of the Philippines],” said Fuentebella. The said transformer is crucial to the delivery of power that will be coming from Cebu and from some of the geothermal

power plants of Energy Development Corp. (EDC). The 120 MW represents 55 percent of the power demand coming from the three provinces that were severely affected by the earthquake on July 6. The remaining 40 MW that will be sourced from EDC’s Tongonan geothermal plant that will provide power to the said provinces on July 19 instead of July 16. “This is the latest status coming from the EDC,” Fuentebella announced. NGCP, for its part, is looking at other options to transmit power, one of which is the relocation of transformers to Leyte. It is also considering to provide connection of power barges that will be installed in Bohol, Ormoc, Leyte, Tagbilaran and Maribojoc.

Fight vs Maute-IS group gets morale boost from OFWs, Peshmerga soldier By Recto Mercene @rectomercene

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Peshmerga fighter who had seen action against the Islamic State (IS) in Kurdistan was among those who joined overseas Filipino workers (OFWs) in Iraq in expressing their support for security forces fighting militants in the southern Philippines. In a letter handed to officials of the Philippine Embassy, Kurdish fighter Rebaz Hasan said he expects to see the Armed Forces of the Philippines and the Philippine

National Police defeat the Maute-IS group behind the failed attempt to take control of the city of Marawi a few weeks ago. “From the Kurdish Peshmerga to the Filipino Peshmerga, we express our solidarity with you in the fight against the Islamic State,” wrote Hasan, who comes from Sulaymaniyah in the eastern part of Iraqi Kurdistan. Peshmerga, which is Kurdish for “those who confront death”, are the military forces of the Kurdistan Regional Government of Iraq. The Peshmerga have been fighting the

IS since the terrorist group, which is referred to in Iraq by its Arab acronym Daesh, attempted to storm the region in 2014. The Peshmerga foiled that attempt and had since successfully defended a front line that stretched more than 1,000 kilometers. When Baghdad launched the offensive to retake Mosul, the de facto capital of the IS in Iraq, Kurdish forces served as the spearhead. “We hope and pray for your victory against Daesh! Long live the Philippines! Long live Kurdistan,” said Hasan, who helped his Filipina

sister-in-law renew her passport during a consular outreach mission in Erbil that was conducted by the Philippine Embassy over the weekend. “The Peshmerga are respected fighters who, despite being outgunned and outnumbered, succeeded in holding their line against the IS in 2014, thus preventing the terrorist group from entering and taking control of Kurdistan,” Embassy Chargé d’Affaires Elmer G. Cato said. Also sending a letter of suppor t to Fi l ipi no t roops w a s

Kurdish writer and journalist Bestoon Othman Khalid. “As the Peshmerga succeed in defeating the Islamic State from this part of the world, the barbaric terrorists appeared in Marawi,” Khalid said in the letter he e-mailed to the embassy. “The friendly people and government of the Philippines are now fighting this brutal terrorist organization.” “As an international citizen from the Kurdistan Region, I show solidarity with our Filipino brothers and sisters and wish them all the success in the fight against terrorism,” he

added. “The Islamic State is a threat to the entire world. This is why we have to work hand in hand to fight this common enemy.” Both Hasan and Khalid sent their letters in response to the appeal made by the embassy on behalf of the Blas F. Ople Policy Center and the Department of Foreign Affairs for OFWs to send messages and letters of support to troops fighting in Marawi. The initiative is being undertaken in cooperation with the Civil-Military Operations Group of the Philippine Army.

Economy

A4 Thursday, July 13, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

PHL’s goal to be Southeast Asia’s LNG hub gets ‘great interests’ from 5 countries

CUSI: “Japan, China, Russia, Korea and including Indonesia. These are countries that have shown great interest in the project.”

will build an LNG terminal and is open to partnering with the private sector. Last month Cusi said he wants the Philippines to become Southeast Asia’s LNG hub. “We are determining if the Philippines can be the hub for LNG. We missed being the hub for aviation, the hub for maritime. Maybe, we can become the hub for LNG in Southeast Asia,” he said. LNG is natural gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas. “The Philippines already failed in aviation becoming a hub despite our geographical advantage and location, and in maritime. So this would probably an opportunity. It’s a dream,” Cusi added.

Lenie Lectura

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DOE sets offering of some areas near disputed WPS for petroleum exploration

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he Philippine government has received “great interests” from five countries that want to be involved in the liquefied natural gas (LNG) sector. “Japan, China, Russia, Korea and including Indonesia—these are countries that have shown great interest in the project,” Secretary Alfonso G. Cusi said on Wednesday after the agency’s “E-Power Mo” Energy Consumers and Stakeholders conference in Manila. The five countries are among the 26 groups included in the list of the Philippine National Oil Co. (PNOC), which earlier received unsolicited proposals for a plan to build a LNG facility. The PNOC was supposed to come up with a shortlist in end-June. “They have shown great interest, but it doesn’t mean we have shortlisted. But we are evaluating all proposals. We can’t say it will all be a government-to-government undertaking. It will depend on their roles, what capacity they are going to play because this project is a bit complex. It depends who can give the best solution,” Cusi added. The Department of Energy (DOE) and PNOC will meet on Friday to thoroughly discuss the proposals of these five countries. “We will meet on Friday…so we can evaluate them,” said the DOE chief said. The DOE is sticking to its 2018 target to launch the LNG project. “We want to complete it within the term of President Duterte,” Cusi said. PNOC has been vocal in saying that it

BusinessMirror

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By Lenie Lectura

@llectura

HE Department of Energy (DOE) said on Wednesday that some areas near the disputed West Philippine Sea (WPS) will be offered to investors for petroleum exploration activities.

“We may include areas in West Philippines Sea, Sulu Sea and around Palawan province,” agency’s Energy Resource Development Bureau Director Ismael U. Ocampo said during a news briefing after a DOE-led conference, entitled “E-Power Mo”. The DOE has yet to determine the exact locations that will be included in the sixth Philippine Energy Contracting Round (PECR) for petroleum in December. PECR is a transparent mechanism that allows the government to develop and utilize indigenous petroleum resources under a service contract regime, through partnerships with qualified local and international exploration companies. The agency is pushing for the next PECR, despite a moratorium on all exploration and drilling works in Service Contracts (SC) 72 and SC 75 in December 2014 and 2015, respectively, amid maritime tension with China. SC 72 is an oil and gas exploration permit covering the Sampaguita natural-gas prospect

in the Reed Bank, to the west of Palawan. SC 75 is somewhere northwest of Palawan. Developments in those areas were put on hold over the territorial dispute, despite the ruling of the Permanent Court of Arbitration in favor of the Philippines. The DOE, however, is aware that it needs to consult with the Department of Foreign Affairs (DFA) on this. “We need clearance from the DFA,” Energy Undersecretary Felix B. William Fuentebella said. “We defer this to the DFA.” Ocampo said the DOE will discuss this with the DFA “within the month”. If and when, the agency is successful in persuading the DFA in lifting the moratorium, Ocampo said, “We can already finalize the areas to be offered in blocks in the West Philippines Sea for the next PECR.” The DOE is pursuing the launch of PECR 6 this year, even as it has yet to award the contracts under the PECR 5. But officials are confident that the DOE will meet its target to award the pending

petroleum contracts ahead of the PECR 6 launch. “The DOE can meet that target,” Fuentebella assured. The DOE launched in May 2014 the fifth PECR for petroleum. Under this bid, 11 petroleum blocks, with a total of more than 4.7 million hectares in West Luzon, Southeast Luzon, West Masbate/Iloilo, East Palawan and Recto Bank, were offered for exploration and development. The areas for petroleum exploration include Area 1 in Southeast Luzon; 2 and 3 in Masbate-Iloilo; 4 and 5 in Northeast Palawan; 6 in Southeast Palawan; 7 in West Palawan; 8 to 11 in West Luzon. Two of the blocks are close to the Spratly Islands, of which a portion is being claimed by the Philippine government, which are areas under territorial dispute with China. Ratio Oil Exploration Ltd. of Israel submitted an offer for Area 4, which covers 416,000 hectares in waters of East Palawan. Colossal Petroleum Corp., an affiliate of listed Coal Asia Holdings Inc., submitted bids for Area 5, a 576,000 hectares block in waters east of Palawan, and Area 7, a 468,000 hectares block within the disputed Reed Bank. “We are already finalizing the contract. After which, we will submit it to Malacañang for signature, then we can award the contracts under PECR 5,” Ocampo said. The DOE is eager to launch another petroleum contacting round to solicit interest from investors.

Break time A salesgirl at a footwear shop, which sells locally made shoes at a posh mall in Fort Bonifacio, takes her afternoon break after completing her morning sales. The shoes being sold in the stall are crafted and made in Liliw, the footwear capital of Laguna. Nonie Reyes

More competition experts needed at PCC–Balisacan By Elijah Felice E. Rosales @alyasjah

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he Philippine Competition Commission (PCC) has told the United Nations competition body of its birth pains as a nascent government agency, citing the urgent need for more practitioners of competition law. In a news statement released on Wednesday, the PCC said it shared with the UN the primary obstacles the antitrust agency is facing in the implementation of the Philippine Competition Act (PCA). The most concerning, according to PCC Chairman Arsenio M. Balisacan, is the lack of competition experts in the Philippines. “In other countries, the knowledge and practice of competition law and economics are well-developed. The Philippines may be new in the game, but is catching up fast,” Balisacan said. To grow the number of competition experts in the country, the PCC said it encourages lawyers and economists to consider specializing on competition law.

In spite of the deficiency in competition experts, the PCC said, it made major headway among corporate and commercial-law practitioners, even if the PCA was only signed two years ago. “We have selected the best competition practitioners to join us in PCC. We also welcome those who want to specialize in this field. Our lawyers have had to surmount a steep learning curve for us to enforce merger control as credibly and as faithfully as the law intends, and on a par with other mature competition regimes,” Balisacan said. He added seminars and capacity-building on competition law should be continuously held in the business sector, judiciary, legal discussions and academe “to ensure a relevant and effective merger control regime”. He said competition law has yet to break ground in Philippine law-school curriculums, unlike tax and labor laws. The few managers running the PCC is not a problem, the antitrust chief said, as the agency vowed to protect sensitive in-

for mation of transactions in merger-review procedures. “This is a normal concern for businesses operating and cooperating with a new competition authority. But as the foremost authority on merger control, we assure our stakeholders that PCC applies the highest standards in dealing with business information,” Balisacan said. “The way to smooth merger reviews is paved with transparency and accountability. We must adhere to the law to avoid hefty fines and this is geared toward a culture of compliance,” he added. At present, the PCC is assessing 109 notifications on mergers and acquisitions amounting to a total of P1.8 trillion and has approved 88 transactions. The PCC has attended the 16th Session of the Intergovernmental Group of Experts on Competition Law and Policy in Geneva, Switzerland. The session has gathered trade and competition authorities across the world, in coordination with the UN Conference on Trade and Development.

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RDC 8, lawmakers ask PRRD to declare state of emergency in Eastern Visayas

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By Elmer V. Recuerdo Correspondent

ACLOBAN CITY—The Regional Development Council (RDC) in Eastern Visayas has asked President Duterte to declare a state of emergency in the region, following the 6.5-magnitude earthquake on Thursday, resulting in a region-wide blackout since then. Also, lawmakers from Eastern Visayas on Wednesday urged the Palace to declare a state of calamity in Region 8 after a 6.5-magnitude earthquake struck parts of the region on July 6. In a news conference, PDP-Laban Rep. Ben P. Evardone of Eastern Samar, chairman of the House Committee on Banks and Financial Intermediaries; and Liberal Party Rep. Edgar S. Sarmiento of Western Samar said a declaration of a state of calamity is needed for the region to recover. The National Grid Corp. of the Philippines (NGCP), responsible

for the transmission of electricity from the source to electric cooperatives through the grid, earlier said electricity from Cebu could not be transmitted to consumers because all of its transformers in its Ormoc substation were damaged by the quake. The recommendation for a state of emergency was formalized through a resolution, entitled “Recommending to the President Through the National Disaster Risk Reduction and Management Council [NDRRMC] to Declare Eastern Visayas Under a State of Emergency Arising from the

Region-wide Adverse Impact of the July 6, 2017, 7.5-Magnitude Earthquake”. The resolution said that based on the present situation, “the current regional situation is considered an emergency of both regional and national concern, given that the damage affected other areas beyond the borders of Region 8.” It also said that absence of electricity creates a “consequential negative economic impact felt, especially in the business sector.” If approved by the President, the declaration will allow local government units (LGUs) to make use of the calamity fund in providing support and assistance to their constituents and provide neighboring LGU of highly affected areas to extend assistance under existing Commission on Audit rules and regulations The recommendation was made during an RDC Executive Committee meeting on July 8 and for warded through NDR R MC Chairman and Defense Secretary Delfin N. Lorenzana. It stated that a declaration of emergency will fast track the region’s recovery and rehabilitation after the calamity as it will authorize the LGUs to use their emergency and calamity funds. The declaration of a state of emergency is expected to has-

ten measures that will resolve the current region-wide power blackout and empower LGUs and concerned agencies to act on the feared price surge and hoarding of petroleum products and other commodities. T he E xec ut ive Com m it tee meeting held last Saturday was called to assess the extent of the damage brought by the earthquake and address the regionwide power shutdown. Reports from the Office of Civil Defense, the Department of Energy read by Undersecretary Felix William B. Fuentebella, the NGCP and the Federation of Rural Electric Cooperatives in Region 8, among others, were presented during the meeting. Meanwhile, RDC 8 stated that apart from the physical damage, the region-wide power shutdown is taking its toll on the business sector, which is reliant on power generated by the damaged power plants in Tongonan, Ormoc City. Other resolutions passed by the council include one urging all concerned stakeholders to Build Back Better a More Resilient Energy Sector and one asking the DOE and other concerned agencies in the energy sector to review the Regional Transmission Development Plan and Support the Eastern Visayas Energy Development Plan. With Jovee Marie N. Dela Cruz

Taiwan sets eyes on Central Luzon as target for ‘southbound’ investment By Henry Empeño Correspondent

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UBIC BAY FREEPORT—Central Luzon is now being eyed as an ideal destination for Taiwanese investments under Taiwan’s New Southbound Policy, which seeks enhanced economic cooperation with the Asean, as well as countries in South Asia and Australasia. Speaking in the recent Philippine Investment Promotion Plan Investment Roadshow to Taiwan, Subic Bay Metropolitan Authority Administrator Wilma Eisma urged Taiwanese businessmen in Taipei and Taichung City to consider the so-called Central Luzon Manufacturing and Logistics Zone (CMLZ) as a prime investment destination. Eisma said the CMLZ—composed of Clark Freeport, Subic Bay Freeport, and the Freeport Area of Bataan—has ample space for manufacturing with its land area of more than 90,000 hectares, superb perks for businesses and management by agencies that have come together as one unit. “Together, we have worked closely to maximize our potential as one manufacturing and logistics zone. By joining forces, we now offer you many advantages,” she told businessmen. Eisma said the foremost advantage of locating in CMLZ is its strategic location, as the area “is a critical entry point to the Asean region populated by 650 million people, as well as a natural gateway to East Asian economies, such as China, Japan, Hong Kong, Singapore, Taiwan and South Korea”.

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Davao ‘good target’ of terrorists–1003rd Brigade commander By Cha Monforte Correspondent

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HILIPPINE Army 1003rd Brigade commander Col. Ernesto Torres said Davao City and neighboring areas in Davao region are considered “good targets” of Islamic State terrorists, as Davao City is considered the seat of government outside of Metro Manila, being President Duterte’s home city. “The President is always in Davao Cit y a nd if ter ror ists want to shame him, they would naturally take Davao City and the neighboring areas as good targets because they can surely get media mileage from their attack”, said Torres, whose brigade headquarters is based in Barangay New Visayas in Santo Tomas, Davao del Nor te. He commands around 1,500 Army troopers securing parts of Davao del Norte and Davao City. He informed Davao del Norte Sangguniang Panlalawigan his brigade’s security plans and programs during their session on Monday. Asked on the possibility that Islamic terrorists can thrive in the province, Torres replied, “There is a possibility in Davao del Norte, although it is remote.” He said military forces in the province have been constantly keeping an eye on the migration of internally displaced persons, or the so-called bakwits, from the conflict area of Marawi City and keeping the level of good security of the province right now. He differentiated the current martial law in Mindanao to Marcos’s martial law, which he reckoned to have a “political purpose”, while the current is addressing a “specific security problem”.

TORRES

Board Member Alfredo de Veyra III askedhow the military could check on the possible penetration of bad elements to Cafgu Active Auxiliaries (C A A) considering the usually nonrigid training w ith shor t per iod associated with their recruitment, Torres said they have mechanism to prevent them entering the CAAs while there is a regular Army officer deployed to lead in every CAA battalion or force organized in an area. He said there are about 900 Cafgu personnel from 37 detachments scattered in 1003rd Raptor Brigade’s area of jurisdiction covering Davao City and Davao del Norte. He informed the provincial boards his brigade has two Army battalions with around 450 men each, an artillery battery company, an armor company a military intel company, a Civil Military Operation company and a reconnaissance company. Torres has been in his post yet for two months since he assumed in May 2017.

China team inspects proposed drug-rehab site in Sarangani town By Manuel T. Cayon @awimailbox Mindanao Bureau Chief

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SECOND PHL HYDRO SUMMIT Sen. Sherwin T. Gatchalian (right), chairman of the Senate Committee on Energy, speaks with

Hedcor Inc. executives Bill Haboc and Darlene Arguelles during the opening of the second Philippine Hydro Summit on July 12 at a Makati City hotel. Gatchalian supports the government’s thrust to streamline permits and licensing processes for hydro developers, like Hedcorm, now mandated to harness renewable-energy resources. MAU VICTA

She added the CMLZ is at the crossroads of international shipping and air lanes, and accessible to the Asean region within three to four hours by plane via the Clark International Airport, and four days by ship to and from the Port of Subic. Another advantage, Eisma said, lies in the developed infrastructure support at CMLZ, like the eight passenger airlines with international

and domestic flights, as well as four cargo operators in Clark and the 10 shipping lines that call at Subic’s various seaports. Eisma also cited the 93.77-kilometer Subic-Clark-Tarlac Expressway, which connects Clark and Subic, thus enabling a faster and more efficient logistics and supplychain system for business locators and tourists.

“These developed infrastructures enhance our strategic location and internal supply-chain systems,” she said, adding the combination of these infrastructures “presents a workable business platform for foreign businesses engaged in the manufacturing, as well as industrial estate development, shipbuilding, aviation and aerospace and business-process outsourcing.”

Toyota opens 4th full-service dealership in Aklan

ALIBO, Aklan—Toyota Motors Philippines (TMP) has opened its fourth full-scale dealership and service center in Numancia, A klan, last Tuesday afternoon. Satoru Suzuki, TMP president, said the company is bullish on

Editor: Efleda P. Campos • Thursday, July 13, 2017

the opening of another branch because of the vibrant economy of the province. “Aklan is known because of Boracay Island and the Kalibo Ati-Atihan Festival. We consider 2017 as the year of continued challenges to our company,” he said during his message

at the opening of the dealership. Edison Lao, general manager of the Toyota Motors-Aklan, said the branch is the fourth in the island of Panay, composed of the provinces of Iloilo, Capiz, Antique and Aklan. In 2015 TMP partnered with the Lao family as part of its dealership

expansion nationwide. Aklan Gov. Florencio Miraflores said TMP’s investment in the province was a sign of Aklan’s continued economic growth. “Aklan is a national highway of vehicles, as tourists come and go to Boracay Island,” he added. Jun N. Aguirre

AVAO CITY—A Chinese team inspected on Monday the probable site for a drug-rehabilitation center in Sarangani province, one of two multimillion-peso facilities to be established in Mindanao under Chinese grants. Gao Gouyong, the Philippine branch executive manager of China Construction Third Engineering Bureau Co. Ltd., led the team accompanied by Sarangani provincial health officer Dr. Arvin Alejandro and the engineering officer Gerald Faciol. The team made a brief visit to Purok 4, Barangay Kawas of Alabel town. The team earlier paid a courtesy visit to Gov. Steve Chiongbian Solon. The provincial information office said the team “is on the final visit and site inspection of the 3-hectare lot” where the regional drug-rehabilitation center will be constructed. T he faci lit y is one of t wo recipients of the “Grant-Aid Dangerous Drug Abuse Treatment Rehabilitation Centers Project,” the information office said. The grant was an outcome of the China visit of President Duterte last

year, the information office added. The center would be worth P350 million with a 150-bed capacity and a recovery clinic. Construction is expected to start this year. Meanwhile, local residents in Maitum town in the province participated in an earthquake drill last week, as authorities also expanded the consciousness on disaster preparation among children. The drill sent rescue volunteers and government disaster responders to the drill area in Barangay Kalaong to determine the pace and preparedness of the town. The drill also evaluated the capability of the rescuers and security personnel “to give critical support as first responders who provide immediate assistance to victims of disasters and other calamities”, the information office said. The south-central portion of Mindanao, which includes Sarangani, has been affected by the tsunami that hit the Moro Gulf in the early 1970s. The tsunami was triggered by one of the strongest earthquakes on the same day in the area. The drill also involved the pupils of Perrett Central Elementary School, who were later lectured on how to prepare and respond appropriately during disasters.

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By Jonathan L. Mayuga

OSHUA makes time for waste. Every morning, the 13-year-old high-school freshman waits in front of their house to make sure kitchen waste is picked up by backyard hog raisers making the rounds in their small village in Dasmariñas, Cavite, to collect excess food.

Sometimes, he lamented, collectors refuse to take their kitchen waste because it also contains spoiled food. “I could have buried it, but there’s no open space left in our house. Last time, nobody picked up our kitchen waste. A stray cat scattered it all over. It stinks and I had to clean it up,” he said. Every Saturday, he also waits for the garbage collector to hand over their garbage bag. He is unaware if there is a materials recovery facility (MRF) in their village. It has also been his duty to dispose of the garbage every day, but not with a small reward. He gets to sell empty bottles, newspapers and plastic containers to a nearby junk shop for extra cash. Joshua’s parents are teaching him proper waste segregation— something that his family has been practicing to reduce the garbage the household produces daily.

A looming garbage crisis

IN the Philippines, with a population of over 100 million and still growing, solid waste management—or the lack of it—is a very serious health and environmental issue. Many highly urbanized areas are now experiencing serious environmental and health problems brought about by improper solid waste management practices. The illegal operation of open dumps exposes communities to serious health hazards, while uncollected waste, which comprises about 20 percent of total waste generated, ends up in open spaces and often finds its way in waterways. The Metropolitan Manila Development Authority (MMDA) hauls tons of waste that clogs canals and creeks in Metro Manila to prevent flooding, a perennial problem in low-lying areas during heavy rains. The National Solid Waste Management Commission (NSWMC), an interagency body created by virtue of Republic Act (RA) 9003, or the Ecological Solid Waste Management Act of 2000, estimates that the Philippines produces 40,000 tons of garbage every day, or 14.6 million tons a year. The computation is based on the weighted average of 0.4 kilograms per capita per day (kg/ cap/d), the amount of waste every Filipino produces on a daily average. Based on a projected population growth, annual waste generation in the Philippines will reach 16.63 million tons by 2020. Poor solid waste management leads to environmental pollution—air, soil and water— that exposes people to potential environmental and associated health risks.

Wasted solution?

REPUBLIC Act 9003 provides the legal framework for a systematic, comprehensive and ecological solid waste management program to ensure the protection of public health and the environment. The law underscores the need to create institutional mechanisms and incentives, as well as imposes penalties for violation of the law. The enactment of RA 9003 more than 25 years ago is seen as the ultimate solution to the country’s looming garbage crisis. The law provides for the formulation of a 10-year management plan, promotion of proper ecological solid waste management practice through segregation at source, recycling and repurposing, to reduce

the volume of waste, for disposal to a sanitary landfill. However, the full implementation of the law, particularly its provision on proper waste segregation, recycling, composting and disposal, remains to be seen. The NSWMC blames the looming garbage crisis in the Philippines largely on the failure of local government units (LGUs) to enforce the law. The NSWMC said most LGUs are reluctant to set aside local funds for proper ecological solid waste management in their respective towns. According to Ely Ildefonso, executive director of the NSWMC secretariat, lack of skills or knowhow, as well as financial resources to implement RA 9003, should not be an excuse. He added that the NSWMC has been offering LGUs both technical and financial assistance ever since the law was enacted. “They are not providing fund for solid waste management because it is not really their priority,” he noted. LGUs can also solicit support from foreign financing institutions and nongovernmental organizations (NGOs) for various programs related to ecological solid waste management. These NGOs promote environment-friendly solutions, like waste reduction, recycling, upcycling and repurposing. However, their efforts have achieved little success on account of people’s unhealthy lifestyle, lack of interest or sheer apathy.

Urbanization, populati

garbag

Still a priority

WASTE-to-energy (WTE) is described by environmental groups as a quick fix, but an unsustainable and problematic solution. While the WTE remains an option for the government, the NSWMC considers the three R’s— reduce, reuse and recycle—as a priority program. “Our priority is to recover all recyclable waste. This means recycling, then composting,” Ildefonso said. “But to do that, we have to do segregation at source.” If properly implemented, recycling and composting can reduce waste generation by up to 80 percent, leaving only the remaining 20 percent residual and special waste for disposal or for conversion through waste-toenergy or other uses, such as for construction material. According to Ildefonso, there are four types of waste—the recyclable, the biodegradable, the residuals and the special waste. The NSWMC estimates 25 percent of waste on the average is recyclable, 50 percent is biodegradables and 20 percent is residual. The agency estimates that 5 percent is special waste or toxic and hazardous waste. Recyclables can be repurposed or sold as junks for recycling. Ildefonso said biodegradables—mostly kitchen waste—can be disposed of through composting. Agricultural waste, which is also biodegradable, can be turned into organic fertilizer. Ironically, not all LGUs, including those in rural areas, provide areas for proper composting of biodegradable waste, he said.

Ildefonso explains AIDS as the acronym of Apathy, Ignorance, Discipline and Selfishness, things ail Filipinos have when dealing with the garbage problem. “Many Filipinos do not really care. They are ignorant. They lack discipline and they are selfish when it comes to helping their community,” Ildefonso said. He said a lifestyle change is necessary to effectively reduce waste. “When Filipinos are in other countries, they are disciplined; they follow the law. Back here, there’s apathy: Walang pakialam [They don’t care],” he lamented.

AIDS syndrome

Open dumps

ILDEFONSO said the government is not solely to be blamed for the garbage pileup. Surely, the daunting task of addressing such problem is not the government’s alone, he added. “Filipinos are afflicted with AIDS.”

SCAVENGERS at a dump in Cavite Tonyoquias | Dreamstime.com

FORMER Environment Secretary Regina Paz L. Lopez had wanted to shut down open dumps, starting with those she said may potentially contaminate the country’s freshwater resources. Lopez cited the Payatas Sanitary Landfill, which she said may affect the water sup-

ply in La Mesa Dam. The dam supplies potable water to more than 12 million Metro Manila residents. Currently, the NSWMC is targeting to close this year a total of 95 open dumps in the Manila Bay region, which encompasses the National Capital Region, Region 3 and Region 4A. Outside the Manila Bay region, more than 300 open dumps need to be closed or converted into sanitary landfills, the NSWMC said. However, Ildefonso said an underlying problem in closing open dumps is the failure of LGUs to establish a sanitary landfill. In Metro Manila and other urban centers like Metro Cebu and Metro Davao, lack of suitable space for a sanitary landfill is a major problem. “We do not have much space for landfills. That’s the problem,” he said. Ildefonso said only 15 percent of the total 1,634 LGUs nationwide have landfills, underscoring the

need to establish more or introduce alternative technologies for effective waste disposal. As mandated by RA 9003, LGUs are supposed to initiate action shutdown, or convert open dumps into sanitary landfill. Doing so, however, requires LGUs to spend more, especially for hauling and disposal.

WTE solution, opposition

WITH the failure of LGUs to implement proper waste segregation, recycling and composting, the WTE solution to the garbage problem has become more attractive. The Department of Environment and Natural Resources (DENR) is also eyeing the rollout of several waste-to-energy projects in partnership with the private sector and the government of Japan. With a guideline that would allow the use of appropriate technologies in place, Ildefonso said potential investors from European

countries, South Korea, Japan, Australia, the United States and China are looking at the Philippines for possible WTE ventures. The guideline adopting any technology for WTE will be allowed with certain standards and according to existing laws. WTE technologies do not also necessarily involve incineration and would even reduce the country’s greenhouse-gas emission, while effectively reducing up to 95 percent the volume of waste generated. Among the WTE technologies allowed under the guideline are gasification, gyrolysis, bioreactor, biomethanation, hydrolysis, pyrolytic-gasification, plasma and other thermal processes—technologies not requiring the use of incinerators. The WTE scheme has been the subject of debate because of the Clean Air Act, a law which prohibits open burning and use of incineration technologies. But with no concrete solution in

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Legal hurdles

ion growth seen to heighten

ge woes

GREEN groups, however, are tepid with the WTE as a solution to the garbage crisis. Some groups allege the QC WTE project violates existing environmental laws, such as RA 9003 and RA 8741 (Clean Air Act). Both landmark laws ban incineration, while RA 9003 requires waste segregation at source, doorto-door waste collection and increased recycling and composting. In the case of QC, there is not enough waste to fuel the facility, some of the groups claim. To note, Quezon City generates about 2,000 to 3,000 tons of garbage daily. To fulfill the waste requirement under the joint-venture agreement, the QC government will likely have to import waste from neighboring cities and burn mixed waste. Doing so will violate the segregation provision of RA 9003, Sonia Mendoza, chairman of Mother Earth Foundation Inc., was quoted in a statement as saying. “This project will seriously undermine ecological solid waste management as it will encourage people to produce more waste instead of reducing waste,” Mendoza said.

Unsustainable

ANNE Larracas, managing director of the Global Alliance for Incinerator Alternatives, said a high percentage of waste produced in QC is organic or biodegradable, which has low energy content. “This means that the current waste composition is highly unsuitable for burning, and additional fuel will have to be added to increase the efficiency of burning waste,” Larracas said. “This will lead to burning even recyclable waste with high calorific value, such as paper and plastics, in order to produce the purported energy generation of such facility.” She added that many QC barangays already have good wastemanagement programs. “Instead of turning to WTE technologies, QC can actually replicate the programs in these barangays. These programs are truly sustainable, ecological and cost effective,” Larracas added. “By employing these ecological programs, millions of pesos are saved from tipping and collection and transportation fees. Resource recovery is also more climate-friendly than trying to produce energy from WTE incinerators.”

Carrot and stick

A WASTE-TO-ENERGY facility Frek58 | Dreamstime.com

sight, the government is taking the bold move to go for the socalled no-burn WTE option. “This is where waste-to-energy technology comes in,” Ildefonso said. President Duterte has issued a public pronouncement backing WTE technologies to address the country’s garbage problem. Some LGUs are also already venturing into WTE schemes through publicprivate partnerships. The DENR is open to the idea of establishing WTE facilities— first to address the garbage woes, and second to boost power supply and provide cheap electricity to host communities. According to Ildefonso, the latest WTE project that recently became operational includes two in Nueva Ecija, which has a capacity of generating 40 megawatts. But environmental groups contend that WTE is just “a sexy title” for burning waste through incineration. “​W TE goes against the very

purpose of the Clean Air Act, which seeks to curb pollution.​ [WTE] runs against the zero-waste vision of the Ecological Solid Waste Management Act, encouraging more waste generation rather than​ recycling, thus promoting a culture of overconsumption,” Abigail Aguilar, detox campaigner of Greenpeace Southeast Asia-Philippines, said. “We should instead promote practice of reduction, segregation at source, recycling and reuse. The government should couple this with renewable-energy solutions, which are cleaner and more viable.”

QC case

REPORTS have said the 38-member Quezon City (QC) Council gave Mayor Herbert Bautista the authority to forge a joint-venture agreement with the private sector for the development of the city’s own WTE plant. Bautista earlier said such move helps the city avert a pos-

sible crisis in waste management with the impending closure of the landfill facility in Payatas in three years. The city government expects to earn additional revenue if the power or electricity generated from the soon-to-be-developed WTE facility is sold to electric companies, the mayor has said. The WTE facility is expected to generate 30 megawatts to 35 megawatts of electricity, according to Bautista. He added that the savings derived from the sale of the power or electricity will be used to fund the construction of additional school buildings, health centers, hospitals and multipurpose halls. The QC government spends P1 billion annually for solid waste management. The money, Bautista said, goes to hauling services, postclosure care and maintenance of the Payatas controlled disposal facility, special operations and toxic/ hazardous waste collection, treatment and disposal.

TO encourage LGUs to enforce RA 9003, the NSWMC provides technical and financial support in the crafting of solid waste management plans. According to Ildefonso, the support includes providing seminars and training to boost LGUs’ capacity in the conduct of waste analysis and characterization studies (Wacs). The Wacs can help LGUs come up with informed decisions as to how to properly manage waste, he added. Erring LGUs, on the other hand, face possible administrative and criminal charges, as a consequence of their inaction. As of last year, the NSWMC has filed cases against 50 LGUs. Another 154 LGUs are facing the same consequences, according to Ildefonso. RA 9003 mandates LGUs to implement proper waste segregation, composting and disposal. Among its responsibilities is to establish an MRF in every barangay and close all open dumps within their jurisdiction. However, Ildefonso said rapid urbanization may eventually worsen the problem. This is where LGUs must take the lead in enforcing ecological solid waste management. “It is important that LGUs start to address the garbage problem seriously. They should come up with a solid waste management plan, appoint an environment and natural resources officer who will focus on environmental issues like garbage, and set aside budget for solid waste management,” he said. Ildefonso added the NSWMC will continue to give LGUs the carrot—help them by providing the necessary support—but will also be carrying a big stick—by filing appropriate cases against erring local officials for failure to enforce the garbage law.

A8

Thursday, July 13, 2017

The World BusinessMirror

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US judge halts Iraqis’ deportation

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ETROIT—A federal judge on Tuesday halted the deportation of 1,400 Iraqi nationals, including many Christians fearing persecution, while courts review the orders to remove them from the US. Judge Mark Goldsmith issued a 24-page opinion, asserting jurisdiction in the case over the objection of the Justice Department, which argued US district judges do not have jurisdiction. “This court concludes that to enforce the Congressional mandate that district courts lack jurisdiction—despite the compelling context of this case—would expose Petitioners to the substantiated risk of death, torture, or other grave persecution before their legal claims can be tested in a court,” Goldsmith wrote in a 24-page opinion. Goldsmith earlier blocked the deportations while he considered whether he had jurisdiction over the case. Many of the Iraqis, including 114 rounded up in the Detroit area last month who are mostly Chr istians, fear attacks over their religion if returned to Iraq. The government says they face

deportation because they committed crimes in the US. Goldsmith earlier extended a ruling suspending the deportation of the 114 while he considered jurisdiction to all Iraqi nationals in the US. T h e U S g o v e r n m e nt s a i d 1,400 Iraqis are under deportation orders nationwide, though most are not in custody. Some h ave b e e n u nde r orde rs for years because they committed cr imes in the US. But lega l action over depor tations took on new urgenc y because Iraq has agreed to accept them. The American Civil Liberties Union (ACLU) said a suspension is necessary so Iraqi nationals can go to immigration court and argue that their lives would be in jeopardy if returned to their native country. Without some intervention, the ACLU contends that people could be deported before their case is called. AP

Iraqis and supporters rally outside the Theodore Levin United States Courthouse on June 21 in Detroit. AP/Carlos Osorio

Russia story refuses to let the page turn W

ASHINGTON—If President Donald J. Trump emerged from his meeting with President Vladimir Putin of Russia last week hoping he had begun to “move forward” from the controversy over the Kremlin’s election meddling, as advisers put it, his flight home the next day made clear just how overly optimistic that was. As Air Force One jetted back from Europe last Saturday, a small cadre of Trump’s advisers huddled in a cabin helping to craft a statement for the president’s eldest son, Donald Trump Jr., to give to The New York Times explaining why he met last summer with a lawyer connected to the Russian government. Participants on the plane and back in the United States debated about how transparent to be in the statement, according to people familiar with the discussions. Ultimately, the people said, the president signed off on a statement from Donald Trump Jr. for The Times that was so incomplete that it required day after day of follow-up statements, each more revealing than the last. It culminated on Tuesday with a release of e-mails making clear that Trump’s son believed the Russian lawyer was seeking to meet with him to provide incriminating information about Hillary Clinton as “part of Russia and its government’s support for Mr. Trump”. The Russia story has become the brier patch from which the president seemingly cannot escape. It dominated his trip, to Europe last week and, after he leaves on Wednesday night for a couple of days in France, it may dominate that trip, as well. Every time the elder Trump tries to put the furor behind him, more disclosures thrust it back onto the Washington agenda. Even before the latest reports, Trump’s head-spinning willingness on creating a joint cybersecurity team with Russia fueled criticism. Now people close to the president and to his legal effort are engaged in a circular firing squad, anonymously blaming one another for the decisions of the last few days. The e-mails, which the younger Trump released after learning that The Times had obtained copies and was about to publish them, undercut the president’s line of defense in the Russia inquiry. For months, the elder Trump has dismissed suspicions of collusion between Russia and his team as “fake news” and a “total hoax”. His eldest son, likewise, had

previously asserted that talk of collusion was “disgusting” and “so phony”. Donald Trump Jr. said in a Fox News interview that he would have done things differently in retrospect, but he maintained he had done nothing improper. At a minimum, however, the e-mails show that the younger Trump was not only willing but also eager to accept help advertised as coming from the Russian government. “I love it,” he wrote. Joining him at the meeting with the Russian lawyer in June 2016 were Jared Kushner, his sister’s husband and now a senior White House adviser, and Paul J. Manafort, then the campaign chairman and a veteran political operative with longstanding ties to a pro-Russia party in Ukraine. Both the younger Trump and the Russian lawyer, Natalia Veselnitskaya, have said in recent days that no incriminating information about Clinton was actually passed along during the meeting at Trump Tower, but that Veselnitskaya did discuss US sanctions imposed on Russian humanrights offenders. While Donald Trump Jr. has been the main focus of the controversy because he set up the meeting, Kushner faces potential trouble because he currently works in the White House and neglected to mention the encounter on forms he filled out for a background check to obtain a security clearance. The e-mails were discovered in recent weeks by Kushner’s legal team as it reviewed documents, and they amended his clearance forms to disclose it, according to people briefed on the developments, who like others declined to be identified because of the sensitive political and legal issues involved. S i m i l a r l y, M a n a f o r t re c e n t l y mentioned the meeting to congressional investigators looking into possible collusion, according to the people briefed on the matter. The disclosure of the e-mails left the White House again on the defensive as tension inside the president’s orbit has grown. Trump is frustrated and, at the urging of advisers, said nothing publicly in defense of his son until on Tuesday when he issued a one-sentence statement that was, for him, unusually bland. “My son is a high-quality person and I applaud his transparency,” Trump said. New York Times News Service

Republican senators vow to unveil health bill, despite deep divisions

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ASHINGTON—Senate Republican leaders, facing their restive colleagues after the 4th of July recess, vowed on Tuesday to press ahead with their effort to repeal and replace the Affordable Care Act (ACA), with a new version of their bill on Thursday and a vote next week—regardless of the deep divisions in the party. The weeklong recess only seemed to generate more doubts about the Senate bill, but Sen. Mitch McConnell, Republican-Kentucky, the majority leader, signaled that he was not ready to give up on his party’s seven-year-old promise to gut President Barack Obama’s signature domestic achievement. Accusing Democrats of obstructionism, he announced he would delay the Senate’s scheduled August recess by two weeks so that senators could keep working. But pessimism among Republicans still pervaded the Capitol on Tuesday after a week in their home states that did little to resolve the disputes that thwarted a vote last month. Sen. Charles E. Grassley, RepublicanIowa, said on Tuesday he was “very pessimistic” about passing a bill, while Sen. John McCain, Republican-Arizona, said it was “very possible, very probable” that the Senate bill was dead. Sen. Susan Collins, RepublicanMaine, said, “Minor changes and tweaks will not be sufficient to win my support for the bill.” Changes are coming, but none that are likely to radically alter the estimate by the Congressional Budget Office that 22 million fewer people would have health insurance in 2026 under the Senate health-care bill than under the ACA. A new estimate is expected from the budget office early next week. The revised bill is expected to include a $45-billion fund to help combat the opioid epidemic, as well as a provision allowing consumers to use health savings accounts to pay for premiums. Senate Republicans are also likely to keep a pair of taxes imposed by the ACA on people with high incomes. The law increased the payroll-tax rate for many high-income taxpayers and imposed a tax on their investment income. Both taxes would be eliminated by the repeal bill passed by the House in May and by the original version of McConnell’s bill. Keeping those taxes would undercut a major argument against the bill by Democrats, who have branded it as a tax cut for the rich disguised as a health bill. But the largest changes to the health care system are likely to remain in the bill. About two-thirds of the increase in the projected number of uninsured Americans would result from deep cuts in expected Medicaid spending, the budget office said. The bill would impose caps on Medicaid spending and would roll back the expansion of the program under the ACA. The Senate measure will be considered under special procedures that limit debate to 20 hours, preclude a Democratic filibuster and allow passage with a simple majority vote. It is unclear whether McConnell would start the debate next week if he lacks firm commitments from enough senators to ensure passage. Delaying the vote—again—might not help. “Anybody who thinks that it’s going to get easier by waiting,” said Sen. John Kennedy, Republican-Los Angeles, “that’s a testament to the power of human denial as far as I’m concerned.” At least 10 Republican senators, led by David Perdue of Georgia, had urged the majority leader to work into August, so lawmakers could show some results to their constituents. McConnell said delaying the recess would provide time to work on other matters after the Senate deals with health care next week. But the Senate Democratic leader, Chuck Schumer of New York, suggested a different motivation for McConnell’s announcement. “They’re struggling with health care,” Schumer said. “They don’t want to go home and face their constituents.” “The problem is not the timing,” he added. “It’s the substance.”

New York Times News Service

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Thursday, July 13, 2017

A9

Building a ‘Smart Nation’ means higher school costs in Singapore

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chooling isn’t cheap in Singapore: not just for citizens, but for the government too. The city state boasts one of the best education systems in the world and as the government tries to transform the economy into a high-tech hub—part of its “Smart Nation” program— it’s putting heavy emphasis on equipping students with skills for a digital economy. Government spending on education has doubled since 2005 to S$12.9 billion ($9.3 billion) this year, or 17 percent of its total budget. That’s not only to pay for teachers and better infrastructure, but also subsidies for Singaporean students. The city state is the third most-expensive place in the world to educate a child—trailing only Hong Kong and the United Arab Emirates. Pa re nt s bud ge t $70, 9 3 9 for schooling from primary through tertiar y level, according to a survey by HSBC Holdings Plc. published in June. But for Singaporean families, the government foots most of the education bill. If you’re a citizen, it’ll cost you S$13 a month for a child at primary school, while a foreigner pays as much as S$613. T he gover nment cur rent ly subsid i zes 435,10 0 st udents enrol led in pr imar y t hrough secondar y schools and is projec ted to a ssi st 8 0,10 0 who are doing undergraduate and

postgraduate studies this year. “Government expenditure is likely to continue to hold firm if not increase over time,” said Selena Ling, an economist at Oversea-Chinese Banking Corp. in Singapore. While families are probably spending more of their budgets on schooling as costs increase, overall expenditure is still small compared to other “big ticket” items, like housing and food, she said. The latest consumer price data shows education costs rose 3.2 percent in May from a year ago, more than double the rate of inflation. The Ministry of Education said rising education costs are due to improvements in the quality of teaching, upgraded infrastructure and curriculum enhancements. At universities, coursed have been adjusted to better prepare students with computer-related skills—enrollment spaces for technology-related programs have been increased and new courses have been introduced, the ministry said in an e-mail. “Increased government expenditure on education would likely have a positive impact on the Singapore economy in the long run,” said Kelvin Seah, an economics lecturer at the National University of Singapore. “These initiatives are meant to increase the human capital of individuals and increase worker productivity.” Bloomberg News

Decade-old trauma haunts Abe’s bid to stay amid slump in support

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npopular policies and a slew of scandals triggered a slide in public support for Japanese Prime Minister Shinzo Abe that led to a heavy election defeat. That was in 2007, when he abruptly resigned, citing health issues, after losing in the upper house of parliament. Ten years on, his situation looks uncomfortably familiar. Abe returned to Tokyo on Tuesday from a curtailed European trip to face lost public trust and record-low voter support. Ministerial gaffes and his failure to allay suspicions over a cronyism scandal involving a close friend contributed to his ruling party suffering an historic defeat in a recent Tokyo election. The public is wary of his plan to rush through a revision to the pacifist Constitution. But this time around he’s likely to hold onto his job—at least for the time being. No opposition party has support in double figures and no senior member of his own ruling Liberal Democratic Party (LDP) has emerged as an open challenger. Abe could stay in place until a party leadership election expected in autumn next year, just months before a general election has to be held. “What’s different from 10 years ago is that the Democratic Party is very weak,” said Lully Miura, a lecturer at the Policy Alternatives Research Institute at Tokyo University, referring to the main national opposition party. “And there’s no one in the LDP who can attract more support than Abe as party leader or prime minister at this point.”

‘No magic tricks’

Support for Abe’s Cabinet fell 13 percentage points to 35 percent in a poll published by public broadcaster NHK on Monday, the lowest since he retook office in late 2012. In a separate survey by the Asahi newspaper, 61 percent of respondents said they didn’t trust Abe, with most saying they were not convinced by his explanation of how one of his oldest friends was selected to open a new veterinary college with government support. Abe plans a Cabinet reshuffle next month. He’s expec ted to keep core members, such as Finance Minister Taro Aso and Chief Cabinet Secretary Yoshihide Suga in place, while ousting embattled Defense Minister Tomomi Inada and other ministers tainted by gaffes and scandals, according to local media. Personnel changes, however, failed to boost Abe’s support after he lost an upper house election 10 years ago. “There are no magic tricks for reviving the party,” LDP Secretary-General Toshihiro Nikai told reporters on Tuesday. “We will

deal honestly and sincerely with the political issues facing us.” Abe may also try to bolster the economy with fresh fiscal stimulus, or seek a rapprochement with Chinese President Xi Jinping that could help deter the threat from North Korea and improve confidence in his leadership. Barclays Plc. warned that markets could be complacent about the potential effect of Abe losing power, Tetsufumi Yamakawa, head of Japan research, wrote in a July 7 note. He said the government could then move toward balancing public finances and normalizing monetary policy.

No opposition

A decade ago, Abe’s failed first term in office helped to build support for the Democrats, who swept to a general election victory in 2009. While the main opposition party has striven to keep the public’s focus on Cabinet scandals, it’s reaped no benefit this time around. Support for the LDP fell 6 percentage points from the previous month to 30.7 percent in the NHK survey, but only 5.8 percent of respondents backed the Democrats. Forty-seven percent said they supported no party, the highest level since July 2012—just months before Abe took office. In the Asahi survey, 82 percent said a viable opposition party was needed. Local media are touting Foreign M inister Fumio Kishida and former D efense M inister Shigeru Ishiba as senior LDP members likely to emerge as leadership rivals. In recent weeks, both have grown increasingly critical of the prime minister, and Kyodo News, citing unidentified government officials, said on Wednesday that Kishida intends to leave the Cabinet. “If I think about taking over the administration in the future, I think what’s needed is patience and humility,” Kishida told members of his party faction earlier this month. But former administrative reform minister Seiichiro Murakami said in an interview last week that the potential challengers were weak because neither had offered an alternative policy vision. Tokyo Gov. Yuriko Koike, a recent defector from the LDP, and her Tomin First group overwhelmed Abe’s party in the July 2 election in the capital. But she’s said she wants to focus on local politics in the runup to the 2020 Tokyo Olympics. In any case, it is unclear whether Koike, a conservative populist who has avoided direct criticism of Abe, would be keen to form a national opposition group. Bloomberg News

A worker directs a crane to lift a roll of coiled steel plate into barge, in the city of Smederevo, 45 kilometers east of Belgrade, Serbia. When US Steel sold its loss-making smelter in Serbia to the government for $1 in 2012, few thought the communist-era factory would ever be revived. Then came along a state-owned Chinese company. Hebei Iron and Steel’s €46-million ($52-million) purchase of the steelworks last year is part of China’s broader effort to project influence and gain access to the European market. AP/Darko Vojinovic

China’s new Silk Road encroaches on US turf in Eastern Europe

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n the 19th-century mansion in central Belgrade where bureaucrats plan some of Serbia’s important overseas projects, 64-year-old Ivan Mrkic is busy unpacking boxes teeming with the books, research papers and maps he needs to become an instant expert on China. Mrkic, a one-time foreign minister, anticipates investors from Hong Kong and Beijing will pour tens of millions of euros into Eastern Europe and he wants Serbia— among the poorest—to be ready. For decades, US money has powered steel plants and carmakers in post-Communist Europe, but the region is now hanging its hopes on China stepping into the void created by Donald J. Trump’s isolationist turn. “Sometimes it takes time for the Chinese to take a position, but once they do, the speed of realization is fascinating,” said Mrkic, who’s been tasked along with former President Tomislav Nikolic to set up a one-stop shop to facilitate trade and investment from the world’s second-largest economy. “We decided we’d better create a special office to make sure everything works well.” From Poland on the Baltic Sea to Slovakia, Hungary and Bulgaria along the Danube river, governments are wooing Chinese investors to, in some cases, replace US companies that are pulling out. It’s a sign of what’s in store with Trump’s America relinquishing its role as the world leader on issues from climate change to free trade, and Chinese President Xi Jinping championing internationalism.

Xi’s gateway

For Xi, the 16 Central and Eastern European nations and their more than 110 million consumers are a stepping stone into the European Union (EU). Eleven are members already and the other five, among them Serbia, are v ying for inclusion in the 28-nation bloc. Forging a route into the continent is integral to Xi’s plan to build a modern-day Silk Road to carve out new export markets for local businesses as the Chinese economy slows. In keeping with that vision, Beijing in November

110M The number of consumers in the 16 Central and Eastern European nations

pledged to plough €10 billion ($11 billion) of capital into Central and Eastern European countries, many featuring among the more than 60 nations targeted by Xi’s Belt and Road initiative. The cash-starved countries of emerging Europe, including Poland, the Czech Republic, Hungary and Slovakia, have keenly reciprocated the advances, sending top officials to Beijing this year to curry favor just as their local markets rallied this year.

Struggling villages

“My wish is that the Chinese will help and employ as many of our citizens as possible,” said Julius Beluscak, the mayor of the eastern Slovakian village of Velka Ida, where United States Steel Corp. has run a factory for 17 years and is now in talks to sell it to Hong Kong-based Hesteel Co. Speaking at the City Hall overlooking the village’s main, pothole ridden road, Belascuk said the condition of the plant has been deteriorating for years and pollution is the worst in the country. He hopes the new owner will invest in greener technologies. Hesteel already bought a Serbian factory in Smederevo for €46 million almost a year ago, and is in negotiations to take over US Steel’s plant in Kosice, Slovakia, too. “I wouldn’t say the village is benefiting” any longer from US Steel’s presence, Belascuk said. Eastern Europe’s leaders are pulling out all the stops to charm the Chinese. When Xi embarked

on a regional tour through various capital cities last year, he was welcomed in Prague with a parade through the Czech capital’s main boulevards. They were decorated with red-and-yellow Chinese flags for the occasion, some of which were defaced by protesters decrying China’s policies in Tibet. “There may be more willingness to put human-rights issues with China on the back burner,” said Ian Bond, the director of foreign policy at the Brussels-based Centre for European Reform and a former British diplomat. “In many respects, economically, there is a lot of concern in Europe about the direction the US is heading in.”

Dividing Europe

The camaraderie between Eastern Europe and China is making some in Western Europe uneasy. The EU has been pressing Xi to give its companies the same free access to do business in China that the Chinese get in Europe. Many also worry Beijing is seeking to gain greater political clout by driving a wedge between the bloc’s founding and newer members. At odds with the European Commission over a range of issues, including rule of law and migrant policy, Poland’s ruling Law and Justice party has also been chumming up with Trump, who got a warm reception during a visit to Warsaw last week. Czech President Milos Zeman, meanwhile, wants stronger ties with China and Russia rather than with the North Atlantic Treaty Organization and the EU. But alienating their more advanced neighbors by courting China may not even be worth it, according to Kerry Brown, an associate fellow at Chatham House in London and a former first secretar y to the British Embassy in Beijing.

Unrealistic expectations

Chinese foreign direct investment into the region still pales in comparison to the US and the EU. In Poland, the largest of the economies, US investors poured a net €62.2 million into the country in 2015 versus a net outflow to China. Barely any of the $3.9 billion of investments Zeman predicted would materialize in 2016 actually did. “Eastern European expectations are high and I wonder if that isn’t a big problem,” Brown said. “The Chinese are not just there to hand out aid and money. There is

a big expectation that China is a charity. I just don’t think that is very realistic.” While China’s no-strings-attached approach to investment is generally welcomed by developing countries, they often have poor credit ratings and questionable governance. China has struggled to recoup loans in Venezuela and Africa, and several projects in Central Asia have spurred protests. “There are also challenges for China, for instance the culture gap and also political risks,” said Wang Huiyao, director of the Beijing-based think tank Center for China and Globalization. “Chinese companies are not good at crosscultural adaptation, and they really have to hone their management skills and build themselves into truly multinationals.”

Airports, spas

A steady stream of new deals is developing nonetheless. Chinese companies are in talks to invest in a factory manufacturing LED lighting and a coal mine in Poland, as well as a high-speed rail upgrade linking the Hungarian and Serbian capitals. Hungary’s government also signed a deal in May with Bohong Group Co., a maker of car components and exhaust systems, while Chinese conglomerate CEFC bought a stake in Travel Service AS and brewer Pivovary Lobkowicz in the Czech Republic. Back in Belgrade, Mrkic and a b out t wo doz e n col le a g ues moved into the first-floor mansion hall in late-June that previously housed the directorate responsible for Serbs displaced by years of war, which was pushed to the ground floor. Mrkic said he planned to hire experts and interpreters to help make it easier for Chinese investors to learn about the opportunities in Serbia. Among the deals in the works is one to refurbish the Belgrade airport and another to buy a stake in copper mine RTB Bor. A Chinese investor is even considering purchasing a network of spas in Serbia, well known for tourist resorts featuring geothermal springs and medicinal mud. “We’re in an embryonic stage,” Mrkic said. “I know that many countries in Central and Eastern Europe vie for the Chinese attention, some may have been more efficient” than Serbia, “but our projects with China have really flourished.” Bloomberg News

A10 Thursday, July 13, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Let’s make every day an anticorruption day

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orruption is a social evil that destroys the institutional fabric of our country. People, especially the poor, get hurt when public funds are wasted. It is estimated that grafters steal about 20 percent of all government project funds, amounting to trillions of pesos that could be used for education, health services, or infrastructure projects. Tired of seeing how corruption has been holding the country’s economic growth, more than 16 million voters supported in May 2016 the presidential candidate who promised them a corrupt-free government under his watch, apart from his pledge to wipe out illegal drugs and criminality.

That’s how the presidential bet who said he hates corruption got elected. On his first day in office, President Duterte aired a clear warning to all his appointees in the government who would be tempted to engage in corruption. His words: “One whiff of corruption and you’re out.” True to his word, Duterte has fired two of his longtime allies and closest aides from the Cabinet. Peter Laviña, his spokesman during the 2016 presidential elections, was sacked in February following corruption allegations at the National Irrigation Administration. Two months later, the President fired Ismael D. Sueno as secretary of the Department of the Interior and Local Government over corruption allegations in connection with the purchase of Rosenbauer firetrucks from Austria. Speaking at the 10th listing anniversary of Phoenix Petroleum Philippines Inc. at the Philippine Stock Exchange in Makati on Tuesday, the Chief Executive reiterated his commitment to fulfill his campaign pledge of eliminating corruption in public office. The government, he said, is trying its best to create an environment conducive to investment and establish a harmonious working relationship with investors. Duterte added that his administration will continue to institute reforms and implement policies for economic growth to become more sustainable. In the same forum, the President admitted he cannot do the job of eliminating corruption in the government alone. The President said it is the Filipinos themselves who can truly halt corruption. That’s why he gave the people an easy way to report shenanigans in the government through the President’s Hotline, or 8888, which is dedicated to receive complaints against fixers, scalawags and even poor government services. Callers are asked to identify the government employee and agency involved in their complaint, the date and details of the incident, their proposed solution (if any) and their contact details. The complaints will be forwarded to both the concerned agency and the Office of the President within five days. Since the launching of the President’s Hotline, more people are reporting bribe solicitation incidents. Observers, however, said thousands of victims of corruption—like jeepney, bus and taxi drivers—are still hesitant to report these incidents. One reason cited for nonreporting is the amount being asked is too small to bother about. Other reasons, like those cited by victims of red tape, were fear of reprisal and lack of time to report. In a world where giving/receiving of bribes is the norm, we can’t expect to see government agencies that citizens can trust. But in the 21st century, we can now use the power of technology to build dynamic and continuous exchanges between government institutions and key stakeholders—citizens, businesses, the media and civic groups. We must help the President in his drive against corruption in the government. We can do this by making every day an anticorruption day. All of us must do our part to expose and help prosecute corrupt public officials. Punishing grafters, we believe, is a vital component of an effective anticorruption drive.

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Fake auto parts and road safety Cecilio T. Arillo

database

A

NY legitimate car nut would tell us not to scrimp on automotive parts, especially counterfeit ones, since the “savings wouldn’t be worth the headache”.

Lately, there is clamor within the domestic auto-parts industry about the proliferation of fakes being sold by unscrupulous auto supply shops. Most are imported from abroad and costs only a fraction of original parts but bear very identical packaging. Current available data from the Land Transportation Office (LTO) tallies 7,690,038 registered vehicles across the country, bulk of which are in National Capital Region. Even a third of that figure would be a very lucrative market for fake parts. Fakes are not to be confused with original equipment manufacturer (OEM) parts. OEM parts undergo the same rigid quality and performance testing standard procedures as original ones. Besides, some of a vehicle’s components are actually made by separate OEM companies as contractors to huge car manufacturers, like Toyota, Mercedes Benz, BMW, or Honda. Examples of top 100 global OEM companies are JTEKT Corp.,

Bosch GmbH, Denso Corp., Yazaki Corp., BASF SE and NTN Corp. Independent bogus manufacturers may counterfeit both original and OEM parts. Recently, auto enthusiast and veteran journalist Rey Langit hosted auto parts advocate lawyer Noven Joseph Quioc in one of his programs. Lawer Quioc said the Philippines unfortunately lacks facilities for accident and fatality analysis, such as those in developed countries like the US, making efforts to understand the cause of accidents difficult. Quioc said fake auto parts are not treated at the same level as spurious drugs or food items since they don’t seem to have an immediate lethal or health impact. Langit said it is quite alarming that some of the most commonly counterfeited parts are directly related to passenger safety than cosmetic value. Examples are mag wheels, tires, bearings, brake discs,

brake pads, rubber rings, axle boots, oil filters and under chassis components, such as tie rods, rack ends and ball joints. In most cases, consumers are unaware that they are buying a fake part since the packaging of counterfeits is almost like that of original products. There are times that a consumer would consciously prefer a fake auto part for the fraction of a cost in order to save. That’s why many car enthusiasts suggest to only purchase parts from reliable and reputable auto supply shops. These shops usually have posters or flyers that show comparisons of packaging and product quality of parts in order to help consumers identify if what they are buying is fake. More often that not, fake products have misspellings, grammatical errors or design inconsistencies, such as misaligned texts or inaccurate colors in the packaging. The quality of the boxes and hologram/security stickers are of substandard quality. Some parts are also plastic-sealed to avoid tampering. “Fake car parts compromise the safety of everyone in the vehicle. For instance, buying fake rims, tires or brakes may not seem much, but many thrifty car owners forget to understand that these parts keep direct contact with the road. Should these parts fail, the accident will most likely be catastrophic, if not cause of traffic,” said Jose Nicolas Calanoc, deputy editor of C! Magazine.

“Those who are buying fake automotive parts should ask themselves: are their and their passenger’s lives worth that amount they get to save?” he said. Arnel Doria, president of Safety Riders Association of the Philippines and Safe-T Ryders Training Center, said in a recent news conference that the menace of fake auto parts is not just restricted to loss of life but translates into a loss of revenue for an industry, as well. It also means less taxes and revenues for the government because the firms that make these fake parts do not pay taxes. Worse, many of these fake parts are smuggled into the country. That’s why international and local auto parts makers are coordinating with the National Bureau of Investigation (NBI) to raid and seize these items. The law-enforcement agency has been at it for almost two decades now, following complaints. Once caught, importers, distributors and retailers of fake parts will be charged in violation of the Intellectual Property Code of the Philippines. Recently, the National Bureau of Investigation conducted simultaneous raids in Metro Manila, Metro Cebu, Davao and Tagum, resulting in a rich haul of fake automotive parts. Again, would you rather risk your life and your loved ones for a fraction of a price? To reach the writer, e-mail cecilio.arillo@ gmail.com.

For Europe’s central bank, better to be flexible than sorry

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By Ferdinando Giugliano | Bloomberg View

he European Central Bank (ECB) is unnerving markets by remaining vague over the future of its bond-buying scheme. Yet, if investors listened carefully, they would detect an emerging framework for understanding what guides policy-makers.

The first principle is that the ECB has gone “data dependent” over its quantitative easing (QE). Whereas previously central bankers had said that bond purchases would continue until the end of 2017, for now they appear more reluctant to tie their hands over what will happen next. It will take at least until September before central bankers make clear whether they will reduce the pace of asset purchases from 60 billion a month. This decision reflects an open debate within the governing council about how much weight to give conflicting indicators. For example, while economic activity and confidence remain strong and unemployment continues to fall, the recovery has had only a limited impact on prices: at 1.3 percent, inflation is still below the ECB’s target just below 2 percent. This does not mean investors have nowhere to look. In fact, two sets of indicators stand out. The first is the labor market: There is no sign that wages are rising fast, as they would if the labor

market were overly tight. That suggests that unemployment still has further to fall without stoking inflation, which in turn makes it less urgent for the ECB to tighten its monetary policy. The other indicator is the price of oil: While the ECB is primarily concentrating on core inflation—which ignores volatile items, such as energy—this distinction can often be artificial. Were energy prices to resume their fall, as they did last week, there will inevitably be spillovers to core inflation, which will make the ECB more prudent about exiting QE. The second principle investors should note is that the ECB may well be creative in how it tapers QE. This means deviating from the textbook of the US Federal Reserve, which cut back its asset monthly purchases by roughly $10 billion (€8.7 billion) after each Federal Open Market Committee Meeting between the end of 2013 and 2014. In a recent interview with two European newspapers, Benoit Coeure, an executive board member, pointed to

the decision the ECB took last December to scale back asset purchases while extending their horizon, as a possible model for the future. The ECB could therefore announce that QE will be reduced to, say, €40 billion a month but extended for another six months. This would bring the central bank closer to the termination of net asset purchases, while giving the euro zone economy more time to recover. One problem with this strategy is that the ECB has committed to purchasing sovereign bonds in accordance, with its so-called capital key, which determines how much each country contributes to the central bank and is used to work out how much of each country’s bonds can be purchased. This means buying sizable amounts of German or Dutch sovereign bonds, even though these have become scarcer— partly because of other rules constraining the central bank purchases. While the ECB can introduce some flexibility to the rules, this will be politically difficult to sell in capitals, such as Berlin. But what, it’s worth asking, about the impact of political events on the ECB’s decision to taper QE? The biggest worry is, of course, Italy, which will hold a general election in the spring of 2018. The three-ways split in Italy’s politics between the center-left, center-right and

the populist Five Star Movement, means the vote is unlikely to produce a stable government. This could spook markets, causing a rise in the spread between Italian and German sovereign bonds. Would an Italian crisis send data-driven banking out the window? That’s unlikely. As the euro zone’s third-largest economy, Italy obviously can’t be ignored when it comes to decisions about tapering. However, all indications from Frankfurt are that the central bank will take its decisions on the basis of economic considerations alone. As ECB President Mario Draghi said in his last news conference, the central bank’s mandate “is specified in terms of price stability. It’s not specified in government budget support or other considerations”. Were Italy to run into trouble, there would be other tools at the ECB’s disposal. These include the “outright monetary transactions” program, which involves targeted bond purchases for a country in difficulty in exchange for a program of reforms. The ECB faces a delicate balance between communicating its intentions and being able to adapt to evolving circumstances. As they prepare for the autumn, investors should be patient: Better to have a flexible central bank than one that commits to the wrong path and then has to make amends.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Rebuilding a damaged agricultural sector

The Word that is lived Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1

A

nd yet, as we all know, Philippine agriculture is a devastated sector. It is unable to feed the nation. Although it covers over one-third of the country’s landmass of 30 million hectares, agriculture output accounts for less than 10 percent of the GDP. Still, it employs around one-third of the labor force. The resulting low income per capita in the sector explains why poverty wears a predominantly rural face. In turn, the eroded capacity of the sector to create decent jobs explains the unabated exodus of rural migrants to the urban areas, as well as the rise of rural poor colonies throughout the archipelago.

Hence, the big challenge to the Duterte administration, now on its second year, is two-fold: how to stop the continuous decline of agriculture as a productive sector, and how to transform it into a motor of growth and job creation. There are promising developments. Agriculture Secretary Emmanuel F. Piñol has been insistent on the importance of the rice-sufficiency program and the extension of more assistance to the farmers—for example, free irrigation and palay-price support. To strengthen farmer coping adjustment to market demand and climate-change challenges, Malacañang also launched a “colorguided” map on soil and crop suitability. However, the administration’s agricultural-policy team is still not united on how to push the sufficiency-transformation program. There are advocates of liberalized rice importation, even during palay harvest season. There is still no policy unity on what should be the role of the government’s National Food Authority (NFA) in the rice and other agricultural markets. There are also unresolved land problems. The full implementation of the 30-year-old Comprehensive Agrarian Reform Program (CARP) is an unfinished business. There are even debates within the Cabinet on whether to relax the policy banning conversions of agricultural lands. Proposals for a comprehensive national land-use plan remain proposals awaiting Congressional approval and public scrutiny. In the meantime, big realty-estate companies and resort and subdivision developers are having a field day accumulating agricultural land in various regions to build new cement jungles, develop resorts and playgrounds for the rich, or keep them idle temporarily for “land banking” purposes. To strengthen agriculture, the new Philippine Development Plan (PDP) 2017-2022 has identified the following policy doables: Revitalization (the DBM allocating P120 billion in five years), diversification (encouraging farmers to plant high-value products and exportables) and modernization (through mechanization, credit assistance and so on) of the sector. In addition, the PDP talks of the need for product standardization and strengthening of agricultural supporting institutions. However, the PDP is silent on the “failed agricultural policies” mentioned by then-Presidentiable Duterte. What

are these failed policies? How should these be corrected? Answers to these questions are necessary if the government has to forge a national consensus on how agriculture can regain dynamism and how the country can regain its ability to feed the nation. The Department of Agriculture-NFA conflict over rice importation illustrates the abject lack of policy coherence within the executive branch of the government. For the Integrated Rural Development Foundation, which published a book, entitled Rebuilding a Damaged Agricultural Sector (2016), one way of tackling the policy-failure issue is to go historical. There is a need to examine what has happened to the sector during the three decades of the CARP (1988-present) and the longer period of Structural Adjustment Program (SAP) (late-1970s to the present). The SAP is built around the neoliberal economic idea that agriculture grows best when it is “deregulated” (meaning no government intervention in the market, such as price support) and “liberalized” (meaning no restrictions and low tariffs on agricultural imports). The unilateral SAP of the 1980s to 1990s pushed by the IMF-World Bank was reinforced by the Philippine trade-liberalization commitments to the World Trade Organization (WTO), the Asean trade in goods agreement and to a number of bilateral free-trade agreements. And yet, the CARP and SAP decades have turned out to be lost decades for Philippine agriculture. Yes, there are pockets of growth, such as banana. But the sector as a whole has been stagnating and shrinking. The country has become a net agricultural importing country since 1995, ironically the first year of Philippine membership in WTO. In certain years, the Philippines was also officially reported as the world’s largest rice importer. Worse, the majority of those living in the countryside, including the beneficiaries of the CARP, have either remained poor or became poorer because of limited farm incomes and jobs. The point is that an honest-to-goodness review and inquiry on the “failed agricultural policies”, as voiced out by then-Presidentiable Duterte, remains unaddressed. A bold reform program should come out of the review process as a guide in the rebuilding of the damaged sector. Reading IRDF’s book is a good starting point.

‘C

ome to me, all you who labor and are burdened.... Learn from me,” Jesus told us last Sunday. Now comes the precise follow-up: “Whoever has ears ought to hear” in the gospel reading that reveals the centrality of listening to and receiving the word of God (Matthew 13:1-23).

God’s efficacious word

God’s irrevocable and most powerful Word was spoken to us, the Word of life and of our salvation. And the invitation of Jesus Christ to us is to listen to Him and learn from Him and together with Him to follow the will of God. Unlike the days of old, we are not to harden our hearts but to open our ears to hear what we ought to be hearing, and so accept the reign of God.

WE are daily subjected to a deluge of words: words of love and wisdom, of joy and inspiration, as well as words of untruth and shamelessness, of hatred and violence; words of triviality as also words that transform. What words do we receive and enshrine in our hearts, to live by and draw meaning from—ultimately, God’s word or those of the snake? Though man may turn a deaf ear to the Creator’s word, it shall prevail. God’s word does not return void; it does the divine will (Isaiah 55:11). God means what He says, and what He says creates history. When the Word of God became flesh to dwell among us (John 1:14),

Hindrances and difficulties

Notwithstanding the generous sowing of the word of God’s kingdom, the seed thrown to the four winds to reach every nook and cranny, the result varies. The hungry birds, the rocky soil, the scorching

Is Dutertenomics feasible?

Atty. Irwin C. Nidea Jr.

Tax law for business

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he 120-30 day rule has its share of evolution in jurisprudence. It started as a strong, lone dissent by then-Presiding Justice Ernesto Acosta of the Court of Tax Appeals (CTA) until it became a doctrine. After several Supreme Court (SC) rulings, some of the principles on the 120-30 day rule have been defined as follows: 1. The Commissioner of Internal Revenue (CIR) has 120 days from the date of submission of complete documents in support of the administrative claim, within which, to decide whether to grant a refund or issue a tax-credit certificate.

2. The 120-day period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the two-year period. If the 120-day period expires without any decision from the CIR, then the

Alálaong bagá, God’s word is efficacious, transforming those who listen to it with open hearts. The liberality of the sower goes hand in hand with the fecundity of the seed. To reap 30-fold or 100-fold underlines the miraculous, for that is how divine grace works. The reign of God comes as surely and as richly as the hundredfold harvest described. Vital is the disposition of the respondent to God’s word: openness, conversion and continuing trust in the God who speaks to us, in spite of our obstructing sinfulness. The indifference, hardness of heart, defection, inconstancy, betrayal and the seeming failure of the word that we witness in others around us can also all happen to us at different times. We all need to relisten, ponder some more, and hear again with renewed vigor God’s word of love and life. Join me in meditating on the Word of God

every Sunday, from 5 to 6 a.m. on dwIZ 882, or by audio streaming on www.dwiz882.com.

to suffer from low levels of capital stock. Adam Smith defines capital as “That part of a man’s stock [that] he expects to afford him revenue”. Duterte promises to build a subway, new railways, expressways and airports, among others. The total cost for these projects will amount to a whopping P8.4 trillion in the next five years. This could mean that infrastructure’s share to the country’s GDP is expected to rise from 5.4 percent in 2017 to 7.4 percent in 2022. Duterte’s ambitious infrastructure project is also partly to blame for the peso’s free fall against the US dollar—its lowest in a decade. The peso is now regarded as the worst-performing currency in Asia (so far) this year. But, the International Monetary Fund has given some reassuring words. It says the Philppines’s ample foreign currency reserves will support the economy to weather its currency storm.

Unfortunately, there are still some issues that linger. One of these issues is whether a taxpayer may opt to appeal a decision of the CIR that is issued within the 30-day period after the lapse of the 120-day period. Justice Catherine Manahan of the CTA, in a dissenting opinion, answers this issue in the affirmative. According to her, if the CIR issued the denial of the claim for refund after the lapse of the 120-day period, but within the 30-day period, to appeal the inaction to the CTA, the taxpayer may opt to count the 30-day period to appeal to the CTA from the denial of the claim. Her view is that a taxpayer is given two options after it files its administrative claim for refund, namely: 1) to wait for the lapse of the 120-day period without any action on the part of the CIR and, within 30 days from the lapse, file an appeal with the CTA;

or (2) in case of full or partial denial of the claim for refund, file an appeal with the CTA within 30 days from receipt of the decision denying the claim. The mandatory character of the 120+30 day period is pertinent when the petitioner chooses to appeal the “inaction” of the Commissioner after the lapse of the 120-day period. The operative word “may’’ in Section 112 (C) of the Tax Code suggests that these two options are given to the taxpayer for its benefit who, in turn, may freely choose one over the other or none at all. Although this opinion makes a lot of sense, this may not hold water as of now, since the SC, in a decision penned by Chief Justice Sereno, has already declared that the “inaction” of the CIR is already considered as its “decision”. Thus, the taxpayer has no other option but to appeal

the inaction of the CIR and count the 30-day period from the lapse of the 120-day period. The 120-30 day rule started as a strong dissenting opinion. I will not be surprised if, in the future, the SC adopts the dissenting opinion of Justice Manahan as the new doctrine. After all, change is the only permanent thing in this world.

T

here is this basic principle in economics that one shouldn’t spend way beyond his means. This simply means having control of your company’s finances and being assured that there is ready money to be spent in realizing your business projects. Borrowing is resorted to if there isn’t enough money in your vault, but this exercise should be carefully weighed in with the amount of cash your business is going to generate.

administrative claim may be considered to be denied by inaction. 3. A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative claim or from the expiration of the 120-day period without any action from the CIR. 4. All taxpayers, however, can rely on Bureau of Internal Revenue (BIR) Ruling DA-489-03 from the time of its issuance on December 10, 2003, up to its reversal by this Court in Aichi on October 6, 2010, as an exception to the mandatory and jurisdictional 120+30 day periods. 5. If the BIR issues a written request for the taxpayer to submit additional documents after the filing of the administrative claim, the 120-day period commences from the submission of the additional documents by the taxpayer.

confusion, contradiction and futility. The inducement and intoxication of money or power or ambition metamorphose them into lying thieves or masquerading fools. But, finally, there are those who hear, receive and live the word of God.

allowed to come up with its own bid, but the original proponent has the right to match the price of its bid. Over time, the winning proponent gets to recoup its investment, operating and maintenance expenses in the project. So, it all boils down to the Dutertenomics plan to get the bulk (66 percent) of its financing from us, taxpayers. At this point, Duterte’s economic team is in the thick of lobbying Congress for the passage of this government’s tax-reform bill, dubbed the Tax Reform and Acceleration and Inclusion Act (TRAIN). TRAIN is designed to cut personal and corporate income-tax rates but aims to let go of the tax exemptions given preferentially to certain industries and impose new taxes on petroleum products, cars, softdrinks and other sweetened products to counterbalance revenue losses. But even if the TRAIN gets Congress nod, money to be generated from it will only total P1.63 trillion between 2018 and 2022, or only 14 percent of the planned P8.4 trillion. We’ve had to contend with the outlook of recurrent deficits and mounting debt. The economic team has to train its sight in making certain that our economy will be in the best footing for a robust economic growth. Without adequate revenues, Dutertenomics is bound to fail, unless the government pursues the PPP route as what Mr. Ang of San Miguel has been advocating.

Businesswise

120-30 day rule on VAT refund revisited

sun, and the choking thorns are familiar features in most agricultural settings. In describing these obstacles to growth, Jesus recognized the difficulties, and even human resistance, that hinder the establishment of God’s reign. In His own ministry, many rejected His preaching. The actual experience of the apostolic community interpreted for them the parable of Jesus, as we in our time must do. The question then as now is why do people not listen to God’s word so that it can bear fruit in them, fruits they themselves need? First, there are those who do not understand at all what is proclaimed to them, meaning they reject it outright. They have ears, but hear not. They are picked clean by the birds. Second, we have the abundance of fair-weather and nominal Catholics, who initially rejoice at some fascinating elements of the faith, cafeteria-type believers who just select (turo-turo) what they fancy on the menu, but are turned off by the cross and the imperative of perseverance in hardships and persecutions. The burning sun is simply too much for them, plus the fact that they hardly have roots on their rocky ground. Third, many are those whose intentions are in order, but worldly interests detour them into a maze of

So where will Dutertenomics get funding to fulfill such a grandiose project? We were given the impression earlier that Duterte’s cozying up with China will give his project tremendous boost. It became clear, however, that China is not about to give us friendly rates if and when we borrow from its various banks. And, as I’ve written several columns back, Forbes in its May article wrote that commercial borrowings from Japan and China would certainly put the Philippines into a “virtual debt bondage”. It was revealed much later that the official development assistance from overseas and multilateral institutions has only 15-percent share in funding the much-touted Dutertenomics. The chunk will come from taxes and public-private partnerships (PPP). It appears, however, that the government is more gravitated to government-to-government deals, which San Miguel Corp. President and CEO Ramon Ang scoffs at. Mr. Ang knows whereof he speaks. After all, it was he who parlayed the once food-and-beverage company to the most successful diversified conglomerate in the country today. The government will not fork out a single cent in PPP ventures. It is a form of project financing in which a private entity gets concession from the government to finance, design, construct and operate a facility under the buildoperate-and-transfer law. A rival company that wishes to undertake the same facility is given a chance to bid in a “Swiss challenge”. It’ll be

Val A. Villanueva

President Duterte has sworn the “golden age” of infrastructure will be the cornerstone of his governance and promised economic prosperity for all; hinting that the inclusive growth that has eluded previous administrations will finally come to fruition. There is no debate why the country needs an infrastructure overhaul. Most of our major thoroughfares are in their sorry state, and there are simply few major bridges needed to speed up transfer of food and implements to their intended destinations. This problem always leads to higher transport costs. And, of course, free-flowing trade is spurred when there are viable infrastructure to support them. Simply said, an excellent infrastructure system is the panacea to the country’s financial malaise. Underspending on infrastructure has inhibited economic growth in the past years. Previous administrations’ thrifty ways have partially caused the country

Thursday, July 13, 2017 A11

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

The author is a partner of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of WTS Global. The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at irwin.nidea@ bdblaw.com.ph or call 403-2001 local 330.

2nd Front Page BusinessMirror

A12 Thursday, July 13, 2017

www.businessmirror.com.ph

Proposal to impose season-based rice tariffs welcomed by experts T By Cai U. Ordinario

@cuo_bm

he National Economic and Development Authority (Neda) is open to the proposal to impose season-based tariffs on rice to discourage more rice imports during harvest season.

Socioeconomic Planning Sec ret a r y Er nesto M. Per n i a said economic managers w ill discuss this proposal during their next meeting. Pernia made the pronouncement after Finance Secretary C a rlos G. Dom i ng ue z I I I , a former agriculture secretar y, said he wants seasonal rice tariffs to replace the quantitative

RA 8178 The law that needs to be amended to scrap the rice QR and convert it into tariffs, as what Manila committed to the WTO

restriction (QR) on rice. Dominquez’s plan is to impose 35 percent during the lean months and 50 percent during harvest season to protect the local farmers from import surge while shielding consumers from price spikes. “Well, we [economic managers] will discuss the possibility of imposing seasonal tariffs on rice imports and arrive at a common decision,” he told reporters in an interview. The Philippines, which secured the approval of the World Trade Organization (WTO) to extend its waiver on the special treatment for rice, needs to amend Republic Act 8178 to scrap the QR and convert it into tariffs. University of Asia and the Pacific (UA&P) economist Rolando Dy told the BusinessMirror that imposing a 50-percent tariff during rice harvest is “acceptable”

and is an effective deterrent to smuggling. Philippine Institute for Development Studies (PIDS) senior research fellow Roehlano Briones, who initially proposed a 35-percent levy on rice, said he would prefer a uniform tariff of 35 percent. “I favor imposing a 35-percent tariff year-round. However, imposing 50 percent is also okay if we can prove that it is warranted,” Briones told the BusinessMirror. For mer Tar iff Commission chief George Manzano said imposing seasonal tariffs works best for products that have a short shelf life. But for products that have a long shelf life, such as rice, Manzano said this would not be “very effective”. He also said any tariff, seasonal or not, must be imposed within the bounds of WTO rules and agreements. Manzano added

the government should see to it that these seasonal tariffs would not cause domestic rice prices to go up. “One has to look at the tradeoffs. If the seasonal tariff is very high, then the domestic price of rice may be very high, too,” Manzano told the BusinessMirror. “The government will have to weigh the welfare of the consumers against the welfare of our rice farmers.” Last week Dominguez said economic managers are still deciding on the tariff rate to be slapped on rice imports, following the expiry of the country’s rice-import cap. However, what is certain is that it will be between 35 percent and 50 percent, Dominguez said. “I think what’s being discussed is something like 35 percent or 50 percent. [It’s] around that range.” The finance chief added that economic managers are “thinking

about a number of things” to ensure they cover all possible options on resolving the matter. Dominguez said they are open to the idea of a season-based tariff rate for rice imports. Dominguez said this might be the best way to balance the interest of local farmers and consumers. “[As much as] we have to protect the local farmers from [the] dumping of foods, we also have to protect the consumers and hope the prices [of rice] will be moderate,” the finance chief said. Fact is, Dominguez added, prices of local rice are higher than those of imported rice, especially if the staple is produced by a fellow Asean nation. In a 2015 study, commissioned by the Department of Agriculture, it was found out that Thailand and Vietnam have the lowest production cost for every kilo of rice.

Nonie reyes

ALCOHOLIC DRINKS TO START BEARING TAX STAMPS IN 2018

T WEAK PESO A teller counts P500 bills at the Citystate Savings Bank Makati branch. The peso closed at 50.55 to the dollar on Wednesday, its weakest since September 2006, and may weaken further in the near term owing to a further widening in the country’s trade deficit. NONIE REYES

Senators want VAT reforms to focus on plugging loopholes, ending abuses By Butch Fernandez

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@butchfBM

he Senate is eyeing remedial legislation mandating stricter reportorial requirements to plug loopholes in the value-added tax (VAT), a major source of revenue used to bankroll various government projects, Sen. Juan Edgardo M. Angara affirmed on Wednesday. “Let us zero in on those abusing it,” said Angara, Senate Ways and Means Committee chairman, referring to various sectors allowed to claim VAT exemptions. A ngara c lar if ied t he committee’s position, as he allayed concerns that ongoing Congress deliberations to amend the existing law could lead to upward adjustments in current VAT rates.

ANGARA: “We are conducting the VAT review sector by sector. There will be no VAT increase.”

“We are conducting the VAT review sector by sector,” Angara told reporters, adding, “There will be no VAT increase. In fact, we are worried about its effect on housing.” Sen. Joseph Victor G. Ejercito also sought to allay fears that ongoing deliberations on the tax reforms could result in amendments to ensure higher VAT collections by lifting current exemptions enjoyed by certain sectors, as proposed by the House of Representatives.

Ejercito, who chairs the Senate Committee on Urban Planning, Housing and Resettlement, assured that the Senate would insist that VAT exemptions stay for lowcost housing, saying, “We will work out reporting requirements with the housing agencies.” He added that there are other affected sectors that need to be consulted, indicating the Senate will be conducting more hearings on a Senate counterpart measure of House Bill (HB) 5636 expanding the VAT base. Under HB 5636, the VAT base is proposed to be expanded by “limiting exemptions to raw food and other necessities, such as education and health.” A s proposed in the House bill, other VAT exemptions to be removed include that sale of socialized housing but only upon

establishment of a housing-voucher system to benefit buyers of socialized housing; sale of low-cost housing; sale of residential lots valued at P1.9 million; sale of house and lot and other residential dwellings valued at P3 million; and lease of residential units with monthly rental of up to P12,800. A primer on HB 5636 provided to the Senate also proposed to increase the VAT threshold from the current P1.9 million to P3 million; retain the zero rating of indirect exporters until the establishment and implementation of an enhanced VAT refund system; and a general repeal of all special laws granting VAT exemption. The house bill, however, retains the VAT exemptions of senior citizens, persons with disabilities and cooperatives.

By Jovee Marie N. dela Cruz @joveemarie & Rea Cu @ReaCuBM

he Department of Finance (DOF) will start implementing the tax-stamps scheme for alcoholic beverages early next year. The assurance was made by Finance Secretary Carlos G. Dominguez III after a lawmaker criticized the Bureau of Internal Revenue (BIR) for failing to implement it. “Probably early next year,” said Dominguez, when asked for the timeline of the implementation of the tax-stamps system covering alcoholic drinks. Dominguez said the Internal Revenue Stamps Integrated System (IRSIS) will be implemented for liquor, with the BIR already signing a memorandum of agreement with the APO Production Unit Inc. for the printing of the stamps. He said IRSIS is needed to plug leakages and help increase revenue collection of the government. On Tuesday Party-list Rep. Antonio Tinio of ACT Teachers said the required tax stamps still cannot be found on locally produced alcohol products five years after the passage of the “sin” tax law. “We deplore the abject failure of the BIR to implement a system of excise-tax stamps for alcoholic beverages. It’s been five years since the enactment of the sin-tax law, which mandates that such stamps are affixed on every bottle of locally produced distilled or fermented beverages, as proof of payment of excise tax,” Tinio said. “Up to now, not a single bottle sold in the country has the required stamp. This means that the consumer paying the higher price has no assurance that the sin tax actually went to the government,” he added. In contrast, Tinio said the tax-stamp system has long been in place for tobacco products, with the case of Mighty Corp. focusing attention to the use of counterfeit excise-tax stamps to evade taxes. “For as long as stamping of alcoholic beverages is not being implemented, that massive loophole is there to be exploited. In my view, Congress should not entertain proposals for new taxes for as long as the BIR cannot properly implement existing tax laws,” he said. “However, there’s no excuse for the BIR to in effect give perversely preferential treatment to local alcoholic-beverage manufacturers by dragging its feet and giving them a free pass on the excise-tax stamp requirement,” the lawmaker said. BIR Assistant Commissioner Teresita M. Angeles told lawmakers that the new cigarette-tax stamps will be out by October this year. Angeles said before the implementation of the sin-tax law, the country has generated P32.16 billion from locally manufactured cigarettes in 2013. With the sin-tax law in place, excise taxes doubled to P67.94 billion in 2014. Some P90 billion in excises taxes were collected in 2015, although collections decreased to P85.9 billion in 2016 due mainly to the proliferation of fake-tax stamps, the implementation of the graphic health-warning law and cigarette smuggling.