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Friday, July 21, 2017 Vol. 12 No. 281

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@joveemarie

he Cabinet proposal to impose season-based tariffs on rice in lieu of the quantitative restriction (QR) scheme faces rough sailing in Congress, as lawmakers already voiced their concerns over the proposal, particularly for being prone to manipulation by unscrupulous traders.

A call for consumer activism Dr. Jesus Lim Arranza

PANGANIBAN: “Seasonal tariffication will be easier to manipulate.”

For one, House Committee on Agriculture and Food Chairman and Partylist Rep. Jose T. Panganiban Jr. of AnacIP said replacing the QR on rice with season-based tariffs could become an avenue for smuggling. “If I were to decide, seasonal tariff will not be effective as compared to straight tariff because of unscrupulous Continued on A5

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Solons buck proposed season-based rice tariffs By Jovee Marie N. dela Cruz

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Make Sense

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nfair trade practice (UTP) is an economic bane that has made the lives of consumers and businessmen miserable. Defined as a trade practice that uses various deceptive, fraudulent or unethical methods to obtain business, unfair trade practices include misrepresentation, false advertising-tied selling and other acts that are declared unlawful by statutes. UTP can also be referred to as deceptive trade practices. Continued on A11

PLANT SHUTDOWNS TO CUT BM Reports LUZON GRID’S JULY-SEPT POWER SUPPLY BY 2,000 MW Pinoys hope Duterte keeps campaign promises in Year 2 By Lenie Lectura

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FUENTEBELLA: “We are beefing up the numbers to avert any supply problem.”

@llectura

BOUT 2,650 megawatts (MW) of power-generating capacity will be shaved off from the Luzon grid in the Julyto-September period, owing to a number of power plants that are scheduled to go offline. The Department of Energ y (DOE), however, is not worried, saying that the situation would not likely result in power-outage incidents because, for one, a cooler temperature would normally result in lesser demand for electricity. Also, new power facilities are expected to inject power into the grid during the eight-month shutdown of one unit

of the Sual power facility, the country’s biggest coal-power source. “We are beefing up the numbers to avert any supply problem,” Energy Undersecretary Felix William B. Fuentebella said in an interview on Thursday. The 1,200-MW Sual Power Station is near the Lingayen Gulf in See “Plant shutdowns,” A2

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By Jasper Emmanuel Y. Arcalas @jearcalas

& Catherine N. Pillas @c_pillas29

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Conclusion

S President Duterte speaks on Monday for his second State of the Nation Address (Sona), importers, traders and businessmen in general expect “meatier” government support would flow from his mouth. And he will, if Trade Secretar y Ramon M. Lopez is to be believed. In a briefing with reporters on Wednesday, the chief of the Department of Trade and Industr y (DTI) said the Commander in Chief would empha-

size micro, small and medium enterprises (MSMEs) as key to the countr y’s further development, if not for the Philippines’s socioeconomic grow th in the past year. “The MSME development efforts are close to his [Duterte’s] heart,” Lopez said, adding that there are currently 514 Negosyo ( bu si ness) centers. Ent re pre neurs-clients in these centers are now at 800,000, he said. In one year of the administration, we’ve helped 520,000, Lopez added. The DTI chief also expects t he C h ief E xec ut ive to c ite the Pondo para sa Pagbabago at Continued on A2

A K-9 unit patrols the main session hall of the Philippine Congress in Quezon City on July 20, four days before President Duterte delivers his second State of the Nation Address. NONIE REYES

n japan 0.4540 n UK 66.1665 n HK 6.5089 n CHINA 7.5264 n singapore 37.1594 n australia 40.3992 n EU 58.5328 n SAUDI arabia 13.5542

Source: BSP (20 July 2017 )

BMReports BusinessMirror

A2 Friday, July 21, 2017

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Pinoys hope Duterte keeps campaign promises in Year 2 Continued from A1

Pag-asenso (P3, or fund for change and development) Program. The P3 is a P1-billion financing scheme that aims to give MSMEs better access to finance and to reduce their cost of borrowing. The fund will also give priority to the country’s 30 poorest provinces. This is intended to replace the “56” money-lending system. Given his push on inclusive growth, I believe the President will cite this program in his Sona, according to Lopez.

Protecting trade

THE same support is expected by Meat Importers and Traders Association President Jesus C. Cham to be cited in Duterte’s Sona. However, Cham said the nature of the support should be in terms of policy. Cham cited, for one, opening the

local market to foreign imports. He believes doing so would lead to a decrease in the price of meat at the retail level. “We hope the government will see that food cost in the Philippines is high, and this is due to a misguided protectionist policy,” Cham told the BusinessMirror. “Government has decided to liberalize rice importation, and this is a step in the right direction,” he said. “Similarly, the importation of meat and meat products should be liberalized.” Cham added the tariff slapped by government on meat imports pushes up the landed cost of commodities in the local market. This cost is then passed on to Filipino consumers, making meat expensive and particularly inaccessible to lower-income families, he said. “High import duty rates push up the cost of imports, even

Plant shutdowns. . . Sual, Pangasinan. It is owned by TeaM Energy, which is a joint venture between Marubeni Corp. and Tokyo Electric Power Corp. The Sual Power Station’s Unit 2 (600 MW) tripped on June 14 due to a main generator transformer failure. It was supposed to resume operations on July 13. However, based on a preliminary report of inspection, the main transformer is not repairable at site, according to TeaM Energy Head of External Affairs Froilan Gregory Romualdez III. To date, Sual 2 remains offline. The same unit was scheduled to undergo another maintenance shutdown for 30 days, from August 5 to September 30, based on government data. TeaM Energy said Sual 2 will not operate for a total of eight months. “Per GE-Alstom specialists, who are the original equipment manufacturer of the equipment, it would take six months to manufacture a new transformer, another month for its shipping, and an additional month for installation and commission. In total, it may take eight months for Unit 2 to be returned to

as local producers are not able to supply meat at affordable prices,” Cham said. “This [situation] especially affects the bottom half of the population who are not able to consume good quality protein.”

Reforms, changes

ACCORDING to Cham the reforms initiated by the Department of Agriculture (DA) in securing import permits or sanitary and phytosanitary (SPS) import clearance has disrupted the flow of trade in the market. “[The] DA has not made it easier to import but has made it harder,” he explained. “Manual processing takes longer to issue ‘import permits’, which are presented in the guise of SPS clearances.” ProPork President Edwin G. Chen believes the air should be cleared between traders and government. One way to achieve this,

Continued from A1

service,” Romualdez said in an e-mail. “At the moment, we are exhausting all possible efforts to source for a readily available transformer of similar specifications in order to lessen Unit 2’s downtime.” Moreover, Sual 1, which is another 600 MW of power-generating capacity, will be shut down for 30 days starting September 16. Other power plants that will undergo maintenance shutdown from July to September this year are the following, Santa Rita Module 30 (250 MW) on July 1 and 2 and from September 16 to 20; Santa Rita Module 20 (250 MW) on July 8 and 9 and from September 2 to 6; Santa Rita Module 10 (250 MW) on July 15 and 16; Calaca Unit 2 (300 MW) from July 17 to August 30; Southwest Luzon Power Generation Corp. Unit 2 (150 MW) from September 15 to October 14; and San Lorenzo Module 60 from September 21 to October 25.

‘No worries’

In all, the capacities of the power facilities that underwent and/or will undergo maintenance shutdown in the current

he said, is the implementation of a comprehensive livestock program to promote deeper collaboration between the government and the private sector. “More collaborative interaction between the industry and the Department of Agriculture [is needed],” Chen told the BusinessMirror. “I find the interaction greatly reduced than the previous administration.” Chen believes the government should also allocate budget for programs supporting the industry. “Livestock and poultry is the second-biggest contributor to the Philippine agriculture,” Chen added. “Unfortunately it has the smallest budget from the DA.”

Small farmers

ARZE Glipo, executive director of the Integrated Rural Development Foundation (IRDF), believes government “support should be in the

quarter total 2,650 MW. The DOE has yet to determine if a yellow-alert notice needs to be issued by the National Grid Corp. of the Philippines (NGCP). “We have yet to get hold of the updated demand-supply projection, but we are working on the numbers now,” Fuentebella said. A yellow alert means thin power reserves. It is issued when contingency reserve is less than the capacity of the largest synchronized unit of the grid. In Luzon, this is equivalent to 647 MW, or one unit of the Sual power plant. However, a yellow alert does not necessarily mean power outages or blackouts; but it could turn to a red alert, which means power outages are very likely to occur. “The DOE is closely looking into the impact of the prolonged and unplanned outage of one unit of Sual. The numbers are being updated and verified. No worries. We’re on top of it,” Fuentebella said in a text message. For one, the third quarter of the year is considered an off-peak period because temperature is cooler. “The tendency is to consume less electricity. This is normally the behavior during rainy season,” the DOE official said. When sought for comment, Manila Electric Co. Head of Utility Economics Lawrence

direction of self-sufficiency”, especially in garlic and onion. “The DA is now encouraging farmers to plant garlic and onion not only in the North but also in the Mindanao region, so why not? It’s a good idea so we won’t be manipulated by middlemen and the cartel,” Glipo told the BusinessMirror. “At the same time, we provide employment to people in the rural areas.” The government should allocate more funding to programs directed in helping the country’s small-scale farmers increase their income, she added. “The bias of the government’s policy should be toward small farmers,” Glipo said. “If you look at the statistics, most of the farmers in the world are small-scale ones—so the government’s support should go there.” Glipo believes programs that would help farmers improve their

Fernandez said in a text message, “from the second quarter to the third quarter, which is the start of rainy season, the overall average consumption goes down by 5 [percent] to 10 percent.” Moreover, new power plants are scheduled to come on line in the second half of the year. “One of which is SMC’s [San Miguel Corp.] Limay plant, which will contribute 150 MW. I think it will commercially run in November,” Fuentebella said. Another plant that is scheduled to inject power into the grid this year is the 420MW expansion of the Pagbilao coal-fired power plant.

Causers pay policy

Fuentebella said the DOE is proposing to penalize power-generation companies (gencos) if they are found liable for causing a sudden power-plant shutdown. The DOE has yet to firm up details on its proposed policy, dubbed as the “Causers Pay Policy Program”, but said the objective of this is to pass on the burden to the gencos, distribution utilities and the NGCP “if the cause of the outage is intentional on their part, if they were negligent or incompetent”. “This is a proposed policy that we will seriously look into together with the ERC

income would include distribution of better planting materials, resilient irrigation systems and easier access to financing or credit. The DA could also look into improving the implementation of the National Organic Agriculture Program, according to the IRDF official. Glipo hopes the government will implement an integrated program that would tie up the livestock sector with organic farming. “This should be done in an integrated manner because one of the problems faced by farmers is the source of organic matter,” she said. “For example they have already been trained to do organic farming but they do not have any source for manure.” Glipo said an integrated program would allow organic farmers to tap the supply of manure from owners of cattle and poultry farms.

[Energy Regulatory Commission] and have it tested. Basically, it will be determined if the cause was intentional or not, if there were lapses on their part that led to the outage, which could have been avoided in the first place,” Fuentebella added. The proposed policy will be formalized through a memorandum circular, which is targeted for issuance within the year. While the penalty is yet to be firmed up, the DOE official said the responsible party must pay for the incremental cost of electricity. For instance, when a power plant conks out and the DOE was able to determine that there was negligence on the part of the plant operator, the operator will be made to shoulder, among others, the cost related to sourcing a more expensive fuel source, instead of passing on this cost to the consumers. “We have load interruptions caused by forced or unplanned outage of some plants. We want to look at how to make them accountable. It is basically addressing that level of responsibility to the entire system,” the DOE official added. AC Energy Holdings Inc., the power arm of conglomerate Ayala Corp., welcomes this plan, albeit rules must be set first. “ They should look into it. That is what they are doing now, as they should. But in terms of explicit set of rules, well that remains to be seen,” company President John Eric Francia said when sought for comment.

DOT. . .

Continued from A12

She also enlisted the support of various stakeholders in implementing the ”twindestination” tour packages of Philippine Airlines (PAL), which has been very keen in providing airfares at discounted prices. PAL has already started offering special fares for Manila-Saigon and its US-ManilaSaigon routes. The Philippine air carrier, which has also promo fares for Thailand, will soon be supported by a network that will offer tour packages for the country, beginning the last quarter of 2017, said the DOT in a news statement. Eva Air, which flies to Cebu; Asiana Airlines; and just recently Korean Airlines, which has added flights from San Francisco going to Manila, are among the airline-partners which have been very supportive of the DOT in conducting its familiarization trips and soon, its Balikbayan packages. Teo also called for twinning destinations between Clark with other Asian nations. “Twinning domestic destinations, like Clark with other Asian destinations, would be profitable as it is already a secondary gateway to Laoag, Vigan and La Union, extending even to Baguio via TPLEX. Connectivity of our country’s secondary gateways has improved, making it even more convenient to travel.” She said this twinning program will also pave the way for the less known and the least-traveled destinations to gain some prominence. The US is the second top market for visitor arrivals in the Philippines, accounting for some 15 percent of the 2.9 million total arrivals in the first five months of the year. From January to May, visitor arrivals from the US grew by about 12.8 percent to 428,767.

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The Nation BusinessMirror

Editor: Vittorio V. Vitug • Friday, July 21, 2017 A3

Imee, Ilocos 6 lawyer to SC: Resist lawmakers’ ‘bullying’

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party-list lawmaker on Thursday said he will ask the governor of Ilocos Norte to explain before the House of Representatives the “irregular” cash advances, amounting to P66.45 million, for the procurement of 115 units of various types of vehicles using excise taxes from locally produced Virginia-type cigarettes when a House probe focused on the fund-diversion case resumes on July 25.

Party-list Rep. Enrico Pineda of 1-Pacman said Ilocos Norte Gov. Imee Marcos allegedly authorized in 2011 and 2012 such spending using funds from the province’s share in excise taxes from locally produced Virginia-type cigarettes. This developed as the camp of Marcos and the six Ilocos Norte officials, collectively known as Ilocos 6, have urged the Supreme Court (SC) to immediately act on their petition seeking the issuance of a writ of amparo to protect their constitutional rights. Lawyer Vicentito Lazo, one of the counsels for Marcos and the Ilocos 6, said the High Court should not allow itself to be bullied by lawmakers, who have earlier threatened to issue a show-cause order against three Court of Appeals justices who ruled that the detained officials must be released immediately. “Under the rules of the Supreme Court,

the writ of amparo should be issued immediately if, upon its face, there is a ground for its issuance. Unfortunately, the justice in charge and two others have inhibited from the case, so no action has been taken on our petition,” Lazo said. The petition for a writ of amparo is a remedy available to any person whose right to life, liberty and security is violated or threatened with violation by an unlawful act, or omission of a public official or employee or of a private individual or entity. Pineda added, “[Marcos] alone can explain the mysterious disappearance of all documents pertaining to this questionable diversion of funds that should have been used exclusively for the welfare of tobacco farmers.” Marcos’s signatures, he said, were on most of the documents pertaining to the cash advances made to procure five sec-

ondhand buses, 70 minitrucks and 40 multicabs—from the purchase requests to the obligation requests for the funds, and even the disbursement vouchers. “Only Gov. Imee Marcos can solve the mystery behind the documents that have all gone missing after such irregular purchases were uncovered,” Pineda said. “Her stamp of approval [were] in almost all of the documents related to these questionable transactions, so who else can best explain the paper trail behind them?” A subpoena has already been issued to Marcos to compel her to attend the hearing. Six provincial executives have been detained at the lower chamber since May 29 “for their contemptuous act of giving evasive answer, tantamount to refusal to answer” questions about the money meant for the benefit of tobacco farmers, but supposedly misused as cash advances for the purchase of motor vehicles sans the benefit of public bidding. These six Ilocos Norte provincial officials currently detained at the Batasan complex are Josephine Calajate, Ilocos Norte provincial treasurer; Encarnacion Gaor and Genedine Jambaro, both working at the Provincial Treasurer’s Office; Evangeline Tabulog, the provincial budget officer; Eden Battulayan, officer in charge-accountant; and Pedro Agcaoili, the chairman of the Bids and Awards Committee and the Provincial Planning and Development Office. Under Republic Act 7171, the share of provinces from the taxes should only be used for certain projects that will promote the welfare of tobacco farmers.

Jovee Marie N. dela Cruz and Joel R. San Juan

groups dispute ‘terrorist front’ tag on two NGOs

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atholic and other religious leaders have rallied behind two non-governmental organizations (NGOs) overseeing the operation of schools in the country after Turkish Ambassador Esra Cankorur last week accused the NGOs of being terrorist fronts. No less than former Education Secretary and De La Salle University President Bro. Armin A. Luistro expressed support for the NGOs. The Catholic Bishops’ Conference of the Philippines (CBCP), likewise, led a group of four religious and lay Catholic organizations during a news conference on Tuesday morning to express support for the Integrative Center for Alternative Development Foundation Inc. (ICAD) and the Pacific Dialogue Foundation Inc. (PDF), the NGOs that run the Filipino-Turkish Tolerance School in Zamboanga City and the Fountain International Schools in Metro Manila, respectively. The Church and lay leaders cited the ICAD and PDF for their numerous programs and projects in partnership with religious groups and the government for charitable causes and to promote peace and understanding among the Christian, Muslim and other major faiths. Likewise, the groups debunked as false the terror charges hurled by Cankorur in the media last week. Attending the news conference in support of the two NGOs were Fr. Carlos Reyes, executive secretary of the CBCP Episcopal Commission on Interreligious Dialogue; Dr. Potre Diampuan, regional coordinator of the United Religions Initiative Southeast Asia-Pacific; Dr. Tess Ramiro, president of Catholic lay group Aksyon Para sa Kapayapaan at Katarungan (Action for Peace and Justice) Center for Active Non-Violence for Philippines Inc.; shariah lawyer Harun Ali, secretary- general of the

Imam Council of the Philippines; and Marites GuingonaAfrica, founder and president of the Peacemakers’ Circle Inc., an active interfaith dialogue organization. In defending the two NGOs, Luisto said, “I have never had any doubt that both ICAD and PDF are legitimate foundations that share our Filipino values of peace through education and a deep respect for our common humanity despite differences in cultures, beliefs and traditions. Both ICAD and PDF have been working quietly in their own way to build such an environment through their educational programs here in the Philippines.” “I have never had any reason to link their operations here with alleged terror groups locally, as this would seem totally in conflict with their ongoing advocacies and programs on peace-building,” he said. Luistro also praised the quality of education in the NGOs’ schools. “I have admired their culturally sensitive programs within an atmosphere of academic excellence where the values for respect of divergent cultures and faiths lead to a more wholistic education for both Filipino and foreign students.” The religious and lay leaders said their show of support for the two NGOs and their schools were a result of tested partnerships between them to promote interfaith dialogue so that conflicts resulting from misunderstanding can be resolved peacefully and equitably. They added that their appearance before the media sprang from their firm belief in the mission and performance of the two NGOs, since, they said, these have consistently undertaken programs and projects to improve the lives of Filipinos via charitable works and the provision of better education.

Economy

A4 Friday, July 21, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

DOE approves grid-impact study for five more power projects By Lenie Lectura

@llectura

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HE Department of Energy (DOE) has cleared five power projects for the conduct of a grid-impact study (GIS). A clearance for the conduct of GIS is necessary for a power firm before it can proceed with the construction of its power project. The proposed projects could generate a total of 209.2 megawatts (MW) of installed power capacity. Based on DOE data as of June, the project proponents that were allowed to proceed with the GIS are Supreme Power Corp., for a 7.2MW diesel power-plant project in Ubay, Bohol; SPC Power Corp., for a 32-MW diesel-fired power barge in Maribojoc, Bohol; Bataan 2020 Inc., for a 25-MW multi-feedstock cogeneration plant in Mariveles, Bataan; Horus Solar Energy Corp., for a 45-MW solar-farm project in Morong, Bataan; and Solar Philippines Tanuan Corp., for a 100-MW solar-power project in Batangas. The DOE approval was issued on June 13 for Supreme Power, SPC Power and Bataan 2020. Horus Solar and Solar Philippines, meanwhile, sought the green light from the DOE for their respective proposed projects on June 20.

209.2 MW The combined installed capacity of the five power projects approved for GIS In May the agency cleared eight power projects, including three from a unit of San Miguel Corp., for the conduct of a similar study. Based on the list, Strategic Power Development Corp. (SPDC), a wholly owned subsidiary of the conglomerate, will be involved in the following power projects: 100-MW Nabuangan run-of-hydro river in Apayao, the 500-MW Dingalan pumped storage hydroelectric plant in Aurora and the 400-MW San Roque Lower East Pumped Storage in Pangasinan. The other five projects include Marubeni Corp.’s 70-MW diesel genset facility in Leyte; Solar Philippines Inc.’s 100-MW Iba-Palauig solar plant in Zambales and another 100-MW solar plant in Medellin, Cebu, Hayes Solar Energy Corp.’s 27-MW solar plant in Misamis Oriental; and REPower Energy Development Corp.’s 1.5-MW Tignoan River (Uper Cascade) hydro electric plant of in Quezon.

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Manufacturing and real estate boosted industry growth in Q1

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By Cai U. Ordinario

@cuo_bm

he robust growth of the manufacturing and real-estate sectors boosted the gross revenue of industries to 9.5 percent in the first quarter of 2017, according to the Philippine Statistics Authority (PSA). Based on the Quarterly Economic Indices (QEI), the Total Gross Revenue index (TGRI) grew faster in the first quarter of this year compared to the 6.9-percent growth posted in the same quarter of the previous year. “[The QEI] is a compilation of quarterly indices on production, gross revenue, employment, compensation, production per worker, compensation per employee and average earnings,” the PSA said. Manufacturing posted the fastest growth across industries with 13 percent, and real estate with a

9.5% The growth of TGRI boosted by the manufacturing and real-estate sectors in the first quarter of 2017, compared to 6.9 percent in the same quarter of the previous year

growth of 12.8 percent. Other sectors that posted high TGRI growth were trade, as well as transportation and telecommunication, with a growth of 8.6 percent and 8.1 percent, respectively. In terms of the Total Employment Index (TEI), industries posted a growth of 1.4 percent in the first quarter of 2017. This was largely due to the real-estate sector, with a TEI growth of 9.8 percent; followed by transportation and communication with 5.5 percent; and finance with 2.8 percent. Other sectors, like private service, posted a TEI growth of 1.5 percent; electricity and water with 1.3 percent, manufacturing with 1 percent; and trade with 0.8 percent. “On the other hand, mining and quarrying contracted by 5.6 percent,” the PSA added. Meanwhile, the PSA said the Total Compensation Index grew faster at 6.2 percent in the January-to-March period in 2017, compared with the 4.5-percent growth recorded in the previous year. Industries that contributed to

the growth were real estate with 15.8 percent, manufacturing with 13.7 percent, and private services with 5.5 percent. The PSA, however, said mining and quarrying declined by 0.8 percent, while electricity and water contracted by 6 percent. With this, the Total Compensation per Employee Index posted a growth of 4.8 percent, faster than the 4.5-percent growth in the previous year. “This acceleration was attributed to the uptrend of manufacturing with 12.6 percent, real estate with 5.4 percent, and mining and quarrying with 5.1 percent,” the PSA added. However, data showed electricity and water, transportation and communication, and finance declined by 7.2 percent, 2.4 percent and 1.1 percent, respectively. The data in the QEI were obtained from various agencies, such as the Mines and Geosciences Bureau, Forest Management Bureau, Sugar Regulatory Administration, National Power Corp., Manila Electric Co., Manila Water Co. Inc. and Maynilad Water Services Inc.

Solon describes TRAIN as ‘most egalitarian’ legislation in 70 years

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he Tax Reform for Acceleration and Inclusion (TRAIN) Act, or House Bill (HB) 5636, the government’s centerpiece taxreform package recently passed by the House of Representatives, “is the most egalitarian legislation the country will have in 70 years”, according to PDP-Laban Rep. Joey S. Salceda of Albay, a noted economist. The measure, which is projected to deliver about P354 billion in monetary impact annually, P170 billion of which represent direct transfer from the elite to middle income and poorest households, seeks to overhaul the country’s personal incometax system, expand the value-added tax (VAT) base, ensure bigger internal revenue allotments (IRA) to local governments to further enhance their development capabilities, and resolve the income inequality between the poor and the wealthy. “Nowhere in the past 70 years, or since the country’s first Congress was convened in 1945, could we find a legislation as egalitarian as [the] TRAIN, which delivers such huge monetary impact to address the gross inequality between the elite and marginalized Filipinos,” Salceda said. The TRAIN is considered as the most ambitious and significant reform initiative by the administration of President Duterte, who certified

the measure as urgent. The House overwhelmingly approved the measure with a 246-9 vote with one abstention on May 31. The Senate will tackle it when Congress resumes session later this month. Its lead proponents expect the bicameral committee to eventually enact it by September. HB 5636 consolidated Salceda’s original HB 4688, Rep. Dakila Carlo E. Cua of Quirino’s HB 4774 and several others. It adopted the title and most provisions of Salceda’s bill, including the conditional-cash transfer, and the proposals of the Department of Finance (DOF). Cua and Salceda are chairman and vice chairman, respectively, of the House Ways and Means Committee. Government information teams coordinated by the DOF have been fielded out to engage various sectors to ensure proper and accurate understanding of the measure and its value. Some 107 such meetings have already been held, mostly with transport groups, civil-society organizations, people’s organizations, youth groups and local government units around the country. Salceda, who actively participates in the meetings, said he has answered and explained the most asked questions about the measure. The TRAIN will overhaul the

country’s personal income-tax system. Effective from 2018 to 2020, taxpayers earning up to P250,000 a year will be tax-exempt, while those earning up to P400,000 will pay a 20-percent tax on the excess over P250,000. People earning up to P800,000 will be taxed P30,000, plus 25 percent in excess of P400,000. Those earning up to P2 million will pay P130,000, plus 30 percent of the amount in excess of P800,000. Those earning up to P5 million will pay P490,000, plus 32 percent in excess of P2 million, while those earning over P5 million will be taxed P1.45 million, plus 35 percent in excess of P5 million. Slight adjustments will be put into effect by 2021 onward, with reduced percentage on earnings beyond the set income brackets by those earning up to P250,000 a year remaining tax-exempt. “The TRAIN is the only tool that could make our tax system more efficient, equitable and pro-poor, since the government cannot exclusively tax the rich because such measure would immediately be struck down as class legislation,” Salceda emphasized. The measure also increases excise taxes on oil and vehicles, expands the VAT base, and taxes sweetened beverages and lotto win-

Book-reading activity

Young learners from the Dolores and Kapalaran elementary schools in Taytay, Rizal, set aside their cell phones and gadgets for some good, old-fashioned book reading in celebration of the National Children’s Book Reading Day. The activity commemorates the publication of Jose Rizal’s Ang Pagong at Matsing at the SM City in Taytay on Tuesday. PNA/Joey O. Razon

nings, but retains VAT exemptions for senior citizens and disabled persons and transactions by various cooperatives. Aside from the poor, LGUs will, likewise, directly benefit from TRAIN, 40 percent of which hiked revenues will go to the IRA

of barangays, towns, cities, provinces and the Autonomous Region in Muslim Mindanao. TRAIN is expected to hike tax revenues that will fund the government’s massive development programs and generate inclusive eco-

nomic growth that will ultimately benefit the poorest families. It is projected to ultimately reduce poverty to single digit, grow the economy and transform the Philippines into an Asian economic powerhouse by 2028, with $1.2 trillion GDP. PNA

Malacañang hails JP Morgan’s outlook for Philippine economy

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alacañang on Thursday said the Duterte administration’s efforts to build a robust economy is catching the eye of international financial institutions. Presidential Spokesman Ernesto C. Abella welcomed JP Morgan’s positive outlook on the Philippine economy at a Palace news conference. New York-based financial services company JPMorgan Chase & Co., through its chief economist for Asean, had expressed bullishness about the Philippines’s economic prospects, noting that the Philippines, under the Duterte adminis-

tration, is now moving on a more equitable growth path. “We are glad that JP Morgan has recognized the Duterte administration’s efforts to bring prosperity for all toward our vision of a comfortable life for all Filipinos,” Abella said. “Yes, we are in a unique opportunity and we expect this growth to become more robust, sustainable and inclusive as we usher in the Golden Age of Infrastructure through our massive ‘Build, Build, Build’ infrastructure plan, where we shall pour in investments in infrastructure to generate employment

and spur growth of industries in and outside the National Capital Region,” he added. In the same news briefing, Socioeconomic Planning Secretary Ernesto M. Pernia said the President’s first year in office can be summed up on the themes of malasakit, pagbabago and patuloy na pag-unlad, which are the pillars of the Philippine Development Plan (PDP). “We can talk about infrastructure and macroeconomic fundamentals, but in the end, it all boils down to human development; welfare of the people; poverty reduction; inequality reduction; lifting the people out

of poverty by giving them the opportunities to get themselves out of poverty,” Pernia said. According to Pernia, the National Economic and Development Authority (Neda) has already approved 28 projects during the first year of the Duterte administration worth about P786 billion. Pernia also noted that unemployment rate decreased from 6.1 percent in April 2016 to 4.7 percent in October last year, while underemployment rate has gone down to 16.3 percent. In terms of foreign direct investments, investments increased

from $5.8 billion in 2015 to $7 billion in 2016. “The government intends to massively invest in infrastructure over the medium term, totaling P8.2 trillion, and the funding will be an optimal mix of GAA [General Appropriations Act], ODA [official development assistance] and private-sector funding. The idea is always to find the most cost-effective and optimal mix of funding sources,” he said. According to Pernia, the Neda is now in the process of speeding up implementing projects and making sure that they are delivered on

schedule and on time to the people who have long aspired for higher standards of living. Pernia also allayed fears that the Philippines will fall into a “debt trap” regarding loans with China. “Well, we haven’t yet signed any loan agreement with China, except oral commitments or some written memoranda of understanding, and we certainly are going to be very careful with our dealings in terms of project financing from the Chinese government,” he said. Pernia added both sides have clearing mechanisms. PNA/PND

Agriculture/ Commodities news@businessmirror.com.ph

BusinessMirror

Editor: Jennifer A. Ng • Friday, July 21, 2017 A5

PHL bans all meat imports from Brazil By Jasper Emmanuel Y. Arcalas

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@jearcalas

he Philippine government has temporarily banned all meat imports from Brazil to ensure the safety of Filipino consumers after salmonella was detected in some of the shipments from the Latin American country.

The ban was announced by Agriculture Secretary Emmanuel F. Piñol on Thursday. Piñol added the government will inspect meat-packing plants where imports that tested positive for salmonella were sourced. “While we are conducting tests, we can temporarily stop the importation from Brazil and clear them [meat-packing plants] one by one,” he told reporters in an interview on July 20. “It will be a total ban of all Brazilian companies. But we will clear them one by one as we conduct the validation,” Piñol added. Piñol said his pronouncement

takes effect on Thursday, and he will sign and release a memorandum order formalizing the temporary ban. He added the Department of Agriculture (DA) will send a technical team to Brazil that would physically inspect and investigate the list of accredited foreign meat establishments approved to export meat and meat products to the Philippines. “We will send people to Brazil by July 26,” he said. “They will check the facilities and then, as soon as they are cleared, they will be allowed to export to us.” While is aware that banning Brazil meat imports would limit sources of

beef for the Philippines, Piñol said he has to prioritize consumer safety. “Trade can always resume the moment things are cleared. Our first and foremost priority would be the safety of our consumers”. Meat Importers and Traders Association (Mita) President Jesus C. Cham told the BusinessMirror that the ban could result in higher prices of meat and meat products in the domestic market. “It will have a huge impact. For [mechanically deboned meat (MDM)], the ban on Brazil negates the lifting of the ban on Dutch poultry,” Cham said in an e-mail. “The DA should immediately lift the poultry ban on other EU countries in order to increase the supply. For beef, I’m afraid there are very few alternatives,” Cham added. Cham said the government should expedite its investigation to avert any spikes in local meat prices. “It is unfortunate that [the] DA has decided to ban Brazil until the plants are inspected. Brazil is an important source of meat for the Philippines.” “To minimize the impact, we urge [the] DA to inspect the plants expeditiously, at the same time

5-year road map to hike mango production–Piñol

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he Department of Agriculture (DA) will craft a fiveyear mango-development plan to increase mango production, which declined by nearly 10 percent last year. Agriculture Secretary Emmanuel F. Piñol said he has ordered the crafting of the road map after DA officials met with mango-industry stakeholders on July 18. Piñol added the meeting was attended by top exporters of dried and processed mango, the president of the Philippine Mango Growers Assocation, Agriculture Undersecretary Evelyn G. Laviña, Bureau of Plant Industry Officer in Charge Vivencio Mamaril and North Cotabato Board Member Rollyboy Sacdalan. “It was agreed that the government should step in and come up with a clear plan to address the problems while, at the same time, draw up a five-year road map to fully develop

the Philippine mango industry,” he said in a Facebook post on July 20. Piñol added industry stakeholders had voiced out to him the country’s dwindling production and the problems they are currently facing. “While the demand for mango has increased over the years, Philippine mango production has declined drastically,” he said. “The Philippine Mango Growers Association said national production has dropped from over 1 million [metric tons] annually to only 400,000 MT last year.” In an interview with reporters on Thursday the DA chief said the road map seeks to address the industry’s perennial problem with pests, particularly the cecid fly and capsid bug. Piñol added he will also lift the ban on the importation of calcium nitrate, a chemical used by mango growers to catalyze the flowering

stage of the fruit. “In 2016 the government banned the importation of calcium nitrate, which is used to induce flowering in mangoes. The reason being is that calcium nitrate could be used in making bombs,” he said. “Now, I want importation to resume.” Piñol added he also directed the Sugar Regulatory Administration (SRA) to tweak the schedule of release of sugar imported by mango processors. “What the SRA is doing [is] that they release the allocation of sugar importation for mango processors every quarter,” he said. “We were able to address this by instructing [SRA Administrator Anna Rosario V. Paner] to give attention to the request of driedmango processors’s request to time the release of sugar imports based on cropping season,” Piñol added. Jasper Emmanuel Y. Arcalas

Solons buck proposed season-based rice tariffs Continued from A1

importers who tend to withhold importation on lean months, just like what they did to garlic,” Panganiban told the BusinessMirror. “Also, seasonal tariffication will be easier to manipulate,” he added. Finance Secretary Carlos G. Dominguez III was the first to float the idea of imposing a tariff of 35 percent during the lean months and 50 percent during harvest season to protect local farmers from import surge, while shielding consumers from price spikes. Agriculture Secretary Emmanuel F. Piñol later said the proposal of Dominguez is consistent with President Duterte’s order to discourage imports during harvest season. Panganiban said the proposal of the finance secretary will be discussed in the ongoing technical working group (TWG) meetings to consolidate all the bills amending Republic Act (RA) 8178, as well as the positions of the stakeholders. The Philippines’s waiver on the special treatment for rice has already lapsed. However, the country in April informed the WTO it was not able to convert its QR on rice into tariff, citing delays in the amendment of RA 8178, or the Agricultural Tarrification Act. Amending RA 8178 is needed to scrap the QR and convert it into tariffs. Without the amendment, the Philippines needs to enforce reduced rates on agricultural goods covered by the Philippines’s tariff commitments to the WTO.

“Of course, that will be one of the inputs that will be discussed in the TWG, if it would be the official position of the finance department or the economic team of the government,” Panganiban added. The TWG, he said, has not received “the DOF official position paper on the matter”. Partly-list Rep. Tom Villarin of Akbayan also expressed reservations on the proposal of the DOF secretary. “Seasonal rice tariffs mean that we can accurately predict the weather and its impact on rice production. With climate change disturbing cropping cycles and the thinness of global rice production and supply, we cannot sacrifice rice self-sufficiency and making rice tariffication weather-dependent,” he said. “If we impose [seasonal rice] tariffs, it should be to boost local productions as priority, thus it should be at its allowable maximum.” Panganiban said the TWG will finish and submit the consolidated draft bill amending RA 8178 by August. “The TWG will finish [consolidating the filed bills and positions of stakeholders] by August.” Earlier Panganiban said the leadership of the 17th Congress has agreed to include in its priority bills measures replacing quantitative import restriction on rice with tariffs. Panganiban’s House Bill (HB) 5433 also seeks the creation of the rice competitivenessenhancement fund. The bill said, “In lieu of the QR, the maximum bound rates committed under the Uruguay Round Final Act shall be imposed on the

agricultural products whose quantitative restrictions are repealed by this Act, as amended.” It also said in case of shortages or abnormal price increases in agricultural products, whose QRs are lifted, the President may propose to Congress revisions, modifications or adjustments of the Minimum Access Volume (MAV); “provided, however, that in the event Congress fails to act after 15 days from receipt of the proposal, the same shall be deemed approved”. The bill also said in lieu of the QR on rice, the maximum bond rate shall be as notified by the Philippines to the World Trade Organization. The measure also seek the creation of the rice competitiveness-enhancement fund for rice. The rice fund shall consist of all duties collected from the importation of the staple under this act, as well as revenues from MAV mechanism for five years from the start of the effectivity of the bill. Besides Panganiban’s HB 5433, Party-list Rep. Gloria Macapagal-Arroyo of Pampanga and House Committee on Economic Affairs Chairman Arthur Yap of Bohol have also filed two separate bills seeking to place safety nets for Filipino rice producers by imposing tariffs in lieu of QRs on rice imports and to amend the RA 8178, or the Agricultural Tariffication Act. In HBs 5023 and 4904, Arroyo and Yap want to direct tariff collections from rice imports to projects and programs that enhance rice productivity and increase farmers’ incomes.

adhering to the standards of the international Codex Alimentarius Commission, of which the Philippines is a member,” he added. The Mita chief also urged the DA to reconsider its “zero-tolerance policy” on salmonella, saying that the tests conducted by the government on meat imports are not in accordance with the Codex Alimentarius. “With regard to Memorandum Circular [MC] 9-2008-5, our view is that it has erroneously classified fresh frozen meat and offal as being under two separate cases—case 1 and case 10. It has also classified fresh frozen comminuted meat [MDM] under two separate cases--Case 1 and Case 4” Cham said in a letter to National Meat Inspection Service (NMIS) Executive Director Ernesto S. Gonzales dated July 13. “Obviously, it is physically impossible for meat and offal to be both raw and cooked at the same time. It has to

be one or the other. As well, chicken MDM is not fish,” he added in the letter, a copy of which was obtained by the BusinessMirror. The Mita asked the DA to amend MC9-2008-5 so it would adhere to Codex Alimentarius Commission recommendations. “As a logical consequence, we request that the zero-tolerance policy on salmonella on raw meat be discontinued,” Cham said. He added salmonella in raw meat is “not a concern”, as all bacteria found in raw meat would be killed by cooking, especially when very well done like what Filipinos do. “Salmonella in fully cooked, readyto-eat, processed meat is dangerous. But you can see from the international standards [that] it is not a concern in raw meat,” he said. “The concern in raw meat is the total bacteria population or aerobic plate count, also referred to as total

plate count. As long as TPC is within limits, then the meat is fit for human consumption. Meaning, it is fit for cooking, not necessarily safe if eaten raw or half cooked,” he added. Sought for comment, Piñol maintained the efficacy of the government’s zero-tolerance policy, adding that it is duty-bound to ensure that meat products being sold to and eaten by Filipinos are safe. “If you could remember when we exported oysters that were reportedly positive for salmonella, the US immediately banned us. Why are we going to be lenient when they are the ones violating our safety provisions?” he asked. However, the DA chief said he is open to discussing possible changes in MC9-2008-5 with meat-industry stakeholders. “We have to study it, we just cannot change policies overnight. We have to call industry stakeholders again and discuss it with them.”

A6

A BusinessMirror Special Feature

Friday, July 21, 2017

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FRANCHISE ASIA PHILIPPINES 2017

PRESENTS A BIGGER INTERNATIONAL EXPO G

ATHERING over 45,000 visitors last year, the international franchise expo of Franchise Asia Philippines 2017 is expected to break new records as it opens a bigger franchise expo today with more exhibits at the 2nd floor of SMX Convention Center. Co-presented by PLDT SME Nation and BPI Family Ka-Negosyo, this year's Franchise Asia Philippines Expo will showcase 600 franchise and business solution opportunities from 16 countries all over the world covering 12,000 square meters of exhibit space. Set on July 21 to 23 at the SMX Convention Center in Pasay City, expo visitors can browse top local and international franchise brands up for franchise, regional/start up brands, and suppliers and partners that can help enable businesses. "The Franchise Asia Philippines Expo is a one-stop shop for those who want to start a business or ex-

pand an existing one. It offers various franchise opportunities from the food, retail and service sectors - both home, as well as international franchise brands who are looking for franchisees in the country," says Sherill Quintana, Franchise Asia Philippines 2017 Overall Chair. "Aside from that, we have exhibitors from various industries that offer solutions to your business needs." "We are also proud to note that our expo is getting more international participation," said Mr. Jose Magsaysay, Jr., Franchise Asia Philippines 2017 Expo Chair. "This year's expo will showcase about 50 brands coming from the US, Japan, Middle East and ASEAN." In fact, gracing the opening ceremony are the ambassadors of Indonesia, Singapore, Thailand and the representative of Manila's Taiwan Economic and Cultural Office. The three-day expo will also feature learning and business matching opportunities to help

visitors explore franchising deeply. On the International Franchise Opportunities and Business Matching session, international exhibitors will have the chance to meet potential business partners in the Philippines. Meanwhile, the "How to Invest in the Right Franchise Wisely Seminar" is for aspiring entrepreneurs who want to start franchising, and the "How to Franchise Your Business Seminar"

is for existing business owners who want to franchise their business. Also part of the expo activities are the PLDT Presentation on July 21, Discovery Day Session on investing in Indonesia and significance of Halal Certification and Mentoring Session by Go Negosyo on July 22, Café Latte Art Competition on July 23, and many more. "Franchise Asia Philippines is part of our commitment to promote

franchising as a tool for economic development and nation-building through enterprise development and employment generation. And with that, we continue to raise the competitiveness of the Philippine franchise sector as we position the country to be the Franchise Hub of Asia," said PFA President Alan Escalona. Franchise Asia Philippines 2017 is organized with the support from DTI, the Philippine Chamber

of Commerce and Industry, the Philippine Retailers Association, GoNegosyo, the Embassy of Indonesia, Hong Kong Trade Development Council, Taiwan External Trade Development Council ,the World Franchise Council, International Franchise Association and the Asia Pacific Franchise Confederation. For inquiries about Franchise Asia Philippines, ​visit www. franchiseasiaph.com.

MESSAGES

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UR warmest greetings to the delegates, speakers, exhibitors and trade visitors of Franchise Asia Philippines 2017 and we would like to congratulate you for organizing this centerpiece capacity-building activity for the Philippine franchising sector. As we continue to work towards a country where no one will be left behind, it is important that everyone is provided for with equal opportunities. For that, we commend PFA for making the Philippine franchise sector a powerful instrument in opening business and job opportunities for the Filipino people. With your theme, “Innovate and Replicate: ASEAN Rising,” we can see your commitment to raise the global competitiveness of the Philippine franchising sector and thus, enable homegrown franchise brands to be at par with the best of the world. We encourage the sector to keep raising the bar but with the awareness of your higher calling to serve the people by making the Philippines a nation of opportunities. Once again, congratulations!

Y warmest greetings to the Philippine Franchise Association (PFA) as it holds Franchise Asia Philippines 2017. Our government recognizes the indispensable contribution of franchising in our progress as a nation. I therefore commend PFA for organizing this event to promote the best practices and the latest business solutions in this fledging industry. Your role even becomes more crucial as our country faces the challenges of a single integrated ASEAN Economic Community. As we embrace the prospects that come with regional integration, I am confident that you would empower the Philippine franchising sector as a driving force towards global competitiveness and inclusive growth. May this event serve as a venue where our entrepreneurs can exchange ideas and experiences to further improve their trade. Together, let us make the Philippines conducive for business so we can open more opportunities for our people. I wish you all the best!

PRES. RODRIGO ROA DUTERTE

MARIA LEONOR GERONA ROBREDO

President | Republic of the Philippines

Vice-President | Republic of the Philippines

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ARMEST welcome to the speakers, delegates, exhibitors and visitors of Franchise Asia Philippines 2017 held on 19-23 July 2017 at the SMX Convention Center. I wish to commend the Philippine Franchise Association (PFA) for organizing this trade event that provides a strategic avenue for stakeholders to learn and to exchange ideas on the best global industry practices and business solutions. As an important driver of entrepreneurship and innovation, the franchising industry has made great progress and significant contributions not only in fostering entrepreneurship but also in the pursuit of inclusive growth in the Philippines. Franchise Asia Philippines 2017’s theme Innovate and Replicate: ASEAN Rising highlights the need to raise business competitiveness in the midst of regional integration. The theme is timely and relevant as the Philippines chairs ASEAN 2017, and one of the priority strategies being pushed in this regional forum pertains to the establishment of an innovation-driven economy. Also equally noteworthy is the event’s contribution in promoting the Philippines as an investment destination for foreign franchise brands. The Department of Trade and Industry (DTI) recognizes the contributions of the PFA and the franchising industry stakeholders in helping the Government in its thrust to empower the country’s micro, small and medium enterprises (MSMEs). I am happy to note that your incubation center and emerging concepts areas, which have opened opportunities for countless of MSMEs through the years, continue to grow. With the franchising industry being part of an important segment of the economy, I highly encourage you to develop your growth potential, as well as urge you to continue partnering with the Government in fostering an entrepreneurial culture that helps MSMEs to grow local and to go global. As the country’s primary capacity-building activity for the Philippine franchising sector, the Franchise Asia Philippines 2017 is a platform to create more brands, more franchise concepts, more businesses, and ultimately, more jobs that will spur from the entrepreneurial spirit that stirs the industry. I also hope that the awardees of the 14th Franchise Excellence Awards, as well as the participants in the NxtGen in Franchising 2017 will continue inspiring other stakeholders to sustain the industry’s core values in business growth and ethical practices. May the Franchise Asia Philippines 2017 continue to be a potent instrument in creating businesses and generating employment for Filipinos—with an end in view of realizing shared Prosperity For All (PFA). Thank you and mabuhay!

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N behalf of the members of the Asia Pacific Franchise Confederation (APFC), we would like to extend our warmest congratulations to the Philippine Franchise Association (PFA) as it holds Franchise Asia Philippines 2017. Our profound commendation also to the PFA Board of Trustees and Officers, and to the Organizing Committee of Franchise Asia Philippines 2017 for underscoring the role of franchising in promoting greater regional and global economic integration. It is interesting to note that APFC members comprise a market of 3.5 billion with 5 of its members – China, India, Indonesia, Japan and the Philippines – considered among the largest markets in the world. If viewed as an economic bloc, APFC is almost half of the world’s population and a quarter of the world’s economy. Clearly, the Asia-Pacific region is a goldmine for franchises. And we have seen this with the continued growth of franchising across the region. Franchising has helped many entrepreneurs grow their business within and beyond their borders. It has also opened opportunities for aspiring entrepreneurs to start their own business and become their own boss. The economic vibrancy of the region has also enticed many international brands to open business here. Indeed, franchising has proven itself to be an important contributor to economic development through the tens of thousands of businesses it has created and the millions of jobs it has generated across Asia-Pacific. With the holding of Franchise Asia Philippines 2017, we are confident that new horizons will be opened for franchising in Asia-Pacific!

ANDREW NUGROHO

Chairman, Indonesia Franchise Association Chairman Asia Pacific Franchise Confederation

RAMON M. LOPEZ DTI Secretary

SAMIE LIM

Chairman Emeritus, Philippine Franchise Association Secretariat Asia Pacific Franchise Confederation

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HE World Franchise Council (WFC) is a non-political Federation of 43 national franchise associations from around the world, together with two supra national bodies – the Asia Pacific Franchise Confederation and the European Franchise Federation. Formed in 1994, it aims to promote the growth of franchising internationally, and facilitate best practice in franchise association management among its members. It also aims to foster and encourage the development of franchise associations in nations where such an association does not currently exist. Franchising has been growing worldwide. Global markets are receptive to the business model. The business model provides entrepreneurial minded business people with an opportunity to run their own “shop. ”What makes franchising attractive not just for individual entrepreneurs but also for foreign countries is its contribution to economic output. According to the most recent WFC Survey on the Economic Impact of Franchising Worldwide study, approximately 2 million franchised businesses sustain over 19 million jobs around the world. On average, franchising contributes 2.7% to national GDPs. To put this into perspective, this is about equal to the share of the U.S. spending on general government, including executive and legislative organs, law courts and general services. The size of a nation has little impact on the enthusiasm for franchising. Despite the prevalence of U.S. brands in non U.S. markets, they do not lead the globe in total number of home grown franchisors. At well over 4,800 concepts, South Korea leads the pack with the highest number of brands offering franchises. Similarly, when franchising’s economic output is measured as a share of a country’s overall GDP, South Africa emerges in the top five with 11.5% of its GDP generated by franchises. France and Australia maintain their top five spots from 2015, with franchises in the three countries combined generating almost $400 billion, representing a large share of each country’s total economy. Franchising also provides an opportunity for franchisors to expand globally. An adjusted average 28% of franchised concepts in a given country are actually foreign based. Consumers are open to foreign products and services, and as a result local economies benefit. As franchising is poised to play an ever more significant role for the world’s economies. In Philippines the Number of Brands reached 1,500 with an impressive number of units 140,000 and with 68% of the Brands are of Domestic Origin. The Franchise Economic Output in Philippines in USD is around $16,000,000,000. the Philippine Franchise Association (PFA) has always played a leading regional and global role in promoting franchising business model. FRANCHISE ASIA Philippines 2017 with this year’s theme “INNOVATE & REPLICATE: ASEAN RISING” it paves the way to innovation to be an integral part of the franchise business model, technology and innovation will reduce cost and facilitate greater expansion even in remote locations. once again PFA event promises to provide exceptional opportunities to attend and hear world class speakers, visit the exhibition, attend seminars and make the most of the educational programmes available.

TAREK TAWFIK Chairman

HATEM ZAKI

Board Member Int.

Egyptian Franchise Development Association “EFDA” World Franchise Council General Secretariat

A8

The World BusinessMirror

Friday, July 21, 2017

briefs Japan returns to trade surplus in June due to export growth Japanese trade returned to surplus in June, with both imports and exports continuing the strong growth they have had all year. Exports rose 9.7 percent from a year earlier (estimate 9.5 percent). Imports increased 15.5 percent (estimate 14.4 percent). The trade surplus was ¥439.9 billion ($3.9 billion). The nation’s modest economic recovery reflected in the trade data and the move to tighter policy by other major central banks is putting pressure on policy-makers in Japan to be clearer about their plans to normalize monetary policy. Bloomberg News

McCain’s brain tumor is aggressive type WASHINGTON—Sen. John McCain’s tumor is one of the most aggressive forms of brain cancer, and his family and doctors are deliberating next treatment options. The senator had undergone surgery last week to have a blood clot removed from above his left eye, and that clot turned out to be a sign that a tumor called a glioblastoma had begun growing. McCain’s doctors at the Mayo Clinic said they managed to remove all the tumor that was visible on brain scans. But this kind of tumor, formally known as a glioblastoma multiforme, is aggressive and sneaky. It puts out microscopic roots that go deeper into brain tissue, explained Dr. Joshua Bederson, chairman of neurosurgery at Mount Sinai Health System in New York, who has no direct knowledge of McCain’s care. Still, a tumor above the eye is in a location that permits removal with far less risk of damage to language, motor and other brain functions than in many other areas, he noted. AP

Saudis release woman in viral miniskirt video without charge DUBAI, United Arab Emirates— Saudi Arabia announced on Wednesday that a woman who was detained after wearing a miniskirt in a video that went viral has been released without charge. The decision not to press charges was a rare win for supporters of women’s rights in Saudi Arabia, who criticized the public outcry against her. It also comes as Saudi Arabia overhauls its prosecution system under a new, young heir to the throne who has taken steps to try and modernize the country and its public image. The viral video and the reaction to it in Saudi Arabia prompted police to bring the woman in for questioning for wearing “immodest clothes” in violation of the kingdom’s conservative Islamic dress code. Her release from detention without charge suggests that the subsequent international attention brought to the case may have helped lead to her quick release. Some women fleeing allegedly abusive families have languished in prison without charge, and others in the past have been imprisoned for defying Saudi Arabia’s ban on women driving. AP

Report: Trump ends covert plan to arm Syrian rebels WASHINGTON—President Donald J. Trump has decided to halt the Central Intelligence Agency’s yearslong covert program to arm and train moderate Syrian rebels battling the regime of the nation’s president Bashar al-Assad. Russia had long pushed the US to end the program. The phasing out of the secret program was reported by The Washington Post on Wednesday. Officials told the newspaper that ending the operation reflects Trump’s interest in finding ways to work with Russia. The program was a key component begun by the Obama administration in 2013 to put pressure on Assad to relinquish power. But even its supporters have questioned its usefulness, since Moscow sent forces in Syria two years later. AP

www.businessmirror.com.ph

Trump’s honeymoon with China ends as dialogue turns frosty

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he brief honeymoon between the world’s two largest economies appears to be over.

Three months ago, President Donald J. Trump had warm words for his Chinese counterpart Xi Jinping after the two leaders bonded at Trump’s Mar-a-Lago resort in Florida. Within weeks, the Trump administration was touting early wins in talks with China, including more access for US beef and financial services, as well as help in trying to rein in North Korea. Now, the two sides can barely agree on how to describe their disagreements. High-level economic talks in Washington broke up on Wednesday with the two superpowers unable to produce a joint statement. Commerce Secretary Wilbur Ross scolded China over its trade imbalance with the US in his opening remarks, and then both sides canceled a planned closing news conference. Both sides later made separate statements following the talks. Treasury Secretary Steven Mnuchin and Ross said China “acknowledged our shared objective to reduce the trade deficit which both sides will work cooperatively to achieve.” China’s foreign ministry issued a reciprocal statement, saying both sides agree to start “constructive cooperation” to narrow the trade gap. Trump campaigned on “protecting the forgotten man and putting America first, but if you can’t deliver their jobs back to them, the next best thing is to get them some retribution and that’s what’s happening here,” said Stephen Myrow, managing partner at research firm Beacon Policy Advisors Llc. in Washington.

$309B The amount of trade deficit of US with China

It was the first meeting under the Trump administration of the two countries’ most senior economic officials, a ritual that began in 2008. Rebranded as the Comprehensive Economic Dialogue this year, the discussions were led by Mnuchin and Ross on the American side, and Vice Premier Wang Yang for the Chinese. Federal Reserve Chairman Janet Yellen took part in the talks, and executives, including Alibaba’s Jack Ma and Blackstone’s Stephen Schwarzman, met on the sidelines.

Trade irritants

After last year’s forum, the two countries released a 6,589-word statement asserting the mutual interest they share in each other’s prosperity. The document a l so i nc luded com m it ment s, such as one by China to reduce excess capacity in its steel industry—still a major irritant as the Trump administration weighs whether to impose tariffs and quotas on steel imports. “The Trump administration may have had unrealistic expectations of what China will do to balance trade,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in

Container vans at a port in China. US officials complain of the trade gap between the US and China in favor of the latter. Bloomberg

Hong Kong. “Now it is the start of real hard negotiations.” At opening remarks by the two sides on Wednesday, Ross complained about the trade gap with China in unusually blunt terms. While US exports to China have grown in recent years, imports from the Asian countr y have expanded even faster, leading to a $309-billion trade deficit, Ross said. “If this were just the natural product of free-market forces, we could understand it, but it’s not,” Ross said, as Wang looked on. “So it’s time to rebalance in our trade and investment relationship in a more fair, equitable and reciprocal manner.” In his opening remarks, Wang called cooperation “a realistic choice” for both countries, while adding his own view of how the US- China relationship should proceed. “Dia log ue cannot immed iately address all differences, but confrontation will immediately damage the interests of both,” Wang said, according to the staterun Xinhua News Agency.

Canceled briefings

Shortly after, the Treasur y sent an e-mail to reporters, saying the US had canceled a news

conference scheduled at the end of the day, when Mnuchin and Ross were to discuss the outcome of the meeting, which they expected to be concrete Chinese commitments. The Treasury department later e-mailed a notice that China had canceled its own media briefing. W hile confronting the Chinese over the US trade deficit will play well politically in America, it’s not a good strategy for making progress with Chinese leaders, who are under their ow n political pressures at home, said David Loevinger, managing director of emerging markets sovereign research at TCW Group Inc. The US has had success by allying with economic reformers who will push back against “powerful vested interests” in China opposed to opening up its economy, said Loevinger, who played a leading role in economic talks with the Chinese as Treasury’s senior coordinator for China affairs in the Obama administration. “In some ways the Teddy Roosevelt strategy of talking softly and carrying a big stick is effective with China, but in the administration’s case, they’re tweeting loudly with very little follow-up,” he said. Bloomberg News

As US attention wanes, China woos Myanmar

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AYPYITAW, Myanmar— When Myanmar’s leader, Aung San Suu Kyi, wanted to hold a peace conference to end her country’s long-burning insurgencies, a senior Chinese diplomat went to work. The official assembled scores of rebel leaders, many with longstanding connections to China, briefed them on the peace gathering and flew them on a chartered plane to Myanmar’s capital. There, after being introduced to a beaming Suu Kyi, they were wined and dined, and sang rowdy karaoke late into the night. A cease-fire may still be a long way off, but the gesture neatly illustrates how Myanmar, a former military dictatorship that the US worked hard to press toward democracy, is now depending on China to help solve its problems. The pieces all fell into place for China: It wanted peace in Myanmar to protect its new energy investments, it had the leverage to press the rebels, and it found an opening to do a favor for Myanmar to deliver peace. China is now able to play its natural role in Myanmar in a more forceful way than ever before as the US under the Trump administration steps back from more than six years of heavy engagement in Myanmar, including some tentative contacts with some of the rebels. The vacuum left by the US makes China’s return all the easier. When Myanmar began to adopt democratic reforms in 2011, the Obama administration quickly reciprocated, loosening sanctions as part of a broader effort to strengthen relationships with

Southeast Asian nations as a bulwark against China’s rise. As Myanmar’s relations with China cooled, the result of what many saw as heavy-handed intervention by Beijing, Barack Obama became, in 2012, the first US president to visit the country. He came again in 2014, promoting stronger trade and security relations, and counted the country’s opening as a foreign policy coup. But the US did little to build on the new relationship, and now the tables have turned. As the Trump administration pays little attention, China is exercising strategic and economic interests that come from geographic proximity, using deep pockets for building billiondollar infrastructure and activating ethnic ties with some of the rebel groups, all areas where the US cannot compete. “China wants to show: ‘We are doing our best at your behest,’” said Min Zin, executive director of the Institute for Strategy and Policy in Myanmar, who attended the peace gathering in May. “As the United States recedes, Aung San Suu Kyi is relying more and more on China in Myanmar and on the international stage.” A n d n o t o n l y M y a n m a r. Across Southeast Asia, China is energetica l ly br ing ing nations into its orbit, wooing US friends and allies with military hardware, infrastructure deals and diplomatic attention. In the Philippines, a US ally, President Duter te is leaning strongly toward Beijing. T he military government in Thailand, another US ally, has bought submarines from China and, at

China’s request, deported Uighurs, a Turkic ethnic group that China accuses of fomenting violence in China. In Malaysia China is offering Prime Minister Najib Razak lucrative deals, like high-speed train projects. After the Obama administration made big gains in Myanmar, China’s president, Xi Jinping, was reported to have asked, “Who lost Myanmar?” The message has gotten through, as China pushes on multiple fronts to bring the country back into its fold. Suu Kyi seems receptive. She has visited Beijing twice since becoming Myanmar’s de facto leader last year. In contrast, she skipped an invitation from Washington to attend a conclave of Southeast Asian foreign ministers—she is also foreign minister of Myanmar—organized by Secretary of State Rex W. Tillerson. China and Myanmar have also found common cause in their hard line on Muslims. At the UN several months ago, China blocked a statement supported by the US on the persecution of the Rohingya, the Muslim minority in Myanmar. But nowhere is China’s effort to win over Myanmar clearer than as mediator in Myanmar’s ethnic civil wars, the mission, Suu Kyi says, is dearest to her heart. “I do believe that as a good neighbor China will do everything possible to promote our peace process,” she said during a visit to China last year. “If you ask me what my most important aim is for my country, it is to achieve peace and unity among the different peoples of our union.”

China is well positioned to help. Among the armed groups most resistant to peace talks are the United Wa State Army and the Kokang Army, both of which have been tacitly supported by China for years in their battles with the Myanmar military. The Wa, whose army is said to have 20,000 members, use Chinese currency in their autonomous region, where illegal narcotics are made and exported into China. Two Wa arms factories produce weapons with the help of former Chinese Army officers, and the Wa have received Chinese armored combat vehicles and tank destroyers, probably through Chinese middlemen, experts say. A third group, the Arakan Army, uses Chinese arms and vehicles provided by the Wa. China’s special envoy for Asian affairs, Sun Guoxiang, brought the leaders of all three to the peace conference, as well as the leaders of four other rebel groups, most of whom use Chinese weapons. “China wants quiet in Myanmar,” said Maung Aung Myoe, an expert on the Myanmar military at the International University of Japan. “It hurts their interests to have fighting because it disrupts China’s trade. China now owns the peace process. The Myanmar military knows that.” China has a particular interest in pressing the Arakan rebels to the peace table. They operate in the western state of Rakhine, where they can wreak havoc with the Chinese-built pipelines that carry oil and natural gas from the Bay of Bengal to southern China. New York Times News Service

Trump angry at Sessions, Comey, and warns Mueller

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ASHINGTON—President Donald J. Trump said on Wednesday that he never would have appointed Attorney General Jeff Sessions had he known Sessions would recuse himself from overseeing the Russia investigation that has dogged his presidency, calling the decision “very unfair to the president.” In a remarkable public break with one of his earliest political supporters, Trump complained that Sessions’s decision ultimately led to the appointment of a special counsel that should not have happened. “Sessions should have never recused himself, and if he was going to recuse himself, he should have told me before he took the job and I would have picked somebody else,” Trump said. In a wide-ranging interview with The New York Times, the president also accused James B. Comey, the Federal Bureau of Investigation (FBI) director he fired in May, of trying to leverage a dossier of compromising material to keep his job. Trump criticized both the acting FBI director who has been filling in since Comey’s dismissal and the deputy attorney general who recommended it. And he took on Robert S. Mueller III, the special counsel now leading the investigation into Russian meddling in last year’s election. Trump said Mueller was running an office rife with conflicts of interest and warned investigators against delving into matters too far afield from Russia. Trump never said he would order the Justice Department to fire Mueller, nor would he outline circumstances under which he might do so. But he left open the possibility as he expressed deep grievance over an investigation that has taken a political toll in the six months since he took office. Asked if Mueller’s investigation would cross a red line if it expanded to look at his family’s finances beyond any relationship to Russia, Trump said, “I would say yes.” He would not say what he would do about it. “I think that’s a violation. Look, this is about Russia.” While the interview touched on an array of issues, including health care, foreign affairs and politics, the investigation dominated the conversation. He said that as far as he knew, he was not under investigation himself, despite reports that Mueller is looking at whether the president obstructed justice by firing Comey. “I don’t think we’re under investigation,” he said. “I’m not under investigation. For what? I didn’t do anything wrong.” Describing a newly disclosed informal conversation he had with President Vladimir Putin of Russia during a dinner of world leaders in Germany this month, Trump said they talked for about 15 minutes, mostly about “pleasantries.” But Trump did say that they talked “about adoption.” Putin banned American adoptions of Russian children in 2012 after the US enacted sanctions on Russians accused of human-rights abuses, an issue that remains a sore point in relations with Moscow. Trump acknowledged that it was “interesting” that adoptions came up since his son, Donald Trump Jr., said that was the topic of a meeting he had with several Russians with ties to the Kremlin during last year’s campaign. Even though e-mails show that the session had been set up to pass along incriminating information about Hillary Clinton, the president said he did not need such material from Russia about Clinton last year because he already had more than enough. New York Times News Service

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CA affirms dismissal of ARMM governor over undeclared wealth By Joel R. San Juan @jrsanjuan1573

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HE Court of Appeals (CA) has affirmed the decision of the Office of the Ombudsman dismissing former Autonomous Region in Muslim Mindanao Zaldy Ampatuan from the service following a lifestyle check that found him with unexplained wealth and underdeclared assets amounting to P70.67 million from 2000 to 2009. In a 22-page decision penned by Associate Justice Henri Jean Paul Inting, the CA’s Fourteenth Division denied the petition filed by Ampatuan, one of the accused in the Maguindanao Massacre, seeking the reversal of the Ombudsman’s decision and order respectively issued on June 26, 2015, and September 23, 2015. The June 26, 2015, decision of the Ombudsman found Ampatuan guilty of serious dishonesty and grave misconduct, and meted him the penalty of dismissal from the service with accessory penalties of cancellation of eligibility, forfeiture of retirement benefits, perpetual disqualification from holding public office, and barring him from taking the civil service examination. The September 23, 2015, resolution, meanwhile, denied Ampatuan’s motion for reinvestigation of the decision. The decision of the Ombudsman stemmed from the joint affidavitcomplaint filed in September 2010 by the lifestyle check panel of the Office of the Ombudsman against the then-ARMM governor for dishonesty and grave misconduct. The panel noted that Ampatuan served as assemblyman of the ARMM Regional Legislative Assembly prior to 1998, when he was elected as mayor of Shariff Aguak, Maguindanao, for three terms from 1998 to 2007. Ampatuan, however, did not finish his last term as mayor from 2004 to 2007 after he ran and won as ARMM regional governor in August 2005 and was reelected in 2008. The petitioner, according to the Ombudsman, submitted his statement of assets, liabilities and net worth (SALN) for the years 2000 to 2009, where he declared a net worth of P6.99 million with no liabilities until it ballooned to a net worth of P19.29 million with total assets of P36.49 million and total liabilities of P17.2 million in his 2009 SALN. Ampatuan also declared the Maguindanao Pawnshop as his only business interest. However, it was discovered that Ampatuan owns at least 38 houses and lots in Shariff Aguak, Cotabato City, Davao City and Metro Manila—amounting to P58.48

million that were not declared in his SALN. The Ombudsman said the total value of acquisition per year by the petitioner with respect to the houses and lots far exceed his annual net. On the other hand, the Ombudsman said the former ARMM governor and his wife, Bai Johaira Midtimbang, who served as municipal mayor of Datu Hoffer, Maguindanao, own a total of 24 vehicles worth at least P46.96 million. It was also discovered that Ampatuan has 26 firearms registered in his named worth P6 million and that he went out of the country 16 times in a span of five years. The Ombudsman said Ampatuan’s unexplained wealth and underdeclared assets for the years 2000 to 2009 amounted to P70,671,176. In upholding the decision of the Ombudsman, the CA did not give credence to Ampatuan’s claim that he was not able to file his counteraffidavit due to the negligence of his counsel. As a result, Ampatuan said he was deprived of due process, thus, should be exempt from the rule that a lawyer’s negligence binds the client. “With the foregoing, the contention that petitioner was denied due process by reason of his former counsel’s gross negligence is clearly bereft of merit,” the CA said. “As can be gleaned from the proceedings before the Office of the Ombudsman, the petitioner was given ample opportunity to file his counteraffidavit and/or opportunity to explain or defend himself,” it added. The CA explained that based on the records of the case, the Office of the Ombudsman even gave Ampatuan an opportunity to file his verified position paper in a resolution issued on February 17, 2011. However, the former governor still failed to comply and, instead, through his counsel, filed motions questioning other orders issued by the Ombudsman, in an apparent bid to delay the proceedings. The CA also dismissed Ampatuan’s claim that the Ombudsman erred in finding him guilty of serious dishonesty and grave misconduct, and consequently dismissing him from the service. “In this case, the evidence presented by the respondent [lifestyle check panel] well supports the findings of the Office of the Ombudsman that petitioner did not only fail to disclose all his and his wife’s assets, but also failed to provide an explanation as to how he and/or his wife acquired assets,” the CA said. Concurring with the ruling were Associate Justices Ramon R. Garcia and Leoncia R. Dimagiba.

Govt employs ‘whole systems approach’ to fight terrorism, poverty in Mindanao

IN this photo released by the Presidential Communications Operations Office, President Duterte, center left, wearing a bullcap and an assault rifle slung on his shoulder, walks with other military officers and security men inside the camp of the 2nd Mechanized Infantry Brigade, Light Armored Division, July 7, in Iligan City. The President was supposed to fly to Marawi City but was forced to cancel the visit due to inclement weather. Presidential Communications Operations Office via AP

By Elijah Felice E. Rosales

M

@alyasjah

alacañang on Thursday said the Duterte administration is employing a “whole systems approach” to defeat terrorism and eradicate poverty in Mindanao.

In a news briefing, Presidential Spokesman Ernesto C. Abella said the government recognizes the need to combat terrorism, especially at a time when Islamic State (IS) threat is high across countries.

“We’ve been fighting terrorism in the Philippines for many years, and a month and a half into his presidency, the President had already warned the military of what he termed IS disease,” Abella said.

Correspondent

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LARK FREEPORT—Newly installed Mabalacat City Mayor Crisostomo C. Garbo has hit the ground running with health services as his main focus. Garbo, who is barely three weeks in office, said he has already completed his medical specialists’ team, which include two general surgeons, two orthopedic surgeons, two ophthalmologists, a nephrologist who also caters to dialysis patients and an oncologist for cancer patients. Garbo, who finished a degree in medicine, said the Sangguniang Panlungsod has allotted P10 million for hospital-bill assistance and P15 million to cater to the health needs of his poorest constituents, with the poorest of the poor getting 100-percent free hospitalization. He added there are now four rural health units in the city to cater to the health needs of Mabalaqueños. The mayor said general-surgery patients can come on Monday

for consultation and be scheduled for surgeries on Wednesday or Friday. Garbo added he also created a central pharmacy near the mayor’s office and allotted an initial P20 million for it. He said the local government unit will sign a Memorandum of Contract on Friday (July 21) with the San Rafael Medical Center, Garcia Medical Center, The Medical City-Clark and AUF Medical Center hospitals for the patients’ hospitalization. “I want my constituents to feel and benefit from the services that they really need,” he said during the media forum “News @ Hues” organized by the Pampanga Press Club, in cooperation with Park Inn Hotel by Radisson at the SM City Clark complex here on Tuesday. Garbo added he also came up with a program of free burial services and assistance in the amount of P15,000 for the indigents after the city council approved a P15 million budget. Garbo said his main focus after health is education, peace and order and traffic.

“We recognize that poverty in Mindanao and the sense of hopelessness it brings help spawn terrorism. It is for this reason that, while we are fighting terrorism, we are also fighting poverty,” Abella added. Abella was responding to a report by the US State Department, naming the Philippines as one of the five countries with the most number of terror attacks in 2016. The report said “the emergence of IS-affiliated extremist groups, persistent kidnappings of the Abu Sayyaf Group [ASG], attacks on government forces and bombings” all pointed to terrorism as a “serious problem” in the Philippines. “Members of numerous groups,

including parts of the ASG; the Dawlah Islamiyah Lanao, [locally] referred to as the Maute Group; and Ansar-al Khalifah Philippines, have pledged allegiance to IS,” the report read. The report added the IS in Iraq and Syria has called on its supporters in Southeast Asia to join these groups and attack targets in the Philippines. The report tagged Isnilon Hapilon as the leader of IS efforts in Southeast Asia purportedly attempting to establish a caliphate in the region. The ASG, beheading two Canadian hostages in April this year and in June 2016, were cited as notable terror attacks. The bombing of the Davao City night market in September, which killed 15 people and injured more than 40 people, was also mentioned as an alarming incident of terrorism. In a bid to end terrorism in Mindanao, Abella said the government is “confronting it, engaging the situation with a whole systems approach”. “As they say, we can sign a hundred [of] peace agreements, but if those on the ground do not immediately feel the dividends of peace, those agreements will not be sustainable,” the President’s spokesman added. Mindanao is currently under martial law pursuant to President Duterte’s Proclamation 216, declared on May 23 when Maute Group fighters laid siege on Marawi City, Lanao del Sur. Duterte will be seeking Congress’s approval on Saturday to extend military rule in Mindanao until the end of the year. Government troops are still in the process of clearing Marawi City of Islamist militants. The twomonth fighting in the municipality has left 565 dead and more than 300,000 displaced.

Singapore firm, Pampanga hospital to establish P500-M cancer center By Joey Pavia | Correspondent

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ITY OF SAN FERNANDO— A Singapore-based firm and a Pampanga hospital on Wednesday signed an agreement to establish a cancer treatment and management center in the province. TE Asia Healthcare Partners (TE Asia) will invest at least P500 million worth of equipment and technology to upgrade the cancer-center facility at the Mother Teresa of Calcutta Medical Center (MTCMC) in this city. TE Asia has cancer-center facili-

ties in Vietnam, Hong Kong and Indonesia. It is investing for the first time in the country. The MTCMC’s cancer center is the first state-of-the-art cancer center in Central Luzon. The parties formalized the partnership with the contract signing at the MTCMC on July 19. TE Asia was led by its CEO Eng Aik Meng, while MTCMC was led by Board Director Vilma Caluag during the signing. Rhais Gamboa, MTCMC CEO, said the cancer center will be housed in a P150-million four-

Mayor Garbo bares plans for Mabalaqueños By Ashley Manabat

Editor: Efleda P. Campos • Friday, July 21, 2017 A9

The mayor also announced that the road widening from Barangay Tabun to Barangay Lakandula in Mabalacat City will be a showcase for the city. “All electric posts will be relocated or moved out and spaghetti wires will also be removed or bundled together,” he said. Garbo added some P80 million was allocated for street lighting on the said highway “so that Mabalaqueños can feel that their community is now a city”. The mayor said they are now in transition from the past administration with former Commission on Elecions Assistant Regional Director lawyer Emmanuel Ignacio as head of his transition team. He disclosed that the former administration of Boking Morales left some P725 million in the city coffers for the remaining months of the year, from the total budget of P1.325 billion. Out of the P725 million, some P375 million was already allotted for the salaries, wages and benefits of the city employees, he

said. The remaining P400 million will be appropriated for various city projects. He added that there is also a remaining 20-percent development fund and 5-percent fund for the City Disaster Risk Reduction and Management Office. Garbo said newly issued business permits and mayor’s permits will no longer have the mayor’s picture as practiced in the past administration. “In my inaugural speech, I already instructed the removal of all posters and banners, especially the ones with pictures of politicians,” he said. Meanwhile, the inventory of all personnel in the city government’s 19 departments and divisions, including permanent and casual employees, as well as job orders (JOs), have resulted in a massive overhaul. Garbo said there were 1,008 JOs and only 310 physically showed up during the roll call. He added there are also some 446 casual employees that, when combined with JOs, draw annual salaries amounting to P120 million.

story building to be built within the next 10 months. The cancer center will be operational by July next year. For the equipment alone, TE Asia is infusing at least half a billion pesos, to cater to three branches of cancer treatment and management—chemotherapy, radiotherapy (brackytherapy, tomotherapy and positron emission tomography scan) and surgery. While MTCMC has already invested in its own tomotherapy center, the partnership will bring

in additional equipment such as linear accelerator, a cutting-edge technology for tomotherapy. Tomotherapy or helical tomotherapy, according to Wikipedia, is a type of radiation therapy in which the radiation is delivered slice-by-slice. Gamboa said the entry of TE Asia in the Philippine medical industry is “somewhat a vote of confidence to the country’s economy”. TE Asia was established in 2014 to address the explosive growth in health-care services demand in Asia.

4 kids died of meningo in Eastern Visayas By Elmer V. Recuerdo Correspondent

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ACLOBAN CITY—The Department of Health (DOH) in Eastern Visayas confirmed the recent death of a 7-year-old boy of suspected meningococcemia, bringing to four the total number of fatalities of this dreaded disease this year. DOH-8 epidemiologist Boyd Roderick Cerro said the latest victim was admitted to a hospital in Oras, Eastern Samar on July 12, but died the following day. He said the boy showed red rashes that were turning purple, a symptom of meningococcemia infection. Three other children, whose ages ranged from 11 months to 11 years old, have already died of the same infection this year. Seven cases of meningococcemia have already been reported in Eastern Visayas since January. T he pat ients were f rom Mac Arthur, Abuyog, Carigara and Tacloban, all in Leyte and one each from Calbayog City, Samar and Oras, Eastern Samar. All pa-

tients were referred to the Eastern Visayas Regional Medical Center in Tacloban. Cerro said people who were in direct contact with the patients seven days before the diagnosis were given precautionary medications. Despite the reported cases of meningococcemia this year, the DOH has asked the public not to panic. While the disease is not highly contagious, Cerro advised people to increase their resistance through exercise, diet and proper rest. Cerro also advised people to avoid crowded places, maintain cleanliness and avoid sharing utensils used by an infected person. “We discourage parents from bringing their children to crowded places because they have weaker resistance than adults,” he said. He also said that early detection of meningococcal infection and prompt treatment will greatly improve chances of survival. Meningococcemia is a potentially life-threatening bacterial infection of the bloodstream caused by Neisseria meningitidis bacteria.

A10 Friday, July 21, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Manila: 2030

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he current estimated population of the Metro Manila area is a little over 13 million. Of course, that number is only a guess, especially when you try to define “Metro Manila” beyond simple legal terms. For those of us that live here, Metro Manila can mean almost everywhere, from Bulacan to Cavite. Actually, if you include that big Greater Metro Manila, the population number rises to 24 million. Even forgetting about the daily population surge of workers that swell the numbers, help clog the transportation and put a strain on both infrastructure and services, it will only get more crowded. Metro Manila is officially—by the UN’s definition—a megacity, along with such diverse places as New York City and Dhaka, Bangladesh. In 1950 only 30 percent of the global population lived in cities. Since then, the percentages have reversed now with only 30 percent living in what are considered rural areas. This has created new economic opportunities, along with the new problems those massive amounts of urban dwellers face. The Brookings Institution—a century-old American research group—has tried to make some sense of all this and project some sense of order into this migration. It has identified seven general types of cities, which include the megacities. The designations tell an interesting story. In no particular order are: Global Giants, like Tokyo, Japan; Emerging Gateways, such as Warsaw, Poland; Asian Anchors, led by Sinagpore; and Factory China, with Dalian, China, on top. San Jose, California, with its Silicon Valley, is at the top of the Knowledge Capitals. Medium-sized American cities, such as Sacramento, California, have their own classification: American Middleweights. International Middleweights include Perth, Australia, and Munich, Germany. The Giants are economic and financial centers. The Asian Anchors get the most foreign investment. Gateways are regional centers of commerce, while Factory China speaks for itself. The Knowledge Capitals are centers for learning and innovation, while the Middleweights will probably always be in the “middle” economically. Brookings points out that these designations are not any sort of “ranking” in terms of quality of life or whatever. They are simply a way to describe and lump together different global cities. Manila is currently considered the fourth-largest Megacity behind Tokyo-Yokohama, Jakarta and Delhi. So, by now, you are probably asking the same question we are asking: Where do we fit in the Brookings Institution classifications? Nowhere, and we don’t. There are 125 cities in those seven categories, and they cannot find a spot that Manila would fit into. Either we are so diversified that we defy a single definition, or we are so confusing no one can figure out what or who we are. But never fear. The International Monetary Fund does have a spot for the Philippines. We are only one of five “Key Emerging Markets of the Future”. By 2030 the Philippines is expected to have shown one of the highest growth rates of the middle-class economic group in the world. By then, Brookings may have to make a new category just for us. Since 2005

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Oh, I see James Jimenez

spox

A

S we get closer to the President’s State of the Nation Address, one particular thing is getting much clearer. The push to postpone the 2017 Barangay and Sangguniang Kabataan elections is getting stronger. On Wednesday the chairman of the House Committee on Suffrage and Electoral Reforms was reported to have expressed confidence that the postponement measure would be passed next week. His confidence appears to be well-founded, as the Speaker of the House himself recently declared that the President would be asked to certify the postponement bill as urgent. When that happens, the legislative mill goes into overdrive, and things happen much faster. The Speaker likewise indicated that, in the absence of elections, incumbent barangay officials would be replaced by appointed officers in charge. Oh, I see. With the certainty of postponement growing by the minute, it’s no surprise that the barangays are all in a tizzy, with those in office drawing up lists of “to be anointed”, hoping perhaps to position themselves as power-brokers to whom the new dispensation would owe some sort of debt of gratitude; and those out of office right now are busy remind-

ing everyone of the benefits of being “friendly” to them, when their turn comes—“as it surely will”—they presumably hasten to add. In the meantime, those without power, more so those without any expectation of ever getting influence in their communities, are scrambling for cover. And it’s not difficult to understand why. The avowed motivations behind

With the certainty of postponement growing by the minute, it’s no surprise that the barangays are all in a tizzy, with those in office drawing up lists of “to be anointed”, hoping perhaps to position themselves as powerbrokers to whom the new dispensation would owe some sort of debt of gratitude; and those out of office right now are busy reminding everyone of the benefits of being “friendly” to them. the move to postpone the elections have been repeatedly articulated: get rid of barangay officials involved in illegal drugs; frustrate the attempts of drug lords to buy their way into barangay politics; save money; and, besides, it’s all politics anyway. These reasons, taken on principle, are all laudable. But as even the moon has a dark side, it would be unwise to pretend that postponing the elections will only bring good results. It makes sense, therefore, to hope that sufficient safeguards are put in place by the government to ensure that things don’t go irredeemably sideways.

Speaking of appointments—but of a different sort—remember Ramil Comendador? He’s recently been appointed to the position of Election Officer IV, after hurdling a competitive selection process, which saw him besting six other applicants for the post. Comendador literally rose through the ranks of the Commission on Election, starting as a utility worker in a Commissioner’s office. From there, he became an election assistant, while slogging his way through law school. When he passed the Bar earlier this year, he met the qualification requirements for election officer and, now, that’s exactly what he is. It’s an inspiring story made even more uplifting by the fact that Comendador is about as authentically humble as a person can get. In an age where rampant egotism and self-promotion has often been touted as the only route to success, Comendador is irrefutable proof to the contrary. Even better, when faced with an opportunity to cash in, Comendador instead chose to dedicate his life to public service. May his tribe increase. Now, if only all those other appointees-to-be were cut from the same cloth, then maybe— just maybe —things will turn out alright.

Caritas Manila conducts disaster-prevention educational-awareness program Rev. Fr. Antonio Cecilio T. Pascual

SERVANT LEADER

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N observance of the Disaster Prevention Month this July, Caritas Manila launched its educational-awareness program on disaster prevention that will run from this month up to September.

This educational-awareness program aims to educate most, especially urban poor communities in Metro Manila, about disaster prevention and awareness. Caritas Manila works with the 13 vicariates of the Archdiocese of Manila to organize and invite participants from communities in different parishes. Together with the concerned local government units and parishes, Caritas Manila identifies families and places most prone to disaster and prepares corresponding lectures and programs needed by the communities. The social services and development ministry of the Archdiocese of Manila held its recent disaster-

prevention educational-awareness program for the Vicariate of Espiritu Santo on July 19 at the Immaculate Concepcion Parish in Tondo, Manila. There were 29 participants who attended the event from other parishes, namely, San Roque, Risen Christ, San Rafael, Immaculate Concepcion, Santa Monica and San Jose Manggagawa. The first leg of the disasterprevention educational-awareness program was held for the Vicariate of Santo Niño at Our Lady of Peace and Good Voyage Parish in Delpan, Tondo, on July 14. Forty-three participants attended the event, including those from the parishes of Saint John Bosco, Our Lady of the Most Blessed Sacrament, San Pablo

Apostol and Santo Niño de Tondo. The next educational-awareness program for the remainder of July are for the following vicariates and host parishes: Vicariate of Nuestra Señora de Guia at Our Lady of Remedies Parish (July 21); Vicariate of San Jose de Trozo at San Sebastian Parish and Saint John the Baptist Parish (July 26); and Vicariate of Our Lady of Loreto at the Sacred Heart Parish (July 28). The schedules for the month of August are as follows: Vicariate of San Fernando de Dilao at the Saint Peter the Apostle and Santo Niño de Pandacan Parish (August 3), Vicariate of the Holy Family at the Our Lady of Abandoned Parish (August 9), Vicariate of Saint John the Baptist at the Saint John the Baptist Parish (August 11), vicariate of San Felipe Neri at the San Roque Parish (August 17), Vicariate of Santa Clara de Montefalco at the Santa Clara de Montefalco Parish (August 23), Vicariate of SaintJoseph the Worker at the San Ildefonso Parish (August 25) and in the Vicariate of Saints Peter and Paul at the National Shrine of Sacred Heart of Jesus (August 30). The last leg will be on September 1 at the Mater Dolorosa Parish for the

Vicariate of Our Lady of Guadalupe. Trained volunteers and staff from Caritas Manila have been providing seminars and awareness campaign, with participants undertaking relevant activities that emphasize disaster-risk reduction and management (DRRM) education, such as an orientation on the different health hazards, devoting time for discussion of preparedness, mitigation and prevention during the rainy season in class, a symposium or forum on DRRM and other related activities, to meet the needs of the participating communities. The Church has been continuously doing its role to make communities and families more resilient against threats to their health and safety. Let us do our part in return to spread awareness and education to ensure effective and efficient responses to disasters. To know more about Caritas Manila, visit www. caritasmanila.org.ph. For your donations, call our DonorCare lines 563-9311, 564-0205, 09997943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www.veritas846.ph. For comments, e-mail veritas846pr@ gmail.com.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Where is the market failure?

When was the last time you wrote a letter?

Ser Percival K. Peña-Reyes

Tito Genova Valiente

annotations

EAGLE WATCH

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his issue involving Uber, Grab and the Land Transportation Franchising and Regulatory Board (LTFRB) has caused quite a stir recently, as people protest a seemingly heavy-handed intervention in the workings of a free market. Indeed, government intervention becomes warranted when there is market failure, a situation where unregulated markets are inefficient because prices fail to provide proper signals to consumers and producers. A perceptive student of economics should ask: “Where exactly is the market failure in this issue? Is the LTFRB justified in its aggressive pursuit of violators?” This essay attempts to tackle these questions. As economic theory goes, there are four sources of market failure: 1) imperfect competition; 2) public goods; 3) externalities; and 4) imperfect information. It would be instructive to see how this recent issue relates to each source. In imperfectly competitive industries, some firms influence price and competition. Output is lower and price is higher than they would otherwise be under perfect competition. Clearly, Uber and Grab have given commuters a desirable alternative to taxis that refuse to take rides during peak hours when commuters need them the most, or take rides selectively at a negotiated premium. In the absence of alternatives, rushing commuters fall prey to unscrupulous taxi drivers exercising market power, but because of transportation network companies (TNCs), such predatory behavior is now tempered somewhat. Nevertheless, the traditional taxi industry is aggrieved by the surge in popularity of TNCs, so one must still consider the welfare of workers in this industry. Since regulating competition is part of its job description, the LTFRB argues that it is simply ensuring a level playing field, so they must go after colorum Uber and Grab drivers. Market failure could also come from the existence of public goods that bestow collective benefits on members of society. Public goods are nonrival in consumption, and their benefits are nonexcludable. Being nonrival in consumption means that one person’s enjoyment of the benefits of a public good does not interfere with another person’s consumption of it. Being nonexcludable means that once the good is produced, no one can be excluded from enjoying its benefits. Strictly speaking, public transport entails some cost that opens up the possibility of exclusion. By and large, an efficient public-transport system can have the characteristics of a public good if it enables people who cannot afford cars to avail themselves of much cheaper travel alternatives. With the problems surrounding the Metro Rail Transit and Light Rail Transit (LRT), it should be obvious why commuters prefer to take Uber and Grab. Externalities are costs or benefits imposed on individuals who are external to market transactions. If social costs or benefits are overlooked,

the decisions of households or firms are likely to be inefficient. TNCs have introduced carpooling, which can save fuel and reduce negative externalities from congested roads and air pollution. Carpooling offers a win-win solution, as both driver and rider are better off, and the environment stands to benefit with reduced private car usage. However, because Uber and Grab could be quite lucrative, enterprising Filipinos might be tempted to purchase fleets of cars with the intent to operate them with hired drivers, and so the LTFRB has decided to regulate their numbers, lest they contribute further to traffic congestion. Market efficiency also depends on whether buyers have perfect information on product quality and price, and firms have perfect information on input quality and price. Imperfect information can lead to inefficiency. Imperfect information could lead riders to pick discourteous drivers, or worse, drivers with criminal intentions. TNCs have managed to address this problem through their feedback system, which allows customers to rate drivers so that others would choose the good and avoid the bad. To be fair, the LTFRB has a feedback mechanism through an online complaint form, but it only captures complaints. It is unclear whether any further action is taken. TNCs are clearly far ahead in dealing with customer feedback, although the LTFRB wants to have all Uber and Grab cars duly registered for the safety of commuters. Thus, the two main arguments that are used to justify the aggressive pursuit of unregistered Uber and Grab cars are the level-playingfield argument and the public-safety argument. While the intentions are good, others give strong counterarguments. One is that despite the willingness of TNCs to comply with registration requirements, the LTFRB made it practically impossible for them to do so. Another counterargument is that the LTFRB aggressively demands safety from TNCs, without applying the same standard to taxis that are seen as more problematic. It seems the benefits introduced by TNCs far outweigh the costs, so perhaps, the LTFRB should consider striking a compromise with these companies. The one-stop shop for Uber and Grab registration is certainly a step in the right direction. Ultimately, consumer welfare should be paramount in this discussion. Ser Percival K. Peña-Reyes is a faculty member of the Ateneo de Manila University, Economics Department.

‘D

ear” is the word that begins a letter. It has nothing to do with you being held dearly or being cared for. It is part of the tradition of letter writing. And that tradition is almost dead.

We send e-mails everyday. We send hundreds of e-mails, all written in a hurry. The protocol has changed for e-mails. One does not care for the grammar or spelling anymore, so long as the person understands the message. If there is one major contribution the e-mail has brought to language, it is that it has singly brought back the original meaning of the word Dear. In the furious and fast world of e-mailing, telling someone he or she is dear has no place at all. There are no salutary remarks needed. One goes straight into the content of the message. I know of people who pause before the word Dear a bit terrified at the thought of the commitment embedded in those four letters. These individuals do not belong to the generations where “formal” and “informal” were bracketed. The world of letter writing is

A

Continued from A1

n even more serious form of illegal activity that affects not only consumers, but the global economy, as well, is illicit trade (IT). IT is a fast-growing problem worldwide that comes in many forms. Be it smuggling, counterfeiting or tax evasion, governments are losing billions of dollars in tax revenues, legitimate businesses are being undermined and consumers are being exposed to poorly made and unregulated products.

lightyears away from the technology-driven mails. Imagine yourself hunched over a table. Better still, you are seated with the proper posture your gradeschool teachers had trained you to have. You set yourself in the right mood. You have eaten well, you are not cranky. If it is in the morning, you make sure the sunlight filters in to shine upon the paper you would use. There is the proper pen and the right paper for writing letters. If one has the breeding and the skills for it, one uses fountain pen. Huh? What is that? You heard it. It is called a fountain pen and when you buy it, you need to acquire also the ink for it. The fountain pen is as personal as a comb. You don’t lend it away; very few people borrow a fountain pen. It is expensive. Then you write. But not before you have composed in your mind

the words that you want to say. If you make mistakes, you do not erase them. For one it is hard to erase an ink, the kind that is usually described as semipermanent. An error in a word means you throw the paper away and start all over again. The ballpoint pen is also used. The shift to this kind of pen marked a change in the tradition. There is less rigor and fewer expectations in persons who use this pen. In closing the letter, you have a range of phrases to choose from: “Very truly yours”; “Very sincerely yours”; “Always”. Do not take them literally. They do not mean anything. These words are gifts of a period when men and women were taught to be good to each other. Civility is the construct for the communication of that era.

I have not really gone deep into this art and craft of letter writing. Here is my suggestion. Write a letter now, as in “write” with your pen. Dab a bit of cologne or perfume on the paper. Yes, I am serious with this advice. Put it in the envelope and go the nearest post office. If you wish you can write a letter to yourself. I plan to write a letter to my mother who recently passed away. In a few days, I will be home in Naga. The letter would have arrived by then. There is nothing special really in that letter. I am just telling her, aside from really meaning the word Dear in the opening, that letter writing is dead. Take it from me: There is magic in the post office.

E-mail: titovaliente@yahoo.com.

Reexamining the tax treatment of transport network companies Atty. Pierre Martin Reyes

Tax Law for Business

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ttracting widespread attention and, perhaps, public condemnation in recent days is the impending crackdown by the Land Transportation Franchising and Regulatory Board (LTFRB) on Uber and Grab drivers without franchises. In a Palace briefing on Tuesday, Transportation Secretary Arthur P. Tugade asserted that “the government should also have a share from their [Uber and Grab] earnings”. He added that there should be mechanics on revenue-share collection. On this point, it is important to recall that as far back as October 29, 2015, the Bureau of Internal Revenue issued Revenue Memorandum Circular (RMC) 70-2015, which lays down the tax treatment of persons engaged in the business of land transportation, particularly transport network companies (TNCs), such as the likes of Uber and Grab. The current tax rules cover two scenarios: (1) the passenger pays the TNC and the TNC pays its partners (the persons or entities who own the vehicles); and (2) the passenger pays the partner and the partner pays the TNC. If the payment is made by the TNC that, in turn, pays the partners, the tax treatment is as follows: If the TNC is not a valid and current holder of Certificate of Public Convenience (CPC) The TNC shall issue a valueadded tax (VAT) official receipt (OR) to its passenger and as a land

A call for consumer activism Dr. Jesus Lim Arranza

Friday, July 21, 2017 A11

In 2013, for instance, the Philippine government lost P15.6 billion in revenues due to illicit trade in tobacco alone. If we factor in the illicit trade in products other than tobacco, the government could be losing hundreds of billions of pesos each year to IT and UTP. These monies could have been used to build more roads, hospitals and school buildings, even as it could have improved the lives of millions of Filipinos. Moreover, IT and UTP also create unfair competition in the market affecting the viability of legitimate business. And most important, IT and other forms of illegal trading activities expose consumers to

transportation service contractor, shall be subject to 12-percent VAT. If the TNC is a holder of a valid and current CPC The TNC shall issue a non-VAT OR to the passenger and, shall be subject to the 3-percent common carriers tax (percentage tax). On the other hand, if the payment is made to the partner who, in turn, pays the TNC, the tax treatment is as follows: If the partner is not a holder of a valid and current CPC The partner is a land transportation service contractor, and should issue either a VAT OR, when it is a VAT-registered taxpayer or a nonVAT OR if it has not exceeded the threshold of P1,919,500.00 and has not opted for VAT registration. If the partner is a holder of a valid and current CPC The partner shall issue a nonVAT OR to the passenger/customers and shall be liable for the 3-percent common carriers tax.

I chose to take the path of an advocate for the cause of consumers and local industries. As chairman of the Federation of Philippine Industries, I have seen the impact of IT on local industries, such as how the cheaper smuggled and lowerquality made products create unfair competition for legitimate local industries. I have also personally experienced the ills of illicit trade as a consumer.

Based on the above, it is clear that a mechanism is in place to ensure that TNCs and their partners are paying the proper taxes to the government. What needs to be done, however, is to further clarify the rules. RMC 70-2015 provides clear rules when it comes to VAT and the common carriers tax, but further guidance is needed from the government on the issue of income tax. The RMC modestly provides that the TNCs and their partners must withhold the required creditable/expanded withholding tax, final tax, tax on compensation of employees and other withholding taxes and that payments made by TNCs to partners and payments made by partners to TNCs are subject to expanded withholding tax. As a catchall, the RMC states that the TNCs and their partners should file the applicable tax returns and pay the correct internal- revenue taxes. Some issues that should be addressed for the benefit of the TNCs and their partners are as follows: 1. The tax treatment considering that a percentage of the passenger’s fare pertains to the TNC, while a certain percentage goes to the partners; 2. The applicable withholding tax treatment on payments made by the TNC to the partner; 3. The applicable withholding tax treatment of payments made by the driver to the TNC; 4. The withholding tax treatment if the partner owns the vehicle and engages another person to drive the car on his behalf; and

5. The proper treatment of special discounts and promo fares given by TNCs to passengers. Let there be no mistake. The TNCs and their partners, like everyone else, should pay their fair share in taxes. However, the government should do its part to make compliance with the law easy and straightforward. From being enforcement oriented, the government should shift its orientation to one that is service oriented. That can be done by providing clear and comprehensive rules that, in this case, can be followed by partners of TNCs who are mostly individuals. It cannot be denied that TNCs and their partners have provided a solution to our transportation woes. Perhaps, it is high time to reexamine our legal and tax rules on transportation and to make it work for those who are trying to comply and take part in the shared goal of improving the quality, sustainability and reliability of public transport, instead of making the rules work against those who refuse to comply and take part.

poorly made products that can jeopardize their safety and make them the biggest losers to IT and UTP as end users. The government has established mandatory certification procedures on certain products to ensure its compliance to Philippine standard requirements. But illicit traders have their way of going around these rules. This puts us in a dilemma, whether to be passive consumers and legitimate industry stakeholders or to stand up for our rights. As Romanian-born American novelist and political activist Elie Wiesel once said about advocacy, “We must always take sides. Neutrality helps

the oppressor, never the victim. Silence encourages the tormentor, never the tormented.” And with that, I chose to take the path of an advocate for the cause of consumers and local industries. As chairman of the Federation of Philippine Industries (FPI), I have seen the impact of IT on local industries, such as how the cheaper smuggled and lower-quality made products create unfair competition for legitimate local industries. I have also personally experienced the ills of illicit trade as a consumer. Thus, I have committeed to seriously pursue this advocacy both as FPI chairman and as a consumer.

The author is a senior associate 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 pierremartin.reyes@bdblaw.com.ph or call 403-2001 local 311.

2nd Front Page BusinessMirror

A12 Friday, July 21, 2017

www.businessmirror.com.ph

Tax reform to increase purchasing power of Pinoys, boost GDP–ADB 6.7% F By Cai U. Ordinario

@cuo_bm

ueled by the optimism that Congress will approve the Comprehensive Tax Reform Program (CTRP), the Asian Development Bank (ADB) raised its growth forecast for the Philippines for 2017 and 2018.

In an Asian Development Outlook (ADO) Supplement, the Manila-based multilateral development bank said it now forecasts the Philippine economy to expand by 6.5 percent this year and 6.7 percent next year. In the ADO report released by the ADB in April, the bank said growth this year would likely hit 6.4 percent and 6.6 percent next year. “Tax reform likely to be approved

in the second half of 2017 will unleash purchasing power in 2018 through lower personal income tax,” the ADB said. The CTRP has already been passed by the House of Representatives. However, the bill is still pending at the committee level at the Senate of the Philippines. It aims to address various issues in the countr y’s tax system, like the so-called bracket

The GDP growth projected by the ADB for the Philippines for 2018

creep where low-income ta xpayers “ hurt more” than their high-income counterparts. Bracket creep, Philippine Institute for Development Studies senior research fellow Rosario G. Manasan earlier said, has occurred because of the “nonindexation” to inflation of personal income-tax brackets. Manasan added this also means the coverage of each tax bracket does not take into consideration the current value of the peso. Apart from the passage of the CTRP, the ADB is confident the gov-

ernment’s massive infrastructure plan is already gaining traction. The government aims to spend P8.44 trillion until the end of the term of President Duterte to address the country’s infrastructure deficit. In the next three years alone, documents from the National Economic and Development Authority showed the Three-year Rolling Infrastructure Program from 2018 to 2022 will cost P3.55 trillion. This will finance 4,762 projects composed of 4,343 projects with a cost of less than P1 billion; 233 projects that cost P2.5 billion and above; and 186 projects costing P1 billion to below P2.5 billion. “The government is making progress in ramping up infrastructure investment,” the ADB said. The recovery of the agriculture sector from the destruction caused by El Niño has also boosted growth and allowed the manufacturing sector to expand.

The ADB said the impact of the growth of these sectors will spill over to the rest of 2017 and even 2018. Economic growth prospects in developing Asia for 2017 have improved on the back of strongerthan-expected export demand in the first quarter of this year, according to the ADB. In a supplement to its ADO 2017 report, the ADB upgraded its growth outlook for the region to 5.9 percent in 2017 and to 5.8 percent for 2018, from the earlier forecast of 5.7 percent. “Developing Asia is off to a good start this year with improved exports pushing growth prospects for the rest of 2017,” said Yasuyuki Sawada, ADB chief economist. “Despite lingering uncertainties surrounding the strength of the global recovery, we feel that the region’s economies are well-placed to face potential shocks to the outlook.” The ADB said growth projections

for Southeast Asia are expected to remain at 4.8 percent in 2017 and 5 percent in 2018. This will be boosted by strong performance of Malaysia, the Philippines and Singapore. This outlook can only be dampened by the slower-than-anticipated expansion in Brunei Darussalam. “Robust domestic demand— particularly private consumption and investment—will continue to support growth in the subregion, according to the report,” the ADB said. Consumer price inflation in the region is projected to be slower than previous estimates due to steady international oil and food prices despite increasing demand due to enough supplies and favorable weather conditions. Price inflation is now expected to drop to 2.6 percent in 2017 and 3 percent in 2018 compared to the original projections of 3 percent and 3.2 percent, respectively.

D.O.T. SEEKS NEW ASIAN DESTINATIONS FOR ITS ‘TWINNING’ PROGRAM

By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

T TOURIST SPOT IN QC A Chinese tourist enjoys her visit to QCX, an interactive museum at the Quezon City Memorial Circle that highlights the history and culture of Quezon City. Nonie Reyes

Why the next crisis is closer than you think

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inanci al crises are an inexorable part of civilizational history and, since the Dutch “tulip mania” in the 17th century (yes, it really was about flowers), they have often been triggered by asset bubbles bursting. People (or firms) borrow to purchase the thing that’s surging in price, and there comes a certain point when they can’t afford to service that debt. In the runup to 2008, several debt-financed bubbles were in play—not tulips this time, but mortgage-backed securities and government bonds from Southern European states. Eventually, a vicious cycle set in—prices collapsed, and the credit markets that had financed the stampede of investments suddenly closed. A decade later the response to the 2007-2008 crisis has created another bubble, and thus the conditions for another crash. In November 2008, the Federal

Reserve (the Fed) began with quantitative easing (QE)—making up money, and pouring it into the system by purchasing assets. Now, thanks to QE, the Fed, the Bank of Japan and the European Central Bank (ECB) collectively hold more than $13 trillion worth of assets, many of which are government bonds. This has created an unprecedented monetary order. You’d normally expect high levels of debt to make borrowing more expensive. But world debt has grown to more than 325 percent of world GDP, while interest rates remain on the floor. Earlier this year, even Argentina, a state that defaulted as recently as 2014, was able to sell 100-year bonds with a yield of only 8 percent. The logical corollary of extremely cheap money is extremely high bond prices. QE ensures a voracious demand for government bonds, and so drove prices up—so long as the authorities were buying on a mass

scale, investors knew that if they piled into bonds, they’d be able to sell them at rising prices. Thanks to all the easy money from QE, this could be done on virtually free credit. Now, however, the central banks want to draw back. They fear that if their extremely loose policies are not ended before the next recession hits, then even more extraordinary medicine could be required, with who knows what side effects. The Fed terminated its QE purchases in 2014 and has since raised interest rates to 1.25 percent; the ECB has said it will be done with QE by the end of this year. Some rate-setters at the Bank of England have been talking about tightening policy too. So there is no longer the certainty of open-ended support for the bond markets. The government bond bubble, and parallel bubbles in shares and other things, thus look at risk of bursting. If they do, governments and the rest of us are in for a sharp rise in borrowing

costs. That will knock growth. T he ef fects cou ld r icochet worldwide, as they did in December 2015, when the Fed raised rates for the first time in nine years, and caused capital flight from China and carnage in emerging markets, as investors were lured by higher returns in the US. The very vulnerability of the bond bubble, and the grave consequences of a bust, could keep it going for a time yet. When in 2013 the Fed first tried to taper its Treasury bond purchases, investors pushed up yields dramatically, and a hasty retreat had to be beat. That could happen again. History tells us bubbles always eventually burst. But it doesn’t tell us when. And it certainly doesn’t tell us what happens when central banks created the bubble—to escape from the last crisis, which they are not at all sure is over yet. Helen Thompson is a professor of political economy at Cambridge. NYT

H E D e p a r t m e nt o f Tourism (DOT) will be expanding its “twinning” program to cover other countries in Asia, especially tailored for visitors from the US. Tourism Secretary Wanda Corazon T. Teo revealed this in a speech on Monday before 40 Asian-American travel agents and media, as well as airline representatives, during the Philippine Business Mission in San Jose, California. “While destination twinning has already been an established program of the DOT in the recent years, we have been working to expand the reach of this strategy to new, emerging markets, like Vietnam, as well as Thailand and Malaysia, among others,” she said. Under the DOT’s twinning program, the Philippines and another Asian country promote each other’s destinations, so their respective visitors would be encouraged to visit the other. The program is undertaken through fare promos, as well as packaged tours. Teo disclosed that one of the immediate plans of the DOT is to strengthen its partnership with the travel trade industry in the West Coast, which already committed to produce

tourists all over the US to twin destinations of Manila and Bangkok in October this year, in time for the memorial service commemorating the first death anniversary of King Bhumipol of Thailand. For her part, Tourism Attaché in San Francisco Purificacion Molintas said DOT San Francisco has recently started implementing this “twin-destination” program in collaboration with DOT Los Angeles targeting Thailand, Vietnam and Malaysia. She noted that California and Vancouver, Canada, hosts the most diverse Asian diasporas in North America, making them perfect markets for the program. “We will take advantage of the Americans’ interest in the Philippines. We should strike while the iron is hot and craft all the strategies that can capture the market to the Philippines,” she emphasized. The DOT chief also said she has instructed the agency’s overseas offices “to beef up their respective networks and hone them along the way. And in the case of San Francisco, this is the very first time they are touching base with Thai and Vietnamese travel markets, only this year. Our target for them is to increase these markets by 10 percent in the next two years.” See “DOT,” A2