Businessmirror june 07, 2018

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n Thursday, June 7, 2018 Vol. 13 No. 236

‘Labor reforms to swell ranks of jobless Pinoys’

By Elijah Felice E. Rosales

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BSP not keen on moving in despite weaker peso

@alyasjah

XPORTERS have warned of a slowdown in employment in the months to come, as investors are reportedly wary of the country’s business climate with the string of labor reforms being implemented by the government.

5.5 percent

See “Labor reforms,” A2

Rebalancing privatization:

Keeping public services public Rene E. Ofreneo

laborem exercens

T

he approval by the House of Representatives of House Bill 7437 prohibiting the privatization of government hospitals is a welcome development. As explained by the bill’s principal author, Angelina Tan, public health institutions “should remain public and should continue to serve the poor.” There are more than enough private hospitals to cater to the needs of the rich.

Continued on A2

PHL still one of fastest-growing economies in E. Asia–World Bank

By Cai U. Ordinario

By Bianca Cuaresma

T

@cuo_bm

@BcuaresmaBM

HE Bangko Sentral ng Pilipinas said on Wednesday that it is “very comfortable” with the local currency’s level and is not keen on making the BSP’s presence felt in the market, despite the outcry over rising import inflation due to the weaker value of the peso.

BSP Governor Nestor A. Espenilla Jr. said the recent movement of the peso—which has been generally on the uptrend for the rest of 2018— is just a “normalization” on the part of the local currency.

“Things are just normalizing.

Right now, where we are at is very comfortable and the Philippines is competitive at its current level,” Espenilla said.

Data from the Bankers Association of the Philippines showed the local currency closed the day’s trade at P52.385 to a dollar on Wednesday with a total traded volume of $859.1 million.

This is already about P2 weaker than the P50.395 to a dollar average value of the peso at the end of 2017.

The fall of the peso’s value raised concerns among various sectors in the country, the latest being manufacturers complaining about rising costs due to higher imported inflation.

In the latest survey among manufacturers for the monthly Purchasing Managers Index (PMI ), IHS Ma rk it Pr i nc ipa l See “BSP,” A8

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The unemployment rate in April, which was lower than last year’s 5.7 percent, according to the PSA The Philippine Exporters Confederation Inc. (Philexport) said unemployment may have gone down in April, as shown in the latest Labor Force Survey by the

2016 ejap journalism awards

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An employee is seen at work at a microchip production facility in Laguna. The export sector—of which semiconductors and electronics firms are key players—are worried that recent labor reforms, such as tighter rules on contractualization, will dampen investors’ plans and crimp further expansion and job creation in months ahead. NONIE REYES

‘₧10K’ budget to influence wage boards?

By Jovee Marie N. dela Cruz @joveemarie

& Samuel P. Medenilla

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@sam_medenilla

OV E R N M E N T e c o no mists on Wednesday drew flak from lawmakers and labor groups for what was billed as unrealistic assumptions on the Filipino family’s survival budget, with some groups daring them to live on such measly amounts to realize how wrong they are.

One major labor group, the Federation of Free Workers (FFW), also expressed concern that the controversial National Economic

PESO exchange rates n US 52.5330

“I’m sure this crazy computation is the same argument they will use to block any legislated wage increase or a wage order from the wage boards that carries a significant …increase.”

—FFW’s Cainglet

and Development Authority (Neda) estimates may have been trotted out to influence the regional wage boards that are now deliberating on whether or not it’s time to raise floor wages in their respective areas.

Members of the Makabayan bloc challenged the economic

managers to live on a P10,000per-month budget or roughly P25.56 each person per day, amid rising prices of basic commodities and services, which most militant sectors blamed on the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Party-list Rep. Carlos Isagani T. Zarate of Bayan Muna, Party-list Reps. Antonio L. Tinio and France L. Castro of ACT Teachers, and Party-list Rep. Arlene D. Brosas of Gabriela said P10,000 is not enough for the monthly budget of a family of five to live decently, as claimed by the Neda.

See “10K budget,” A8

he Philippines will remain as one of the fastest-growing countries in the East Asia and the Pacific region this year until 2020, the World Bank said in its latest report.

In its “June Global Economics Prospect” (GEP) report, the World Bank upgraded its economic growth forecast for the Philippines in 2020 to 6.6 percent, from January’s 6.5 percent.

The country is still projected to grow by 6.7 percent this year and next year. This forecast, however, is lower than the government’s 7-percent to 8-percent target this year until 2022.

“Growth in the Philippines and Vietnam remains robust, but capacity constraints (e.g., high capac-

ity utilization rates) limit further acceleration, especially in the Philippines,” the World Bank report read.

The Washington-based lender said the expansion of the East Asia and the Pacific region is projected to gradually ease from 6.3 percent in 2018 to 6.1 in 2019 and 6 percent in 2020.

In the East Asia and the Pacific region, Cambodia will record the highest growth this year at 6.9 percent; Myanmar and Lao PDR at 6.9 percent in 2019; and Myanmar at 7.1 percent in 2020. The other top growing countries this year are Vietnam with 6.8 percent and the Philippines and Myanmar with 6.7 percent.

In 2019, the list includes Cambodia and the Philippines with a GDP expansion of 6.7 percent and Vietnam with 6.6 percent. In 2020, Lao PDR will lead the region with 6.9 percent, followed by the Philippines and Cambodia with 6.6 percent.

Former SEC Davao head named new SEC chairman

By VG Cabuag

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@villygc

HERE’S a new chief at the Securities and Exchange Commission. Malacañang has named Emilio Benito Aquino as the new chairman for the next seven years.

Aquino, a Mindanao-based certified public accountant (CPA) based in Zamboanga, will replace Teresita Herbosa, whose term

ended in March. He will be the first male SEC chairman in about two decades. The last male chairman was Perfecto Yasay, from 1995 to 2000.

Aquino, a lawyer who graduated from San Beda College, was already appointed as Commissioner by President Duterte on December 2, 2016.

He took his oath before Finance Secretary Carlos G. Dominguez III on December 7, 2016.

See “SEC chairman,” A8

n japan 0.4785 n UK 70.3890 n HK 6.6946 n CHINA 8.2072 n singapore 39.3623 n australia 40.0039 n EU 61.5634 n SAUDI arabia 14.0080

Source: BSP (6 June 2018 )

Thursday, June 7, 2018 • Editor: Vittorio V. Vitug

A2

The Nation BusinessMirror

DILG insists all LGUs must guarantee ease of doing biz

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By Nelson S. Badilla | Correspondent

FFICIENCY must now be the norm in transacting business with all local government units (LGUs) across the country.

Thus, the Department of the Interior and Local Government (DILG) on Wednesday expressed optimism that, by this time, it will be easy for investors and businessmen, regardless of size or capitalization, to process the release of business licenses, clearances and other related permits and documents with President Duterte’s signing on the Ease of Doing Business (EODB) law.

On May 28 Duterte has signed into law Republic Act (RA) 11032 or Ease of Doing Business and Efficient Delivery of Government Services Act of 2018.

RA 11032 aims to make the process of establishing and running a business in the country be more efficient and easier compared to past decades.

It likewise amended the AntiRed Tape Act of 2007.

The new law instructs LGUs to adopt a unified form in processing

applications for business permits and renewals, the establishment of business one-stop shops, and the automation of business permits and licensing system within three years.

In a news statement, the DILG pointed out that it expects a “100-percent compliance among LGUs in streamlining their processes in the issuance of business licenses, clearances and other permits” following the signing of the EOBD law.

DILG Officer in Charge Eduardo M. Año said, “[N]ow that we have a law, local governments should fasttrack efforts to make their localities business-friendly by simplifying their business procedures.”

Año added that LGUs’ compliance on the efficient way of releasing business permits and other documents will actually benefit the LGUs stating that “[i] n the long run, they themselves will reap the economic benefits

and rewards of a conducive business environment.”

Año urged all LGUs to be more proactive in adhering to the provisions of the new law, since LGUs’ compliance rate from previous DILG initiatives on streamlining business processes can still be improved.

He also revealed that the DILG, together with the Departments of Trade and Information and Communication Technology, have issued Joint Memorandum Circular 2016-01, or the Revised Standards in Processing Business Permits and Licenses in All Cities and Municipalities, stipulating the guidelines in streaml in ing business per m its a nd licensing system.

He pointed out that “[t]he DILG has been working on streamlining business processes for quite some time [where we found out] that the percentage of compliance can still be improved.

Hopefully, with the passage of the new law, we can really push for 100-percent adherence from the LGUs.” Records provided by the DILG’s Bureau of Local Government Development, showed that only 59.37 percent or 900 LGUs are compliant with the revised standards in processing business permits and licenses.

But the DILG believed that this will change for the better in the next few months.

To eliminate corruption in the processing of business applications, government agencies, including LGUs, are also required by the law to adopt a “zero contact policy,” except during the preliminary assessment of the business application and submission of requirements as stipulated in the RA 11032.

DILG Spokesman Assistant Secretary Jonathan E. Malaya further explained that “the new law also provides that the issuance of the fire safety evaluation clearance and the fire safety inspection certificate shall, in no case, be longer that seven working days.”

Ma laya, however, clar ified that the Bureau of Fire Protection should also collocate with the LGU’s one-stop shop to assess and collect the fire safety inspection fees, as well as develop an online/ electronic mechanism for assessing and collecting payments and sharing data.

“Long queue time and processes drive investors away from our localities. With streamlined processes in business applications and renewals, we are laying a welcome mat for them to set up business in our LGUs,” Malaya said.

Cops uncover smuggled rice pilferage activity outside Mindanao military camp

By Rene Acosta

@reneacostaBM

P

olicemen seized over the weekend more than a hundred sacks of rice outside the headquarters of the Armed Forces Western Mindanao Command (Westmincom), and uncovered what could be a “syndicated” pilferage activity of confiscated smuggled rice stored in the military camp.

The confiscated staple form part of the recent seizure by the Naval Forces Western Mindanao, which is headquartered at the Westmincom.

According to a report by the Zamboanga City police, intelligence

operatives led by Chief Insp. Ramon Bautista Jr. uncovered the supposed modus operandi last Saturday while they were conducting a rov ing patrol near the gate of the Westmincom at around 9:50 p.m.

The report said the policemen noticed a white truck bearing licensed plate ACS 6904 and saw that it was loaded with sacks of rice after its tail door was accidentally half opened.

“While on the process of following said truck, half of its tail door was partially opened and visibly seen its cargo as alleged to be smuggled rice. Said truck was flagged down and stopped near Budgetwise, Calarian for

verification,” the report said.

The policemen flagged down the truck and questioned its driver, Michael Napolereyes, 29, who told the intelligence operatives that the cargo was indeed long grain white rice carrying the brand name “Chef Brand.”

Napolereyes claimed that the rice came from Westmincom and owned by a certain “Custom.”

“Further, verification made as to its legality, said driver couldn’t produce any legal papers sustaining its legality,” the reports said.

“Subject vehicle and its cargo are under custody of this office prior turnover to the Bureau of Customs for proper disposition,” it added.

Police said that the truck is owned and operated by Salam Jibil Addan, a resident of Talon Talon, Zamboanga City.

A total of 125 sacks of rice, each containing 50 kilograms, were recovered from the Canter Fusu truck.

The rice was supposedly part of those seized by the Naval Forces Western Mindanao in its antismuggling operations during the past months.

In one of its operations in April, the Naval Force Western Mindanao seized more than 27,000 sacks of smuggled rice valued at P68-million seized from a Mongolian-flagged carrier, off Olutanga, Zamboanga Sibugay.

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Boracay stakeholders demand clarity in agrarian reform, rehab plans of govt

Tourism Secretary Bernadette Fatima Romulo Puyat met with some 30 stakeholders from Boracay Island for two hours on June 4 at the NAC Tower in Taguig to listen to their concerns about the world-famous destination’s closure. She is flanked by tourism consultant Arturo P. Boncato Jr. (left) and DOT Regional Director for Western Visayas Helen Catalbas. Contributed photo

By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

O

WNERS, managers and sales executives of some 30 resorts on Boracay Island asked for clarity regarding President Duterte’s pronouncements about putting the No. 1 tourist destination in the country under agrarian reform.

The Boracay stakeholders also spoke up on the various issues confounding their establishments, such as the lack of a clear rehabilitation program by the government, during a two-hour meeting with Tourism Secretary Bernadette Fatima Romulo Puyat and other key officials of the Department of Tourism (DOT) on Monday, at the NAC Tower in Bonifacio Global City, Taguig.

In an interview with the BusinessMirror, Mia Mancio, director of sales of Le Soleil Boracay, said the stakeholders asked Romulo Puyat, “what is really the rehabilitation for, if the island will just be put under agrarian reform? Why are the roads being widened, and the drainages being built?

Is this for the farmers?”

Duterte ordered the closure of the Philippines’s top tourism draw for six months starting April 26, saying it was meant to give way to the government’s rehabilitation effort—to address environmental pollution, drainage issues, traffic on the main road and easement violations.

Of late, however, the President has been saying that he would put the island under agrarian reform and distribute land to the Ati natives and other poor residents.

Mancio added, the stakeholders also asked for a concrete timetable on the reopening of the island. “What is the plan for Boracay? How do we verify that the projects are being implemented and ongoing? For instance, many of the resorts there have self-demolished their establishments to give way for the road-widening project. But no [government] work is being done.”

The Department of Environment and Natural Resources (DENR), which chairs the interagency task force on Boracay, is widening the main road by 12 meters as part of the government

easement regulations, and relieve the island of traffic jams.

Romulo Puyat, in a separate interview, said, “I felt I needed to hear their side because they are our stakeholders.” She added she would be attending the next Task Force Boracay meeting to raise the issues of the stakeholders. “Their concerns are valid,” she stressed.

The tourism secretary suggested the stakeholders form an “interim task force,” composed of representatives from each industry on Boracay, who can bring their concerns directly to the tourism agency.

This was the first time the DOT deliberately held a widespread consultation with Boracay stakeholders. Before the island was closed, DOT officials met only with pockets of stakeholders, and usually for just short periods of time. A large meeting with stakeholders took place on April 17, only a week before the actual closure of Boracay.

During said meeting, a number of government agencies laid out their work plans during the closure, although tourism stakeholders came away from the event confused and unconvinced with the rehab program.

Those who attended the meeting with Romulo Puyat included owners or representatives of five-star resorts on the island like Discovery Shores Boracay, Shangri-La’s Boracay Resort and Spa, the Henann Group, along with small- and medium-scale hotels and resorts.

Some resort representatives also raised the point that if Boracay is reopened, and its management just goes back to the local government units (LGUs), “nothing will change; [the island] will just go back to the way it was.” One source stressed, “We need people in the LGU who will be passionate about the island, and not someone who can be bought.”

The Department of the Interior and Local Government is currently preparing charges against LGU officials said to be responsible for the mismanagement of Boracay, resulting in overbuilding, establishments being built without the necessary government permits, rampant easement violations and environmental stresses.

Rebalancing privatization: Keeping public services public Continued from A1

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f government hospitals are privatized, the poor’s access to health service shall be subject to the profit requirements of the big private hospital operators. Such a development shall also erode the capacity of the national government to implement the Universal Health Care program, whose success depends on the existence nationwide of health facilities providing accessible and affordable health service to the poor.

Lito Atienza, one of the bill’s sponsors, also warned that, unchecked, private interests buying government hospitals are likely to transform the lands where these government hospitals stand into commercial and real-estate projects.

As it is, most of the idle prime land in the urban areas have already been acquired by the country’s big land developers, usually for “land banking” purposes.

In the opening of classes this June, it was revealed that a major headache of the Department of Education and the local government

units is where to build the new school buildings because there are no available lands in the city and town centers. In fact, cities and urban areas are growing without any spaces not only for schools and hospitals but also for trees and parks.

But what is the point of this article?

The policy proposal to stop the privatization of government hospitals should be widened into a critical assessment of privatization as a general policy tool in the development of various infrastructure projects and in the delivery of government services, especially basic public services.

Such an inquiry should be informed by the rethinking on privatization sweeping Europe and North America. This rethinking is reflected in the “re-municipalization” and “renationalization” of privatized energy, electricity, water, transport, housing, telecommunications, waste treatment, health, education and other basic services that have taken place in the United Kingdom, hailed as the birthplace of privatization (courtesy of Margaret Thatcher in

the 1980s), Germany, France and other European countries. Per a recent study by the Netherlands-based TNI, there are at least 835 remunicipalization and 49 renationalization cases.

Most of these re-municipalization and renationalization programs happened due to the combined or united efforts of civil society organizations (of various political persuasions, from left to right) and local government authorities, who are exasperated over the rising cost of services under the profit framework of the private companies and the failure of these companies to meet other expected public gains from privatization, such as improved productivity, environmental care, reduced public debt, efficient service and community wellness. Goods that were once considered public goods, such as education and water, have been commodified and commercialized. As the TNI reported, the first and foremost objective of any investors taking over control of public services is to make a profit for their shareholders.

One outcome from the wave of

re-municipalization and renationalization hitting Europe and even North America is the decline of public-private partnerships as a government instrument in generating new investments and in the delivery of basic public services.

Ironically, this is not the case in the Philippines, where PPP is hailed as the chief mechanism in making the “Build, Build, Build” program of the Duterte Administration work.

PPP is supposed to supplement the efforts of the government to raise funds for needed infrastructures and smoothen the development of an infra project, from design to operation. And yet, there are cases where PPP is being used to acquire a government project even if this project is already fully developed and is providing the citizens quality service at a reasonable price. A good example of this is the case of San Jose del Monte Water District (SJDMWD).

Per study by the Freedom from Debt Coalition, SJDMWD is one of the most successful water districts in the country, developed through the decades (from the 1970s) by the LGU

of San Jose. By 2016 its total assets were estimated to be P1.6 billion. It employs 276 employees, provides over 102 connects, and services all the 59 barangays of the city 24/7. It is the fourth-largest in the country and is one of the most profitable, with no reported debts.

And yet, sometime in 2017, concerned residents of San Jose were surprised when they learned that Prime Water Infrastructure Corp.

(Prime Water), reported to be the country’s third-biggest water-distribution firm (after Manila Water and Maynilad), are negotiating a joint-venture agreement to manage the water system of San Jose despite the proven technical and financial capacity of SJDMWD. All in the name of PPP? Engineer Even Calajate of the Alliance for Consumers Protection wondered why a water district that is doing well is being “privatized.”

One purpose of PPP is for qualified corporations to help the gaps in financing and technical capacity of a local service provider. But this is abundantly not the case of San Jose Water District.

Calajate is also aghast why the LGU of San Jose and Prime Water have not responded to the repeated pleas of the concerned citizens of San Jose for consultation and dialogue. They rightfully fear that, once “privatized,” the water district shall see a succession of water rate increases, and the quality of water service might even dip.

Somehow the name of the Villar family is being dragged into this “privatization” project because Prime Water is linked to the Villars. Sen. Cynthia A. Villar, who has been championing the cause of SMEs and small farmers, should try to look into this. The Villars do not need San Jose Water to further their highly diversified business conglomerate. Better, as policy-makers, they should help the country review its privatization program and recommend what is the right policy balance, e.g., when is privatization needed, what are the limits to privatization, what is the most appropriate regulatory framework on privatization and when should public services remain in public hands.

Economy BusinessMirror

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NHA urged to act on illegal sale, rent of govt housing units

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he chairman of the House Committee on Housing and Urban Development is urging the National Housing Authority (NHA) to nullify the transfer of rights for housing units unlawfully sold by beneficiaries of the government’s socialized housing programs.

In House Resolution 1906, Rep. Alfredo Benitez of the Third District of Negros Occidental said there are many cases where beneficiaries of the housing programs of the NHA had either sold or rented out the housing units and/or lots awarded to them.

“The government should put an end to [the] housing [sector’s] boom and bust situation blamed mostly to so-called professional urban poor community settlers,” he said.

“The NHA should conduct a thorough investigation to identify the housing units that have been disposed [of] by the original beneficiaries through sale or lease; and declare as null and void the transactions with the original beneficiaries as

provided by law,” Benitez said.

He added this practice has hindered the success of the government’s housing program.

According to Benitez, the NHA should develop mechanisms to transfer the rights for housing units, whose owners have been proven to dispose of their awarded house and/or lots through sale or lease, to other qualified beneficiaries.

He said these mechanisms should prioritize the actual occupant of the housing units disposed of by the original awardees as the new beneficiaries who will get new contracts with the NHA. Under Republic Act 7279 or the Urban Development and Housing Act, socialized housing units, including its improvement, cannot be “sold, alienated, conveyed, encumbered or leased by any beneficiaries.”

Benitez cited Section 14 of the law that provides that “the unlawful sale, transfer or disposition of the lot awarded shall be null and void and the beneficiary will lose his/her right to the land.” Jovee Marie N. dela Cruz

PHL aerospace industry aims for $2.5-B revenue by 2022

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By Elijah Felice E. Rosales

Terminal system

PARC seeks to widen powers to deal with ‘problematic’ agri venture deals

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he Executive Committee (ExCom) of the Presidential Agrarian Reform Council (PARC) is urging President Duterte to grant the body more powers over agri-business venture agreement (AVA) cases, an official of the Department of Agrarian Reform (DAR) said.

Strengthening the power of the PARC and the PARC ExCom could be carried out through an administrative order currently being crafted by the agency’s legal experts, according to DAR Undersecretary for Legal Affairs Luis Meinrado C. Pangulayan, also the concurrent head of the PARC’s ExCom Secretariat.

PARC is the highest policy- and decision-making body for agrarian reform matters and disputes.

Under the law, the President presides over the body as chairman, with the agrarian reform secretary as vice chairman.

PARC members include secretaries of various implementing agencies of the Comprehensive Agrarian Reform Program, including the Office of the Executive Secretary, Departments of Agriculture, Environment and Natural Resources, Budget, Local Government, Public Works, Trade, Finance and Labor, Land Bank of the Philippines, National Irrigation Administration and Land Registration Authority. The body also has six sectoral representatives of affected landowner’s

six representatives of agrarian reform beneficiaries.

In an interview, Pangulayan told the BusinessMirror that PARC is unable to resolve “problematic” AVA cases because of PARCs inherent limitations, hence, the need for more power, through DAR, with President Duterte’s imprimatur.

“We are currently crafting an administrative order to ensure that the rights and interests of agrarian reform beneficiaries in AVAs are aptly protected based on lessons from the past. We are coming up with the administrative order to make the correction,” he said.

At the same time, Pangulayan said there is a pending bill in Congress, and said that the DAR had submitted its comments to the House committee.

“We have also advised House committee about our administrative order on AVA,” he said.

Aside from House Bill 5085 filed in the House of Representatives, a similar law on AVAs, Senate Bill 1351 filed by Sen. Risa Hontiveros-Baraquel last year is under deliberation at the committee level.

According to Pangulayan, the PARC ExCom, during its meeting on February 22, 2018, has resolved to recommend to the PARC that it be granted the powers to act on all matters requiring policy formulation or case resolution pending before PARC. Jonathan L. Mayuga

Boracay dive shop owner protests DENR ‘pollutant’ tag

By Jonathan L. Mayuga

A

@jonlmayuga

dive shop operating on Boracay Island on Wednesday criticized the Department of Environment and Natural Resources (DENR) for including the firm on the list of establishments that allegedly violated environmental laws.

In a letter to the BusinessMirror, Ethel Tornberg, general manager of WaterColors Boracay Diving Adventures, said while the firm indeed has a faucet for sand washing and rainwater collection and drain pipe from their establishment, she said such pipe is in no way in violation of the Clean Water Act. The water flowing from the pipe is not contaminated or containing human waste, Tornberg said.

Tornberg was reacting to a report in the BusinessMirror that saw print on May 30 based on a DENR statement that named establishments or owners of uncovered pipes near the beach on Boracay that discharge untreated wastewater in violation of Republic act 9275, or the Clean Water Act of 2004.

The DENR said owners of pipes will face charges

for violation of the law.

Tornberg explained that their rainwater drain pipe was installed to to prevent flooding and associated erosion of the beach path during the rainy season and to recycle water to the vegetation area just in front of the firm’s dive center on the White Beach.

In fact, she said, the drain pipe helps bind the sand to prevent further erosion. “[That] other than rainwater and clean water from a faucet, there is no other outflow of any type of water,” she said.

Tornberg said the establishment is also connected to the Boracay Island Water Co. for both water supply and sewerage for more than 10 years.

“We further clarify that we are a dive center only. We do not rent rooms to tourists nor do we run a restaurant or bar, so we do not produce waste and human waste that such establishments produce,” Tornberg added.

She said her company fully supports the DENR’s efforts to improve Boracay, but expressed dismay and was indignant over the firm’s “tainted reputation” after being bunched with other establishments accused of dumping human waste to the beach.

@alyasjah

he Philippine aerospace industry is optimistic it can hit its target export revenue of $2.5 billion by 2022, as it gears up to become a respectable player in the Asia-Pacific region by banking on a resounding interest from investors to expand operations in the country.

Trade Undersecretary Nora K. Terrado said local aerospace manufacturers are ready to supply the growing global demand for aircraft parts and mechanisms. This, after domestic producers participated in a two-day summit in Clark, Pampanga, where they had the opportunity to reach to international clients through business-to-business meetings.

“Philippine aerospace and aviation companies are ready to absorb the robust global demand for aircraft operations and aerospace parts manufacturing. As the exhibition was a great opportunity for the local companies to meet, know and know each other’s capabilities with their global

A commercial airliner flies over the construction site of the Southwest Integrated Terminal System along Roxas Boulevard in Parañaque City. The terminal system is one of the ongoing projects of the Department of Transportation. ALYSA SALEN

Editor: Vittorio V. Vitug • Thursday, June 7, 2018 A3

counterparts and discuss where they can converge and be partners, we expect these positive developments into sealed business deals and, subsequently, translate to more export earnings for the country,” Terrado said.

According to the Board of Investments, the summit is able to gather 64 foreign companies, 51 local firms, 13 embassies and chambers, six schools, four domestic industry associations and three foreign industry associations. The participants range from aerospace and aviation industry suppliers, subcontractors, exhibitors with selling capabilities or services in sales, marketing, business development and technical promotion, as well as

buyers, contractors, decision-makers seeking commodities or capabilities for the supply chain, procurement purchasing, engineering, fabrication and research.

Should local aircraft parts makers grow further, this will lead to more employment for Filipinos and revenue for the government, according to Terrado.

“The growth of the aerospace industry will mean more export earnings for the country and more quality jobs for Filipinos,” she said.

As of present, local aerospace firms are able to manufacture parts for major firms, such as France-based Airbus and United States-based Boeing. The sector’s exports continue to expand by the minute, and had shown generally positive outlook over the past few years.

The industry posted a compounded annual growth rate of 4.2 percent from 2012 to 2016. In 2016 Europe and the Americas are the country’s biggest export destinations for aircraft parts with shares of 45.8 percent and 40.8 percent, respectively, while the Asia Pacific accounted for 12.8 percent.

Local aircraft parts makers are currently capable of exporting original equipment manufacturing parts.

This includes flight control actuation systems, interiors, galleys and equipment, panels and lavatories for global commercial aerospace firms.

A4

TheBroa

Business

Thursday, June 7, 2018

Flaw in law threatens to sl T

By Jasper Emmanuel Y. Arcalas

HERE’s a borer pestering the seed industry—and it’s not even an insect. This pest, which the government and private sector are trying to exterminate, is a flaw in a legislation that has been lingering for more than two decades now.

Seed-industry stakeholders have declared it’s high time to amend the 26-year-old Seed Industry Development Act of 1992 (Sida) to cope with the needs of the sector.

Cause

THE move to amend the Sida is a result of private seed companies’ woes in dealing with the proliferation of so-called counterfeit seeds, especially fake genetically modified (GM) seeds, in the domestic market today.

Industry stakeholders, such as Monsanto Philippines Inc. (Monsanto), estimate that the volume of fake GM corn seeds being sold in the market has been continuously increasing over the past four years with total hectarage planted with such product expanding to about 100,000 hectares to 120,000 hectares in 2017.

This land area is already around 12.32 percent to 14.78 percent of the estimated total 812,000 hectares planted with GM corn in the country. Industry stakeholders estimate that about 80 percent to 85 percent of the country’s yellow corn output is genetically modified.

The hectarage planted with counterfeit seeds used to be only about 1 percent of the total GM corn area in 2012, according to Monsanto.

These counterfeit GM seeds were first discovered by the private sector four years ago, Monsanto’s Gabriel O. Romero said.

Romero, who has a PhD in Genetics from University of California, Davis, explained they received reports from their regional sales distributors there are so called “ukay-ukay” seeds being sold in the domestic market.

These seeds, he added, were genetically modified and contained the Bacillus thuringiensis (Bt) corn traits registered with a government-authorized and approved multinational firm.

“We were really alerted by our sales people who have internal data on other companies,” Romero, Monsanto’s Regulatory Policy and Scientific Affairs lead, told the BusinessMirror. “More so, there are farmers who report to our field personnel about these products.”

“It’s somehow an indirect estimation but, if taken together, this is the estimate that we are seeing [on the scope of counterfeit seeds],” he added.

Content

THE ukay-ukay seeds were being sold in plain sacks or bags and were marketed as conventional seeds, according to Romero.

To verify field reports that the ukay-ukay seeds contained Bt traits, Monsanto and the Bureau of Plant Industry (BPI) launched an internal investigation in 2014.

The investigation led to a series of laboratory tests to determine whether the ukay-ukay seeds are GM. It turned out to be true.

“In February 2014, the seeds industry requested the BPI that we conduct an internal survey and testing to confirm if these ukayukay seeds really contain the traits registered under the companies,” Ma. Lorelie Agbagala, chairman of BPI Biotech Technical Advisory Group, told the BusinessMirror.

“We did some sampling test-

ing and we found out that the result [was] positive and containing traits belonging to Monsanto,” Agbagala added.

Romero said the distributors of the ukay-ukay seeds were neither authorized by Monsanto nor approved by the BPI.

Cost

ALONG with the expansion of area planted with fake Bt corn seeds was the increasing number of companies selling these illegitimate products.

“In 2012, we observed in the field at that time that there is only one company selling counterfeit Bt corn seeds and it started to increase by 2014,” he said.

“It started in remote areas of Region 2, which is a top-growing corn province,” he added. “Right now, there are at least seven companies and counting that are selling counterfeit seeds.”

And these companies, Romero explained, are registered seed producers and dominating the conventional seed market. However, they are only small players when it comes to Bt seeds.

What encouraged the proliferation of the counterfeit seeds is its enticing cost, according to Romero.

“Usually the price of counterfeit seeds is half than the branded seeds,” he said. “That is why it is very attractive to small farmers.”

Romero estimated that a 10-kilogram bag of fake Bt corn seeds, which could cover half an hectare, costs around P2,000 to P2,500, compared to the P4,000 to P5,000 worth of branded and authorized ones.

Indeed, some farmers opt to plant the counterfeit Bt corn seeds because of their cheaper value instead of the branded ones, according to the Philippine Maize Federation Inc. (PhilMaize).

“We can only see one reason for it, it is the cost. Because the ones they are saying to be counterfeit are cheap [compared to branded ones],” PhilMaize President Roger V. Navarro told the BusinessMirror.

“That’s the reality. Cost is a big factor for farmers. And that is why they are buying these so called fake seeds,” Navarro added.

Consequence

WHILE corn farmers may be able to cut their expenses for seeds by half, what they do not know is that this thriftiness may cost them more than the price tag.

“The risk is that farmers do not have the guarantee in terms of yield because they [no longer know] what specific type of seeds [they are] using or breeding,” Navarro said. “Whether it is bred by the farmers or sold by anybody, there would always be that risk that it would not grow properly.”

Romero explained that utilization of counterfeit seeds costs farmers the same amount of input but results in lower yield.

Based on their estimate the yield of counterfeit seeds is about 30 percent to 50 percent lower than the registered kernels authorized by the government, according to Romero.

“Definitely our self-sufficiency will decline if the technology behind Bt corn would decline [due to counterfeit seeds],” he said.

“Because, eventually, the tech-

CORNFIELD in Bukidnon, one of the country’s major corn producers. NONIE REYES

nology of Bt corn may just become conventional. That means the chemical control of the technology would not be that effective and farmers would have to use more pesticides again,” Romero added.

“They [corn crop] will now be susceptible to pests and would eventually result in lower yield. And if that happens, we may not even be able to meet our local demand for corn and much less, the chance of exporting it will not happen.”

The Monsanto official explained that the counterfeit Bt corn seeds sold in the market do not come with a “refuge” system.

A refuge system seeks to maintain the efficacy of the technology behind Bt corn seeds by mixing conventional seeds in every bag of the product.

These conventional seeds would keep pests unresistant to Bt corn as they would serve as food for insects such as corn borer.

Without the refuge, Romero argued, pests may develop sooner

or later a resistance to Bt corn and would eventually eat them, as well.

“The early failure of the technology would result in faster development of resistance by pests to Bt corn,” he said. “If that happens, then we are going back to conventional seeds. Then farmers would have to do a lot of chemical spraying again. It’s like going back to zero.”

If this problem is left unchecked, then the number of farmers using these adulterated Bt corn seeds would continue to rise and may cause the demise of the technology within three to four years, Romero warned.

“The number will continue to increase as long [as these illegal companies] see that the government is looking the other way,” he said.

“If the government will not strengthen its regulation, then these companies will just be encouraged to continue to produce more.”

Constraint

ROMERO argues that there’s no strong regulation at the moment, that is why small players are encouraged to engage in this illegal practice.

Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano is quick to point out that the issue of counterfeit seeds is not within the jurisdiction of the Department of Agriculture (DA).

“They want us to issue a ceaseand-desist order [on these counterfeit seeds]. But we do not have the power to issue such order,” Serrano said in an interview.

“We do not have a law-enforcement power,” Serrano added. “We only say that this product is safe, this product is registered as a regulated product and is part of the approved list.”

However, unlike the Department of Trade and Industry, we cannot go after these companies producing counterfeit seeds, he explained. “Motu proprio, that is not

within our scope.”

Serrano pointed out that once seeds are sold in the market, everyone could already breed them on their own. “In the Philippines you cannot patent living organisms.”

Under the Sida, the government, particularly the DA, could only apprehend distributors who sell “unlawful seed lots.”

The Sida defines unlawful seed lots as those displayed for sale and infected with pests and/or diseases and those that are sold with false documents and certifications.

The Sida does not have any provision covering other types of seeds, including hybrid and those developed by biotechnology.

Compliant

AGBAGALA said the least that the BPI can do is to issue a list of approved GM corn seeds for propagation or commercialization.

“There is no law [that] we could use as a basis to take action against these companies,” she said. “The

aderLook slow seeds sector’s success

sMirror

least we can do and what we did actually during the time of Assistant Secretary Paz J. Benavidez II and Director [Vivencio R.] Mamaril was to issue an approved list of Bt corn products for propagation or commercialization.”

The list, Agbagala said, was meant to inform buyers and farmers of the registered and authorized Bt corn seeds by the BPI. “It would make them think twice if they want to buy those seeds offered by other companies.”

Last March, BPI OIC-Director George Y. Culaste issued a memorandum containing the updated list of GM-corn events approved for propagation by the agency.

This is to ensure that all parties concerned strictly comply with proper product stewardship of GM corn and other relevant policies, Culaste said in the memorandum dated March 16.

“The BPI shall conduct regular monitoring and any noncompliance with existing rules and regu-

www.businessmirror.com.ph | Thursday, June 7, 2018

lations will be dealt with accordingly,” Culaste added.

Under the list, the companies authorized to sell Bt corn are: Syngenta, Advanta, Monsanto, Pioneer, Bioseed and Asian Hybrid.

Court

WHAT legitimate GM seed companies could do, Serrano says, is to seek legal opinion, particularly the possibility of amending certain laws overseeing the industry.

He advises these companies to take their complaints to the court as indicated by law.

“We told them that they file a case in the court against these people. But remember under our laws, farmers can retain seeds,” Serrano said. “Nothing prevents the farmers from performing breeding work.”

Navarro echoed Serrano’s statement, adding that no one is stopping farmers from breeding the seeds on their own. However, marketing or selling the seeds they breed is a different matter, Navarro argued.

“The challenge really lies in the government, particularly for the BPI. Because a farmer can make that in the field and there is no problem about it,” he said.

“But if they are going to sell it, that is a different issue already.

Selling it would be already illegal.

While they can do it, breed it and plant it on their own, they cannot sell it as they must undergo the process of BPI,” he added.

Asked whether his group promotes a particular brand of Bt corn seeds, Navarro said the agency can only make suggestions.

“We only make suggestions based on the adaptability of seeds in their areas, because not all seeds can grow in all types of area,” he said. “We can only make suggestions among the members of our group, but we cannot impose specific brands on them.”

Under the Plant Variety Protection (PVP) Act of 2002, the right of farmers to “save, use, exchange, share or sell their farm produce” of

a certain variety protected by seed companies is enshrined.

This means that small farmers could undertake breeding work of seed varieties given that “the purpose of reproduction” is for sale “under a commercial scale.”

The PVP law allows companies or entities, which own certain varieties, to go after people who are reproducing their protected seeds illegally by filing cases in court.

Call

ASKED if Monsanto will file a complaint before the court against seed companies counterfeiting their products, Romero said, “I think it is part of the right of the technology owner to do that.”

“But the stand of Monsanto is to license. Monsanto is not selfish with its technology and Monsanto is open to parties that will be compliant [with government rules],” Romero added. “We would rather share the technology with the companies as it would be a

win-win partnership.”

However, seed industry stakeholders are calling for the amendment of the Sida in order to address the challenges they currently face.

“There is a gap in the current regulations or policies that oversee the seed industry. The Seed Law does not specify what comprises illegal seed practices,” Philippine Seed Industry Association (PSIA) President Mary Ann Sayoc told the BusinessMirror. “It states something about unlawful seed lots, which only refer to infected seeds.”

Sayoc disclosed that a technical working group (TWG) has been created, with representatives from BPI and the seed industry, to review the Sida.

The outcome of the TWG would be the proposed amendments “that will give a stronger legal protection for seed companies and farmers affected by illegal seed practices.”

“The [PSIA] does not tolerate any form of illegal seed practice, including selling of counterfeit seeds. Seed is the most important input in crop production,” she said.

“Selling counterfeit seeds deprives farmers of their livelihoods and lowers their productivity.

Those unscrupulous persons resorting to illegal seed practices are misleading and exploiting farmers. They place farmers’ livelihoods and families at risk and decrease the overall capacity of sustainable food/crop production,” she added.

One of the proposed amendments of the PSIA to the Sida is to include “all types of seeds,” including open-pollinated, hybrids and seeds developed through biotechnology.

“The Seed Act should be harmonized with the PVP law,” said Sayoc, who is also the public-affairs lead of East-West Seed.

Romero supports Sayoc’s statement, adding that “the industry has matured already and we already have a wide range of seeds that should be covered by law.”

Edilberto M. De Luna, executive director of CropLife Philippines, said his organization is throwing its support behind the amendment of Sida, particularly strengthening the powers of the BPI to curtail the illegal practices in the seed industry.

“The problem we are seeing is that the existing policies, regulations and laws are not clear with their scope on the industry. We believe that there should be a clear regulation that would address the proliferation of counterfeit seeds,” De Luna, a former agriculture assistant secretary, told the BusinessMirror.

“We are supporting the amendment to the current Seed Act and proposing that there should be explicit provisions in the law dealing with seed counterfeiting and mislabeling for us to address the present policy gap,” De Luna added.

De Luna revealed more bad news: they learned that it’s not only GM corn seeds that are being counterfeited in the market today; hybrid vegetable seeds are now also the target of fakers. “So this is the magnitude of our problem.”

Congress

AT present, two bills are pending in Congress that seek to improve or amend the present Seed Act: one in the House of Representatives and another in the Senate.

Deputy House Speaker Rep. Sharon S. Garin of AAMBIS-Owa Partylist filed House Bill 3535, which aims to strengthen the lawenforcement powers of the government, particularly the BPI, in seizing illegal seeds in the market.

“Although the law is an essential measure to the development of the seed industry, it is opportune to revisit the 22-year-old law in order to adapt to the needs and realities of the bureau and the agricultural industry,” Garin said in the explanatory note of the bill.

“This bill aims to propose

A5

amendments to a two-decade-old law to further bring high-quality seeds and planting materials to the farmers,” he added.

The bill has two objectives: to expand the police powers of the BPI in apprehending illegally labeled seeds and to impose higher penalty on violators of the law.

“RA 7308 limits the power of the executive director of the BPI to confiscate the seeds which are illegally labeled, identified or imported and apprehend the owners or sellers,” she said.

“RA 7308 mandates a fine of not more than P10,000, which is notably very low due to inflation,” she added. “The current penalty no longer discourages the commission of the offense, and in fact, enhances the violation of the law because of the very small fine imposed.”

Garin’s bill seeks to add provisions to the Sida which would give a concrete definition of false documents and increase the penalty to P50,000, among others.

Meanwhile, Sen. Cynthia A. Villar filed Senate Bill 322, which seeks to set up a “continuing national program for hybrid and other quality seeds production.”

Villar’s bill doesn’t seek to amend the present Sida but aims to complement it.

“Despite the passage of Republic Act 7308, otherwise known as the ‘Seeds Industry Development Act of 1992,’ there is still a need to promote comprehensive quality seed production to farmers and farmer organizations by developing and propagating quality seeds for them,” Villar, who chairs the Senate Committee on Agriculture and Food, wrote in the explanatory note of the bill.

“The establishment of a seed production program will greatly enhance farm productivity by providing farmers with quality, hybrid and affordable seeds, as well as the needed technical and other support services. This should include production of quality corn seeds and high-value crops, as well as the needed technical and other support services,” Villar added.

Crafting

AGBAGALA admits that it is also time to amend the Sida.

“The BPI is supporting the amendment of the law to protect the technology,” she said. “It is high time to make amendments. Seeds are evolving and there are now a lot of varieties, which are not included in the present Seed Act.” Sayoc said the initiative to amend the Sida came from Villar herself.

Sayoc also said the TWG has met thrice already and is set to meet for the fourth time next week.

She added that comments and proposed amendments were solicited from the other organizations.

Aside from the BPI, PSIA and Crop Life, these include the Philippine Rice Research Institute, Southeast Asia Regional Initiatives for Community Empowerment, the Food and Agriculture Organization of the United Nations and the University of the Philippines-Los Baños.

Sayoc added the proposed amendments will be presented to the National Seed Industry Council in October and the final draft will be submitted to Congress/Senate in December this year.

De Luna said the seed industry will actively lobby with lawmakers to get their support on the impending amendment of the Seed Act. “Of course, we will support [the amendment of Sida] and even advocate for enforcement powers [of BPI],” Romero said. “We know the limitations of the present regulation. That’s why we will support [actions] to strengthen their regulatory powers.”

Until then, the farmers must continue to live with the perils— to their bottom lines and the consuming public’s welfare—posed by such massive counterfeiting.

A6 Thursday, June 7, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Dealing with rogue cops

B

efore he retired from the service, former Philippine National Police chief Director General Ronald M. “Bato” dela Rosa admitted that despite the efforts of the Duterte administration to rid the PNP of rogue policemen, at least 2 percent or 3,500 of police personnel were “scalawags.”

He said these rogue cops were still involved in illegal activities, tarnishing the image of the PNP. The relief of the entire 1,000-member Caloocan police force last year following the killings of two teenagers and a warrantless raid and robbery by the police that was caught on video confirmed the presence of scalawags among the 175,000-strong PNP and highlighted the need for police reform.

The Philippines has one police officer for every 600 people, not an ideal situation compared to neighboring countries in the region. Exacerbating the situation is the fact that the police force is so underfunded to provide prompt and efficient service. For example, some officers say they have to buy their own bullets.

The Duterte administration, however, has been taking care of the PNP, and the President’s campaign promise of doubling policemen’s salaries has been fulfilled. The President was explicit: He said he would defend those who were performing their jobs but will not think twice about firing the corrupt ones. “Those involved in abuses, murder-forhire, those ‘ninja jobs,’ you do not only lose funds, you lose your life,” Duterte added.

To deal with the rogue cops, the President created the PNP-Counter Intelligence Task Force. In just 16 months since its founding, the PNPCITF has filed cases against 194 police officers, 74 of whom were arrested in various anti-police scalawag operations.

In change of command ceremonies on Tuesday, outgoing PNP-CITF commander Senior Supt. Jose Chiquito Malayo said the highest ranking official arrested was a chief inspector. “It’s not easy to head this unit.

The mandate and functions are not easy since we are running after PNP personnel who are trained like how we are trained, that are equipped how we are equipped. Thinking even better than the criminals,” Malayo said, adding “it was emotionally difficult to arrest fellow police officers.”

The newly installed PNP-CITF chief, however, warned that his operatives would not hesitate to shoot fellow police officers if they resist arrest during operations against scalawags. CITF Commander Senior Supt. Romeo Caramat Jr. gave a stern warning to rogue cops to stop their illegal activities or face humiliation once they are caught. “I’d advise them to resign now from the service to save themselves from further humiliation once they are caught by the members of PNP-CITF,” he said.

Caramat said it would not be easy to corner the PNP’s own personnel, since they are also trained in armed combat and are familiar with police strategies. He admitted this will be a big challenge, and it will be especially difficult to arrest scalawags who are in top positions. But the PNP-CITF will do its job in accordance with the evidence on hand, although Caramat has to accept that for those in top positions, it will take time and effort to gather evidence against them. He said the PNP-CITF will continue its efforts to clean the police force of scalawags, which is the best way to ensure that the PNP only delivers prompt and quality service to communities.

Since 2005

BusinessMirror A broader look at today’s business

Philippines’s money flow John Mangun

OUTSIDE THE BOX

T

here is always one key to the deal: money flow. Every businessman since the guy that sold the serpent the apple in the Garden of Eden knows this. The only people that do not know this are fools and some economists.

You cannot even begin to think about making a profit until you get the money in the door. Revenues, not earnings, run a business. Once a business has the revenues then it can concentrate on maximizing profits either by lowering expenses or raising prices, both methods that create income.

Money flow is also what makes prices increase. We hear so often about “asset price bubbles” and how these bubbles break. But that picture is completely wrong. It is not a “bubble.” It is a “balloon.” A rubber balloon increases in size as air is pushed into the balloon, right?

An asset balloon increases in price as money goes in and it does not

burst; it deflates. An asset balloon is like a toy balloon with a hole in it, as money is always coming out as people sell the asset.

Therefore, the balloon deflates when no more money is put into the asset. It is like the stock market. As I have said before, people sell their stock for a million reasons from health-care needs to a need for a vacation. So, there is always “normal” daily selling. If the stock market BUY button was broken and stopped working for 30 days, prices could literally go to zero as all the money/air came out of the market.

If money flow is so critical— and it is—how does it apply on a national level? We say accurately

Cecilio T. Arillo

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has economic growth.

Maybe money flow is not important to economic growth. Maybe more money flowing in would create more economic growth. Or maybe the economists have it all wrong with their data or at least what the press and media report.

You have read in the press about the Philippines “current account” which supposedly measures money flow. But what if it does not? Current account is measured from “the sum of the balance of trade, net income from abroad and net current transfers (such as from loans and for loan repayments). The current account measures money flowing in and out of a country as a result primarily of trade flows.

The capital account measures money flowing in and out of the country as a result of capital flows.

The last time the Philippines recorded a negative capital account was in 2007. The last time Germany experienced a negative capital flow was in December 2016.

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Wrong policies that keep oil prices and power rates rising

✝ Ambassador Antonio L. Cabangon Chua Publisher

that money is the lifeblood of an economy so then as in the human body, the money must flow into the economy like your own bone marrow is constantly creating new blood. Yet, the numbers that economists use would seem to often contradict that idea.

Using the benchmark that economists use—the current account— Germany posted positive money flow of $387 billion in 2017. The Philippines current account for 2017 was a negative $315 million. While there is a huge difference between “billions” and “millions,” the German economy grew 2.2 percent and the Philippines’s grew by 6.7 percent.

Certainly this is a “bratwurst” and “mango” comparison in many ways. But if money flow is critical to the healthy life of an economy, we should see a close correlation and even causation between money flowing into and out of an economy and economic growth. Yet, there has not been a positive current account in the United States since 1981 even as its economy grew. We know that a large portion of the US economic growth over the past decades was paid for by borrowing and debt. But Canada is not a “debt salve” and runs a negative current account yet still

Part Two

Down the drain

O

N June 19, 1986, four months after the Edsa pocket revolt, President Corazon C. Aquino, likewise, deliberately abolished the Ministry of Energy and placed the multibillion-peso Philippine National Oil Corp.

(PNOC), a successful Philippine firm featured successively in Fortune’s 500 Best Corporations, under the administrative supervision of the Office of the President.

As a consequence, the country’s long-term total energy plan went down the drain after the Aquino regime corrupted, dissipated and privatized its money-making corporations and subsidiaries, including the National Power Corp. (NPC) and the highly profitable Petron, which served as a buffer against foreign oil production and distribution monopoly. Petron then controlled 40 percent of the country’s fuel-distribution network.

To cover its beaten tracks, Mrs. Aquino, through the Presidential Commission on Good Government (PCGG), charged the late Energy Min-

ister Geronimo Zamora Velasco with having allegedly committed corruption, only to be later declared innocent by the Supreme Court.

Velasco died in 2007, but left behind a solid reputation of honesty and certitude as well as his own personal files made into a book, which exposed the unforgivable sins of the Aquino regime in the energy sector.

Here’s an extract from Velasco’s 209-page book Trailblazing: The Quest for Energy Self-Reliance, published by Anvil (Manila) in 2006: “…it appears that Mrs. Aquino abolished the ministry upon the advice of Cesar Buenaventura, who

had claimed that the Ministry of Energy was ‘the most corrupt’ among the Marcos-era agencies. [Joker Arroyo, President Aquino’s executive secretary, who had witnessed how hard Buenaventura lobbied to have the ministry abolished,” confirmed Velasco’s statement in his book. “…Cesar Buenaventura was one of Mrs. Aquino’s closest advisers, but he also happened to be the president of Pilipinas Shell at the time. I have no idea as to Buenaventura’s basis for claiming that the ministry was the most corrupt, but I also have no doubt that he had Shell’s interest in mind when he recommended the ministry’s abolition. I could sense that the foreign oil companies were never happy with PNOC, not only because Petron led the pricing structure in the oil market, but also because PNOC’s energy development program, with its emphasis on tapping non-oil sources, threatened to erode the oil companies’ position in the energy market.

“Riding on the wave of antiMarcos sentiment was a good way to eliminate a rival. In my opinion, the abolition of the ministry showed Mrs. Aquino’s inexperience in proper governance. Buenaventura may have been a close friend of hers, but how could she, in conscience, consult someone like him, whose interest was to protect his employer, a foreign oil company operating in the Philippines? On the mere say-so of

Buenaventura, Mrs. Aquino dismantled the whole energy complex that took 12 years to build and which, in government annals, was unique for the successes it achieved, considering the constraints faced by the country.

“Incidentally, the Queen of England knighted Buenaventura, thereafter. Did that have anything to do with the ministry’s fate?

“Joker revealed that other advisers had already been eyeing Petron’s privatization early on in Mrs. Aquino’s term; they were lobbying for British Petroleum and for a Kuwaiti oil company. Other groups close to Mrs. Aquino’s advisers were interested in PNOC’s privatization, because this would enable them to get their hands on Petron.

“From a policy perspective, there was no reason to privatize PNOC Petron even at the time. Why would a government in dire need of cash be willing to let go of a good source of income? PNOC was the biggest government corporation in terms of revenue.

“Much of it was due to Petron, which commanded about 40 percent of the local oil market and occupied the top spot in the industry. More important, as Joker himself acknowledged, PNOC’s involvement in oil importation, refining and marketing took away the foreign oil companies’ advantage of being the only ones who knew how to play the game. It is not See “Arillo,” A7

Opinion BusinessMirror

www.businessmirror.com.ph

In search of clean energy The family of Jesus Msgr. Sabino A. Vengco Jr.

Val A. Villanueva

J

Businesswise

Alálaong Bagá

ust recently, President Rodrigo Duterte inaugurated the 420-megawatt (MW) Pagbilao power plant, a coal-fired facility aimed at boosting energy supply in the Luzon grid.

n a story sandwiched within another story, Saint Mark (3:2035) narrates the arrival and concern of members of the family of Jesus within the report of a confrontation between Jesus and scribes from Jerusalem. The blasphemy of the scribes in imputing that the work of Jesus is by the evil spirit parallels the misunderstanding by His relatives of Jesus’ mission. Real kinship with Jesus is characterized by acceptance of the will of God.

Duterte lauded the opening of the $976-million power facility, which, aside from providing steady power supply, would also enhance the business climate, not only in the Quezon region but the whole country, as well. It is expected to generate billions of pesos in revenue for the national and local governments in the coming years.

The power plant’s big bosses are Pagbilao Energy Corp., a joint venture between TPEC Holdings Corp. and Therma Power Inc., which are subsidiaries of TeaM Energy and AboitizPower, respectively. They boast that, even if the plant is fueled by coal, which many experts consider harmful to the ecosystem, it is “cost effective and complies with environmental standards.” They said the plant is equipped with a flue-gas desulfurizer designed to ensure compliance with environmental regulations.

Worldwide, the clamor is huge for the development of environmentfriendly energy sources, which leave little or no carbon footprint at all. In the Philippines, reliance on unsafe sources of energy is slowly being shunned for nontraditional sources, such as wind, solar and geothermal, among others.

In fact, in August of last year, the President inaugurated the Solar Philippines Factory in Santo Tomas, Batangas, which enabled solar panels to become accessible to the average Filipino consumer and effectively placed our country as a major player in the global renewable energy revolution.

Solar panel costs have fallen 90 percent over the last decade, and 50 percent in the last three years alone, encouraging countries like China and India to get the majority of their new power requirements from renewables.

Bloomberg estimates that construction of 86 percent of planned coal plants globally will be canceled, given the new economics of solar prices.

On the pipeline is another energy project in Pagbilao, Quezon—the Liquified Natural Gas (LNG) Hub Receiving Terminal—which is a 650-MW combined cycle gas-fired power plant.

Australian-based Energy World Corp. (EWC) said its liquefied natural gas terminal, now 90-percent complete, is set to become a hub of LNG distribution around the country once it becomes fully operational. In a report to the Australian Securities Exchange, the company revealed that the facility would be capable of handling 3 million metric tons per annum of LNG. Its first tank could support 3,000 MW of gasfired power plants. “This will support our adjacent 650 MW combined cycle gas fired power plant, and provide expansion options for both EWC and its third-party gas clients,” the company explained. It said the deep water jetty of the terminal can handle all sizes of LNG vessels.

EWC got the Energy Regulatory

Arillo . . .

continued from A6

surprising then that Petron threatened the interest of multinational oil companies.

“Joker’s point about PNOC’s impact on the oil companies is significant, if only because it affirms the fact that foreign oil companies have always invited suspicion that they act as a cartel and dictate the local price of oil regardless of international prices. This issue has hounded the local oil industry since the Ramos administration deregulated the sector, and has intensified in times of unabated oil price increases, such as what we are experiencing now.

“To my mind, however, there is one important question that we should confront—a question that has so far evaded a real answer: As a matter of policy, what should we

Commission’s approval to develop a point-to-point transmission facility to connect its 650-MW combined cycle gas plant to the power grid. The regulatory agency allowed EWC to develop the P694-million transmission facility to connect its power plant to the New Pagbilao Station of the National Grid Corp. of the Philippines.

I was told that it has now reached an advanced stage of construction for both the LNG Hub Terminal and the Power Station. The LNG Hub Terminal, the first of its kind in the Philippines, can process 3 million tons of LNG per annum, which is sufficient enough to generate up to 3,000 MW of gas-fired power plants, and with the second tank currently being constructed, up to 6,000 MW of power.

The project costs over $750 million of direct investment in the Philippines, and has created over 800 direct jobs during the construction period. The project signifies that the country will now be able to gain access to clean and affordable fuel for power generation and further develop its gas infrastructure. It can commission the first 200MW unit of its gas-fired power station in six months after the drawdown of funds from the company’s policy bank lenders (the Development Bank of the Philippines, Land Bank of the Philippines and Asia United Bank), with the 400 MW and 650 MW at three-month intervals thereafter.

Globally, the natural gas “revolution” is the “in” thing. One of the reasons natural gas is called “clean” is its ability to emit 50 percent less carbon dioxide than coal when burned.

Experts see this as a sort of “bridge” fuel until zero-carbon-producing renewables can take over.

Natural gas is also a fossil fuel, but cleaner and more efficient than other traditional fuels. It produces less pollution and greenhouse gases than its counterparts, according to the Center for Liquefied Natural Gas. For example, when natural gas is burned, it produces 45 percent less carbon dioxide than coal, 30 percent less than oil and 15 percent less than wood. During combustion, it produces heat, water vapor and CO2. It is, likewise, cost-effective and plentiful. For instance, 67 percent of Canada’s natural gas comes from Alberta. Natural gas, although not as clean as wind or solar power, is the cleanest fossil fuel. It has been deemed by experts as a key ingredient to the successful transition of the world to a cleaner future.

Experts note that appliances, vehicles and power plants are highly efficient when powered by natural gas.

This high efficiency makes natural gas a cleaner energy option. The Philippines can expect these benefits once the project commences full production.

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

expect from the foreign oil companies in the Philippines? It was not until we operated Petron that I started to realize how critical an oil company is to a country.”

Even the NPC, whose income between 1977 and 1985 rose from P0.4 billion to P18 billion in sales revenue and had total assets of P107.2 billion, almost 10 times of what it had in 1977, was not spared

by Cory’s incompetence and rapacity. Her regime and some of the succeeding administrations broke it up, dissipated its assets and privatized the majority of its operations, including generations, transmissions and distribution under the guise of breaking up government monopoly in the distribution of power.

To be continued

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

I

God’s spirit and power in Jesus misunderstood

Returning back from his teaching forays probably to Capernaum, which he has made his home, Jesus is followed by some relatives concerned about Him. They must have heard of the claims Jesus has been making together with the wonders He has been performing, and how He has been offending powerful people and attracting the unruly crowds to Himself. He must be out of His mind not playing by the established rules and being confrontational with the religious leaders. These relatives,

out of fear, have decided to do some damage control and take charge of Him with force if need be. Clearly, they lack faith in the authenticity of Jesus’ claims and in the source of His wonders.

Also on the heels of Jesus and coming from the important people in Jerusalem are the scribes who have an expert explanation for His extraordinary power to cast out demons. Jesus must have been doing so “by the prince of demons” who works through Him; He is inhabited by Beelzebul, the spirit of evil.

Jesus counters by pointing out the

Thursday, June 7, 2018 A7

absurdity of their accusation: Satan will not engage in self-defeat by expelling his own minions. A house or a kingdom would not be able to endure if it is divided against itself; it would collapse from within.

The power of Jesus is evidently not from the prince of evil; in fact, Jesus is the one more powerful than Satan. Jesus overcomes and ties him up (Mark 1:7), and plunders his property and releases his captives (Luke 4:18).

New kinship

BY imputing the presence of God’s Spirit in Jesus to be the presence of the evil one, the religious leaders have committed an unforgiveable blasphemy against the Almighty, an everlasting sin in the hardness of their heart, cutting them off from any fellowship with Jesus.

On the other hand, Jesus’ blood relatives who are embarrassed about Him and lack faith are literally standing “outside” and apart from the people “sitting around” Jesus and listening to Him inside the house.

The mother of Jesus is said to be with His brothers who have come to take control of Him; she has joined the group obviously to make sure that her son would not be mishandled by

His overzealous cousins.

In this situation of traditional religious and family ties not measuring up to the experience of the divine in his person, Jesus starts a new family and fellowship. Those people who prefer to stand outside the house instead of stepping inside to listen to Jesus’ teaching and engaging in the work of the kingdom of God, they are not Jesus’ family or kin. Their bond with Him is not the accident of blood, but their shared commitment to and cooperation with the will of God. Belonging to Jesus are those who do the will of God as He does it.

Alálaong bagá, God’s power is necessary for any man or woman to become a faithful follower of Jesus.

We are recreated by the power of God in Jesus. However, this divine power in Jesus can be terribly misunderstood and resisted, or it can empower us to gather around Him, listening to His words and being transformed by them to be a new people with a new identity and destiny as Jesus’ “kapamilya” in doing the will of God. 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.

Income-tax holiday: Delineating the jurisdictions of the BIR and BOI Atty. Fermo B. Avila

Tax Law for Business

T

he word “holiday” connotes a break, leave or a day off.

More often than not, it brings pleasant perceptions, especially when used in conjunction with “income tax”. In the Philippines, an income-tax holiday (ITH) is basically a break from the payment of income tax levied by the national government for a certain period of time. It is a fiscal incentive given to an entity (also referred to as a “registered enterprise”) that complies with the conditions required under Executive Order (EO) 226, otherwise known as the Omnibus Investments Code of 1987, and is given in relation to the entity’s registered activities.

Under the aforementioned code, the Board of Investments (BOI) is the government body that has the primary responsibility of implementing the provisions of EO 226.

On the other hand, the Bureau of Internal Revenue (BIR) is the government agency designated to levy, assess and collect income taxes for the national government under the National Internal Revenue Code of 1997 (Tax Code), as amended.

At the onset, an issue between the Tax Code and EO 226 seems to arise with regard to the determination of which government agency/ body has the primary jurisdiction of determining the income-tax

liability of a registered enterprise.

Specifically, if a registered enterprise has a pending motion for reconsideration with the BOI over its previously denied income as part of its ITH incentive, will such proceeding stay/suspend the proceedings before the Court of Tax Appeals with regard to an income-tax assessment against it?

The Court of Tax Appeals En Banc, in CTA EB 1498 (CTA Case 8545), held that there is no conflict between EO 266 and the Tax Code. The said case involves an assessment by the BIR for deficiency income taxes of a domestic corporation, which was registered with the BOI as an Operator of

Tourist Accommodation Facilities.

During the pendency of the case before the CTA-Division, the domestic corporation filed a manifestation and omnibus motion with a prayer for the suspension of the proceedings due to a pending motion for reconsideration with the BOI over its previously denied income as part of its ITH incentive. When it elevated the case before the CTA En Banc, it claimed that the BOI has the exclusive jurisdiction to rule on whether a particular source of revenue is part of the registered activity entitled to ITH incentive.

However, the CTA En Banc ruled against the domestic corporation and held that the BIR and BOI have their respective mandates. The BOI is mandated to promote and generate investments and improve the image of the Philippines as a viable investment destination, while the BIR is mandated to assess and collect all national internal revenue taxes, fees and charges. While the BOI has the power to decide controversies, it is limited to those concerning the implementation of EO 226, but with regard to the assessment and collection of the taxes, fees and charges, it is the BIR who was exclusively vested with the said directive.

The Court also pointed out that, in the letter decision issued by the BOI, it was categorically stated therein that the amount granted for the

domestic corporation’s income-tax exemption is subject to adjustment, if any, by the BIR. Moreover, the proceedings before the BOI does not stay or suspend the conclusions reached by the BIR in its own proceedings, more so oust the CTA of jurisdiction. The CTA En Banc emphasized that a taxpayer claimant must prove the veracity of its claim independently in the proceedings before the BOI and the BIR because, while both offices perform analogous functions, the mandate of their respective offices are distinct from one another.

Thus, while the BOI has the authority to grant an income-tax holiday to a registered enterprise, it is not empowered to determine the tax liability of a registered enterprise. Such power remains with the BIR, the government agency with the exclusive jurisdiction of levying, assessing and collecting internal revenue taxes for the national government.

The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at fermo.avila@ bdblaw.com.ph or call 403-2001 local 150.

From cabbages to oil, inflation has many fathers

By Andy Mukherjee Bloomberg

I

n the words of economist Milton Friedman, inflation is “always and everywhere” a monetary phenomenon. But if you asked a brokerage analyst in Singapore why prices were soaring in 2007, the response might well have been, “Ah, bus fares went up.”

That was then. When the general price level is not a problem (like now), there’s little interest in studying food or fuel costs, exchange rates or even the more expensive haircuts and meals that people associate with dearness in a tight labor market. But peacetime is when central banks have to prepare for the coming war, lest they be caught on the wrong foot, and Friedman’s critique returns to haunt them.

Goldman Sachs Group Inc. analyzed which Asian economy is threatened by exactly what facet of inflation. Some of its findings border on the obvious: Oil shocks make imported goods costlier across the region. Others are counterintuitive: It’s

only in Taiwan and Thailand that fuel prices also drive headline inflation.

For India, Indonesia and the Philippines, it’s exchange-rate depreciation that really matters in the aggregate. However, since the rupee, rupiah and peso tend to weaken as oil shoots higher, energy gives the impression of being the main culprit.

Singapore, Hong Kong and Japan behave like typical rich countries, with inflation determined solely by “output gap,” a measure of whether production is above or below potential.

China is different. Overheating doesn’t seem to move the price needle in industries ranging from construction and catering to education and retail. Since these goods and services, which economists call non-tradables, account for 34 percent of the Chinese consumption basket (versus 16 percent for India and 21 percent for Indonesia), headline inflation can be low even with the economy growing gangbusters.

In six out of 11 countries in the region, including China and South Korea, the exchange rate has a strong

bearing on inflation. By relative importance, only food comes close. Cabbage prices in South Korea and pork in China aren’t a sideshow.

Goldman’s analysis helps explain why Asian central banks are so touchy about currency depreciation even in the absence of large dollar debt. Indonesia’s new central bank governor has already acted preemptively and raised interest rates to ward off the kind of inflationary collapse of the rupiah that has happened time and again. The Philippines acted in May. Both have said they’re prepared to do more.

India is up next. Ahead of Wednesday’s monetar y policy meeting, expectations of an interest-rate increase are gaining ground, and not because the economy is growing strongly. A hot topic of debate is what to do about the slumping rupee. JPMorgan Chase & Co. is calling for higher rates— not so much to shore up the currency as to cushion its fall. Bank of America Merrill Lynch’s advice is to leave rates alone at 6 percent now— maybe even prune them further

later—and raise dollar funding from nonresident Indians.

Whatever the ultimate decision, at least one economist has called for an end to the prevailing fiction that policy-makers don’t target the value of the rupee. With even administratively controlled prices (such as electricity charges) being affected by the exchange rate according to Goldman’s analysis, it’s naive to ignore this important variable.

If Goldman is right about the exchange rate’s outsize role in driving Asian inflation, then bond investors will be keenly watching the reaction of the Indian, Indonesian and Philippine central banks over the coming months. That’s because the rupee, the rupiah and the peso are the three worst-performing regional currencies over the past six months.

Where the dollar goes, and where it takes Asian exchange rates—especially if Brent crude climbs much higher than $75 a barrel—is the most important question. The time to worry about haircuts, school fees and bus fares will come later.

2nd Front Page BusinessMirror

A8 Thursday, June 7, 2018

Broilers group: Go slow on farm-product SRP

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By Jasper Emmanuel Y. Arcalas

@jearcalas

HE United Broilers Raisers Association (Ubra) is urging the government to go slow on its proposal to implement a suggested retail price (SRP) scheme on farm products, as it could do more harm than good.

He added, “It depends, especially on the level of the farm gate, on supply and demand.”

Inciong raised as well this issue: the market for some agriculture commodities, such as broiler chicken, is not homogenous, hence, pricing varies.

“The farm gate to the wet market [flow] is just one market. That is only one out of several markets like the supermarkets and the institutions. Every market has specific weight requirements and pricing,” he said.

Due to these reasons, the Ubra official recommended that the Department of Agriculture (DA) implement the SRP scheme on a case-to-case basis.

“Long ago our suggestion was to have an SRP at each point of the value chain at a reasonable price.

There’s an SRP on the farm-gate level, wholesale level and retail level. But that is hard to implement in reality,” Inciong explained. “That’s why my suggestion is on a case-tocase basis.”

A specific case wherein an SRP is badly needed in the market is when the retail prices of commodities do not reflect the situation at

“ We recommend that they study it further and do no harm.

That is our stand right now,” Ubra President Elias Jose Inciong told the BusinessMirror.

“Let’s act like a doctor. Do no harm first and study everything.

When you have all the facts, then you can undertake a certain procedure,” Inciong added.

Inciong explained that the imposition of an SRP on farm products is widely different from doing the same for manufactured goods.

On one hand, the pricing of manufactured goods is on a costplus basis, meaning the selling price is determined by the total amount mark-up to a product’s cost. On the other hand, agri-fisheries products are priced based on the amount of supply and demand in the market.

Furthermore, manufacturers could hedge and store both their inputs and outputs indefinitely, as they are not perishable unlike the farm products, according to Inciong. That is why, he said, the argument that “the businessmen are just passing on their costs to their consumers does not hold true for agricultural products.”

‘₧10K’ budget. . .

Continued from A1

According to the Neda, a family of five can live with a P3,834 food budget, P1,288 house rent, P2,204 for water and electricity and P2,674 for transportation, health and education monthly.

“The ‘sample household budget’ of the economic managers of the Duterte administration is another PR spin meant to deodorize TRAIN and TRAIN-induced inflation and to put down the resounding calls for salary and wage hikes,” Tinio added.

According to Tinio, the real wage and purchasing power of minimum-wage earners have swiftly declined due to the record high inflation rate in May of 4.6 percent nationwide and 5.2 percent in Metro Manila. “P10,000 a month for a family of five is far from the P973 daily or P29,190 monthly cost of living for a family of five according to IBON Foundation,” he said.

Castro said the government is constantly trying to justify TRAIN 1 by saying that it is not the sole reason for the record inflation.”These economists seem to lack actual data from the ground to say that a P1,288 rent for a house that would fit a family of five exists, and a P2,674 budget for transportation, health and education is possible,” he added.

Forced diet

Brosas said by saying that one can live on P25.56 per day, the Neda is pushing Filipinos to go on a forced diet.

Meanwhile, labor groups on Wednesday tagged as “fake news”

Labor reforms. . .

Philippines Statistics Authority (PSA), but argued this will not persist for the remainder of the year.

He said the labor reforms being carried out by the government will certainly affect the employment

TROPICAL DEPRESSION “DOMENG” ESTIMATED AT 755 KM EAST OF VIRAC, CATANDUANES MONSOON TROUGH AFFECTING MIMAROPA, BICOL REGION VISAYAS AND MINDANAO as of 4:00 pm - May 6, 2018

Chickens are seen in a backyard facility somewhere in Central Luzon. The biggest broiler raisers’ association is preaching caution on government plans to impose an SRP (suggested retail price) system on farm produce, citing many variables that could complicate the situation. NONIE REYES

the farm-gate level. For example, the retail prices of broiler remain high despite declining farm-gate prices due to oversupply, according to Inciong.

“You only impose an SRP on broiler during times of oversupply.

Only when the retail prices are not responding to the law of supply and demand,” he said.

“But when prices are stable, meaning the movement is normal and in accordance with historical record, [let it be],” he added.

“We have historical records on the prices of broiler. And we have weekly price monitoring of the farmgate prices,” Inciong said. “So, there is sort of a pattern based on the interaction of supply and demand.”

The government should also be wary of establishing an SRP on agriculture products sold in the supermarket level, as prices in this type of market are contracted, or fixed due to supply contracts.

“For example, you create an SRP on grocer y and say that broiler should be priced between P130 to P135. And then you have a supermarket [that] offers it at a contracted price of P120; then, that means that supermarket could now sell its broiler at P135,” Inciong said.

“This is why I am saying that the pricing is not homogenous. Every market has its own pricing.”

Inciong said his suggestion on SRP could also apply to other

Neda’s computations.

“Talk about fake news...It’s a pity that well respected institution would resort to magic just to foster an illusion that we can buck inflation which is at its highest for the past half a decade,” Julius Cainglet of the FFW said in a statement.

“The Neda is supposed to come up with scientific, logical and research-based information to guide policy-makers, not act politicians’ mouthpiece to peddle lies about the economy,” he added.

Wage impact

Cainglet is worried that the Neda’s recent pronouncement will affect ongoing deliberations by the Regional Tripartite Wages and Productivity Boards (RTWPB) on whether minimum-wage rates must be raised in their respective areas.

“I’m sure this crazy computation is the same argument they will use to block any legislated wage increase or a wage order from the wage boards that carries a significant wage increase,” Cainglet said. Labor Undersecretary Jacinto Paras, however, said in a news conference the Neda’s figures will not be the sole factor that wage boards will consider, and they will “also consider what the employers and workers would say. So [their decision] would be balanced.”

The RTWPBs on Tuesday concluded their meeting with government economic managers to provide them technical inputs for their wage deliberations. They will now start the process of determining if there is a need for them to raise minimumwage rates.

Continued from A1

situation in the country.

In an interview with the BusinessMirror, Philexport President Sergio R. Ortiz-Luis Jr. warned the government is treading the wrong path for millions of workers if it

grants the petitions for wage hikes by lawmakers and labor groups. He said a wage increase will weaken both the Philippines’s investment climate and its competitiveness, as it will follow a recent executive order (EO) that had imposed stiffer regulation on contractualization. “[The improvement in our employment is] understandable because it is on a year-to-year basis.

Remember that the government’s infrastructure program is now in full swing, which it was not last year,” Ortiz-Luis said in a mix of English and Filipino.

“We could have done a lot better if the other aspects of investment— for instance, the labor issues—were resolved. If the government does not address those, it will really take a toll on our employment generation in the next months,” he added.

Figures from the PSA indicated that unemployment rate improved to 5.5 percent in April, the lowest in the past decade, from 5.7 percent during the same month last year. The industry sector posted a surging 8.1-percent growth rate, or

BSP. . .

farm products such as chicken eggs and pork.

Under Republic Act 7581 or the Price Act, the implementing agency, in this case the DA, may issue anytime a “suggested reasonable retail prices” for basic necessities and prime commodities for the awareness of the public.

“From time to time, [the head of the implementing agenc y] may issue suggested reasonable retail prices for any or all basic necessities and prime commodities under his jurisdiction for the information and guidance of producers, manufacturers, traders, dealers, sellers, retailers and consumers,” Section 10, paragraph 5 of the law reads.

Continued from A1

excomomist Bernard Aw particularly cited the Philippine manufacturing sector, along with Indonesia’s, as the worst hit in import inflation due to their weaker currencies.

Transport groups have also raised concern over the prices of petroleum in recent months—as aggravated by the combination of a weaker currency, the newly imposed higher taxes and the international price spikes.

However, the BSP is not looking to meddle in the movement of the peso and is eager to keep the local currency’s rate against the greenback “market determined.” Part of the BSP’s mandate as the country’s central monetary authority is to participate in the trade of the market to smoothen out any excessive movements in the local currency.

Espenilla said, “...but we are generally letting the market decide on the exchange rate [that’s why the BSP is not intervening too much].”

While a weak currency causes concern among importers and sectors relying on imported goods, it bodes well for local consumption as it boosts the purchasing power of the dollars sent home by millions of Filipino migrant workers.

605,000 workers, that heightened its total employment share to 19.7 percent, the largest in the past decade.

The Duterte administration’s “Build, Build, Build” (BBB) program proved to be a major factor in the employment of Filipinos, as the construction subsector generated a total of 468,000 jobs during the period. Ortiz-Luis also considered the infrastructure buildup as the primary mover in the country’s lower unemployment rate in April.

However, the BBB program’s job creation will not suffice, as dozens of investors are now thinking twice about retaining their operations here in the country, Ortiz-Luis said.

“Many businessmen are really saying that, if the government continues with its prohibition on contractual employment—that workers need to be regularized even if firms don’t need them—then they will hold out and transfer to a neighboring country that is more competitive,” he added.

“With this, we should anticipate that unemployment will expand in

the next months. It will not only expand, but it will be disastrous.

The labor reforms by the government are not acceptable to investors, especially the policy on endo.

If they want to leave the country, they will do just that,” the Philexport chief said.

President Duterte signed on May 1 an EO implementing a more stringent regulation on fixed-term employment. Although the EO aims to regulate contractualization, workers argued the EO is toned down and does not reflect what they have been fighting for for years.

Apart from this, labor groups, particularly the Associated Labor Unions-Trade Union Congress of the Philippines, asked the government to implement an P800 nationwide minimum wage in response to the soaring prices of goods and services brought about by petrol price hikes and the inflationary impact of the tax reform law. Leftleaning lawmakers in the House of Representatives are also seeking to standardize the minimum wage rate at P750.

www.businessmirror.com.ph

SEC chairman. . .

Continued from A1

For over a decade, Commissioner Aquino was a practicing CPA-lawyer based in Western Mindanao. He taught commercial law subjects at the law schools of Ateneo del Zamboanga and Western Mindanao State University.

He rose through the ranks in SEC to become the youngest director of the former Prosecution and Enforcement and Non-Traditional Securities and Instruments Departments. He is credited with having issued the most number of cease and desist orders against pyramiding and boiler-room operations of pseudo investment firms.

He also headed the SEC Davao and Zamboanga Extension Offices, where he launched capital market promotion activities, as well as an enforcement program against investment scams.

He earned a Bachelor of Science degree in Commerce major in Accounting, magna cum laude and valedictorian at the Universidad de Zamboanga in 1984. He hurdled the CPA Licensure Exams with a rating of 89.14 percent.

He finished his law studies at San Beda College. He placed 16th in the 1992 Bar Exams. Under a government scholarship, he earned a Master’s degree in Public Management at the Development Academy of the Philippines, graduating at the top of his class. He was also sent to the University of Sydney in Australia, where he was conferred a Certificate of Study for a short course in Effective Governance. In 2002 he completed management at the Asian Institute of Management. With Bernadette D. Nicolas

‘Fight high inflation with price controls’

By Cai U. Ordinario @cuo_bm

T

HE steady rise in commodity prices has prompted local economists to flag the need for the government to implement “short-term interventions” to discourage profiteering and help Filipinos cope with high inflation.

On Tuesday the Philippine Statistics Authority (PSA) said inflation accelerated to 4.6 percent in May, from 4.5 percent in April and 2.9 percent during the same month last year.

Short-term direct government interventions could include putting in place price controls and extending subsidies to stop the surge in prices and discourage profiteering, according to University of Asia and the Pacific School of Economics Dean Cid Terosa.

“An all-out war against profiteering can be waged by the government. Direct government intervention in the supply of all basic necessities can help in the short run as well,” Terosa told the BusinessM irror in an interview.

“Direct intervention will include price controls, beefing up buffer stocks, subsidies, and the like. But all these can lead to market inefficiencies in the medium to long run,” he added.

PSA data showed inflation in January to May averaged 4.1 percent, higher than the 2-percent to 4-percent inflation target set by the Bangko Sentral ng Pilipinas this year.

Terosa said inflation will likely accelerate in months ahead as the rainy season brings supply constraints that in turn could jack up the prices of certain commodities.

Hiking the minimum wage would also hasten inflation, he said.

Ateneo Eagle Watch Fellow Leonardo A. Lanzona Jr. also told the BusinessMirror that the increase in inflation will still be fueled by higher pump prices.

Lanzona said these are tied to international events, such as the Organization of the Petroleum Exporting Countries’ decision to cut production this year and Trump’s withdrawal from the Iran nuclear deal.

To address inflation in an “overheating” economy like the Philippines, he said the BSP must raise interest rates to keep inflation in check.

“Inflation is real. It will not go away even if we suspend the Tax Reform for Acceleration and Inclusion [TRAIN]. We need to look forward, not backward,” Lanzona said.

Philippine Institute for Development Studies Senior Research Fellow Roehlano Briones said inflation may peak at 5 percent this year. To help ease commodity prices, Briones said he agrees with the President’s economic team on the need to convert the quantitative restriction on rice into tariff.

“Tariffication will surely help. Rice prices may fall below P30 per kilogram,” he said.

With Marc Wyxzel de la Paz