Businessmirror July 26, 2018

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Thursday, July 26, 2018 Vol. 13 No. 285

IMF: PHL still strong, but higher rates needed T

By Bianca Cuaresma

@BcuaresmaBM

HE International Monetary Fund (IMF) on Wednesday affirmed the Philippine economy’s position of strength in the coming years, but warned that looming near-term risks must be addressed to support long-term growth.

Following the IMF’s 2018 Article IV Mission—or the IMF’s annual health check of economies across the globe—IMF staff team

head Luis Breuer said the global monetary authority is retaining its 6.7-percent growth outlook for the Philippines for this year.

While this projection falls below the government’s ambitious 7 percent-to-8 percent target range, Breuer said their projection is an in-

dication that the country continues to grow strongly and medium-term outlook remains favorable.

“The Philippine economy is performing well. Real GDP [gross domestic product] grew 6.7 percent in 2017 and the team projects that this rate will be sustained in 2018 and 2019, underpinned by strong consumption and investment, including public investment,” Breuer said.

Breuer’s team visited Manila and Bohol from July 11 to 25 to meet with key officials and assess the country’s overall economic performance.

“The Philippines has been one of the region’s strong economic

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@alyasjah

LECTRONICS exports expanded by 3.1 percent in the first five months of the year and carried much of the load—yet again—for the country’s commodity exports.

The Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi) reported electronic exports in May accelerated to $3.13 billion. This was 2.29 percent higher than the $3.06 billion recorded during the same month last year.

As a whole, the industry contributed 54.38 percent of commodity exports in May, valued at $5.76 billion. Five of the industry’s nine product lines also grew during the month, topped by telecommunication, consumer electronics and office equipment.

With the May growth, year-todate electronic exports increased by 3.1 percent to $14.88 billion, from $14.44 billion in the previous year. This was 55.3 percent of the country’s commodity exports from January to May, valued at $26.91 billion and down by 5 percent.

Sem iconductor dev ices re mained the country’s top export product at $10.92 billion, while electronic-data processing came in next at $2.47 billion.

The missing workers’ rights Rene E. Ofreneo

laborem exercens

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nding the endo issue cropped up in the President’s third State of the Nation Address (Sona). Before he assumed office, the President promised the trade union movement that he would slay the monster called “contractualization.” The trade unions complain that the President has failed to fulfill his promise.

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Govt gets ₧100-B offer for common telco towers

55.3%

By Lorenz S. Marasigan @lorenzmarasigan

T

the 2019 budget, we expect them to be completed in 2019.” Diokno said in a forum, noting that the proposed national budget of P3.757 trillion is 13 percent higher compared to its cash-based equivalent of the 2018 budget, which is P3.324 trillion.

The country used to practice obligation-based budgeting prior to the shift to annual cashbased budgeting.

HE P100-billion unsolicited proposal for the creation of 25,000 common towers across the Philippines will be some sort of a litmus test for the fairly young Department of Information and Communications Technology (DICT), as this will be a precedent for future private-sector offers for tech projects.

Eliseo M. Rio Jr., the agency’s chief, said his group welcomes that unsolicited proposal from Internet Society Infrastructure that was submitted late Wednesday.

At a glance, the proposal involves the creation of 25,000 common towers for telecommunications use through a P100-billion capital spent over seven years.

“We are viewing this as a test case for unsolicited proposals,” Rio said.“ We will study their proposal and conduct our due diligence.”

The said exercise, he noted, will take “about a month to finish.”

“We will just look at their proposal and ask them clarificatory questions.

Then, we will come up with some kind of background investigation on their financial and technical capabilities,”Rio explained. This is the first unsolicited proposal that the department received since its birth about two years ago.

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See “Govt,” A2

The share of electronics in commodity exports, valued at $14.88 billion, during the first five months of 2018

Electronic-data processing, office equipment and consumer electronics rounded the industry’s top product exports for the Januaryto-May period. Seipi said the local electronics industry is targeting to grow by 6 percent this year, after it posted all-time-high receipts of $32.7 billion last year.

The industry is facing challenges from within and without, especially with the escalation of a trade war between China and the United States.

Seipi is appealing to the government to lower corporate income tax from 30 percent to 10 percent for electronics exporters under the proposed second package of the Comprehensive Tax Reform Program.

The industry almost always contributes more than 50 percent to Philippine commodity exports every year. It also employs more than 3.2 million workers, direct and indirect.

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Electronics continues to headline PHL exports in January-May

By Elijah Felice E. Rosales

2016 ejap journalism awards

A worker at a semiconductor plant in Laguna does product-quality checks in this October 2017 file photo. Reports said electronic exports expanded by 3.1 percent in the first five months of the year, and carried much of the load—yet again—in the country’s commodity exports. NONIE REYES

DBM sees 100% completion rate for projects

By Bernadette D. Nicolas

B

@BNicolasBM

UDGET Secretary Benjamin E. Diokno said on Wednesday he expects 100-percent completion in 2019 of all government projects, including those under the “Build, Build, Build” program, intended to be implemented for the fiscal year because of the country’s “revolutionary” shift to annual cash-based budgeting.

Diokno told reporters that there is now “pressure” for all departments and agencies, especially the Departments of Transportation (DOTr) and of Public Works and Highways (DPWH), since their cash appropriations will revert to the Treasury and will need to be re-appropriated if they fail to complete the projects intended to be implemented within the fiscal year.

“So [for] all the projects listed in

n japan 0.4811 n UK 70.3272 n HK 6.8175 n CHINA 7.8619 n singapore 39.2264 n australia 39.6918 n EU 62.5226 n SAUDI arabia 14.2636

Source: BSP (25 July 2018 )

News

BusinessMirror

A2 Thursday, July 26, 2018

House leadership shake-up cancels committee hearings T

By Jovee Marie N. dela Cruz

@joveemarie

HE shake-up in the leadership of the House of Representatives has caused vital legislative work to be disrupted this week.

Several committees of the lower chamber decided to cancel and reschedule their deliberations on pending measures amid hostilities surrounding the recently concluded speakership change.

On Monday Pampanga Rep. Gloria Macapagal-Arroyo was elected as new Speaker, replacing Davao Del Norte Rep. Pantaleon D. Alvarez.

House Committee on Constitutional Amendments Chairman Roger G. Mercado of Southern Leyte said he decided to postpone the Wednesday hearing on the draft federal Constitution submitted by the Consultative Committee (Concom) and other Charter-change proposals after the changes in the leadership. “[The deliberations on the pending measures on Charter change will be] delay[ed] due to new leadership structure,” Mercado said in a text message.

The lower chamber said it would consider three most prominent drafts proposing Charter changes, which include: the draft of the House Committee on Constitutional Amendments; the draft by the PDP-Laban Federalism Institute; and the draft from the Consultative Committee led by retired Chief

Justice Reynato S. Puno.

Besides Mercado’s panel, other committees that canceled or postponed their hearings are House Committee on Ways and Means, House Committee on Transportation, House Committee on Tourism and House Committee on Games and Amusement.

Employees from these committees said the hearings were postponed on instructions of their chairmen.

Negros Occidental Rep. Alfredo Benitez, reportedly designated as the PDP-Laban party whip, said while there will be changes in committee chairmanship, there will be “no purging” merely because a party member did not show support to Arroyo during the plenary voting for speakership.

Majority united

Benitez, in a statement, said the PDP-Laban quickly regrouped to avert a possible fallout that could threaten party unity following the speakership change.

He said the administration party remains formidable and will continue to play its role as the ruling political group in the House of Representatives. According to

Benitez, Alvarez was not present in the caucus of PDP-Laban but said he will continue serving as the party’s secretary-general.

He said over 80 of the 119 PDPLaban congressmen were present at the caucus, with many of the absentees pledging to support the new House leadership.

“We will maintain and further strengthen the majority coalition.

The Duterte administration’s Legislative agenda, particularly the early passage of the proposed national budget, will be our priority,” he added.

Minority

Meanwhile, the lower chamber faces another conflict as several groups are seeking the minority bloc leadership.

Current minority leader Danilo Suarez of Quezon, who voted in favor of Arroyo, said he will stay as opposition leader in the chamber under the former president’s leadership. Also, the camp of Alvarez has formally told Arroyo that it want to elect former majority leader Rodolfo Fariñas of Ilocos Norte as minority leader.

However, Albay Rep. Edcel Lagman said the Liberal Party members who abstained from voting for Speaker, together with others who likewise abstained, constitute the legitimate minority consistent with House rules and recent jurisprudence.

“However, the Magnificent 7 opposition group will remain firmly and fiercely intact irrespective of the outcome of the contest for institutional minority leadership in the

wake of the change of command in the House of Representatives,” he said.

Meanwhile, the Liberal Party has elected former Deputy Speaker Romero Quimbo of Marikina as minority leader.

“We, the 12 members of the House who abstained from the selection of the new Speaker, are ready to answer this call to be the Minority Bloc of the House. Our presence on the floor to express our abstention shows that we are the true minority. We are ready, willing, and able to be the true minority that will act as responsible, reasonable, and credible fiscalizers in the House of the People,” the party said.

The LP members who want to become part of the minority bloc are Quimbo, Lagman, Rep. Francis Gerald Abaya, Rep. Kaka Bag-ao, Rep. Teddy Baguilat, Rep. Bolet Banal, Rep. Kit Belmonte, Rep. Gabby Bordado, Rep. Raul Daza, Rep. Toff de Venecia, Rep. Edgar Erice, and Rep. Jocelyn Limkaichong.

“We know who the new leader of our chamber is. We know who the new majority members are—those who voted for the new Speaker,” the LP said.

The party, citing Rule II, Section 8 of the Rules of the House of Representatives and the Supreme Court decision G.R. 227757 promulgated July 25, 2017, said that “(a) all those who vote for the winning Speaker shall belong to the Majority and those who vote for other candidates shall belong to the Minority; (b) those who abstain from voting shall likewise

be considered part of the Minority; and (c) the Minority Leader shall be elected by members of the Minority.”

According to the LP, the change in the speakership is reflective of the sentiments of the members of the House who call for respect.

“Our colleagues sought to have a Speaker who can respect all individual members of the House and our respective parties. They sought to have a leader who can respect the institution and its processes—including the way the minority leader is chosen,” the party said.

“Along with the change in the speakership of the House of Representatives must come true change in its entire leadership, and this includes the minority. Now that the dust has settled, we need to ensure that the new leadership of the House will include a minority that can guarantee genuine checks and balances in our processes,” it added.

The LP said the relationship between the majority and minority in the Legislature is integral to any well-functioning democracy.

“In the past, it was clear that the minority was subservient to the interests of the Speaker and the supermajority. If we want Congress to produce policies that are worthy of the promise of democracy to the people, we must not allow this to happen again because if it does, we go back to the very reason why the change in the House speakership occurred—ineffective leadership that refuses to recognize differing opinions and persuasions,” it added.

Despite tepid response IMF: PHL still strong, but higher rates needed from Senate, Diokno sees tax bills’ passage

By Bernadette D. Nicolas

B

@BNicolasBM

UDGET Secretary Benjamin E. Diokno expressed optimism that the second package of tax-reform law will be passed by the end of the year, amid perceived reservations among senators to push it.

The President said on Monday in his third State of the Nation Address that he hopes to sign Package 2 before the year ends and even urged the Senate to follow suit after congressmen filed their versions of the bill.

Following the passage of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN), the second package seeks to lower corporate income taxes paid by 95 percent of businesses while providing new fiscal incentives for deserving recipients.

However, senators seemed lukewarm to pass the package as neither the minority or majority bloc members have sponsored it.

Some senators also cited the negative impact of passing this package of TR AIN, such as shooing away businessmen and investors, which can also lead to job losses.

Sought for comment, Diokno said: “They are part of the administration, right? And it is their responsibility to respond to the demands of the President.”

He said they are also hoping to straighten out the issues on TRAIN 2 including this lack of support from Senate once the Legislative-Executive Development Council (Ledac) is convened.

“We plan to convene the Ledac as soon as possible. We will thresh this out. They are the ones determining it. The Ledac is the forum threshing out the differences between the House and the Senate and the Executive so we will convene the Ledac as soon as possible,” he said.

Critics have blamed the implementation of TRAIN for causing the rise in prices of goods. However, the government has since defended the tax-reform law, noting that stopping its implementation would do more harm than good.

Education Secretary Leonor M. Briones also joined the call not to stop its implementation and warned that the government may have to borrow money if the subsequent TRAIN packages are not passed.

“It’s either taxes or borrowing. It’s either taxes or no schools, hospitals, bridges, offices and relief for our poor,” Briones said.

SECURITY Bank Corp. President and CEO Alfonso L. Salcedo Jr. (right) stresses a point while MUFG Bank Ltd. Head of Financial Solutions Group and Managing Executive Officer Makoto Kobayashi listens at the Second Business Matching Fair convened by SBC and MUFG, Japan’s largest bank, in Makati City on Wednesday. Salcedo said the local economy is strong and prepared for another rate hike this year. Related story on the SBC-MUFG briefing, page B1. ALYSA SALEN Continued from A1

performers over the past years, reaping the fruits of prudent policies and critical reforms,” Breuer said.

“The team welcomes the authorities’ strategy of maintaining policy continuity, while adapting to emerging challenges, and taking advantage of the strong economy to implement reforms to improve inclusive growth and job creation. This strategy has served the Philippines well,” he added.

Tighter monetary conditions

Despite the rosy picture, the IMF said the economy will need certain certain adjustments in its policies to safeguard the stability of its growth.

Among the main threats cited by the IMF included the rising inflation path of the country in recent years.

In the first half of the year, the average inflation of the country hit 4.3 percent— higher than the 2 percent-to-4 percent target range of the BSP for the year.

Latest inflation print is at 5.2 percent for June, with BSP officials saying this is not the peak of inflation yet, and can still go higher until the third quarter of this year.

IMF believes that inflation will gradually go back to target in 2019, but further tightening from the BSP is warranted.

The BSP has already let out two consecutive 25-basis-point rate hikes for the year, one in May and one in June. The BSP Monetary Board is expected to meet again in August 9 for its monetary-policy setting meeting.

“Further tightening monetary policy to anchor inflation expectations, conditional on domestic and external developments [is needed]. The BSP’s recent decisions to increase the policy rate twice were appropriate,” Breuer said.

“The team welcomes the BSP’s announced readiness to take further action to safeguard price stability and continued progress in modernizing monetary operations and reforming the capital

markets,” he added.

Just a few days ago, BSP chief Nestor A. Espenilla Jr. made a strong policy hint for next meeting’s policy meeting, saying they are prepared to make stronger follow through actions to the rate hikes already made in the previous months.

Another hike won’t hurt–Security Bank chief

In a separate briefing on Wednesday, Security Bank President and CEO Alfonso Salcedo Jr. said the local economy is strong and prepared enough should the BSP continue to hike rates for the year.

Salcedo said another 50-basis-point hike this year from the BSP is “not big enough to dampen business expansion” in the country.

The banker said rates in the country continue to be relatively low and a 100to 150-basis-point hike in the BSP’s overall interest rate is “manageable” and will not derail demand or growth for economic expansion.

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Govt. . .

Continued from A1

“Our timeline is we would like to have this as soon as possible, especially if they have the capability,” he said. “But it will be subject to a Swiss challenge.”

Under the implementing rules and regulations of the build-operate-transfer law, the government must subject unsolicited proposals to a Swiss challenge—a legal process of inviting other groups to bid for an unsolicited deal.

The original proponent then has the right to submit a counteroffer.

“Once we are done with the review, we can decide whether to award them the original proponent status or reject the whole proposal,” Rio added.

Being granted an original proponent status will give the proponent a competitive advantage over its would-be competitors during the competitive challenge for the project.

After receiving the original proponent status, the company and the implementing agency will then enter into an exclusive negotiations process to further polish the offer to make it more beneficial to the state and the public.

The offer will then be subject to the approval of several bodies under the National Economic and Development Authority, including the Neda Board, which is chaired

by President Duterte.

Once it gets the green light from the Neda Board, the project will then undergo the Swiss challenge.

Common tower policy

Rio noted that this unsolicited proposal may set the tone for the common tower policy that the government is developing.

Under the said policy, the government intends to award two tower companies with licenses to build and operate common towers.

The two companies will be required to erect 25,000 towers each—for a total of 50,000 towers—over a period of seven years for $2 billion each.

Based on the preliminary guidelines released by the government on Thursday, two independent entities will have to build 25,000 towers each until the first half of 2027.

For the first year, each company shall build 1,000 towers on the first year, 2,000 for the second, 3,000 on the third, 4,000 on the fourth, and 5,000 for the fifth to seventh years.

“The unsolicited proposal may be part of the common tower policy. Should the result of the Swiss challenge be favorable to an entity, maybe we can award the second slot through another unsolicited proposal—if any,” Rio said.

However, he noted that if “five or more” tower companies join the competitive challenge exercise for the first unsolicited proposal, the agency may choose to craft a terms of reference (TOR) for a “beauty contest.”

Rio said the beauty contest may take the following as main factors: time of construction, cost of services and number of towers to be built.

“The purpose of that exercise is to bring down the cost of services for the consumers,” he said. “But we will study if that is allowed under the rules.”

The government’s common tower initiative is a much-needed policy that is expected to dramatically improve telco services in the Philippines.

Having common towers—infrastructure where radio transmitters are housed—allows for a faster expansion and modernization of the rapidly changing telco infrastructure and technologies.

Lags in Asia

Based on a study made by TowerXchange, an independent community for operators, tower companies, investors and suppliers interested in emerging-market telecom towers, the Philippines lags behind its neighbors in Asia when it comes to cellsite build.

The number of unique physical cell sites in the Philippines is one of the lowest in Asia, with a combined 16,300 cell sites.

China has the highest number with 1.18 million cell sites, followed by India with 450,000 and Indonesia with 76,477 cell sites; while Vietnam has 55,000, Thailand with 52,483, Pakistan with 28,000, Bangladesh with 27,000 and Malaysia with 22,000 sites.

With 113 million mobile subscribers and only a combined total of 16,300 towers from PLDT Inc. and Globe Telecom Inc. servicing them, the Philippines has the lowest tower density score in Asia, with a meager 0.14 to Asia’s current giant China’s 1.43.

Having common towers is seen to benefit all telcos—including the future third player —as this removes a huge portion of a telco’s capital requirements annually.

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Stakeholders to biofuels board: Raise biodiesel’s CME content

By Jasper Emmanuel Y. Arcalas @jearcalas

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oconut farmers and oil manufacturers are urging the National Biofuels Board (NBB) to hike the coco methyl ester (CME) content of biodiesel in the fuel market from 2 percent to 5 percent to cushion the falling prices of copra.

The increment of the CME content of biodiesel is mandated under Republic Act (RA) 9367, or the Biofuels Act of 2006, according to the coconut industry stakeholders.

“Increasing the current biodiesel blend to 5 percent as mandated by law will increase domestic crude coconut oil [CNO] utilization and thereby contribute greatly in the stabilization of domestic copra prices,” the stakeholders said in a resolution dated July 19.

“The very low prices of copra is adversely affecting the livelihood of 3.5 million coconut farmers and their families, as well as the coconut-based export sector,” it added.

Biodiesel is a blend of diesel fuel and CME, a derivative of coconut oil. The present blend of biodiesel in the country consists only of 2 percent CME and 98 percent regular diesel, according to the PCA. The resolution was issued after a discussion attended by the various stakeholders of the coconut industry, according to the Philippine Coconut Authority (PCA).

The roundtable was part of the government’s efforts to resolve the current copra price crisis, according to the PCA. In May PCA Administrator Ro-

mulo J. de la Rosa appealed to the NBB to increase the CME content of biodiesel to ensure the profitability of coconut farmers.

“The increase could effectively support our coconut farmers and farmworkers, whose livelihoods are threatened by the declining prices of crude CNO in the international market,” de la Rosa was quoted as saying in a news statement issued last May 6.

Citing industry experts, hiking the CME content of biodiesel would increase demand for copra, and, in turn, would push prices to the P30per-kilogram price level, according to de la Rosa. This would translate to about P22 per kilogram at the farm-gate level.

“The current price of about P13 in the remote areas is below the break-even copra production price of P15 per kilo,” he said.

The PCA chief said the price of copra has been continuously declining due to the falling prices of coconut oil in the global market.

“The price of copra has declined because of a glut in supply in the world market of vegetable oils, as well as speculative behavior by global traders reacting to announcements by the European Union that they will ban the use of palm oil in their biofuels program,” de la Rosa said.

“The country’s coconut industry is highly dependent on foreign markets. Increasing substantially the domestic demand of coco products can help wean the industry from the caprices of the global vegetable oils market,” de la Rosa added. With Mauro Alfonso S. Mendoza and Nina Rakel C. Maaghop

Banana growers, exporters urge govt to expedite FTA with Seoul

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anila should expedite the forging of a free-trade agreement (FTA) with Seoul that would allow Philippine banana exports to enter South Korea at lower tariffs, and ensure that the country would not lose the East Asian market against South American competitors.

The Pilipino Banana Growers and Exporters Association (PBGEA) issued the statement after South Korea signed an FTA that allows five Central American nations to export bananas to Seoul at lower tariffs.

“The Philippines could lose South Korea as a top export destination for locally produced bananas three years from now unless tariffs are removed on this agricultural product to enable it to evenly compete with other banana exports entering this lucrative market,” the PBGEA said.

“Cheap banana imports from Central America have started to eat into the share of Philippine bananas in the Korean market and these could totally push us out of the picture by 2022 unless we get the same zero-tariff treatment as they do,” PBGEA Executive Director Stephen Antig was quoted as saying in a news statement issued on Wednesday.

Based on the estimates of the PBGEA, losing the South Korean market would result in the country foregoing close to $300 million in export revenues, with the government losing P6.5 billion in local and national tax revenues. This would affect 32,000 workers and over 200,000 dependents in the domestic banana industry of their means of livelihood, according to PBGEA. Paul Cuyegkeng, president of Sumifru Philippines Corp., said Filipino banana growers are seeking a “level playing field” in competing with exporters from other countries not only in South Korea, but in Japan and China, as well.

“We are talking about protecting the banana industry and saving jobs,” Cuyegkeng said. “It would be highly ironic if we lose jobs in the banana industry, which is mostly based in Mindanao, when the main program of our President, who hails from this island, is job creation.”

PBGEA President Alexander N. Valoria reported that five South American nations—Costa Rica, El Salvador, Honduras, Nicaruga, and Panama—recently forged an FTA with South Korea

that allow them to export bananas to the East Asian market at zero tariffs.

The eradication of tariff duties on the five countries’ banana exports would be fully implemented by 2021.

Valoria added that Peru is already enjoying a tariff-free banana exports to South Korea, while Colombia and Vietnam would get the same treatment three years from now.

“Countries like Guatemala and Costa Rica currently export a small percentage of bananas to South Korea compared with the Philippines, but they could easily bump us off from this lucrative export market three years from now because our bananas would be more expensive than those coming from Central America,” he said.

Valoria explained that while Asean-Korea Free Trade Agreement (AKFTA) is favorable to Southeast Asian economies in several aspects, it is “highly disadvantageous” to the Philippines when it comes to the banana trade as the fruit was included in Korea’s Highly Sensitive List (HSL).

Inclusion in the HSL means that banana is exempted from any tariff concessions from reciprocal agreements, according to Valoria.

The only way to compete against these South American countries come 2021 is to have the tariffs on Philippine banana exports, which are currently over 30 percent, to be removed through a separate FTA, Antig said.

“The high import tariff of 30 percent on Philippine bananas is shouldered by the buyer in Korea, so even if our country is geographically nearer, a businessman planning to sell the fruit in that country would prefer to buy from Central America because of the zero tax,” he added.

“Without the actual removal of the import tariff, the Philippines will undoubtedly lose the Korean market to Central American competitors,” Antig said.

In 2017 the Philippines exported 376,659.44 metric tons (MT) of bananas to South Korea valued at $176.555 million, Philippine Statistics Authority (PSA) data showed. The volume was nearly 40 percent higher than the 269,461.431 MT exported in 2016, while the figure was 39.17 percent over than the $126.859 million export receipt. Jasper Emmanuel Y. Arcalas

Editor: Vittorio V. Vitug • Thursday, July 26, 2018 A3

Natl treasurer affirms sustainability of Duterte admin’s ‘BBB’ program

T

By Rea Cu

@ReaCuBM

he Bureau of the Treasury (BTr) on Wednesday maintained that the country’s higher borrowing requirement, complemented by increased revenue collections to fund the Duterte administration’s “Build, Build, Build” (BBB) program, will spur job growth and improve the debt-togross domestic product (GDP) ratio in the medium term.

National Treasurer Rosalia V. de Leon said that the country’s debt level remains “sustainable,” despite higher borrowings, augmented increased revenue collection, in line with funding the government infrastructure program or the BBB. “Over the medium term, the debt ratio is projected to further improve as economic growth is projected to remain robust. This highlights the better carrying capacity of the economy, as growth fuels fiscal strength in a virtuous cycle. Debt-to-GDP will continue [on a] downward trajectory from 42.3 percent in 2018 to 38.87 percent in 2022,” de Leon told the BusinessMirror through e-mail.

Earlier in the month, local research group Ibon Foundation Inc., said that debt-driven growth under the Duterte administration is not resulting in substantial improvements in the Philippine economy, adding that the bloated debt is fast- becoming an even greater burden now for Filipinos.

It added that, while the country’s ballooning debt accelerated government spending and pushed the 6.8-percent economic growth during the past year, the agriculture and industry sectors—which it said are essential sectors for jobs generation, increasing people’s incomes and stimulating economic activity­—continued to deteriorate.

“This burgeoning debt is alarming, because not only does it create illusory growth; it also increases the Filipino’s debt burden without entailing real benefits for the people,” Ibon Foundation said.

De Leon explained that the government expects the BBB to produce more jobs while fueling economic growth within the 7 percent to 8 percent range over the medium term.

The BBB, which is the government’s massive infrastructure program, was intended to have multiplier effects, namely, helping the economy transition to upper-middle income status by 2022, as well as increasing jobs across sectors, including agriculture and manufacturing.

“The BBB program is projected to produce jobs, while fueling medium-term economic growth within the assumed 7 percent to 8 percent range, and setting the foundation for the transition to an upper-middle income economy by 2022. This is achieved through massive buildup in infrastructure, which has multiplier effects in the short run, while improving potential output and long-term growth,” the national treasurer added.

Ibon Foundation reported that government spending jumped in terms of government final consumption expenditure to 13.6 percent in the first quarter of 2018, from 0.1 percent during the same period in 2017; and in terms of public construction to 25.1 percent from 2.1 percent, fueled by the BBB program.

But the group pointed out that 94 percent of the 75 flagship infrastructure projects under the BBB

program are highly profitable for the private sector, suited to benefit business enclaves alone, with a number of the projects mainly on mega railways, highways and airports.

Furthermore, the group said that the government should focus more on spending for social and economic infrastructure such as irrigation facilities, hospitals, schools, and safe, accessible, affordable mass-transport system, among others, which the people and the economy badly need.

“Incurring debt is necessary for any government. However, the gigantic costs involved in the Duterte administration’s borrow-

ing spree are geared to business-biased projects, leaving the nation’s development needs neglected,” Ibon Foundation said.

Earlier in the month, the BTr announced that gross borrowings for 2019 was programmed at P1.9 trillion, from P986 billion in 2018, on the back of the adjusted deficit ceiling of 3.2 percent.

Broken down, external borrowings account for P297.2 billion and domestic borrowings at P891.7 billion for the year. The programmed gross borrowings for 2019 saw an expansion of 20.6 percent compared to the programmed borrowings this year.

De Leon said that the higher gross borrowings for next year is in line with the adjusted budget deficit of 3.2 percent for the same year as reported by the Develop-

ment Budget Coordination Committee (DBCC), to further sustain the progress of the administration’s BBB program.

She also pointed out that the 75:25 borrowing mix ratio is not set in stone, as the government is taking a cue from market conditions, looking out for opportunities in terms of issuances favorable to the government.

Finance Secretary Carlos G. Dominguez III earlier said that the larger programmed share of domestic borrowings for 2019 will enable the Philippine economy to better hedge against foreign-exchange risks, while the increase in the deficit from 3 percent to 3.2 percent was explained as being in line with the acceleration of the government’s investments in its social services program, among others.

Incurring debt is necessary for any government. However, the gigantic costs involved in the Duterte administration’s borrowing spree are geared to business-biased projects, leaving the nation’s development needs neglected.”—Ibon Foundation

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Thursday, July 26, 2018

Duterte’s Sona pitch leaves Cong A

T a meeting of Senate and House leaders last March 13 on their common legislative agenda, the senators came away with a list of 39 measures they wanted passed before the 17th Congress bows out in 2019, of which 15 are economic bills.

Besides this list, the lawmakers knew at that time they still had to tackle several other key measures— the Bangsamoro Basic Law (BBL), the Fair Election Act, and federalism and Charter change that they expected would end up with them once President Duterte’s handpicked Constitutional Committee is done with its work.

Topping the economic measures was of course the rest of the tax reform package, or the sequel to the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect on January 1.

Fast forward to July 23, as President Duterte delivers his third State of the Nation Address.

To the relief of many quarters, there were no rambling, ad lib portions; no expletives or insults; just a calm, simple delivery of a speech that lasted 48 minutes and packed with at least 15 key legislations and issues that the Chief Executive pitched to Congress.

Atty. Raul Lambino, lawyer of newly installed Speaker Gloria Macapagal-Arroyo and vice president for international affairs of the PDP-Laban, said the leadership of Arroyo is expected to pass all the economic measures of the Duterte administration this year.

“All the economic measures will be prioritized by [Speaker Arroyo] this year,” he said in an interview.

Duterte in his Sona asked members of the 17th Congress to prioritize the passage of several economic measures to augment government coffers for the delivery of social services.

The President sought urgent passage of: rice tariffication, the second package of the tax reform law, lowering of interconnection rates between telecommunications industry players, universal health care, end of contractualization, a national land use law and environmental protection, among others.

In his Sona, Duterte dwelt at length on the BBL, since renamed to Bangsamoro Organic Law (BOL) or the Bangsamoro Organic Law on the Autonomous Region in Muslim Mindanao (BARMM). But since Congress’s bicameral conference committee cochaired by Sen. Juan Miguel Zubiri and House Majority Leader Rodolfo Fariñas had worked overtime during the break to hammer out a compromise version of such a complicated piece of legislation with transcendental implications, at least that task was already completed by the time Sona day rolled around. And all the two chambers had to do was ratify the bicameral conference committee’s output and send the measure to Duterte, who promised to sign it “within 48 hours” of getting the same.

In contrast to the generous pitch for the Bangsamoro, Duterte did not—as analysts and business groups noted—sound as gung-ho on Charter change, although he thanked profusely the chairman of the Constitutional Committee he handpicked to draft a federal charter, former Chief Justice Reynato S. Puno.

Business leaders interviewed by the BusinessMirror a day after the Sona expressed some relief about the President’s applying the brakes on Charter change, as they had worried over the additional bureaucratic layers and more tax burdens that a shift to federalism might entail.

On Wednesday, Senate President Pro Tempore Ralph Recto said senators are not keen on supporting Cha-cha amid concerns “it will bloat the government. It will mean another layer and a bigger tax burden that would lead to a credit downgrade,” said Recto, adding that it is better to focus on job creation and fix inflation.

He stressed that “Congress cannot rush Cha-cha,” and “senators need to study the issue.”

Tax reform

THE BBL or BARMM and the Chacha aside, at least four items on the President’s Sona wish list were coincidentally on the common legislative agenda that was drawn up after the March 23 Senate-House meeting, and therefore these are expected to take priority attention from legislators.

Topping the list of these four items that are common to both the Executive and the Legislative agenda is the rest of the tax reform package under TRAIN, which will include a tax amnesty, corporate income tax reduction, rationalization of fiscal incentives, and higher tobacco and alcohol taxes, and a comprehensive mining tax reform.

Following Duterte’s appeal for Package 2 of TRAIN, the House Committee on Ways and Means on Tuesday immediately buckled down to work.

Led by committee chairman Dakila Carlo Cua of Quirino, the panel convened for a DOF briefing on the cost-benefit analysis of Package 2 as well as on House measures advocating for lower corporate income tax rate.

Finance Undersecretary Karl Kendrick Chua said the Philippines has one of the highest corporate income tax rates in the region at 30 percent. The government, however, collected only 3.7 percent of gross domestic product in corporate income tax revenue.

“That is a revenue productivity of 12.3 percent. Compare that with Vietnam, Malaysia, or Thailand with much lower rates of 20 percent or 24 percent, but they collect 4 percent, 6 percent, or 7 percent of GDP, respectively, with much, much higher productivity,” Chua said.

“On the other hand, we have a very complicated tax incentive system. We grant the most generous fiscal incentives since they are in lieu of all taxes, both national and local, and given forever,” he said.

In Package 2, he said the government’s main objective is to arrive at more fair and accountable tax incentives. “Because every peso granted as tax incentive is a peso off the budget that could have been spent for infrastructure, health, education, and social protection.”

To be sure, deliberations on the second round of tax reforms are bound to be tough, given the huge clamor for lawmakers to first revisit the original TRAIN that took effect last January 1, in order to satisfy various sectors who insist that the so-called TRAIN played a big role in the higherthan-expected inflation posted in April, May and June.

The review of the TRAIN, however, is not seen to derail deliberations on the rest of the tax reform package, given that most stakeholders acknowledge their importance to the economy.

Moreover, the last two items on the second batch of tax reforms—

taxes on tobacco and mining—are seen to be among the key sources for funding the universal health care act, also listed as a priority for both Executive and Legislative.

Universal health care

BESIDES shepherding the tax reform packages, Ways and Means committee chairman Sen. Juan Edgardo Angara had earlier told the BusinessMirror he strongly pushes his friend and “seatmate” Sen. Joseph Victor Ejercito’s advocacy for universal health care.

Ejercito, chairman of the Senate Health committee, had conducted a marathon hearing on the bill in March, and has promised to fast-track the process of enacting the law now that Duterte himself has endorsed it.

Asked whether the universal health care that he also strongly supports will now get even faster disposition since Duterte cited it in his Sona, Senate President Vicente Sotto III told the BusinessMirror that “yes, starting Monday [July 30],” the health care measure will be on the Senate’s agenda.

Duterte had said defects in the healthcare system were “resulting in disparity in health outcomes between the rich and the poor in the urban areas and rural.”

The House bill’s main sponsor, party-list representative now Duterte’s spokesman Harry Roque, said the House bill grants every Filipino the right to health by virtue of citizenship.

In the Senate, Ejercito said, “We’re targeting passage of universal health care program in September, before the busy month of October, which is the filing of certificates of candidacy for next year’s election.”

Following the normal legislative route in the Senate, that means Ejercito’s committee should be reporting out the measure by early August, so it can be deliberated on and voted upon in plenary.

availing health services,” Villanueva said.

The Senate bill aims to qualify every Filipino for health insurance benefits regardless of whether or not he or she is a PhilHealth ID holder.

Villanueva crunched data from financial statements of PhilHealth in 2015 that showed it collected P96.7 billion from premium contributions of all its members, including the government subsidy for indigents. “Consequently, the PhilHealth paid out around P97 billion for benefit payments that covered about 8.4 million claims.

If each claim would be treated as one patient, then it can be assumed that on average, each person who availed PhilHealth benefits in 2015 only got P11,500 each, a measly amount to cover annual medical expenses.”

The bill’s funding source indicates why pursuing the next-round sin taxes is crucial and must be frontloaded: under the bill, funds from the universal health care program will be sourced from: a) 80 percent of the incremental value collected from sin tax; b) 50 percent share of the national government from Pagcor income; and c) the charity fund from the PCSO.

Rice tarrification

BESIDES tax reform, the President pitched at his third Sona the urgent need for rice tariffication—that is, converting quantitative restrictions or caps on rice imports to imposing rice tariffs. This measure is universally seen as a key solution to resolving the problem of rice price spikes on account of supply shortages, a problem that in turn has been blamed for feeding the record inflation in May and June that breached targets. Together with the global oil price increases that the crafters of the TRAIN law admitted to having underestimated, the rice price hikes had been cited among those that caused blame to

NONOY LACZA

By Butch Fernandez and Jovee Marie N. Dela Cruz

The House of Representatives had approved the bill on third and final reading in September 6 last year while the Senate version— arising from five separate bills—is still pending.

Sen. Joel Villanueva authored Senate Bill 60, or the Enhanced Universal Healthcare Act, together with Senators Ralph Recto and Sherwin Gatchalian. The measure seeks to expand the benefit packages being offered by PhilHealth by increasing the amount of benefits to lessen the out-of-pocket expenses on the part of the members, according to Villanueva.

Improving the benefit packages would entail the inclusion of preventive and promotive health services in a bid to alleviate the chances of confinement and encourage a healthy lifestyle among Filipinos.

Villanueva, in pushing his bill, had noted that as of 2016, at least 91 percent or 93 million Filipinos are covered by PhilHealth, but about half of them are indigents while the rest are composed of paying individuals from both formal and informal economies and lifetime members. “We want all Filipinos or 100 percent of the population to be covered by PhilHealth since we believe that every Filipino should not suffer any injustice in

be heaped on the tax reform law.

The President had said in his Sona that “we need to switch from the current quota system in importing rice to a tariff system where rice can be imported more freely. This will give us additional resources for our farmers, reduce the price of rice by up to P7 per kilo, and lower inflation significantly.”

House Agriculture and Food Committee Chairman Jose Panganiban Jr. said House Bill 7735, or the “Revised Agricultural Tariffication Act,” is up for plenary debates in the House of Representatives soon. This will amend Republic Act 8178.

In the Senate, Agriculture Committee chairman Sen. Cynthia Villar had, in the last hearing on the measure in May, said she would rather take her time and completely thresh out all issues on the rice tarrification than risk a haphazard bill that would later create problems for the Philippine farm sector. She said she wanted to protect Filipino farmers.

Villar’s indicative timeline of end-2018 for finishing her committee work on the rice tarrification could be problematic, however, because the Philippines risks being subject of a complaint in the World Trade Organization (WTO) if it does not effect the conversion

PRESIDENT Duterte is flanked by Senate President Vicente Sotto III and House Speaker Pantaleon Alvarez as they say a prayer during the start of the third State of the Nation Address at the House of Representatives in Quezon City on July 23, 2018. AP/AARON FAVILA

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gress with full plate of measures the Nalua, for which four separate bills were filed in 2016 and 2017.

There are obstacles to land use implementation, said former environment undersecretary Elmer Mercado, and one of them is the conflict between mines and the ancestral domain of indigenous peoples. Conflicting laws also pose a problem.

NONIE REYES

President that while the Department of Labor and Employment had some successes in regularizing some workers, there are issues that can only be addressed through tax reforms.”

Villanueva had released in endMay the committee report on Senate Bill 1826, or the “Security of Tenure and End of Endo Act of 2018.”

End ‘Endo’ and contractualization

ONE of Duterte’s most commented on moments in the Sona was his admission that redressing the situation of workers in order to finally end the scourge of “Endo” was not entirely in his hands, despite his May 1, 2018, executive order proscribing Endo. A lawyer, Duterte realized that it would require congressional action to enact a law that satisfies both labor and employers.

He asked Congress “to pass legislation to end the practice of con-

NONIE REYES

from QR to rice tariffs by the third quarter.

The National Economic and Development Authority (Neda) echoed President Duterte’s call on Congress to pass the bill to “tariffy” the country’s quantitative restriction on rice. In a statement on Tuesday, Socioeconomic Planning Secretary Ernesto M. Pernia agreed that the passage of the bill will reduce rice prices and make the agriculture sector more competitive in the long run.

The Philippines’ rice waiver, which expired last year, needs to be replaced by a rice tariff for all rice imports. This is part of the country’s commitments when it acceded to the WTO in the 1990s.

“There is no time to waste. All of us must rally behind the administration’s reform agenda, most especially the rice tariffication bill, which if implemented will make our agriculture sector competitive in the long term,” Pernia said.

Two bills are pending in the Senate on the shift from QR to tariffs: SB 1476 amending the Agricultural Tariffication Act, authored

by Sens. Ralph Recto and Leila de Lima; and SB 1689, by Sen. Risa Hontiveros.

In Neda’s preliminary estimate, headline inflation rate would be reduced by one percentage point if the domestic wholesale rice market reduces its price to the level of imported rice.

Pernia also welcomed the President’s stern warning against “rice hoarders, cartels and their protectors” who can create the impression of an artificial rice shortage.

He said these culprits manipulate the prices of rice to their advantage and to the detriment of the Filipino people.

Land Use Act

YET another measure cited in the 2018 Sona that was also listed on the March 23 common legislative agenda of the Senate-House is the long-pending bill for a National Land Use Act (Nalua).

On Tuesday, Pernia had welcomed the President’s inclusion of Nalua as priority. It had been languishing in Congress for 20 years.

Pernia said Nalua aims to protect prime agricultural lands, to provide rationalized land use planning in the country, to consolidate national laws on land uses, and to address long-standing land use conflicts.

“We all share the President’s desire to protect the present and future generations. With the passage of Nalua, we ensure the sustainable use of the country’s land and physical resources,” Pernia said.

“We need to do this now,” Duterte had said, as the Nalua will “put in place a national land use policy that will address our competing land requirements for food, housing, businesses and environmental conservation.”

HB 5240, or “An Act Instituting a National Land Use and Management Policy, Providing the Implementing Mechanisms and Appropriating Funds Therefor,” was approved by the House on May 2, 2017.

Until press time, it remained unclear how the Senate environment committee would proceed on

tractualization once and for all.”

While the Sona pronouncement may be construed as a marching order for Congress to enact a law to end the odious practice of “Endo,” the slang for “end of contract” (the practice of hiring and terminating workers in five months to avoid the employers’ burden of regularizing them), labor groups sounded skeptical a day after Edsa. One group said a new order “without an attached written certification” must be taken with a grain of salt.

House Bill 6908 had been approved on third reading since January 2018. The Senate bill (SB 1826) principally shepherded by Villanueva was reported out by his Labor committee in March and awaits plenary approval.

Replying to the BusinessMirror about the Senate timeline for passage of the Security of Tenure bill and how he would push it, Villanueva said action on the measure must be “Asap” now that the President himself had explicitly put it on top of the priority agenda.

Labor groups feel the President must certify as urgent Senate Bill 1826, to hasten its passage before October, the deadline for filing certificates of candidacy for the May 2019 elections.

Villanueva told the BusinessMirror he is confident his security of tenure bill addresses both the concerns of both employers and workers.

Right after hearing the Sona, Villanueva said he agreed “with the

Once passed into law, the measure, Villanueva explained, would remove ambiguities in the Labor Code, which is the source of circumventions, and: (a) prohibit labor-only contracting, and provide penalties for violation, (b) limit job contracting to licensed and specialized services, (c) classify workers into regular and probationary employees—and treat project and seasonal employees as regular employees, (d) provide security of tenure, (e) clarify standards on probationary employment, and (f) provide a “Transition Support Program” for employees while they are not at work or transitioning in between jobs.

In wrapping up his report in May, Villanueva said that in the process of producing the measure, “we learned the conflicting and contrasting interests of the different stakeholders. But we also learned that these interests converge. We all want economic growth, we want increase in productivity and we want better quality of life and we want certainty both in doing business and in employment.”

Hopefully, he can indeed produce a bill that guarantees workers’ rights without disrupting business unduly, as employer groups had fretted in interviews with the BusinessMirror on Tuesday that the President’s Sona pitch might be taken as a blanket order against even those forms of contracting that are allowed by law.

“We believe that what we are proposing is consistent to these principles agreed upon by all stakeholders. Ending ‘endo’ is not antibusiness. Guaranteeing the right to security of tenure gives our workers certainty and social protection.

It makes them more efficient and more productive, which is the primary concern of every business.

Being pro-worker and pro-industry at the same time is not an impossibility,” the senator stressed.

The Senate measure kept the absolute prohibition on labor-only contracting, which happens “when a job contractor merely recruits and supplies workers to a contractee or the workers supplied by the job contractor are performing activities which are directly related to the core business of the said contractee or are under the control and supervision of the contractee.”

Villanueva said that in cases of labor-only contracting, the job contractor shall be considered merely an agent, and the contractee shall be responsible to the workers as if the workers were directly employed by the contractee.

Further, in all cases where labor-only contracting is present, the workers shall be regularized by the contractee, retroactive to the date they were first deployed to the said contractee, without prejudice to any criminal, civil, or administrative case against the labor-only contractor and the contractee.

The measure further provides for the licensing and regulation of contractors for specialized work, job or services, and imposes penalties for violations including the cancellation of license and administrative penalty for the responsible DOLE officer who licensed a noncompliant contractor.

Coconut farmers fund, EODB, open pit mining

THE President’s Sona had also endorsed the creation of the Coconut Farmers and Industry Trust Fund, something that Neda’s Pernia hailed the day after.

Three bills on the subject that were filed in the Senate—by Sens.

Bam Aquino, Risa Hontiveros, Francis Pangilinan, Ralph Recto and Cynthia Villar—have been consolidated and the resulting measure was pending at the Conference Committee level as of late March 2018.

HB 5745 is the House version of the coconut farmers’ trust fund.

Currently, both chambers have approved their versions but with reservations, and this prompted Duterte to openly urge them in the Sona to create a bicameral conference committee promptly and reconcile both bills.

Meanwhile, the Senate environment committee has yet to wrap up work on three bills meant to prohibit open pit mining, outlaw black sand mining, and rationalize the sharing of mining revenue, the latter of which was filed by Recto, former ways and means committee chief.

Improving telco services

THE President also cited one of his pet peeves in the Sona: the state of telecommunications service in the country. Despite having prodded all relevant agencies to move quickly to encourage a third telco player seen to end the duopoly in the industry, Duterte still flagged the issue, apparently in a bid to ensure the policy trajectory is sustained.

In the Senate, two related bills remain pending after both hurdling second-reading approval: the Open Access in Data Transmission Act and the Public Telecommunications Policy Act. The mention of the recently enacted Ease of Doing Business Law or the Ease of Doing Business and Efficient Government Service Delivery Act (Republic Act 11032) was a welcome input, Pernia said, agreeing with the President that it will enhance market competitiveness in the Philippines.

Not all legislators were applauding at the Sona, meanwhile.

Akbayan party-list Rep. Tom Villarin said “again his promises to end contractualization, give the coco levy trust fund to farmers, and other basic sector issues are good sound bites but lack political will.

He totally skirted the state of our economy, inflation, unemployment and rising debts.”

The President’s determination to pursue the controversial war on drugs—still focused on law enforcement primarily—while refusing to treat drug abuse as a health problem as well, was also scored by critics.

Lawmakers in the minority in both chambers of Congress were dismayed that Duterte simply glossed over all the issues raised against the bloody manner—with body count estimates ranging from 3,000 to 20,000—in which his administration has fought illegal drugs.

In the Senate, 19 drug-related pieces of legislation are pending, an indication of how seriously lawmakers regard the issue. As to how they will handle the drug-related bills, given the plateful of economic measures already on the agenda, bears watching in days to come.

Meanwhile, it’s back to work for everyone, even in the troubled House, where the leadership change that marred the Sona continued to play out till midweek. And no one’s taking the time to breathe.

With reports by Cai Ordinario, Jasper Arcalas, Samuel Medenilla, and interns Mark Joseph Fernandez and Joahna Lei Casilao

A6 Thursday, July 26, 2018 • Editor: Angel R. Calso

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editorial

Economic growth to remain robust

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recent Bloomberg article cautioned some Southeast Asian countries, including the Philippines, to temper borrowing at a time when interest rates are on the rise. It said this would swell budget deficits and put additional strain on government finances. Bloomberg said the spike in US interest rates and a stronger dollar have adversely affected currencies in the region, which may force Southeast Asian governments to face rising debt especially when tax revenue targets are not met.

The Duterte administration’s “Build, Build, Build” program will produce too many “bills, bills, bills” that will put pressure on the budget, according to analysts who said the proposed borrowing plan for next year is 19 percent higher than this year’s program.

To accommodate the infrastructure push, the government has raised its budget deficit target for next year to 3.2 percent of gross domestic product (GDP) from an estimated 3 percent in 2018.

Under the Build, Build, Build program, the government is looking at 75 flagship projects, which include six airports, nine railways, three bus rapid transits, 32 roads and bridges and four seaports that will help improve rural incomes, encourage countryside investments, make the movement of goods and people more efficient and create more jobs. The government will also build four energy facilities; 10 water resource projects; five flood-control facilities; and three redevelopment programs that will deliver sustainable solutions to meet the needs of urban population.

The National Economic and Development Authority, however, said the country’s widening trade deficit should not be a cause for worry, saying the country imports more infrastructure-related goods as the government is working to close the infrastructure gap. The Neda earlier said the Tax Reform for Acceleration and Inclusion (or the TRAIN law) will boost government revenue to 16.2 percent of GDP in 2018 and to 16.7 percent in 2019, which will help keep debt at moderate levels.

Moody’s Investors Service, in its latest outlook, gave the Philippines investment-grade rating, saying it expects economic growth to remain robust and that some fiscal numbers will improve. The stable outlook, however, came with a caution about threats posed by elevated inflation and political risks, including a potential shift to a federal form of government.

“Although not our base case, indications that monetary policy may not prevent a sustained rise in inflation above our current expectations—and beyond the one-off impact of the increase in excise taxes from TRAIN—would likely exacerbate upward pressure on both market interest rates, capital outflows and downward pressure on the exchange rate,” Moody’s said.

The rating firm added: “The peso has depreciated by more than 6.5 percent this year, among the worst performers in the region, while benchmark 10-year bond yields are 60 to 70 basis points higher than the end of 2017. Persistent pressure on the currency and a current account deficit “pose material challenges to policy-makers in ensuring that inflation expectations and inflation pressure are contained.”

Finance Secretary Carlos G. Dominguez III said the Philippine economy is experiencing elevated inflation rates that are normal for a high-growth economy. He said the “political chatter emanating from certain quarters has failed to dampen the interest of the international business community in the Philippines’s exciting growth narrative.”

Dominguez said the country’s growth potential continues to attract foreign investments.

Since 2005

BusinessMirror A broader look at today’s business

Stock Market 002 John Mangun

T

OUTSIDE THE BOX

he wise old saying that “the best time to plant a tree was 20 years ago, the second best time is now” makes sense also for stock market investing. But then again, “the best time to buy a Jollibee franchise was 20 years ago.”

Since hindsight is perfect, you can say that “the best time not to buy a College Assurance Plan policy was 20 years ago.”

Planting a tree aside, timing is critical. Nothing is ever as easy as some people tell you it is. However, you do not need to be as smart as all the “experts” to win. Even with tree planting, you just have to know what to do and all that requires is effort.

In tree planting, the rule is simple: Combine good soil, with the proper sun and water. For stock market investing it is “Buy when the price is going up and sell when the price is going down,” and you can learn how to do that.

Forget all that wisdom from

Warren Buffet and concentrate on understanding what Kenny Rogers sang in The Gambler. “Every gambler knows that the secret to survivin’ is knowin’ what to throw away and knowing what to keep.” But how you put those rules into practice is not the first step.

My first stock market mentor from more than 40 years ago is my friend Jim Marshall, and he did not teach me a single thing about successful stock market trading.

He taught me about winning.

Many of the financial-literacy gurus will say something like “invest only an amount that you can afford to lose.” Seriously? You are going to start my journey with the word “LOSE!”

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Ji mmy—who wa s a l so my casino gambling buddy—taught me: “If you can’t afford to lose, then you can’t afford to win.”

In other words, you put up an amount that you want to win, not an amount than you can “afford” to lose. You want to make P100,000? Then start investing P100,000. The practical reality is that you put in the stock market an amount that you can afford to have, tied up with absolutely no thought that this is an amount you are going to lose. It is called a “bankroll.”

The first step is to open an online trading account. I strongly recommend also putting half of your

bankroll with a “live” stockbroker.

You want someone who is doing this business every day to talk to. And if you take their investing ideas, execute the trade with them and let them make a commission.

“Stealing” the live broker’s recommendation and trading it online is bad, bad karma. Do not do this. You will pay for your sin.

Now that your account is open, under no circumstances—not a hot tip, not “god” whispering in your ear, not a “dream that seemed so real”—trade the market. At the end of every day and during the day if you can, look at the changes on the stock market indexes, the most active stocks and the biggest winners and losers.

You need to get a feel of the market and which issues are moving in what way.

This is where your live stockbroker comes in and earns an eventual commission. Ask all the questions you have from the information you are watching.

Ask him or her to explain what it all means. Then, if necessary, Google your questions. But you want answers from someone who lives that info every day. Now you are on your path to being a stock market investor.

A US lawmaker and the Aquino regime spread fake news to destroy the Marcoses

✝ Ambassador Antonio L. Cabangon Chua Publisher

The first step is to open an online trading account.

I strongly recommend also putting half of your “bankroll” with a “live” stockbroker. You want someone who is doing this business every day to talk to. And if you take their investing ideas, execute the trade with them and let them make a commission.

Solarz again

Part Two

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NOTHER investigation had also been undertaken, this time by the US General Accounting Office (GAO). This probe was also instigated by New York Congressman Stephen Solarz and commissioned by Sen. Edward Kennedy, who, while the counting of ballots in the 1986 snap election was still in progress, declared that “Corazon C. Aquino won that election lock, stock and barrel,” although, as journalist James Hamilton-Paterson noted, “he had not been in Manila at the time.”

On May 2, 1986, the GAO submitted its report to Solarz. The GAO said: “We have examined the accountability and control over US assistance given to the Philippines.

Between fiscal years 1978 and 1985, the United States made available to the Philippines almost $1.3 billion in Economic Support Fund [ESF], Development Assistance [DA], Public Law 480 Food Aid and military assistance.

“Financial and administrative controls were adequate to ensure that ESF local currency disbursements for project activities were

justified. Financial transactions showed approved amounts to have been disbursed and received by contractors.

“There was no indication of withdrawals from the accounts for unauthorized construction activities.

“We received several allegations concerning the misuse of US assistance, such as incomplete or nonexistent facilities, overcharges and substandard construction.

We interviewed the individuals making the allegations and tried to document instances of abuse.

“We could not substantiate the charges.

“None of the officials of the multilateral organizations we spoke with were aware of diversion of assistance.”

Over a decade later, on March 25, 1996, Rep. Imelda Romualdez-Marcos then of the First District of Leyte would protest to her colleagues in Congress.

“This report was never made public. Neither did Solarz submit his findings to the United States Lower House.

“The accusations against Marcos continued in the American media based on the allegations of Solarz.

Neither the State Department nor the appropriate Congressional committees made public their comments on the report, if any were made at all. The American media obviously did not request for a copy, or if they did, never released this to the public. Solarz of the US House Subcommittee on Asia and Pacific Affairs continued his attacks on Marcos, in spite of the US GAO Report.”

Why were the official reports (NRB and GAO) that absolved President Marcos ignored, if not suppressed?

What did Solarz stand to gain from vilifying Marcos? What possible motivation was compelling enough for him to disregard the

official reports? If he did not relish the politically depressing step of apologizing to the Marcoses, he could at least have stopped his derogatory crusade.

Solarz died of cancer in 2010, one year after President Aquino passed away, also of cancer.

Cory and US govt charged Marcos

On June 11, 1986, the Aquino administration “authorized” the US government to file criminal charges against the Marcoses in America.

This weird maneuver was consummated in Manila with the signing of a document, “Agreement on Procedures for Mutual Legal Assistance,” by PCGG Chairman Jovito R. Salonga and Deputy Assistant Attorney General Victoria Toensing of the US Department of Justice.

The US Justice Department had earlier said, “Mr. Marcos should not be indicted [in the US] until the government of the Philippines had provided full waiver of his residual immunity.” Ambassador Emmanuel Pelaez signed the waiver for the Philippine government. Apparently, this waiver was still inadequate, and so the Salonga-Toensing agreement was formulated.

Following the signing of this agreement, a criminal case was filed in Los Angeles against the See “Arillo,” A7

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Of GMA and electoral ‘fraud’ Val A. Villanueva

Businesswise

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he true state of the nation is felt. No need for President Rodrigo Duterte to tell us how it’s been.

The economy is wobbly; traffic has gotten worse; families have become even poorer with little or no food to share; extrajudicial killings have spawned widows, widowers and orphans; China’s encroachment into our territory remains unchallenged; politicians remain loyal to themselves, and would rather slit each other’s throat for that much-coveted power that their position provides— these basically sum up what have been happening to our country since Duterte took office more than two years ago.

Will things turn for the better in the remaining years of his mandate? From the look of things, we’re in for a tougher ride. The war on drugs will continue “relentlessly,” and the push for federalism will go full throttle despite overwhelming public disapproval, as recent surveys show.

A new political storm is brewing, now that former President Gloria Macapagal-Arroyo leads the lower chamber of Congress.

We expect her to use her office to make sure that the shift from presidential to parliamentary system will be prioritized. Now more than ever, she’s in a position to bring herself back to Malacañang.

Reliable sources told BusinessWise that GMA’s ascension to House speakership was against Duterte’s wishes. He was so miffed that Senate President Tito Sotto revealed that the President almost walked out of his State of the Nation Address (Sona). Insiders are saying that Duterte has now become a hostage to GMA’s cunning maneuvers, which ironically has the backing of his daughter Sara, who has a personal score to settle with former House Speaker Pantaleon Alvarez. Remember that GMA has warlords, technocrats and oligarchs backing her up, plus some of the Palace men are GMA loyalists.

The Supreme Court is littered with her appointees and some Catholic bishops (remember the Pajero bishops?) are known to have been playing footsies with her.

Also, GMA’s Central Luzon allies are much bigger than Duterte’s Davao group, which was only beefed up by Liberal Party turncoats.

The GMA coup—which some lawmakers describe as a “shameful sham”—has drastically changed the political landscape. It is not far-fetched to imagine that feverish jockeying for position and horse-trading are taking place at the once august hall of Congress.

It’s virtually helter-skelter there, according to my informants. To expedite the process of constitutional change, Alvarez has floated the scrapping of the 2019 elections.

Will Arroyo echo her deposed predecessor’s proposal, or will she accede to the clamor of some politicians to implement a hybrid election system? While both favor her, her allies are looking at the hybrid system, which they believe is a more subtle approach.

In a hybrid system, voting is still done manually, but the results are transmitted electronically. The supposed aim is to ensure that the entire election will not be reliant on allegedly “easily manipulated” servers.

Now, let’s assume for a minute that what they say is true, and that the servers can actually be “tampered with.” Why then should we go back to a hybrid system when server-less options, such as a blockchain, are readily available?

There is this historic referendum in Norway wherein the county of Finnmark held a plebiscite which asked its citizens whether they would like to merge with Thoms, a neighboring county. The exercise employed blockchain technology —the same process used by cryp-

tocurrencies like Bitcoin to securely keep track of transactions without the need for servers.

The system used for the referendum was Smartmatic’s, the same provider for the country’s automated elections since 2010.

At the moment, however, the tech company’s reputation in the Philippines has been somewhat sullied due to some issues brought up by the camp of Bongbong Marcos, who claimed to have been cheated in the 2016 polls. Using his vast war chest, Marcos has filed an election protest against incumbent Vice President Leni Robredo before the Presidential Electoral Tribunal (PET).

In all of these, one thing is clear: while other countries are using the same provider and experiencing amazing progress in their electoral processes, we are dismally being left behind.

Given that Smartmatic was the provider for the electoral upgrades in Norway, it’s safe to say that it’s not the tech provider’s fault that we are stuck in a rut. It’s only in the Philippines where nobody loses in an election. A candidate will always claim to have been cheated.

Regrettably, the government is needlessly expending a good chunk of time and resources just to determine whether a secure electronic and automated electoral system has indeed been compromised in a controversy that involves just one electoral post.

It’s not surprising to learn that many Filipinos are feeling frustrated! We have access to the same advanced tools as the rest of the world, yet we choose to be stagnant. What’s even worse is that we are choosing to take a backward step.

In the Norwegian referendum, the secure blockchain system called TIVI allowed the citizens of Finnmark to vote online from the comfort of their own homes. This led to a record-breaking 85 percent turnout. Actually, there were still polling stations available for those who had no access to the Internet, but most of the voters still chose to vote at home.

Aside from eliminating the hassle of traveling to a polling precinct and lining up to cast your vote, the online option also provides a unique innovation that would allow you to change your vote. This means that, if you have already voted but had a change of mind, you can still edit or change your vote, up until the official closing time of the polls.

Now, imagine if we had that here in the Philippines. You don’t have to leave your house so you don’t have to endure traffic jams.

Even if you have to go to a polling place, you will be assured of shorter queues, which would translate to more time for you to devote to more productive tasks. This will be a boon, especially to differently abled Filipinos who must face daunting physical challenges just to exercise their right to vote.

Still, the big question is, will there be an election?

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

Thursday, July 26, 2018 A7

Jesus and encountering God Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

A

deserted place, a mountain, also a temple could very well be the location for an experience of the divine. But it is man in God’s image who in these spaces becomes the focus of the divine. Jesus came as God’s sacrament, and anyone and anything associated with Him and extending Him, like bread, can facilitate an encounter with God (John 6:1-15).

God’s prophet feeding the people A prophet is not only one who bears and delivers God’s Word, but also one who performs signs that manifest God’s power and presence. In our gospel reading, Jesus was being hounded by the crowd because of the signs He was performing, especially on the sick.

Human beings and sickness are inseparable; healing and wellness are always sought after. Jesus led them on to the mountain, knowing what He was going to do, to confront them with the sign that would define their relationship with Him. On the mountain, Jesus sat down

with His disciples as if waiting for the large crowd.

When the people came in view, His prompt question in anticipation was on how to feed them. Highlighting the enormity of the situation, the queried Philip retorted back in his typical incredulous manner that money earned as wages for 200 working days would not be enough even for a tiny bite for everyone. The practical Andrew must have asked around and found a boy who innocently volunteered the information that he had five barley loaves and two fish with him. Those nearby would have grinned even as

nobody else among them admitted to having anything to share. But even Andrew himself was daunted by the disparity between the puny supplies and the thousands of people to be fed.

Truly the prophet

If the prophet Elisha of old could feed 100 men with the offering of 20 barley loaves and still have leftover, Jesus fed 5,000 men and more with only five barley loaves and had 12 wicker baskets of leftover. He is truly a prophet of God and one greater than any prophet before Him. Jesus is the prophet, the one awaited, the definitive revealer of God and the ultimate manifestation of God’s power. But the people misconstrued the sign Jesus performed, as they wanted to make Him a king who would lead them to prosperity and glory. Prophets are usually not wanted as prophets who confront people with God’s Word, but as bearers of divine power that can be channeled to one’s favor.

Jesus had a different vision of His role. He would rather remain a prophet to the end, to the bitter end of a prophet. He would indeed be a king, but not according to the

The missing workers’ rights

in a way that it becomes easy for employers “to hire and fire” workers without incurring expensive legal obligations or earning the ire of militant unions.

Under globalization, the flexibilized workers in the organized or formal sector of the economy have become the over whelming majority in the sector’s work force. A “diagnostics” study by the ILO Manila Office (2017) shows that “trade union and collective bargaining outcomes have been poor.” In July 2016 there were 17,245 registered unions in the

rights is in order. As pointed out in previous articles, the universal rights to join union and bargain collectively are rights being enjoyed by the “dispatched” and “part-time” workers in Japan and other countries.

And one should not forget the rights of the most numerous in the labor force—the informal workers such as the home-based workers, vendors, far mers, fisher folk, indigenous tribal people, landless rural poor and so on. In India one of the biggest and internationally recognized unions is the SelfEmployed Women Association (Sewa), whose members are able to promote their collective welfare such as setting up their own women’s bank and negotiating with the State governments on their entitlements as citizens for certain services, such as education and housing.

Some Philippine civil society and people’s organizations are trying to emulate what Sewa has successfully done in some states of India. But from time to time, these POs and CSOs are confronted with problems about their “legal personalities” and certain national and local rules that restrict or adversely affect their livelihoods and self-help welfare initiatives. There are no formal laws recognizing the basic rights of informal sector workers to form unions or organizations and advance their collective interests in a manner similar to what Sewa and the trade unions have been doing.

This is the reason why an alliance of informal sector organizations has been pushing for a “Magna Carta for Workers in the Informal Economy” legislation. Progressive members of Congress have been filing the MCWIE bill since the 13th Congress. A reform-minded Duterte administration, seeking to reinforce its image as pro-people, should certify this bill as urgent, alongside the SOT bill for those in the formal sector.

One must also hasten to add: the 44-year-old Labor Code needs a legislative overhaul. Paging the new Speaker of the House and the new Senate President!

what comprises ill-gotten wealth must be clearly delineated.

“Does it cover only Marcos and his cronies? One very valid objection to the executive order which created the PCGG is the fact that insofar as sequestration is concerned, the order appears to apply only to ‘Marcos, his immediate family, relatives, subordinates, and close associates,’ and may not be applicable to others [including present government officials and their own close associ-

ates] who may also have acquired ill-gotten wealth.

“Ill-gotten wealth is simply stealing the people’s money from government coffers. Ill-gotten wealth is money coming out of graft or commissions given to the power holders. How does the PCGG propose to distinguish between what is legitimate acquisition of assets [even if they were concessions by the granting power] from the actual wealth of the possessor?”

The PCGG thought it knew what hidden wealth was, and where it might be found. It jumped into action with relish. It initially sequestered 218 companies with equities worth P10.7 billion in the first 100 days, plus P1.837 billion worth of jewelry, aircraft and motor vehicles. Then it started having trouble when courts insisted on due process while the inquisitive alternative press demanded transparency.

To be continued

LABOREM EXERCENS Continued from A1

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owever, in his Sona, President Duterte announced what the administration has accomplished in this area: the regularization of more than 300,000 workers as a result of the Department of Labor and Employment’s (Dole) intensified campaign against “labor-only contracting” (LOC). At the same time, the President acknowledged that giving workers the needed protection against “contractualization” is a difficult one. A law on job security is needed. And so, he is now asking Congress to pass a security of tenure (SOT) law.

Arillo . . .

continued from A6

Marcoses for violating the US Racketeer-Influenced and Corrupt Organizations (RICO) statute.

Back in the Philippines, five months had elapsed after the PCGG’s creation. However, the catchphrase “ill-gotten wealth” remained ill defined, drawing a reaction from civil libertarian Renato Constantino: “...the scope of

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

private sector. Only 1,126 of these unions have collective bargaining agreements, which covered then a total of 200,476 workers. This CBA coverage is less than half of 1 percent of the total employed (41.7 million)! Moreover, the study shows that the CBA rates have been going down from 2003 onward.

The above statistics partly explains why the trade unions are vociferously against any and all forms of contractualization, which is collectively dubbed as the endo problem. Under the existing practice of unionism and collective bargaining, employers insist that only the “regular” or permanent employees can exercise these rights. The “non-regular” or endo workers are excluded. Thus, every collective bargaining process usually starts with a definition of who should be included and excluded in the scope of the CBA. There are even prolonged legal skirmishes on who should be considered an “employee,” as interpreted or defined by the country’s labor jurisprudence. Countless cases handled by the court system recognize only the right of regular or permanent employees to join a union for collective bargaining purposes.

And yet, the Constitution is explicit on the universality of the rights to union formation and collective bargaining. Section 3, Article XIII, provides for the following: “The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

“It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage…”

Clearly, having an SOT law for those doing “regular” work in the formal sector of the economy is an extremely limited way of addressing the contractualization phenomenon. An enabling law to help the non-regulars enjoy the same

Dr. Rene E. Ofreneo

However, it is doubtful if Congress shall be able to pass an SOT law that pleases all the representatives of the three sectors of the tripartite system—trade unions, employers and government. The tripartite debates on “prohibited” LOC and the “permitted” job contracting are as old as the Labor Code, which was promulgated in 1974, or 44 years ago. The reported House consensus on SOT rules revolves around the tighter rules on what constitutes LOC. Specifically, LOC entities are third-party agencies who pretend they are the employers even if they do not possess the capital and equipment to do business and they do not have control over the work process or the means and methods as to how work shall be conducted.

The truth is that contractuali– zation is a complex phenomenon in the labor market, compounded by the reality that most businesses want cheaper labor to be able to compete in a globalized and deregulated economy. In the contractualization process, most workers recruited by employers and third-party agencies end up as temporaries, probationaries, “project employees,” “trainees” and so on. The idea, to borrow from the language of labor economists, is to “flexibilize” the hiring arrangement

people’s earthly paradigm. The sign of Jesus as the prophet is the feeding of the people, not just with the offering of barley loaves but with the offering of His own body and blood. For John the evangelist, what Jesus did on the mountain is a sign that can only be deciphered in connection with the mystery of the Eucharist, to which the rest of the chapter on the Bread of Life is dedicated and which we shall be meditating upon in the next four weeks.

Alálaong bagá, the kingship of Jesus cannot be separated from His prophetic mission. He would be king and priest precisely on the cross of a prophet. It was in His prophetic task to feed and give life to the people that He revealed the full extent of God’s redeeming love. As the primordial sacrament for us of the salvific encounter and covenant with God, Jesus is now the mountain, the desert, the temple, as well as the bread and wine that guarantee us communion with the Almighty.

The truth is that contractualization is a complex phenomenon in the labor market, compounded by the reality that most businesses want cheaper labor to be able to compete in a globalized and deregulated economy.

In the contractualization process, most workers recruited by employers and third-party agencies end up as temporaries, probationaries, “project employees,” “trainees” and so on.

2nd Front Page BusinessMirror

A8 Thursday, July 26, 2018

www.businessmirror.com.ph

Agri damage due to typhoons hits ₧1.12B

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By Jasper Emmanuel Y. Arcalas

@jearcalas

OSSES incurred by farmers and fishermen in areas affected by two tropical storms and a tropical depression have breached the P1-billion mark, according to the Department of Agriculture (DA).

In its latest report, the DA-Disaster Risk Reduction and Management Operations Center (DADRRM OpCen) said as of Wednes-

day noon, the total damage to the farm sector caused by Tropical Storm Henry, Severe Tropical Storm Inday and Tropical Depression Josie

rose to P1.12 billion.

“The increase in the overall damage and losses is attributed to reports on rice, corn, high-value crops and fisheries in all the provinces of Region 3 and Oriental Mindoro,” DA-DRRM OpCen said in its initial damage report, which is yet to be validated.

The report noted that DA regional field offices are now conducting field validation “to determine the extent of damages and losses brought by the three weather disturbances, as well as the needs of the affected farmers and fishermen.”

Most of the production losses were recorded in the rice sector,

which accounted for 83 percent of the total, according to the DA. A total of 37,927 rice farmers in at least 12 provinces lost 12,111 metric tons (MT) valued at P925.99 million.

T he storms affected about 30,274 hectares of rice fields in the provinces of Pangasinan, Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Batangas, Rizal, Laguna, Occidental Mindoro, Negros Occidental and Aklan.

“Region 3 is now the most affected region in terms of damages and losses in rice, which amount to P569.83 million [62 percent] with Tarlac as the most affected province at P362.46 million [39 percent],”

the report read. “The increase in the reported damage and losses is attributed to the reports from all the provinces of Region 3 and Oriental Mindoro,” it added.

The DA said a total of 5,137 bags of palay used for seedbeds were washed out.

The report also indicated that the fisheries sector lost P172.46 million, or 15 percent of the total damage. The typhoons affected 1,055 fishermen in the Cordillera Administrative Region, and Regions 2, 3 and 4A. Production losses in the corn sector reached 93 MT valued at P1.47 million. The three tropical storms affected 167 hectares of

DOLE sets ‘validated’ list of regularized workers amid doubts

By Samuel P. Medenilla @sam_medenilla

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HE Department of Labor and Employment (DOLE) is now coming up with a “validated ” list of regularized workers, amid a clamor from labor groups for it to release concrete proof of its campaign against contractualization.

In an ambush interview on Wednesday, Labor Undersecretary Joel B. Maglunsod said they have issued a new memo to their regional offices to submit the names of workers who have been regularized as a result of their anti-illegal

contractualization campaign.

“Our inspectors will return [to the inspected companies] to validate if the regularization orders were implemented,” Maglunsod said.

He said they will include this in the new list of their inspected companies engaged or suspected of practicing illegal contractualization, which they will submit to Malacañang by next month.

The new list, Maglunsod said, may not be released to the public since it is an “internal” request from Malacañang.

It will include their inspections of locators within economic zones, which are currently among tbe

DOLE’s priority sector for its antiillegal contractualization campaign.

“This is in line with the research of the Philippine Statistics Authority that many violations in contracting and subcontracting [regulations] are in the manufacturing sector. Some of the manufacturing firms are locators of the Peza [Philippine Economic Zone Authority],” Maglunsod said.

Presidential instructions

The labor official said Malacañang is closely monitoring the updates of their drive on contractualization.

“Last night [June 24], we got a new notice from the President for us

to submit by regions the copy of our list. So we submitted the said list,” Maglunsod said.

O n Mond ay l abor g roups slammed President Duterte for citing in his third State of the Nation Address (Sona) the regularization of over 300,000 workers during his term. Labor leaders doubted the veracity of the pronouncement until the government releases the names of the regularized workers and the establishments where they were regularized.

They also speculated that some of the concerned workers were regularized in their contracting agencies rather than their principals.

DBM sees 100% completion rate for projects

The two types differ on time horizon or period of implementation and period of payment. Under

the new kind of budgeting to be followed by the government, contracts for projects and programs

intended to be implemented for the fiscal year should be fully delivered, inspected and accepted by

the end of the fiscal year. Payment should also be done within the fiscal year and up to a three-month extended payment period after the fiscal year for goods and services accepted by December 31 of the fiscal year.

On the other hand, under obligation-based budgeting system, contracts awarded within the fiscal year can be delivered even after the end of the year and the inspection, verification and payment is done within and beyond the fiscal year.

“In this sense, we are limiting the budget and allocating the actual cash resources of the government to only those projects that can be done in the given fiscal year.

This is how it is done in all countries in the world except the Philippines and this is how it is done in the private sector,” he pointed out in a forum.

With the shift, he also expects to improve the budget utilization rate of all agencies to bring it close to 100 percent.

At present, Diokno said there are agencies with a budget utilization rate at around 60 percent to 70 percent. This, he said, was also considered as basis for the agencies’ cash-based budgets.

Under the proposed national budget, the DOTr had the largest increase of 89.3 percent in its cash-based budget for 2019 from its cash-based equivalent in 2018, bringing the budget of the DOTr to 76.1 billion from P40.2 billion.

Meanwhile, the cash-based budget for the DPWH also increased to P555.7 billion for 2019, from its cash-based equivalent from P441.8 billion. The 2018 cash-based equivalent for the DPWH included the projected current year’s accounts payable to be paid in 2019.

The Commission on Audit (COA) had reported this July that the DPWH failed to utilize 66.4 per-

Maglunsod belied these allegations, stressing that workers covered by their regularization order will soon be, or are already, employed by their principals.

As of last week, the DOLE reported it was able to regularize 321,964 workers since it started going after companies engaged in illegal contractualization in 2016.

Maglunsod, however, admitted these figures indeed include projections, since they are based on the number of workers who are actually covered by their regularization orders. “Some [of the companies] have yet to comply. That is why we will validate,” Maglunsod said.

Continued from A1 cent or P440 billion, of its P662.69 billion allocated budget for 2017, while the DOTr only utilized and disbursed P18 billion, or 25.60 percent, of its P71-billion budget for 2017.

Asked why the cash-based budgets of the DOTr and DPWH were increased despite the COA-reported budget underutilization, Diokno explained that these departments need more money to ramp up infrastructure in the country.

“We need more roads, we need more bridges. You can’t penalize them on that,” he said. “In fact, they said they lack people, I am giving them more people. They lack rightof-way money? I am giving them more right-of-way money,” he said.

Diokno also noted that they cannot decrease the budgets of these departments over the budget underutilization, as this will affect the people who are supposed to benefit from the projects. “In fact, for the next 10 years, we have to still build. We have the poorest infrastructure in this part of the world,” he added.

The 2019 cash-based budget of the Department of Health saw a decrease of 25.6 percent from its 2018 cash-based equivalent because of “low” budget utilization rate.

He also warned heads of departments and agencies to use their budget well, as the President can fire them if they can’t comply.

“Use well your budget or lose it; not lose your budget, but lose your job,” he said.

He also explained the decrease in the 2019 cash-based budget of the Department of Agriculture by more than 1 percent: it was on account of the completion of its foreign-assisted project.

The Commission on Elections also had a decrease of 36.4 percent in its budget compared to its 2018 cash-based equivalent.

Diokno said this is because the pol l body had a lready frontloaded the requirement for the next election.

corn fields in Pangasinan, Nueva Ecija and Pampanga. “The increase in values comes from the reports from the provinces of Nueva Ecija and Pampanga,” the report read.

Damage to the high-value crops sector rose to P18.66 million with a production volume loss of 594 MT. The storms damaged assorted vegetables planted in 116 hectares.

“The increase in the reported damage and losses is attributed to the reports from the province of Nueva Ecija,” the report said.

The DA-DRRM OpCen said the value of production loss in Pangasinan’s livestock sector was unchanged at P700,000. With a report

from Mauro Alfonso S. Mendoza, Intern

BOC seizes P55M of fake products in Manila raid

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HE Bureau of Customs (BOC) said it intercepted and seized P55 million worth of fake cigarettes and electronic products after raiding a warehouse in Tondo, Manila on Wednesday.

Members of the BOC-Enforcement and Security Service (ESS) were able to enter the premises after they were issued a Letter of Authority to inspect it.

“There was a tip from the brand owner, which we received through the ESS two weeks ago, that fake cigarettes, cellphone accessories and chargers, DVD replicating machines, and blank DVDs are stored inside the warehouse in Tondo, Manila,” Customs Commissioner Isidro S. Lapeña said.

Lapeña then issued a Letter of Authority on July 23 to inspect the warehouse in Tondo where the fake cigarettes and other merchandise were stored. Found inside the warehouse were approximately 120 cartons of fake cigarettes, three DVD replicating machines, around 300 boxes of blank DVDs, and assorted cell-phone chargers and accessories.

The BOC-ESS said the three DVD replicating machines are estimated to have a market value of around P45 million, while the fake cigarettes and other merchandise goods are estimated to be worth P10 million.

“The seized cigarettes were verified as fake versions of Marlboro, Jackpot, More, Belmont, Fortune, and Two Moon based on the examination conducted by the brand owner representatives,” said BOC-ESS Director Yogi Filemon L. Ruiz.

Based on the initial investigation made by the ESS, the warehouse is allegedly owned by Sonny Kho and Tito Yao. The warehouse owners were not in the premises during the raid on Wednesday except the warehouse administrator identified as Reggy Tan. The BOC said the goods will undergo seizure and forfeiture proceedings for violation of Republic Act 8293, or the Intellectual Property Code of the Philippines, and other pertinent provisions of the Customs Modernization and Tariff Act. “Our relentless efforts to combat the proliferation of fake products were meant to protect consumers, local manufacturers and the public at large,” Lapeña added.

Lapeña led the inspection warehouse at 1515 Antonio Rivera Street, Tondo, Manila on Wednesday. The operation was done in coordination with the local police, barangay officials and the brand owner representatives.

In June Finance Secretary Carlos G. Dominguez III reiterated his order to the BOC and the Bureau of Internal Revenue (BIR) to track down manufacturers of counterfeit tobacco products and their possible cohorts in the government who had a role in allowing the entry of unlicensed cigarette-making machines into the country. Rea Cu