NFA DEFERS TO LATE-JUNE AUCTION FOR IMPORTATION OF 805K MT OF RICE By Jasper Emmanuel Y. Arcalas
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@jearcalas
OLLOWING complaints from some farmer groups, the National Food Authority (NFA) has deferred to late-June the auction for the importation of 805,200 metric tons (MT) of rice by the private sector under the minimum access volume (MAV) scheme. A man arranges sacks of NFA rice at a warehouse in Quezon City, in this file photo. Following complaints from some farmer groups, the National Food Authority has deferred to late-June the auction for the importation of 805,200 metric tons (MT) of rice by the private sector under the minimum access volume scheme. NONIE REYES
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NFA Deputy Administrator Judy Carol Dansal told the BusinessMirror that the NFA Council (NFAC) has decided to cancel the scheduled auction on June 14 and moved it to June 25. The NFAC also decided to reduce the minimum service-fee requirement for the auction to P100 with a bid offer increment of P10 per MT, from the earlier approved P250 minimum amount with P250 per MT increment, according to Dansal. The NFAC also moved to extend the filing of application for interested parties to June 18. “The majority [of the] members of the NFA Council had agreed and voted to consider some of their concerns,” Dansal told the BusinessMirror. Dansal said the NFAC approved the
changes on Monday evening. However, the NFAC maintained some of the provisions of the importation guidelines, such as the schedule of arrival and the financial standing requirement for participating farmers’ organizations and non-FOs. “[The schedule of the arrival] remains the same, since the arrival should not coincide during harvest time,” she said. Various farmers group have aired their opposition to the new M AV importation guidelines directly to the Office of the President. They also submitted to the NFAC on June 7 a letter containing some of their complaints on the importation guidelines. Continued on A2
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A broader look at today’s business Wednesday, June 13, 2018 Vol. 13 No. 242
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BSP allays fears RRR cuts will stoke inflation
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By Bianca Cuaresma
@BcuaresmaBM
ANGKO Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said they are “covering all bases” in deciding which policies to implement, including the controversial cuts in the banks’ reserve requirement ratio (RRR).
Espenilla gave the assurance that the BSP has enough tools in its monetary policy tool kit to ensure that the fresh liquidity released
from the BSP’s vaults and into the local cash stream will not find its way toward inflationary avenues. “The BSP has a diverse tool kit.
People worry about the liquidity from the reserve requirement, we say: don’t worry, we have other tools,” Espenilla said. “Even if
“Even if banks have liquidity, that does not mean you can just give it to any kind of borrower and then create problems for the economy.” — Espenilla
banks have liquidity, that does not mean you can just give it to any kind of borrower and then create problems for the economy,” he added. Toward the end of May this year, markets showed mixed reaction to the Monetary Board’s decision to bring down by another Continued on A2
Trump pledges security guarantees to N. Korea at summit
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INGAPORE—United States President Donald J. Trump and North Korea’s Kim Jong Un concluded an extraordinary nuclear summit on Tuesday with the US president pledging unspecified “security guarantees” to the North and Kim recommitting to the “complete denuclearization of the Korean Peninsula.” They coupled the summit agreement with lofty promises by Trump to handle “a very dangerous problem” and Kim’s prediction for “major change.” Light on specifics, the document largely amounted to an agreement to continue discussions as it echoed previous public statements and past commitments. It did not include an agreement to take steps toward ending the technical state of warfare between the US and North Korea. The pair promised in the document to “build a lasting and stable peace regime” on the Korean Peninsula and to repatriate remains of prisoners of war and those missing in action during the Korean War. Language on North Korea’s bombs was similar to what the leaders of North and South Korea came up with at their own summit in April. See “Trump pledges,” A5
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free fire Philippine statement delivered by Ambassador Teddy Locsin Jr. on June 5, 2018, in celebration of the World Environment Day at the UN Headquarters, New York.
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he Philippines thanks the Permanent Mission of India for organizing this event, and the speakers for their insightful messages. Philippine commitment to environmental protection is as old as the republic and far antedated the worldwide movement. Support for a nationwide logging ban in the 1950s is best measured by the fierce opposition it got in a Congress in the pockets of loggers. The ban was finally made official when there wasn’t much forest left to keep. Twenty years ago, we proclaimed June Environment Month—this is something we like doing when we can’t get anything done. We proclaim it. Continued on A6
‘More loans for MSMEs to help slow inflation’
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United States President Donald J. Trump holds up the document that he and North Korean leader Kim Jong Un just signed at the Capella resort on Sentosa Island as they conclude their historic summit on June 12 in Singapore. AP/Evan Vucci
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resident Duterte wants to set aside an additional P4 billion for the microlending program of the Department of Trade and Industry (DTI) to drive loan sharks out of business, according to Agriculture Secretary Emmanuel F. Piñol. Piñol said the measure was brought up by the President while he and other government officials discussed the spike in the retail prices of farm products during an eight-hour Cabinet meeting on June 11. The chief of the Department of Agriculture (DA) said one theory that came up during the Cabinet meeting is that the capitalization woes of micro, small and medium enter prises (MSMEs) force them to jack up the price of farm goods. “During the Cabinet meeting, the President said he may have to
₧2 billion The budget of the DTI’s microlending program for this year
add another P4 billion to the DTI’s lending program this year,” he told the BusinessMirror. “The target right now is to neutralize predatory loans extended to vendors, who, because of the onerous interest rates, are forced to hike their prices to recoup their cost. At the end of the day, it is only the loan sharks who are earning,” Piñol added. Piñol noted that the DTI has observed a large discrepancy between the current farm-gate price and retail price of broiler in wet markets. Continued on A2
n japan 0.4817 n UK 70.6405 n HK 6.7108 n CHINA 8.2150 n singapore 39.4234 n australia 39.9561 n EU 62.0006 n SAUDI arabia 14.0396 Source: BSP (11 June 2018 )
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Govt trims funds allocated for Marawi rehab
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By Cai U. Ordinario
@cuo_bm
ilipinos will now be spending less for the rehabilitation of Marawi City after the government went over with a fine toothedcomb the list of projects to be implemented between 2018 and 2022. Socioeconomic Planning Secretary Ernesto M. Pernia said the President approved the plan, as well as other policy recommendations, after a Cabinet meeting on Monday night that lasted for nearly eight hours.
The rehabilitation of Marawi City will now cost P62.26 billion, lower than the initial estimate of around P70.42 billion to P73.42 billion. “After thorough vetting [there is now a] lower number of PPAs [programs, projects and activities] and
₧62.26 billion The recalculated target cost for the rehabilitation of Marawi City
lower cost,” National Economic and Development Authority Regional Development Office Undersecretary Adoracion M. Navarro told the BusinessMirror. The bulk of the cost, or P46.48 billion, will be for the Bangon Marawi (BM) Comprehensive Rehabilitation and Recovery Program for 2018 to 2022, or those outside the most affected areas in the city. The remaining P15.78 billion will be for public infrastructure needed for the most affected areas, according to Eduardo del Rosario,
chairman of Task Force BM and the Housing and Urban Development Coordinating Council. In a presentation of the BM program, Navarro said the bulk of the cost (P21.67 billion) will be spent for physical infrastructure, followed by housing and settlement (P10.16 billion). The cost of livelihood and business development is expected to hit P7.47 billion; social services, P5.12 billion; land resource management, P1.35 billion; and local governance and peace building, P705.79 million. Nearly half of the cost (P21.79 billion) will be spent this year and P15.24 billion in 2019. The smallest amount, P766.19 million, would be spent in 2022. Based on Navarro’s presentation, the housing and settlement
nfa defers to late-June auction for importation of 805k mt of rice Continued from A1
The concerns included the volume allocation for FOs and non-FOs, the amount of service fee, the financial standing requirement and the schedule of the arrival of the importation, according to Edwin Y. Paraluman. Paraluman sits at the NFAC as a representative of the farmers. Paraluman said farmers are questioning the 20-80 allocation of the 805,200 MT volume between FOs and non FOs. They complain that their 20percent allocation is too small compared to that of corporations. “The farmers are saying that the allocation of corporations is too high while the farmers are left with a small volume,” Paraluman, who is also the chairman of the Philippine Farmers Advisory Board, told the B usiness M irror. “They are questioning why a corporation could import as much as 50,000 metric tons, while farmers could only import 5,000 metric tons at maximum. If you look at it, it seems that the allocation for the MAV between farmers and corporations is not fair,” Paraluman added. Paraluman said FOs earn from the importation of rice as they sell to businessmen their purchased staple abroad. He noted that the income
they gain from importation allows them to purchase farm machinery and inputs they need to improve t heir productivity. Paraluman said farmer groups who raised their concerns to the NFAC invoked the provisions of the Agriculture and Fisheries Modernization Act,which seek to protect small-scale farmers through: protection from unfair competition, providing income opportunities, and strengthening farmers’ organization through cooperation, according to Paraluman. “It seems like what they did [with the volume allocation] is far from the objective of our law,” he said. The NFA earlier explained that it came up with the 20-80 volume allocation for FOs and non-FOs “based on the history of previous availments” by the respective groups under the MAV importation scheme. Paraluman dismissed such percentage and noted that the 20-80 volume sharing between FOs and non-FOs only happened in last year’s MAV, where many participants signed up for the importation. “The prorating of allocation in the last MAV was not right. Historically in the previous MAVs, which they have records, the volume allocation be-
tween farmers and corporations is 40-60,” he said. “It is not the fault of the farmer organizations [that] their allocation in the previous MAV accounted for only about 20 percent of the total volume. There were a lot of applicants last year, plus they cut some of the farmers’ allocation.” Farmers also fret over the new financial standing requirement for FOs and non-FOs to be able to join the auction. The NFAC now requires applicants to submit financial documents on their current net worth, instead of the previous total net worth requirement. The change, Paraluman noted, limits the participation of FOs, particularly the small ones, in the rice importation. “If it is totel assets, then small farmers would be able to participate and earn income somehow. Because if it is total assets, the net worth of the farmers would be higher and so they will be able to participate,” he said. However, Dansal said the NFAC has maintained the new financial standing requirement for applicants so as to prove to cynics that cooperatives are capable of importation. “It is to ensure the import capacity of the cooperatives in order to destroy the allegations of some public figures
that these cooperatives have no money and that they are selling their import permits to businessmen,” she said. Paraluman said farmers are also questioning the schedule of import arrival, as the first phase of the importation coincides with the last phase of last year’s MAV importation, which is from July to August. Due to this, the farmers argued, the market will be flooded with rice, causing lower farm-gate prices of palay by the time of the main harvest in the fourth quarter, said Paraluman. “For sure the farm-gate price of palay will decline below P20 per kilogram by harvest time due to the volume of imported rice this lean season,” he said. “That is one concern of the farmers,” who wonder aloud “why they are rushing the importation of the current MAV when, in fact, there is still a remainder of about 200,000 metric tons from the previous MAV,” he added. However, Dansal said importers could opt to bring in their imports in the second phase of the MAV importation program, scheduled from December to February of next year. Paraluman will still raise the concerns of the farmers at the NFAC meeting next week, “despite the changes to the guidelines.”
projects are expected to be completed by 2019, while the PPAs in other sectors will run until 2022. The total rehabilitation cost will cover 734 PPAs. The highest number of PPAs at 267 will be for livelihood and business development. About 237 PPAs are related to physical infrastructure. There are also 112 PPAs for local governance and peace building; 68 for social services; 31 for land resource management; and 28 for housing and settlement. Last month Navarro said the total amount could still change pending estimates of the cost of right-of-way acquisition, which includes the cost of land, as well as compensation for relocation. The total amount, Navarro added, will also change as the
government decided to compensate families who lost loved ones during last year’s Marawi siege. Compensation for those who died during the five-month conflict is one of the things Marawi residents seek from the government. Navarro said should the government pursue paying these families, the compensation package could be patterned after the compensation fund for those who died during the 9/11 terrorist attack in New York. She added it could also be patterned with Israel’s. Navarro said the bulk of the BM program will be sourced from the National Disaster Risk Reduction and Management fund, as well as from nongovernment sources, such as development partners and the private sector.
BSP allays fears RRR cuts will stoke inflation Continued from A1
percentage point the deposit requirement of banks—or the portion of depositors’ balances that banks are asked to keep idle in the BSP’s vaults as reserves. This RRR cut is the second slash since Espenilla took office in July 2017. Each cut is estimated to release P90 billion worth of liquidity into the local cash stream. The BSP’s seeming eagerness to consistently bring down the banks’ idle funds has been lauded by the big guns in the lending sector, saying the RRR cut will enable borrowers to have “access to more sources of funds and more efficient cost of borrowing that is expected to propel more economic activity in the country.” However, a number of lo ca l and inter nationa l econo mists raised the concern that, as textbook economics show, more money pumped in the cash stream bears risk of stoking inflationary pressures upward. Most recently, international financial institution Deutsche Bank said in its research note that the RRR cut sends mixed signals to investors on whether the Central Bank is willing to go all out in its tightening cycle to control the rising trend of inflation. Amid these concerns, Espenilla defended the BSP’s decision and cited the BSP’s auction facility as
one that will effectively manage liquidity from banks. On top of that, the BSP chief also said the twin liquidity guidelines—the Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR) will ensure liquidity conditions are in check among banks. The NSFR, as approved for implementation by the BSP a week ago, is a measure of the ability of a bank to fund its liquidity needs over one year. The LCR, on the other hand, covers a shorter period of over 30 days. Both ratios require banks to hold sufficient liquidity assets for certain times of scenarios. “There are safeguards in place. There are parameters. That is why we are comfortable with the way policy is evolving because we are covering all bases,” Espenilla said. Since the BSP’s shift to the auction-based monetary operations under the interest-rate corridor framework in 2016, Espenilla— who was then deputy governor of the supervision and examination sector—was already vocal on t he need to br ing dow n t he banks’ RRR. Even now at 18 percent, the Philippine banking industry’s RRR is still one of the highest in the region. Espenilla said the BSP plans to bring the RRR to a single-digit level on a gradual process in the medium term.
‘More loans for MSMEs to help slow inflation’ Continued from A1
“There was hardly any increase in the prices of chicken at the farm gate but when it reaches the wet market, the price doubled,” he said. “The farm-gate price of broiler right now hovers between P75 to P80 [per kilogram] but based on the monitoring of the DTI, the [retail] price is P150 [per kilogram]. So, where did the 100-percent increase in price come from?” he added. The DA chief dismissed the statement of some sectors that the Tax Reform for Acceleration and Inclusion (TRAIN) law is behind the increases in the retail prices of agriculture products. “So why are prices increasing? The TRAIN law only has a very minimal effect, and if there is an oil price increase, its effect would be less than 1 percent,” Piñol said. “The No. 1 reason would be speculation. And the other
is the reality that our vendors are dependent on loan sharks.” Piñol said the DA would release its SRP matrix for farm products next week. The DTI is pilot testing its Pondo sa Pagbabago at Pag-asenso (P3) program, a microlending program that seeks to replace the “5-6” money lending system, this year. The P3 program aims to provide MSMEs access to more affordable credit. “The P3 is designed to bring down the interest rate at which microfinance is made available to micro enterprises,” Trade Secretary Ramon M. Lopez said. Interested borrowers could loan from P5,000 for start-ups, to P300,000 with a maximum interest rate of 26 percent per annum with no collateral requirement, according to the DTI. The government has allocated P2 billion for the P3 program this year. Jasper Emmanuel Y. Arcalas
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Vest Duterte with extra powers to solve Metro flooding–solon
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he chairman of the House Committee on Metro Manila Development on Tuesday said President Duterte should be vested with emergency powers to address the worsening flood problem in the National Capital Region. Committee Chairman and Rep. Winston Castelo of the Second District of Quezon City, citing a study of Japan International Cooperation Agency, said the economy loses P2.4 billion per day from flooding, which results in stalled vehicle traffic that, in turn, disrupts businesses. “ T his never-ending problem of flooding may already need the emergency powers of President Duterte,” Castelo said in a news statement issued on Tuesday. He added the proposed emergency powers to be given to the President by Congress will allow agencies, primarily the Department of Public Works and Highways (DPWH), to cut through red tape in implementing the floodcontrol projects and relieve Metro Manila of the recurring problem. According to the lawmaker, the details of the emergency powers to be given to President Duterte can be tackled in a Flood Summit. Castelo said the summit will bring together members of the Cabinet, local government officials, urban development experts and economist to draft a comprehensive plan to solve the flooding problem. The lawmaker added that the summit will also seek to synchronize flood-control programs of national
agencies and local government units. He said key agencies, such as the DPWH and the Metropolitan Manila Development Authority, will have a pivotal role in the summit to draft a master plan as torrential rains and bigger floods are expected to hit the country due to the effects of climate change. Castelo added that the departments of Environment and Natural Resources, Local Government, Education, as well as the National Housing Authority, shall also be included in the summit. “I had appealed for the implementation of the projects to mitigate the effects of flooding to be given priority for completion before the rainy season, but it is now June and the rains have started to inundate Metro Manila and the projects are still not completed,” he said. Castelo, meanwhile, said the government should speed up the Metro Manila Flood Control Management Project, which is crucial in ending the problem of intense flooding in Metro Manila during the wet season. “The Asian Infrastructure Investment Bank and the World Bank already funded this P25-billion project aimed at making Metro Manila safe from flooding,” Castelo said. “A focus on the flood problem would also show to the public the government’s determination to protect the welfare of Filipinos who not only lose economic opportunity but also risk their health from their frequent encounter with floods,” he added. Jovee Marie N. dela Cruz
Editor: Vittorio V. Vitug • Wednesday, June 13, 2018 A3
Groups to Duterte: Protest ‘harassment’ of fishermen
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By Jonathan L. Mayuga
@jonlmayuga
ctivists belonging to the Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya), Anakpawis, Kilusang Mayo Uno and other groups on Tuesday marked the 120th Independence Day celebration with protest actions to condemn the continuing harassment of Filipino fishermen by Chinese naval forces in the West Philippine Sea.
According to Pamalakaya Chairman Fernando Hicap, the Duterte administration should file a diplomatic protest and condemn China’s latest bullying of Filipino fishers at the disputed marine territory, particularly the Scarborough Shoal, a traditional fishing ground of fishermen from Zambales, Pangasinan and other fishermen from other coastal towns in Luzon. In a news statement, Hicap, a former Anakpawis party-list lawmaker, said celebrating Independence Day amid the Chinese intrusion and harassment of Filipino fishermen in the country’s own territory is “an exercise in stupidity and futility.” He said it appears that modern-day colonialism is very much alive in poor countries like the Philippines, perpetrated by industrialized nations, such as the US and China, which are on a race
to expand their political, socioeconomic and military clout in the region. “The recent news report of Chinese Coast Guards who took the fish catch of our Filipino fishers’ smacks of insult to our sovereignty as it was done well within the exclusive economic zone of the Philippines. The report also revealed that this practice of the Chinese Coast Guards started after the completion of the artificial islands in Scarborough Shoal,” Hicap said. He added: “We are equally insulted by Malacañang’s media stunt of inviting the fishermen who were the victims of Chinese Coast Guard harassment and robbery of their catch for it was aimed to deodorize the stinking foreign policy of the Duterte administration with China. We dare the government to stand with our fisher folks and protect them.”
perilous time for OFWs, least protection of workers’ rights in PHL
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espite assurances of protection from local and national laws, including international agreements, Filipino workers are living the most perilous time in their own country, and in almost all other countries they are working as overseas Filipino workers (OFWs), labor group Sentro ng mga Nagkakaisa at Progresibong Manggagawa (Sentro) said over the weekend.
In its annual global report released last week, the International Trade Union Confederation has placed the Philippines and the majority of countries where OFWs are eking out their living, under category five, which is a rating for the worst countries in the world to work in. The report said that, “While the legislation may spell out certain rights, workers have effectively no
access to these rights, and are therefore exposed to autocratic regimes and unfair labor practices.” “What is notable in this report is that the Philippines is included in a long list of countries whose current regimes do not actively respect workers’ rights. Hence, despite the existence of national law and being signatories to international laws on labor, the workers’ safety and pro-
tection of their rights are not guaranteed,” according to Joshua Mata, secretary-general of Sentro. According to Mata, these include Bahrain, Hong Kong, Iran, South Korea, Kuwait, Nigeria, Qatar, Saudi Arabia, Turkey and the United Arab Emirates, all major destinations for OFWs, “which means Filipino workers are really screwed up in and outside of their country.”
A4 Wednesday, June 13, 2018 • Editor: Vittorio V. Vitug
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DTI sees export rebound despite 6% drop in Q1
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By Elijah Felice E. Rosales
@alyasjah
usinessmen may feel uncertain about it, but the government is confident that the country’s export performance will rebound within the latter months, following a 6-percent slowdown in the first quarter, according to a senior trade official.
Senen M. Perlada, director of the Department of Trade and Industry’s (DTI) Export Marketing Bureau, said commodity exports will post better figures as soon as the second quarter of the year, mainly due to the country’s upbeat business climate, and the resounding opinion that exports will recover in the next months. Perlada said electronics will persist to carry the load for merchandise exports. On the other hand, nonelectronics is seen performing better in the second quarter. “We forecast electronics would continue on its growth trend, while nonelectronics will start to recover from its double-digit decline. This is based in business expectations survey of the BSP [Bangko Sentral ng Pilipinas], which now includes forecast for the second quarter for business in general, exporters and importers [alike],” Perlada told reporters. Figures obtained from the Philip-
pine Statistics Authority reported a 6-percent drop in commodity exports in the year’s opener. Merchandise goods traded outbound slipped to $15.75 billion in the January-toMarch stretch from $16.76 billion during the same period last year. Perlada’s confidence, however, was not shared by local exporters. Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc., said uncertainties in global trade and the stiffer domestic regulation on contractualization is going to hinder export performance from recovering. He said exporters have to deal with these two issues, and curbing the impact of a trade tension and a new law is just too difficult of a task. In a May interview with the BusinessMirror, Ortiz-Luis explained exporters had to temper plans of enlarging their work force due to the executive order prohibiting fixedterm employment. The EO was
signed by President Duterte as his compliance to a campaign promise to ban contractual hiring. “Well, exports went down because of many reasons. Among them is that agriculture went down because they had a supply problem. Second, and [from what] I understand, a lot of our exporters, especially in handicrafts, held off from hiring people and expanding [operations] because of the issue on contractualization,” Ortiz-Luis, in mixed English and Filipino, said. “And on the global level, there is an instability to a certain degree. We cannot really say if we will bounce back as usual, but we are hoping that our exports will rebound,” he added. The government is looking to grow exports by 9 percent this year, well below the revised 10.17-percent expansion last year. To improve this year will also be crucial, as the government is aiming to hit $122 billion—the lower end of a target range that goes as high as $131 billion—in export receipts by 2022. Electronics exports will play a critical role in the accomplishment of this ambitious objective, as it contributed 52 percent, or $32.7 billion, of the $62.87 billion of commodity exports in the previous year. Electronics exporters, on the other hand, are determined to overcome the escalating trade conflict between superpower economies and still grow by 6 percent this year. Should the target be hit, the industry will now amount to around $34.5 billion to $36 billion.
Indie day job huNT
Jobseekers troop to a makeshift booth in search of work vacancies offered by different companies, led by the ALC Group of Companies, during an Independence Day job fair at the Luneta Grandstand in Manila. ROY DOMINGO
Solon allays foreign debt trap fears amid ‘BBB’ infra build up
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ARTY-LIST Rep. Lito Atienza of Buhay on Independence Day allayed fears that the Philippines might get entangled in a foreign debt trap, as the Duterte administration embarks on an P8-trillion economic infrastructure-spending program dubbed as “Build, Build, Build” (BBB) program to make up for a massive backlog. “We do not see the [Philippine] government getting into a situation wherein it incurs too much external debt that suddenly becomes difficult or impossible to repay,” Atienza, House senior deputy minority leader, said in a news statement issued on Tuesday. Vice President Maria Leonor G. Robredo has warned that the Philippines might fall into a debt trap if the government borrows money indiscriminately, especially from China. “We have no problem with borrowing money, regardless whether it is from Japan, China or South Korea, as long as the government spends the funds on sensible and beneficial projects,” Atienza said. “If we are talking of infrastruc-
ture such as trains, expressways and bridges—these will all help to provide new employment, enable goods and people to move faster at a lower cost, and further stimulate overall economic growth,” the lawmaker said, adding that the growth, in turn, would translate to a larger economic asset from which the government is bound to collect incremental tax income. “Surely the administration will not obtain a project loan from a foreign government at a higher interest rate, if the same credit can be procured elsewhere at a lesser rate,” Atienza said. “We are also counting on the National Economic and Development Authority to rigorously screen and ascertain the feasibility of every project before it is approved for possible foreign funding,” he added. The Philippines and Japan signed in March the initial tranche of a ¥104.53 (P51.3 billion) loan for the first phase of the Metro Manila Subway Project. The concessional loan from the Japan International Cooperation Agency (Jica) carries an annual
RTWPB 6 hikes West Visayas wages by as much as ₧41.50
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ACOLOD CIT Y—The Regional Tripartite Wages and Productivity Board (RTWPB) of Western Visayas has approved an increase of P13.50 to P41.50 in the daily minimum wage of privatesector workers in the region. The new wage order will take effect in August, according to Regional Director Johnson Cañete of the Department of Labor and Employment 6 (Western Visayas) during a news briefing held at the Sugar Workers Development Center here on Monday afternoon. Cañete, who also chairs RTWPB 6, said that under Wage Order 24, the wage rates in Western Visayas will now range from P295 to P365, up from the previous P271.50 to P323.50 under Wage Order 23. The amounts of increase include cost of living allowance (COLA) and depends on the workers’ category. Nonagriculture, industrial and commercial workers employed by companies with more than 10 people will receive an increase of P26.50 to P41.50, plus P15 COLA, for the present rate of P365, compared to the previous P323.50. Those working in establishments with less than 10 workers will get an increase of P23.50 to P18.50, plus P5 COLA, for the new rate of P295,
higher than the P271.50 earlier. Agriculture workers, both in plantation and nonplantation categories, will now receive the same rate of P295. Plantation workers who used to receive P281.50 will get a raise of P8.50 to P13.50, plus P5 COLA, while non-plantation workers who were previously paid P271.50 will receive an increase of P18.50 to P23.50, plus P5 COLA. Cañete announced the new minimum wage rates after a series of deliberations conducted by the board from June 6 to 8. The RTWPB 6 received at least nine position papers submitted by various groups during the four public hearings it conducted across the region in recent months. The hearings were conducted after the Philippine Agricultural, Commercial and Industrial Workers Union-Trade Union Congress of the Philippines filed a petition for wage increase in January. The labor group then sought a P130 to P150 increase, depending on the worker’s classification. The revised rules on minimum wage issued by the National Wages and Productivity Commission require that a new wage order be issued within 30 days after the last wage hearing. PNA
interest rate of one-tenth of 1 percent, payable over 40 years. The subway is the “biggest single project” under the P8-trillion program dubbed “Dutertenomics,” according to Finance Secretary Carlos G. Dominguez III. Atienza, former three-term mayor of Manila, fully supports the subway project, saying “passenger trains are absolutely imperative to cope with the growing demand for high capacity and rapid public transportation.” “What we should avoid is a situation like the mothballed Bataan Nuclear Power Plant,” Atienza said. The $2.3 billion that the Philippine government borrowed to build the 621-megawatt nuclear facility became the country’s single biggest debt obligation until it was fully repaid in 2007. After the plant was completed, it was discarded by the government due to serious safety flaws. The plant was constructed by America’s Westinghouse Electric Co. using money borrowed by the state-run National Power Corp. from the US Export-Import Bank.
Stronger Asean, Russia Customs, trade ties sought
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he Department of Finance (DOF) has called on the Russian Federation to strengthen its cooperation with the Asean to improve Customs administration and enhance economic ties within regions. Finance Secretary Carlos G. Dominguez III has called for closer cooperation between the Russian Federation and Asean in the field of Customs administration to likewise boost economic ties between the two major global trade hubs. During a recent meeting with Russian Ambassador to the Philippines Igor Khovaev, Dominguez suggested that the head of the Federal Customs Service of the Russian Federation take a tour of the countries comprising the Asean as a way to begin the process of establishing stronger Customs ties with economies in the Asia-Pacific region. “He [the head of the Russian Federal CustomsService]canmakeatourofAsean, and maybe if there’s an Asean meeting of Customs officials, we can invite him as a special guest,” Dominguez said. Russia and the Philippines have an existingCustomsMutualAdministrative Assistance Agreement signed in 2013, which aims to promote cooperation between the Customs agencies of the two countries to help fight transnational crimes and commercial fraud, and prevent customs offenses. Rea Cu
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Editor: Lyn Resurreccion • Wednesday, June 13, 2018
A5
Investors: ‘So far, so good’ on historic Trump-Kim summit markets’ point of view from this summit,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “The large part of this is about political theater. It doesn’t seem likely that we will see any substantial changes. What has become clearer is what, while there is high-level rhetoric, it leads to very little action.”
Just the start
United States President Donald J. Trump and North Korean leader Kim Jong Un make the first handshake between US and North Korean leaders in history at the Capella resort on Sentosa Island in Singapore on June 12. The two leaders hold the first-ever summit between the leaders of their respective countries. AP/Evan Vucci
A
Damaging impact
Lagarde’s concerns were echoed by World Trade Organization (WTO) Director General Roberto Azevedo, who said growing trade frictions could cause serious damage to the world economy. “The rising trade tensions that we see before us, they risk a major economic impact, undermining the strongest sustainable period of trade growth since the financial crisis,” Azevedo said at the Berlin meeting. “We must, therefore, stop this escalation of tensions. A tit-for-tat process is not going to be helpful. It’s not going to help anyone.” Lagarde, who attended the summit in Quebec, didn’t mention Trump by name. Her warnings about the risks of protec-
While the Trump-Kim summit offers to start a dialog that will bring an end to sanctions on North Korea and the removal of nuclear weapons, it’s “not nearly as important” as the threat of retaliations in global trade, Rob Carnell, ING Bank chief economist for Asia Pacific, wrote in a note.
Three scenarios
The won will struggle to move in either direction, no matter what the outcome of the US-North Korea summit is, as the Federal Reserve and European Central Bank will also have their monetary-policy meeting this week, Mizuho Bank Ltd. emerging-market currency trader Masakatsu Fukaya said in a phone interview.
“The good news is it’s been more than two minutes and nobody’s walked out,” said Olivier d’Assier, head of applied research for Asia Pacific at Axioma. “Trump had said he’d know in the first minute if it was real or not. Since he’s still in there we’d have to take it that this is positive.”
Contrarian view
Central bank meetings
Positive expectations
Downside risk
Here are some other views of traders, money managers and analysts.
No walkout
“Today’s moves in markets show there’s consensus in markets that the outcome today will be positive,” said Jung Sang-jin, head of equities at Korea Investment Management Co. Ltd. “I am not expecting anything from
Won struggles
“North Korea, South Korea, China and Russia are ready for an end to the 65-year absurdity, but the US is the problem, so I hope for and expect a continuation” to discussions, Jim Rogers, chairman at Rogers Holdings Inc. said by e-mail. “The market, of course, is still wary of the downside risk of the summit turning into a bit of a disaster, bringing nuclear tensions coming strongly back to the fore,” said Nick Twidale, chief operating officer of Rakuten
Lagarde sees darker clouds over world economy after G-7 tiff I nternational Monetary Fund (IMF) Managing Director Christine Lagarde said the risks to the global economy are rising as major industrial nations sharpen threats of a trade war. “The clouds on the horizon that we have signaled about six months ago are getting darker by the day—and, I was going to say, by the weekend,” Lagarde said at a news conference in Berlin on Monday. Her remarks follow a chaotic two-day meeting of the Group of Seven (G-7) in which United States President Donald J. Trump shocked fellow leaders with his disregard for US allies. After leaving the summit early, Trump tweeted he was pulling US support from a joint statement and he accused the host, Canadian Prime Minister Justin Trudeau, of being weak and dishonest. Other G-7 countries lobbied unsuccessfully at the summit for the US to reverse new tariffs on imported steel and aluminum imports. Trump turned the tables by challenging world leaders to eliminate all trade barriers, tariffs and subsidies and he threatened to stop trading with them entirely. Germany and France, who are also part of the G-7, criticized Trump for withdrawing his support, and were joined by the UK in reiterating their backing of the communiqué.
Global trade
Alex Wong, a director of asset management at Ample Capital Ltd. in Hong Kong, says he sees three scenarios for the meeting. The first is a full agreement, which he sees as unlikely. The second: “I don’t think they can sort out everything in the first meeting,” he said. “The most likely scenario is that they have a very friendly meeting first, then organize another one to discuss all the issues in near future.” And the third: “Walking away unhappily,” Wong said. “They came all the way here with months of preparations, so I think this scenario is unlikely.”
fter watching the historic handshake between US President Donald J. Trump and North Korean leader Kim Jong Un, Kazuyuki Terao was mostly positive.
“We don’t know yet how things will unfold,” said the chief investment officer for the Japan arm of Allianz Global Investors. “But it’s hard to imagine they’ll turn out badly from here.” Markets were slightly less enthusiastic. Stocks in Japan and Hong Kong edged higher, while shares in South Korea swung between gains and losses. In currencies, the dollar trimmed its earlier gains and the yen fell slightly. The South Korean won rose, reversing its earlier decline. When Trump shook hands with Kim on Tuesday, it kicked off a meeting between two adversaries that only last year had seemed on the verge of nuclear conflict. Investors across Asia and the world are watching for how the occasion will impact markets.
“Enough with all the speculation and all the teasers, it’s showtime!” Stephen Innes, head of trading at Oanda Corp., wrote in a note to clients. “Few traders are expecting anything definitive to come out of the summit. However, investors remain ever so vigilant for potential fireworks. But keep in mind, this is merely the beginning, and we’re not even into the first chapter let along the epilogue.”
Securities Inc.’s Australian unit. “Investors will be ready for this eventuality, especially given the personalities of the two leaders involved and this weekend’s G-7 [Group of Seven] performance from Trump.”
tionism have grown more pointed in recent weeks, as the Trump administration has imposed more tariffs and threatened others, including against China.
Trump auto tariffs
Trump’s heightened attacks on Canadian Prime Minister Justin Trudeau are raising concerns that he might follow through on threats to impose auto tariffs, a move that would devastate the car industry in Canada and lead to higher US prices. The Trump administration’s pledge to consider tariffs on all imported vehicles took on more urgency last weekend after Trump and his advisers accused Trudeau of “bad-faith diplomacy” for his trade comments following a meeting of G-7 leaders in Quebec. “I have instructed our US Reps not to endorse the Communiqué as we look at Tariffs on automobiles flooding the US Market!” Trump tweeted last Saturday evening while en route to Singapore aboard Air Force One. “Very dishonest & weak,” he said of Trudeau. Trump has asked the US Commerce Department to review whether vehicle imports threaten national security, which would add to levies already imposed on steel and aluminum. The car tariffs could apply to all countries, including North American Free Trade Agreement (Nafta) partners Mexico and Canada, the two biggest exporters of autos to the US. “I think we are all sitting with bated breath hoping that cooler heads prevail, but most of us believe there’s an equal chance that they won’t,” said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ontario. The tariffs would have to clear several hurdles before being implemented, including fierce opposition from the industry and Republican lawmakers who tend to favor fewer and lower taxes. Yet, after White House trade adviser Peter Navarro said there’s a “special place in hell” for foreign leaders like Trudeau who engage in bad faith with Trump, Canada’s auto sector may be more at risk.
Canada’s biggest export
Motor vehicles and parts were Canada’s biggest export after energy products, representing about 16 percent of the C$7.4 billion ($5.7 billion) in shipments over the first four months of this year. The Canadian auto industry directly employs about 130,000 people and contributes more than C$20 billion annually to gross domestic product, according to the Canadian Vehicles Manufacturers’ Association, which represents the Canadian arms of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV. If the tariffs are implemented, they would shave about 0.6-percent off Canadian economic growth, estimated Brett House, deputy chief economist at Bank of Nova Scotia.
Deterioration of confidence
On Monday Lagarde said the “biggest and darkest cloud” over the global economy is the risk of a deterioration of confidence “by attempts to challenge the way in which trade has been conducted, in which relationships have been handled, and the way in which multilateral organizations have been operating.” The fund projects the global economy will grow 3.9 percent this year and next, the fastest pace since 2011. Beyond that horizon, it’s more pessimistic, predicting growth will weaken as central banks raise interest rates, US fiscal stimulus fades and China’s gradual slowdown continues. Asked about the US’s backsliding into protectionist trade policies, Lagarde recalled comments from Supreme Court Justice Ruth Bader Ginsburg. “She was asked, after more than 50 years of marriage, what was the secret of her marriage? And she said this: It helps being a little bit deaf on occasions,” Lagarde said. The IMF, which has 189 membercountries, was conceived during the Second World War to oversee the international monetary system and promote open-market policies that drive growth. The US is the fund’s biggest shareholder. Bloomberg News
Whatever the case, Jingyi Pan will spend her day “writing, writing, writing.” It’s a busy week for Pan, a market strategist at IG Asia Pte. “There are still central bank meetings, lest we forget,” Pan said. Ayako Sera, a strategist at Sumitomo Mitsui Trust Bank Ltd. in Tokyo, agreed. “It’s like there’s a feast going on,” she said of the summit. But “globally, it’ll be the Federal Reserve and European Central Bank meeting outcomes that are important for this week.” Bloomberg News
Trump pledges . . . Continued from A1
At the time, the Koreans faced criticism for essentially kicking the issue of North Korea’s nuclear arsenal down the road to Tuesday’s Trump-Kim summit. Trump and Kim even directly referenced the so-called Panmunjom Declaration, which contained a weak commitment to denuclearization and no specifics on how to achieve it. News photographers captured photos of the broad, two-page agreement, which was not immediately released by the White House. The formal document signing followed a series of meetings at a luxury Singapore resort. Meeting with staged ceremony on a Singapore island, Trump and Kim came together for a summit that seemed unthinkable months ago, clasping hands in front of a row of alternating US and North Korean flags, holding a one-onone meeting, additional talks with advisers and a working lunch. Both leaders expressed optimism throughout the summit. Kim called forecast “major change for the world” as a result of the historic meeting, while Trump pledged to handle a “very dangerous problem.” At the signing, Trump said he expected to “meet many times” in the future with Kim and, in response to questions, said he “absolutely” would invite Kim to the White House. For his part, Kim hailed the “historic meeting” and said they “decided to leave the past behind.” In a moment that would never happen in North Korea, reporters began yelling questions to Trump and Kim after they signed the document, including whether they had discussed the case of Otto Warmbier, the American college student who suffered brain damage while in North Korean custody and died in June 2017, days after he was returned home to Ohio. In the run-up to the meeting, Trump had predicted the two men might strike a nuclear deal or forge a formal end to the Korean War in the course of a single meeting or over several days. The meeting was the first between a sitting US president and a North Korean leader. Aware that the eyes of the world were on a moment many people never expected to see, Kim said many of those watching would think it was a scene from a “science fiction movie.” AP
A6 Wednesday, June 13, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
SRPs: Panacea for price hikes?
S
ince January, when the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law took effect, there had been no let up in the increase in consumer prices. Data from the Philippine Statistics Authority showed that headline inflation rate reached 3.4 percent in January, climbed to 3.8 percent the next month, breached 4 percent in March and April, and rose to 4.6 percent in May. The headline inflation rate in May was faster than the 2.9 percent recorded a year ago. The spike in consumer prices prompted calls from some sectors to suspend the TRAIN’s implementation. As it requires another legislation to do this, experts and government officials, such as Agriculture Secretary Emmanuel F. Piñol, said putting in place price controls or setting a suggested retail price for farm products and manufactured goods could help slow inflation. Piñol threw his support behind proposals to set an SRP for farm products after meeting with farmers and food producers last week. Republic Act 7851 allows implementing agencies, such as the Department of Agriculture, to set SRPs for farm products. Section 10 of RA 7851 indicated that the head of the implementing agency may issue SRPs 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. A study conducted by the Department of Justice’s Office For Competition (OFC) on SRPs in 2015 noted that the rationale behind it is “to ensure the availability of basic necessities and prime commodities at reasonable prices at all times without denying legitimate businesses a fair return on investment.” The SRP, according to the DOJ study, is the government’s avenue to provide effective and sufficient protection to consumers against profiteering, especially during periods of calamity, emergency and widespread illegal price manipulation. The DOJ study, however, said “price caps masquerading as SRPs may inadvertently draw attention away from the real causes of inflation.” It also found that there are no adequate rules or guidelines on imposing the SRP—no prescribed period, process, standards, bases or conditions to guide an agency in determining SRP. Agencies have implied SRPs as a de facto price ceiling with corresponding penalties. The current practice related to setting SRPs, the study noted, could prevent natural supplydemand correction, promote black markets and inhibit industry growth and product development. Poultry growers belonging to the United Broilers Raisers Association made the same arguments when they urged the government to go slow on imposing SRPs for farm products. Ubra President Jose Elias Inciong said agri-fisheries products are priced based on available supply and the market’s demand. Inciong also said pricing for products, such as dressed chicken, varies as the market is not homogenous—it is peddled in supermarkets, wet markets and to institutions. The law allows the government to put in place SRPs, but careful study must be made first. Implementing agencies must see to it that producers and other stakeholders are properly consulted and involved in setting these SRPs. Apart from the SRP, the government could consider the recommendations of the study, which include tapping, expanding and promoting existing government retail and distribution outlets and expanding the existing reward and recognition programs for outstanding suppliers. The OFC noted that the Price Act directs implementing agencies to set aside a buffer fund to procure, purchase, import or stockpile basic necessities and prime commodities and to find ways to distribute these products at reasonable prices.
What goes around comes around Teddy Locsin Jr.
Free fire Continued from A1
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oday, commitment to a balanced and healthful ecology is yet another pillar of yet another Philippine Development Plan. But the scourge of convenience runs unabated: in the scourge of plastic. Plastic is the handiest thing ever invented; the most convenient because it is the most disposable—and yet the hardest thing to get rid off. While deep inroads against it have been made—plastic bags are banned in most localities—nonplastic alternatives aren’t as convenient: starting with straws that melt in your mouth. Refusing to provide plastic
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plastics are rife, but the problem is too overwhelming; coming as it does, not only from within the country, but even more from without—borne on the bright blue ocean circling the Earth; speckled with gleaming plastic foam. A definitive solution is nowhere in sight because it is not something that can be imposed but must
be adopted: a habit near impossible to form. Nonetheless, efforts must start the day before yesterday. Plastics are killing off life in the oceans. There is a dystopian Taiwanese novel of a world with archipelagoes of plastic garbage spawning a race of plastic humanity. Each of us in this room, and each of the countries we represent, can contribute significantly toward this endeavor; going plastic-free starts with the individual. It cannot be stressed enough that individual efforts, though small, create significant ripple effects. The roles of communities, the government and corporations are crucial, and it has had effect in one place and another. But the world is a ball, and what goes around comes around— to thousands of miles of our coast. And nothing more relentlessly than nonbiodegradable plastic garbage. Thank you.
Chasing cartels for the benefit of consumers Atty. Johannes Benjamin R. Bernabe
Competition Matters
Since 2005
BusinessMirror A broader look at today’s business
shopping bags at the cash register is seen as another way to shortchange customers. Proposals to encourage and subsidize alternatives, even to proscribe and criminalize the importation, manufacture and use of
It cannot be stressed enough that individual efforts, though small, create significant ripple effects. The roles of communities, the government and corporations are crucial, and it has had effect in one place and another. But the world is a ball, and what goes around comes around—to thousands of miles of our coast. And nothing more relentlessly than nonbiodegradable plastic garbage.
P
utting a halt to cartels and other collusive acts lies at the heart of the Philippine Competition Commission’s (PCC) effort to improve consumer welfare.
The review of mergers and acquisitions, often involving large corporations, while gaining the lion’s share of attention, is perceived by many as mainly affecting competitors in the market who may be eased out because of the monopolization or dominance by the merged entity. On the other hand, the PCC’s mandate to curtail abuse by an entity of its market power is seen as more directly impacting suppliers, distributors and other entities involved in the production or marketing chain of a good or service. However, all consumers bar none, look at price-fixing, bid rigging, output limitation and market allocation —the last two in the sense that they result in increased prices—as a bane of their existence. Hence, agreements to fix prices are regarded as acts characteristic of “hard-core cartels.” These types of agreement are by their nature inherently bad, such that no analysis is needed of their effect on competition. Under the Philippine Competition Act (PCA), price-fixing and bid rigging are per se prohibited, which means that there is no defense or circumstance that could ever justify their commission. Market competitors found by the PCC to have committed these acts are not only subject to administrative
fines of up to P100 million for a first offense and between P100 million and P250 million for a second offense; moreover, if found guilty by the regular courts, these competitors are liable for criminal penalties in the form of imprisonment of two to seven years, and a fine ranging from P50 million to P250 million. If committed by corporations, the penalty of imprisonment shall be imposed upon their corporate officers and directors. Cartel agreements between or among competitors, which have the object or effect of substantially preventing, restricting or lessening competition by restricting output, technical development or investment are subject to the same administrative and criminal penalties. The same goes for agreements that divide or allocate markets among competitors. These kinds of agreements are similarly seen as egregious and, as such, penalized heavily. The difference, however, with the first type of agreements that seek to fix prices or rig bids is that unlike the latter, the PCC must prove that an agreement, for instance restricting output, has the “object” or “effect” of substantially lessening competition. As such, the PCC must not only prove that an agreement, formal or informal, tacit or explicit, exists; in addition, it
Under the Philippine Competition Act, price-fixing and bid rigging are prohibited, which means there is no circumstance that could ever justify their commission. Market competitors found to have committed these acts are subject to administrative fines of up to P100 million for a first offense and between P100 million and P250 million for a second offense; moreover, if found guilty by the regular courts, they are liable for criminal penalties in the form of imprisonment of two to seven years, and a fine ranging from P50 million to P250 million.
must necessarily conduct an analysis of the agreement to determine whether it substantially lessens competition in the market. Does it, for example, have the purpose of dividing the geographic market such that an entity is only allowed to supply its services in Metro Manila, while its competitor supplies the rest of Luzon? Even if the agreement does not expressly provide for this purpose, if examined in its overall legal or commercial context, can there be no other inference but that the agreement has the object of restricting competition in the market? Alternatively, if this object is not apparent, the PCC can look at the likely or actual effect of the agreement on the market. In this case, the Commission will use economic analysis to prove the pernicious effects a market allocation or an output limitation agreement has on competition and on consumers. Since economic analysis will be availed of to establish liability, it behooves the Commission to ensure that its conclusions on the effect of the agreement are robust and evidence-based.
The third category of anticompetitive agreements prohibited under the PCA is meant to catch all other kinds of collusive acts and need not even be among competitors. For instance, an agreement between a government-owned or controlled medical insurance corporation and an association of health professionals that limits payments to the latter to services that are provided under certain discriminatory conditions may be caught by this prohibition. Its criterion is that entities collude or otherwise agree to engage in acts that have the object or effect of substantially preventing, restricting or lessening competition. Due to its very broad coverage, this type of agreement is balanced by the so-called ‘rule of reason’ such that the PCC must consider any economic efficiency gains, which allow consumers a fair share of the resulting benefits that may be raised by the parties complained against. While this efficiency argument does not afford the parties an automatic exemption from prohibition, it does provide them a potential defense or justification against liability. The PCC’s ability to navigate and hurdle the conditions for successfully prosecuting cartels and various types of anticompetitive agreements described above will make a marked difference in the Commission’s goal of directly improving the lives of Filipino consumers. Commissioner Bernabe served as adviser to the Senate and the House of Representatives in the drafting of, and deliberations on the Philippine Competition Act. A lawyer by profession, he was a senior fellow at the Geneva-based International Centre for Trade and Sustainable Development and served as the Philippines’s lead trade negotiator on select issues at the World Trade Organization, also in Geneva, Switzerland.
Opinion BusinessMirror
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Wednesday, June 13, 2018 A7
‘Trump card’ triggers G-7 crumble, China bloc strengthening? Michael Makabenta Alunan
on the contrary
T
he G-7 super powers bloc is now teetering, which could drastically overhaul the global political alchemy of influence toward China owing to the symbolic ”Trump card” played by US President Donald J. Trump’s insistence on keeping Russia in the G-8 against France’s threats to exclude the United States and Russia for a reduced G-6, while across the globe the China-led bloc held simultaneously the Shanghai Cooperation Organization (SCO) summit in Qundao, as Trump also held a peace summit with Kim Jong Un in Singapore. Put in Russia over G-6 “Nyet?” Over the past months, French President Emmanuel Macron, British Prime Minister Theresa May, and German Chancellor Angela Merkel visited Trump separately to convince him, apart from trade issues, to gang up on Russia for its alleged string of abuses like the March 4 father and daughter Skrippal poisoning or the April 7 Duoma, Syria chemical bombing, believed now to be a machination of British-creation “White Helmets” rescue organization colluding with the terrorist Jhadi al-Islam. Without prior investigation over
the Skrippal poisoning, May expelled in mid-March 23 Russian diplomats, and got the US and Europe to kick out 144 Russians. May called on Russia to prove its innocence in a mockery of justice when the burden of proof supposedly shifts back to the accuser. Putin was unlikely behind lest he risked his reelection that March. Unfortunately, the “Cry of Wolf” British propaganda is losing credibility, more so recalling ex-Prime Minister Tony Blair’s false alarm over Saddam Hussein’s “Weapons of Mass Destruction” hoax, but caused deaths to hundreds of thousands of
See you at the ‘Mandirigma’ book launching
refugees, the rise of ISIS and irreparable damage to Syria-Iraq. And why would Trump swallow the Russian bogey when he is being framed up for possible impeachment since Day 1 in a systematic campaign linking him to Russia’s alleged interference in US elections that catapulted him to the presidency, which appears to be another hoax involving another British spy Christopher Steele, thus increasingly discrediting the Robert Mueller probe on Russiagate. So, when France says Nyet (meaning No in Russian), Trump insisted on including Russia in the G-8 coalition mix to bring “world peace.” Cracks in G-7, North Atlantic Treaty Organization (Nato) worsening. Italy’s populist new Prime Minister Giuseppe Conte, a law professor and first timer in politics, is unnerving conservative Europe as he supported Trump’s position on Russia. Trump invited Comte to visit Washington. Conte survived an attempted coup in Italy, and now wants to revive Franklin Roosevelt’s 1933 Glass-Steagall Act, separating commercial and investment banking that brought stability to the financial sector, although since its repeal in 1999, the financial markets went thru chronic disastrous booms and busts, with the 2008 global financial
Trump finds the Middle-East war as senseless, costing $7 trillion the past 15 years. He has talked peace with North Korea, a strategic historic move, brokered by China’s Xi Jinping, who is spearheading the “Belt and Road” initiative with rival India and Pakistan now joining and easing old tensions with China.
crisis as the last serious one. Wall Street opposes going back to Glass-Steagall, and prefers freer markets, which, unfortunately, led to ballooning derivatives and fictitious debts to over $708 trillion in 2016 alone, bigger than the global GDP of $70 trillion a year. While big banks were bailed out, small banks lending to small businesses creating physical wealth were forced into bankruptcy. From 2007 to 2012 alone, scores of small American banks closed shop. At the Quebec G-7 summit, Trump rejected a supposed sideline meeting with May, and effectively cancelled a meeting with Macron after showing up late. G-6 is composed of France, Germany, Italy, the United Kingdom, Japan and Canada, which are also the
Enforcing the Foreign Account Tax Compliance Act in the Philippines
Florante S. Solmerin
FACT IS MIGHT!
O
n June 14 at 1 p.m., the family and friends of retired Major General Alexander Ferrer Balutan of the Philippine Marine Corps (PMC) will host a book launching about the colorful life of the general who is now the general manager of the Philippine Charity Sweepstakes Office (PCSO). This will take place at the Aguinaldo Hall of the AFP Commissioned Officers Club (AFPCOC) in Camp Aguinaldo, Quezon City.
Defense reporters gave the general the moniker “Mandirigma” (warrior). His name reverberated when he defied a gag order from his commander in chief during congressional inquiries on the 2004 presidential election fraud in Mindanao because of the “Hello Garci” scandal. Then a lieutenant colonel, he was placed in a floating status and his promotion was frozen indefinitely while facing court martial proceedings. Unlike some military and police officers who had a stint in Davao del Norte and came to know personally then-Davao City mayor and now President Rodrigo Duterte, Mandirigma was just one among many military officers who paid the President a courtesy call. Thus, it came as a surprise when Duterte appointed Balutan to the top post of the Bureau of Corrections (BuCor), the government’s maximum penitentiary allegedly under the influence of drug lords that control the multibillion-peso shabu industry. He was Navy vice commander when Duterte appointed him BuCor chief. He has to file an early retirement as he still has a few months to remain in the service. A member of the Philippine Military Academy (PMA) “Matikas” Class of 1983, Balutan is a multiawarded officer in the corps. Before the Hello Garci scandal, Mandirigma had fought and survived countless battles in Mindanao, including the historic capture of Camp Abu Bakar in Maguindanao in 2000, the main camp of the Moro Islamic Liberation Front (MILF), where he led his warriors at the frontline. Balutan is outspoken on issues involving public interest, always ready to defend what is right and just and willing to take the
consequences of his action. Reporters love him because he is media savvy, giving the best “quotable quotes” to journalists to help their stories land on the front page. In more than a decade that I covered the defense beat as reporter, I have written stories about corruption and the lingering “bata-bata system” in the military. The officers involved hated me, spied on me and even threatened me when I keep writing about their shenanigans. But it was this kind of news gathering where I built reliable contacts and earned the trust and confidence of my news sources. These officers and men of the military will volunteer information to me through a secured line to avoid electronic interception. Madirigma is one good source that journalists love to have in the defense beat. He has that charisma because of his “to-set-the-recordstraight” statements on military and social issues. He is a decorated Marine general, and, to his men, he walks the talk and leads by example. Mandirigma is a no-nonsense PCSO general manager. Although vilification campaigns are par for the course, his unbending integrity as a public servant cannot be tainted. That’s because of his transparent method of running the agency coupled with his compassion as a leader. Mauro Gia Samonte wrote the book—MANDIRIGMA, In War Time And In Peace—to be launched on Thursday. I don’t personally know the author, but I admire his writing style. Folks can have the 116-page book that portrays the colorful life of Mandirigma for only P250. See you at the book launch. E-mail: fetad@yahoo.com.
major partners of the Nato, which Trump considers obsolete and be scrapped as a remnant of the cold war. Trump could not forget when Obama sent 4,000 troops to Poland through Nato only two weeks before Trump took office, provoking Russia and disrespecting his incoming presidency. Trump threatens old militaryindustrial complex. We may hate Trump for his misogynist, Islamophobic, racist remarks and womanizing past, but what he is doing leads to world peace, which, ironically, is a “casus belli” or justification for war to what President Eisenhower calls the military-industrial complex, which wants to perpetuate the Cold War and pursue British Lord Palmerston’s idea on the need for “Permanent War and Permanent Revolution.” Palmerston is the same guy who said there are no permanent friends or enemies, but permanent interests. Trump finds the Middle-East war as senseless, costing $7 trillion the past 15 years. He has talked peace with North Korea, a strategic historic move, brokered by China’s Xi Jinping, who is spearheading the “Belt and Road” initiative (BRI) with rival India and Pakistan now joining and easing old tensions with China. One of BRI’s numerous infrastructure development projects is
Dennis B. Funa
INSURANCE FORUM
T
he Foreign Account Tax Compliance Act (Fatca) is a US legislation that is part of the 2010 Hiring Incentives to Restore Employment (HIRE) Act, and forming part of four new sections incorporated into the US Internal Revenue Code. It is a law designed to improve offshore US tax collection by eliminating tax avoidance and evasion. According to the Internal Revenue Service (IRS), Fatca is “an important development in US efforts to combat tax evasion by US persons holding investments in offshore accounts.” Specifically, it requires US citizens to report their offshore financial accounts and to require foreign financial institutions (FFIs) and nonfinancial foreign entities (NFFEs), in this instance, banks and insurance companies in the Philippines, to report to the IRS accounts of their American clients. This reporting obligation requires reports on US account holders’ names, TINs, addresses, as well as accounts balances and withdrawals. The premise of the law is that much tax revenue can be collected overseas particularly in tax
havens. This is a major shift in US tax policy. The US imposes taxes on the worldwide income of its citizens and resident aliens. FFI includes any non-US entity that: a) is engaged in banking or similar business; b) holds financial assets for the account of others as a substantial portion of its business; c) is in the business of investing, reinvesting or trading in securities, partnership interests, or commodities; or d) is engaged in certain insurance related activities. The target of Fatca are “US persons,” meaning US citizens and US permanent residents who are residing outside the US. Reporting of these US persons are made through Form 8938, which is filed together
The remedy to this legal obstacle is the conclusion of an intergovernmental agreement with the US government. In this regard, the US Department of Treasury has drafted model IGAs. One model proposes that FFIs will report the required information to the local tax authority (i.e., the Bureau of Internal Revenue), and it is the BIR that will provide information to the US authorities.
with the US tax returns if they are worth more than $50,000. As a penalty, these US persons will be subject to a 40-percent penalty for underreporting of income. On the other hand, FFIs are required to report to the US Treasury foreign financial accounts exceeding $10,000. Noncompliant FFIs will be subject to a 30percent withholding tax on certain payments to the FFI from US sources, such as interests, dividends, rents, royalties and other types of “fixed and determinable” income, on top of the other usual taxes. The Fatca has been the subject of numerous criticisms. One of these is that FFIs and foreign regulators have been converted into “unpaid IRS agents” and the cost of implementing
the 30-year delayed Kra Canal in southern Thailand that will cut travel distance by 1,200 kilometers from China or Japan to the Indian Ocean, without going down around the Malaysian peninsula through Singapore. If pushed through, perhaps, China can relax its hegemonic expansion in the West Philippine Sea. Beware temptations of arms race. While BRI is for peace and massive development, the world must not be complacent as a rising power is tempted to expand its influence, while a weakening America will feel threatened to a point that both may be dragged into what is called the “Thucydides Trap,” which I wrote about two years ago, which are lessons behind the fall of the Greek civilization due to the senseless 27-year-long Peloponnesian wars resulting from stupid hubris or arrogance, and false honor and pride of the warring Greek leaders. Out of tradition, the super powers are still fueling wars indirectly as the US, Russia, China and to a lesser degree, France, Germany and the UK are still the largest arms exporters, with Asia as the biggest recipient. This is where world opinion must go aggressive in turning “swords into ploughshares” as one Bible message says. E-mail: mikealunan@yahoo.com
it far outweighs the projected gains. The reporting obligation has posed legal obstacles, the most contentious of which is the legality of FFIs disclosing the required information in possible violation of domestic laws, such as those on data protection rules and confidentiality issues. Specifically, the Bank Secrecy law (RA 1405) and the Data Privacy Act of 2012 (RA 10173). The remedy to this legal obstacle is the conclusion of an intergovernmental agreement (IGA) with the US government. In this regard, the US Department of Treasury has drafted model IGAs. One model proposes that FFIs will report the required information to the local tax authority (i.e., the Bureau of Internal Revenue), and it is the Bureau of Internal Revenue that will provide information to the US authorities. A variation model is where the US will be bound to share information to another jurisdiction on a reciprocal basis. The first Fatca IGA was signed by the US with the United Kingdom on September 12, 2012. Once the IGA is in place, the FFIs will be called “participating FFIs.” This IGA is subject to ratification by the Senate. Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.
Agricultural workers bat for approval of Genuine Agrarian Reform Bill MAIL
This is in response to the BusinessMirror’s news story, “PARC seeks to widen powers to deal with ‘problematic’ agri venture deals,” published on June 6. The Unyon ng mga Manggagawa sa Agrikultura (UMA) stated that the Department of Agrarian Reform (DAR) wants to maintain Agri-business Venture Agreement (AVA) to reconcentrate agricultural lands to landlords and foreign
agro-corporations. This is by proposing to grant more powers for the Presidential Agrarian Reform Council (PARC) over AVA cases. AVAs are agreements between private multinational and local plantation corporations and big landlords with agrarian-reform beneficiaries (ARBs), settlers, indigenous peoples and even landlords. Such a scheme like the AVA is also part of the government’s adherence to neoliberal policies, dictated by, among others, the World Trade Organization and the World Bank to devote large areas of lands and water resources for export-crops, mostly under the effective control of agribusiness transnational corporations. The DAR had also been remiss in its obligations in AVAs between ARBs and corporations. This can be shown in the results of the research on AVAs by the Food and
Agriculture Organization (FAO) of the United Nations and the DAR in 2016. Only 57,000 plus hectares of AVAs out of 1.2 million hectares, or only 4.75 percent, have been registered with the DAR. At the same time, none of the 433 contracts that had been executed between various ARBs/ Arbos and agribusiness companies by December 2015 were reflected in DAR records. FAO was only able to secure 57 AVA contracts from DAR provincial offices. In addition to the above, in a direct quote from the FAO study, it also revealed that, “Very few contracts are actually reviewed and approved by the DAR, because companies tend to feel very proprietary about their agreements. In addition, DAR personnel have limited technical capacities to review the validity and desirability of the AVAs. Although from a strictly legal point of view, contracts
which have not been approved by the DAR are null and void, in accordance with section 4.9 of DAR Administrative Order 9 s. 2006, this provision has not been strictly enforced by the DAR nor the parties involved.” So if the DAR has this dismal record covering only 4.5 percent of the agricultural lands under AVA, how can it say that it wants to grant more powers for the PARC over AVA cases? UMA suggests that the government should instead pass the Genuine Agrarian Reform Bill (GARB or House Bill 555), which is gathering dust in Congress, and sign the Comprehensive Agreement on Social and Economic Reforms in the upcoming peace talks with the National Democratic Front of the Philippines in July. John Milton “Butch” Lozande Secretary-General Unyon ng mga Manggagawa sa Agrikultura