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Monday, June 18, 2018 Vol. 13 No. 247
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Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that the inflation rate of 4.6 percent in May could be the highest for the year. “I don’t know [if inflation will be lower than 4.6 percent next month], but 4.6 percent at the most
in the view of Central Bank could be the highest for the whole 2018,” Pernia said. Inflation, Pernia said, is already slowing down and will enable the Central Bank to still meet the 2 percent-to-4 percent inflation rate target range for the year.
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ILL the US-China trade war take a toll on the Philippines? Far from it, Trade Secretary Ramon M. Lopez said, noting the country might even stand to benefit from the escalating economic tension between China and the United States. In a text message to reporters, Lopez shrugged off fears that the Philippines is at the short end of the stick with China and the US going all out in their trade conflict. “The ongoing trade war by two major economies, [the] US and China, is not seen to have a major impact on the Philippines,” he said. Lopez explained largely attributed his optimism to the trade deals the country has with the two superpowers. For one, Philippine exporters are enjoying duty-free
See “Inflation,” A2
3,500 The number of Philippine product lines that enter the US market at zero-percent duty under GSP privilege
importation of more than 3,500 goods to the US under the General System of Preference (GSP). “[The] Philippines still currently enjoys GSP privilege with the US, covering 3,500 product lines that enter the US market at zero-percent duty. Moreover, we are enhancing trade arrangements with the US under the Trade and Investment Framework Agreement as a step toward a possible bilateral free-trade agreement [FTA],” Lopez said. See “US-China,” A2
bsp unfazed by uptick in external debt to $73.2B By Bianca Cuaresma
@ReaCuBM
See “DOF,” A2
@alyasjah
The month-on-month inflation rate has slowed in May to only 0.1 percent, from 0.2 percent in April; 0.5 percent in March; and 0.4 percent in February. “That’s what we’re seeing, the acceleration [has slowed down], the rise in inflation has already slowed
By Rea Cu
PHILIPPINE delegation, led by Finance Secretary Carlos G. Dominguez III, flies to Tokyo this week to share with investors prospects for the country’s economy, and continue high-level dialogues with Japanese ministry officials on flagship infrastructure projects where Japan can play a role in. The Tokyo visit on June 18 to 21 will include a Philippine Economic Briefing (PEB), the second to be held in Tokyo since last year, and the fifth regular meeting of the Philippines-Japan High-Level Committee on Infrastructure and Economic Cooperation, the Department of Finance (DOF) said.
By Elijah Felice E. Rosales
“I don’t know [if inflation will be lower than 4.6 percent next month], but 4.6 percent at the most in the view of the Central Bank could be the highest for the whole 2018.”—Pernia
DOF to woo Japanese funds for infra works
U.S.-CHINA TRADE ROW WON’T IMPACT PHL BADLY–DTI CHIEF
@cuo_bm
HE worst may be over when it comes to high commodity prices as inflation is expected to slow starting in June, according to the National Economic and Development Authority (Neda).
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The worst may be over for inflation: Neda chief By Cai U. Ordinario
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LITERATURE AS ART, LITERALLY A curious visitor looks at the “mural” made of hundreds of different books, piled atop each other, displayed in a bookstore in Bonifacio Global City at the weekend. NONIE REYES
PESO exchange rates n US 53.1220
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HE volatility in the value of global currencies pushed the Philippines’s debt stock against the rest of the world to increase in the first quarter of the year, but the Bangko Sentral ng Pilipinas (BSP) said the increase remains “marginal” compared to its level in end-2017. External debt—or all the types of borrowings made by Philippine residents across the world—of the country stood at $73.2 billion as of end-March this year, posting a 0.1-percent, or $98-million, increase from the end-2017 level of $73.1 billion. According to the Central Bank’s report, the “slight increase” in the country’s debt stock during the
quarter arose mainly from the positive foreign-exchange revaluation adjustments due largely from the weakened US dollar against the Japanese yen. The US dollar and the Japanese yen are the two largest currencies in the country’s entire debt stock, with 61.5 percent of the country’s external debt in US dollar and 13.5 percent in Japanese yen. The BSP said the revaluation adjustments between the two currencies pushed the debt stock higher by $655 million for the quarter. Prior periods’ adjustments due to late reporting were also part of the culprit behind the higher debt stock for the quarter. The BSP said the increase in the country’s external debt could have been higher for the quarter, if not
n japan 0.4816 n UK 71.0666 n HK 6.7690 n CHINA 8.2994 n singapore 39.7828 n australia 40.2452 n EU 62.6468 n SAUDI arabia 14.1663
See “BSP,” A2
Source: BSP (14 June 2018 )
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A2 Monday, June 18, 2018
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PHL eyes end-2018 OK of rice tariff law A By Jasper Emmanuel Y. Arcalas
The source said Canberra sought for an update on Manila’s efforts in converting its rice QR into tariffs during the COA meeting on June 11 and 12. The Australian representative to the COA meeting said Manila’s rice tariffication “is an issue being raised for quite some time.” The delegation of the European
Union (EU) echoed the concerns of Canberra and asked the Philippines to hasten its rice tariffication process and abide with its commitment “finally and for good.” “The EU said it hopes it can be done as soon as possible because it is very important,” the trade official said. In a February COA meeting, the Philippines vowed to present its rice tariff law by June; however, the contrasting Legislative priorities of both chambers of Congress delayed its passage. The National Economic and Development Authority (Neda) earlier told the BusinessMirror it is targeting to pass the country’s rice-tariffication law and present it to WTO member-countries by October. “By October, if we still cannot report any substantial progress on the action we have taken, then it will be difficult for us. Our trading partners might ask for further concessions. Worse, we might be sanctioned, but that’s the worstcase scenario,” Neda Undersecre-
tary Rosemarie G. Edillon said in an interview last month. The substitute bill that would amend Republic Act (R A) 8178, or the Agricultural Tariffication Act, which imposed the QR on rice, has already passed concerned House of Representatives Committee levels and is now awaiting plenary deliberations. The House of Representatives earlier eyed to pass the bill in March but faced delays due to other Legislative priorities of the lower chamber. At the Senate, the Committee on Agriculture and Food is yet to issue its consolidated draft bill amending RA 8178 and converting the rice QR into tariffs. Sen. Cynthia A. Villar, chairman
with officials from the Mitsubishi UFJ Financial Group, , Nomura, Mizuho, Daiwa, and the Sumitomo Mitsui Banking Corp. to discuss the Philippines’s plan to float Samurai bonds by the third or fourth quarter of 2018. He will also hold a separate meeting with officials of the Japan Bank for International Cooperation (JBIC) to discuss possible areas of cooperation between the Philippines and the financial institution. Executive Secretary Salvador C. Medialdea; Secretaries Ernesto M. Pernia of the National Economic and Development Authority, Benjamin E. Diokno of the Department of Budget and Management, Arthur P. Tugade of the Department of Transportation (DOTr), and Mark A. Villar of the Department of Public Works and Highways; Bangko
Sentral ng Pilipinas Governor Nestor A. Espenilla Jr.; and Vivencio B. Dizon, president and CEO of the Bases Conversion and Development Authority, are expected to join Dominguez at the PEB scheduled on June 19. “Then after that I’m going to be talking to JBIC. Then the next day we will be meeting with our counterparts from the office of the prime minster, to look at our projects, to review the progress, and to see if there are any bottlenecks we can eliminate,” he added. On June 20 Dominguez and Pernia will lead members of the “Build, Build, Build” team in discussing the progress of the flagship infrastructure projects that the Philippines is implementing with Japanese funding support, during the fifth meeting of the Philippines-Japan High-Level
Committee on Infrastructure and Economic Cooperation. The fifth high-level meeting will discuss how the two governments could further improve cooperation and explore ways to eliminate bottlenecks in loan processing and project implementation. Since convening for the first time in March 2017 in Tokyo, the joint committee has made substantial progress in terms of expediting the approval processes on both sides to facilitate Japanese financing of several of the Philippines’s big-ticket infrastructure projects. “The next time, we want them to come to Clark so they can see the Philippines not just Manila,” he said. Japan has so far provided the Philippines an estimated $36 million in assistance for Marawi’s relief and rehabilitation operations, among others.
recently, had acknowledged that policy-makers apparently underestimated the global oil market’s spikes, and this compounded the impact of the Tax Reform for Acceleration and Inclusion law, which imposed higher excise taxes on fuel, among others. As a result, many sectors initially blamed the TR AIN law for the inflation uptick in April and May.
In a recent joint statement, the Neda, Department of Finance and the Department of Budget and Management pointed out that the increase in oil prices contributed 0.5 percentage points to the overall inflation rate in May 2018. Taken together, other external and domestic factors made a joint contribution to the inflation rate
of 0.7 percentage points, while the TRAIN contributed 0.4 percentage points, the three agencies said. This means that for every additional peso being paid by Filipinos to account for the increase in prices, around 11 centavos was being paid for the higher cost of fuel; 15 centavos for other external and domestic factors; and nine centavos for the TRAIN cost.
@jearcalas
MID pressure from trade partners, Manila informed the World Trade Organization (WTO) that it is “hopeful” of passing the legislation that would convert its quantitative restriction (QR) on rice into tariffs before the year ends. A trade official privy to the matter told the BusinessMirror the Philippines informed members of the WTO at last week’s Committee on Agriculture (COA) meeting that it is facing “unavoidable” delays in passing its rice-tariffication law. The delay, according to the trade official, who was not authorized to speak for the Philippines, was caused by “other pressing priority legislation initiatives of the President” and “limited resources in Legislative and Executive branches of the government.” “It reassured WTO members it will continue to work on it within its resource limit and hopefully update
DOF. . .
Continued from A1
The PEB—which will lay out the plan to sustain the Philippines’s status as one of the fastest-expanding economies in Asia and its programs for inclusive growth— will also set the groundwork for the deal roadshow that the government will roll out for its planned yen-denominated Samurai bond issue. “I’m going to be meeting the banks to talk about the Samurai bonds, that’s the first day. The second day is the economic briefing, that will help set the ground work for the deal road show, this is just the general overview. We will be inviting the economic team there,”Dominguez told financial reporters. The finance chief is also set to meet
Inflation. . .
Continued from A1
down,” Pernia said, speaking partly in Filipino. In May inf lation averaged 4.6 percent due mainly to high oil prices. Fi n a nc e S e c re t a r y C a r lo s Dominguez III, briefing reporters
the information within the year,” said the trade official, who is based in Geneva where the WTO is also headquartered. “The Philippines said hopefully the tariffication legislation can be adopted within this year.”
Canberra, EU concerned
“Give us time. Because we are thinking of the solutions to the problems that [lifting of rice QR] will cause. We are studying it very hard.” —Villar
of the Committee on Agriculture and Food, said she is taking her time in crafting a “better” rice-tariffication law to ensure that farmers would not be at a disadvantage by the influx of cheap foreign rice. “We know what our problems are. We have thught about it and we are thinking [about] how to pass a better law,” Villar told reporters in an interview at PICC on May 31. “Give us time. Because we are thinking of the solutions to the problems that [lifting of rice QR] will cause. We are studying it very hard,” Villar added. Villar is eyeing an end-2018 passage of the bill in the Senate. She earlier vowed to pass it by March as it was a Legislative priority of the Duterte administration. Edillon noted how “crucial” it is for substantial progress to be made by the Philippines on amending RA 8178. Trading partners, such as Australia, Thailand and the United States, have recently raised questions regarding the country’s efforts to scrap the rice QR. These countries may ask for
US-China. . .
more concessions if the Philippines fails to make substantial progress on converting the rice QR into tariff. Australia and the US may seek expanded market access for their livestock products, while Thailand may request for a higher minimum access volume for its rice. Last month Agriculture Undersecretary Segfredo R. Serrano called on the Senate and the House of Representatives to prioritize the passage of the rice-tariffication bill so that the Philippines could immediately comply with its commitment to the WTO. “What we are saying is that the rice-tariffication [bill] should be passed as soon as possible. Let’s not mingle it with other issues, such as the reorganization of the NFA [National Food Authority],” Serrano told reporters in an interview at the House of Representatives in Quezon City on May 21. “Everyone has agreed that we must tariffy, but that doesn’t mean we have to dissolve the NFA. That’s a different issue,” he added.
On the other hand, Manila, as a member of the Association of Southeast Asian Nations, is covered by the regional bloc’s FTA with Beijing. The trade agreement allows Asean member-states to export 90 percent of product lines to China at lower or zero-percent tariff, and vice versa, he added. The trade chief said, “China is also showing its seriousness in helping balance its global trade surplus” with its decision to unilaterally slash most favored nation rates on footwear, headgear, kitchen supplies and apparel to 7.1 percent from 15.9 percent; cosmetics to 2.9 percent from 8.4 percent; washing machines and refrigerators to 8 percent from 20.5 percent; and processed food and mineral water to 6.9 percent from 15.2 percent—all starting on July 1.
of the two economies. He said the DTI is now closely monitoring the situation to see if opportunities will arise from the trade war, such as manufacturers looking to relocate their operations. “This will have a huge impact on the economies of the two countries, as their higher import costs will affect their respective consumers and imported inputsusing manufacturers,” Lopez said. “This may also lead to moves by affected manufacturers to shift their production activities to other countries like the Philippines. [We are] also reviewing product lists—which ones the Philippines can supply,” the trade chief added. US President Donald J. Trump in January also approved the imposition of 30-percent tariff on solar panels and 20 percent on washing machines. The Philippines can just brush off the additional duty on washing machines, Lopez argued, but not so easily the tariff on solar panels.
Apart from the trade deals, Lopez said the Philippines will persist to benefit from China under the Duterte administration’s policy to establish warmer relations with the Asian superpower. “The goodwill established by [President Duterte] with [Chinese] President Xi Jinping continues to open up huge market opportunities for Philippine products to enter the China market,” he said. China and the US have been going at it since January, and the White House added fuel to the fire on Friday by slapping an additional duty of 25 percent on $50 billion of imports from China. Tariffs on roughly $34 billion of Chinese goods will take effect on July 6, while stiffer duties on another $16 billion of products are up for review. Beijing lined up retaliatory measures. It is planning to impose heavier tariffs on $50 billion of American goods, including beef, poultry, tobacco and cars. Lopez believes this tit-for-tat will heavily impact on the respective consumers
“For the Philippines, there is no impact for washing machines, but there is an impact for solar panels since [we have] one major exporter, Sunpower. The company has submitted a position for exemption,” Lopez said. Based in Biñan, Laguna, Sunpower Philippines Manufacturing Ltd. is a producer of solar modules for commercial purposes. It operates as a subsidiary of California-based Sunpower Inc. As for Washington’s move to slap 25-percent duty on steel and 10 percent on aluminum, Lopez said Manila can live with this, given that the country is not a major exporter of the two products. In spite of saying the Philippines is safe from any damage, the trade chief urged China and the US to practice restraint and not escalate matters further. “Of course, we hope the trade issue doesn’t worsen and world trade goes back to globalization mode,” he said. As any believer of free trade would say, Lopez concluded, “Nobody wins in a trade war.”
Continued from A1
Goodwill factor
BSP. . .
Continued from A1
mitigated by the $735-million net principal payments of the country, as well as the transfer of Philippine debt papers holdings issued offshore. Compared to its year-ago figure, however, the BSP pointed out that the country’s debt stock declined by $609 million from $73.8 billion during the period. Indicators of the country’s ability to pay its remaining external debt, meanwhile, have been trending positive for the quarter, the BSP said. In particular, the country’s DSR— or the measure of adequacy of the country’s dollar earnings to meet maturing obligations—improved to 7.6 percent, from the 9.1 percent seen in the same period last year.
Solar panels
The international benchmark range for DSRs is between 20 percent and 25 percent. A lower DSR indicates a positive adequacy of its dollar earnings to meet its obligations. Meanwhile, the Philippines external debt ratio—a solvency indicator—continued to show an improving trend, declining to 19.1 percent from 19.4 percent in the fourth quarter of 2017 and 20 percent a year ago. The BSP also reported that the country’s external debt profile remains skewed to the medium- to long-term debt, representing 82.4 percent of the total debt stock of the country. “This means that foreign exchange requirements for debt payments are well spread out and, thus, more manageable,” the BSP said in a statement. Medium- to long-term accounts are those with maturities longer than one year.
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Ex-Kadamay cries ‘Red’ vs poor settlers’ group
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RBAN poor settlers initially lauded by President Duterte are now accusing each other as enemies of the state. Jeffrey Ariz accuses his former comrades in the Kalipunan ng Damayang Mahihirap (Kadamay) of sympathetic to or are even members of the New People’s Army (NPA), the armed wing of the Communist Party of the Philippines (CPP). Ariz claims to be the leader of the less than 300 families who broke away from Kadamay, and were occupying the housing project intended for members of the Bureau of Fire Protection (BFP) in Pandi, along with at least 100 remaining members of Kadamay. On Saturday Ariz, 31, and another member of his group, Vilma de la Cruz, 22, claimed that the NPA has penetrated the BFP housing project at Barangay Cacarong Matanda, Pandi, and transformed it into a recruitment hub for armed fighters. Ariz said on Sunday that not only one, but all six masshousing projects of the government in Pandi, Bulacan, that were already occupied by members of the urban poor group have been reportedly infiltrated by the NPA. Lt. Col. Eugenio Julio Osias IV, commander of the civil-military operations of the Army’s 7th Infantry Division, said they are validating the claims of Ariz, de la Cruz and their colleagues who have been tagged as “defectors” after turning away from Kadamay. Osias said they could not yet come into the “picture,” unless otherwise asked by the Philippine National Police, since the issue is still considered by Bulacan police officials as a “police matter.” Chief Inspector Manuel de Vera Jr., chief of police of Pandi, said they have their own intelligence report of what is going on in the housing projects and they will take actions accordingly, noting that Ariz’s group is pitted against Kadamay. Ariz said on Sunday that aside from the BFP, the NPA has penetrated Pandi 3, Villa Louise, Padre Pio, Villa Elis and Atlantica housing projects, all in Pandi, wherein it recruits armed members, with particular interest on children as young as 11. “All of the housing projects have been penetrated by the NPA,” Ariz said, noting how individuals with red bandanas have been freely rooming the BFP housing, asking the villages to “join the rebels.” On the other hand, de la Cruz claimed that people, with bandoleers (bullet magazine holders), were even bolder at night, visiting every houses for the recruitment activity and with particular interest on children as young as 11. Rene Acosta
The Nation BusinessMirror
Editor: Vittorio V. Vitug • Monday, June 18, 2018 A3
Time for federalism has come–Duterte
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resident Duterte said the time for the country’s shift to federal government has come, adding that the unitary form of government was only good at the time that the country was developing as a nation.
Since his presidential campaign, Duterte has been pushing for federalism, which he said will help achieve peace in Mindanao and spur economic development throughout the country in all regions and not just in “imperial” Manila. Duterte’s consultative committee tasked to review the 1987 Constitution is also 95-percent to 98-percent done with its draft federal Constitution, which they will be submitting on July 9 to the President, the committee’s self-imposed deadline. This is to give time for the President to review the draft before his State of the Nation Address on July 23. Duterte also noted in his speech on Saturday night that history then did not mind the struggles of both Christians and Muslims in Mindanao and the Moro people. “We have to move away from the unitary form of government, which has been in existence or set up originally by Spaniards. It has always been a strong central government,” he said during a speech before Filipino Muslims during the 2018 Eid’l Fitr celebration at the SMX Convention Center in Davao.
He noted that it is also time for Filipinos to understand that the people in Mindanao have been victims of injustice. “I am for federalism. I am for peace,” he said. Mindanao Development Authority Chairman Datu Abul Khayr Alonto also expressed his support for the President’s campaign promise for the country to shift to federalism. “Nevertheless, it is acknowledged by all groups and experts in peace process that the unitary state and unitary constitution can never fully address the demands and the aspirations of the Bangsamoro, which is sovereignty-based,” he said. Alonto said the country has also witnessed the President’s political will in pursuing the passage of the Bangsamoro basic law (BBL) in Congress minus the unconstitutional provisions which the President cited in his previous pronouncements. Duterte also vowed to pass BBL during his term and hoped that Moro National Liberation Front (MNLF) Founding Chairman Nur Misuari can join the talks. “So that if there are corrections or maybe additions, or provisions that would not sit well with Tausug and the rest of southern part of Mindanao, the maybe we can realize altogether the friction of the [armed Muslim guerrilla groups] and the rest of Mindanao,” he said. The President said it is very important that they get together and pass BBL so as to prevent the entry of terrorist groups. “If, per chance, nothing really works out here in BBL, then give us time because I do not want to fight,” he said. “I do not wage a war against my own countrymen.” Both houses of Congress have passed their own versions of BBL after the President certified the bill as urgent. The bill seeks to advance the creation of the new Bangsamoro region to replace the Autonomous Region in Muslim Mindanao in a bid to address the diverse needs of the Bangsamoro people and all Mindanao communities to achieve lasting peace for the island group and the country as a whole. Bernadette D. Nicolas
President’s assistant digs in on bullet-in-luggage issue
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AVAO CITY—Special Assistant to the President Christopher Lawrence Go on Saturday admonished on Saturday that someone had to eat the bullet, literally. That is, if the recent case of an airline passenger complaining about a bullet in her luggage would turn out intentionally inserted. Malacañang would still have to wait for the result of the investigation conducted by the Manila International Airport Authority, the Office for Transportation Security and the Department of Transportation. Their probe would be submitted anytime on Sunday, Go said, as he clarified that the investigation would also look into the likelihood that it was the luggage owner who brought it along the luggage. “The President has warned that someone would have to eat the bullet if it turns out the item was inserted into the luggage,” Go said. Previous incidents indicated subsequent extortion by airport personnel for the victims but Go said the luggage owner was allowed to go home to avoid getting extorted. He added the President has also instructed all would-be victims to complain, “make noises to attract attention so that authorities could immediately respond.” Go said the President has assured that the tanimbala would not be tolerated under his administration. The warning was raised anew after the luggage of passenger Kristine Bumanglag-Moran was found with a bullet in her luggage while she was undergoing routine passenger and luggage check on Friday afternoon at Ninoy Aquino International Airport Terminal 3. “This was a primary concern of our President, and he had promised then that if there were another incident like that, he would let [the guilty personnel] eat the bullet,” Go told reporters shortly after the President delivered his speech during the Eid’l Fitr celebration at the SMX Convention Center here. Manuel T. Cayon
A4 Monday, June 18, 2018 • Editor: Vittorio V. Vitug
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DTI seeks ₧4-B fund for MSMEs in 2019
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By Elijah Felice E. Rosales
@alyasjah
he Department of Trade and Industry (DTI) is seeking to double its funding for micro, small and medium enterprises (MSMEs) to P4 billion next year, but exporters believe this is insufficient to cushion the impact of a shifting global value chain and a national policy on contractualization. Trade Secretary Ramon M. Lopez said his agency is asking for a 35.14-percent increase in its budget for 2019. If approved, this will hike the DTI’s budget to P7 billion, from this year’s P5.18 billion. “Yes, of course, [we asked for an increase],” Lopez told the Business-
Mirror. He said a budget hike is needed to improve the agency’s programs and services, particularly on microfinance, shared service facilities (SSFs), exports promotion and consumer protection. Of the proposed P7-billion budget, Lopez said about P4 billion is listed for MSME development. This is almost
double this year’s allocation of P2.25 billion for MSMEs. The DTI’s budget could also soar to as high as P13 billion if Lopez’s appeal to improve funding for the Pondo sa Pagbabago at Pag-asenso (P3) program is approved. The trade chief is proposing to assign P6 billion for the government’s loan service, backed by President Duterte’s desire to set aside at least P4 billion for microfinance. “With the President’s desire to intensify support to MSMEs, there would be additional budgetary support [for them],” Lopez said. The problem, however, is that the DTI had submitted its budget proposal before Duterte decided to increase the funds for the P3 program. “The budget for next year has been submitted, and it did not reflect the P4 billion [stated by the President],” Lopez explained. Either way, he said MSMEs can expect enhanced government assistance next year. Under Lopez, the DTI is utilizing the P3 program and the SSF proj-
ect to improve the capacity of MSMEs. The P3 program is designed to give MSMEs easy access to credit, where they can borrow as much as P300,000 with a maximum interest rate of 26 percent per annum and no collateral requirement. It is also intended to veer them from onerous loans, particularly the “5-6” money-lending system, which has a 20-percent interest per day, week or month charged by the lender. The SSF project is aimed at improving thequalityandproductivityofMSMEsby providingthemwithaccesstotechnology, machinery, equipment, tools, systems, skills and knowledge under a communal system. It hopes to resolve the gap and bottlenecks in the value chain and encourage MSMEs to graduate to larger enterprises with wider market share. However, the Philippine Exporters Confederation (Philexport) believes more work—and funding—is needed to make the country’s MSMEs on a par with its counterparts in Southeast Asia. Philexport President Sergio R. Ortiz-
Luis Jr. said at least P10 billion must be allocated for MSMEs if the government is really serious in boosting their market share in the global value chain. “MSMEs in the Philippines are the most starved in Southeast Asia, and the requirement [to really help them] is in the tens of billions,” he told the BusinessMirror. Ortiz-Luis said the current P2.25billion budget for MSME development can only do so much. “It will just be scratching the surface, unless we can create a way that MSMEs can access credit on easier terms and requirements are not too stringent,” he said. “The format of lending should be amended. There has to be acceptance [from the government] that repayment will not be good, but [the loans] will create jobs,” Ortiz-Luis added. He said he understands repayment is important because government funds are monitored and audited, and this is why he is of the view that a chunk of the conditional-cash transfer (CCT) must be apportioned to MSMEs.
“At least, the CCT requires no repayment because it is handed directly to beneficiaries,” Ortiz-Luis said. ThePhilexportchiefalsosaidchallengesawaitMSMEsinthecomingmonthsand up to next year, with the global value chain anticipated to drastically change with the uncertaintyofglobaltradeandthedomestic labor force expected to absorb impact fromthePresident’snewpolicyprohibiting contractualization. Maria A legria Sibal-Limjoco, president of the Philippine Chamber of Commerce and Industry, said she agrees MSMEs must receive more funds next year. For her, this is the “opportune time” to grow the sector that comprises 99 percent of Philippine business establishments. “If need be, we must increase [budget for MSME development],” Limjoco told the BusinessMirror. She said the current P2.25-billion allocation must be increased by at least 10 percent, or by P225 million, to improve the capacity of MSMEs.
Senate to look into funding sources for ‘BBB’ projects By Butch Fernandez
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@butchfBM
he Senate is poised to conduct an inquiry into the financial requirements of the Duterte administration’s over
P1-trillion “Build, Build, Build” (BBB) projects, with a view to weighing the debt risks. Sen. Sherwin T. Gatchalian, Economic Affairs Committee chairman, said over the weekend the upcoming review is intended
to “ensure the judicious, prudent and sound economic planning” by the government as senators assess the “status, sustainability and risks of projects” to be funded under the massive infrastructure program.
“There is a need to closely monitor the debt obligations and modes of financing incurred and adopted by the Duterte administration for its Build, Build, Build program to ensure transparency, accountability, and prudent use of loans and other financing methods utilized by the government,” the senator said in filing a resolution to conduct the BBB hearings, expected to be officially referred to his committee soon as Congress reconvenes regular sessions on July 23. He pointed out that 40 out of 75 approved infrastructure projects as of July 2017 was expected to be funded through official development assistance, which comprises the bulk of ex penditures amounting to P1.006 trillion. This, the senator noted, as the national government’s total outstanding debt as of December 2017 already added up to P6.65
trillion, while around P329.05 billion was allocated for debt servicing in the 2018 General Appropriations Act. Just this month, Gatchalian recalls the Bangko Sentral ng Pilipinas reported that the country’s external debt-to-GDP ratio was 23.3 percent in 2017—a five-year low and a 5.6-percent decrease from the 28.9-percent ratio recorded in 2013. He stressed that it is “incumbent upon us senators, in the exercise of our power of the purse, to ensure that public funds diverted from health, education and social services financing for debt services payment are properly appropriated.” Gatchalian added that as a flagship infrastructure program of the Duterte administration, “the BBB is expected to spur infrastructure spending from 2017 to 2022 to about P8 [trillion] to P9 trillion, resulting in annual infra spending of P1.4 trillion.”
Govt eyes tweaks in Conditional Cash Transfer Program By Cai U. Ordinario
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@cuo_bm
he national government remains open to the possibility of including employment as a precondition to availing of conditional-cash transfers (CCT), according to an official of the National Economic and Development Authority (Neda). Neda Undersecretary Rosemarie G. Edillon told the BusinessMirror that the employment condition was recommended by Agriculture Secretary Emmanuel F. Piñol. “This could be a good enhancement but it will need to be carefully studied versus the original objective of addressing intergenerational poverty,” Edillon said. Edillon said adding the employment condition on top of the existing requirements to avail of the CCT has to be balanced with the ease of compliance and overall implementation. In the health and education part of the CCT condition, she noted that the government helps poor families achieve these through public schools and health centers. But, Edillon said, securing employment will require more effort on the part of the poor. “This has to be balanced with the ease of compliance to the conditions, which we want focused on human capital investments for the children,” Edillon said. “Note that for the latter, the government provides the service, beneficiaries just need to exert effort to claim it. Unlike if employment will be used as a condition,” she added. Local economists, however, stressed that there is no available data to prove that extending CCT makes the poor lazy. Ateneo Center for Economic Research and Development Director Alvin P. Ang said the Pantawid Pamilyang Pilipino Program (4Ps) is too small for the poor for them to forego any plans of getting employed. Ang said the 4Ps is not a source of income for the poor but the government’s investment in the future, especially for young Filipinos by ensuring they are educated and healthy. “The 4Ps is too small to make people become lazy. Again people is misled to think that 4Ps is for poverty alleviation,” Ang said. “It’s a human capital investment by the State but requires beneficiary to do something to increase their income.” Philippine Institute for Development
Studies (Pids) Senior Research Fellow Jose Ramon Albert also said adding an employment condition to access the 4Ps will not help the poor. Albert said the country’s CCT is achieving its objectives of keeping children in school and reducing stunting. This has been proven through studies made by the government’s think tank Pids and other institutions. However, he said that as it is, the CCT program is “imperfect” and will still need some adjustments to better respond to the needs of the poor. “Many nonpoor are just of the view that the poor are lazy and no amount of data or studies will convince them. They just don’t care,” Albert said. “They just think the CCT is a waste of money even if the CCT has produced many positive outcomes though imperfect.” Some adjustments, Albert said, include possibly revising thresholds for the CCTs for those classified as “extremely poor” and “poor.” Admittedly, he said, the grants extended to some poor families are not enough to maximize the benefits of the CCT. Albert added that the government can explore the possibility of giving different cash transfers for girls and boys to respond to their different needs. “[These can make the] outcomes stronger. The CCT is getting undue criticisms and for things that are not supported by data,” Albert said. Other efforts must also be extended by the government to reduce the cost of receiving the cash transfers. Edillon said the CCTs are usually extended to beneficiaries in far-flung areas. This means that beneficiaries spend much money just to claim their grants. “In some places, the transfer is given in blocks, like quarterly, making the amount substantial. But these cases arise because of the high cost of the transfer. This needs to be studied,” she said. The 4Ps started with 284,000 beneficiary households in 2008. By 2015 beneficiaries expanded to 4.1 million households. In terms of population, the number of beneficiaries rose from 662,000 children aged 0 to 18 years old in 2008 to 10.2 million in 2015. Today the program covers about 79 percent of poor households whose income is less than the amount needed to basic necessities.
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The Regions BusinessMirror
Aboitiz, Nueva Ecija co-op ink renewable energy agreement A BOITIZ Power Corp. has inked a contract with Nueva Ecija II Electric Cooperative Inc. (Neeco II) to supply the latter with 33 megawatts (MW) of renewable energy (RE). C lea nerg y, A boit i zPower ’s brand for clean and RE, will be delivered to Neeco II-Area 1, which includes the towns of Talavera, Lupao, Carranglan, Aliaga, Quezon, Licab, Santo Domingo, Muñoz, Guimba and Talugtug. The 33 MW represents 80 percent of the peak demand of Neeco II’s service area. Neeco II-Area 1 Board President Reynaldo V. Villanueva said the decision to shift to RE is a key milestone for the cooperative, which was established in 1975 and has since sourced its energy requirements from nonrenewables. “We consider our Cleanergy partnership with AboitizPower as a major accomplishment because we have been using nonrenewable energy since we started operations 40 years ago,” Villanueva said. “But we wanted to explore other energy options to maximize benefit to our customers, and at the same time, minimize impact on the environment,” he added. “So we looked at several power com-
panies and in terms of track record, capacity and customer service, AboitizPower emerged as our power partner of choice.” Neeco II-Area 1 is the third electric cooperative in Luzon to use Cleanergy for its customers. However, AboitizPower has been providing clean and RE for 40 years now from its portfolio of hydro, geothermal and solar-power plants, which are strategically located all over the Philippines. AboitizPower and its partners produce more than 1,200 MW of clean and RE from 30 power plants. Early this year, eight electric cooperatives in Mindanao have also contracted a total of 45 MW of Cleanergy, adding to AboitizPower. The company added that the fast-growing Cleanergy clientele also includes some of the most sustainable organizations in the country. Luis Miguel Aboitiz, EVP and COO of AboitizPower Corporate Business Group, said the company “continuously strives to address the increasing demand for RE.” “The Cleanergy brand is our solut ion to t he g row i ng de mand for RE in the country,” he was quoted in a statement as saying. Lenie Lectura
Editor: Dennis D. Estopace • Monday, June 18, 2018
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Netizens urged to report illegal trade in wildlife
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By Jonathan L. Mayuga
@jonlmayuga
O-CALLED netizens can help combat illegal-wildlife trade, which now uses online social-media platforms.
In the Philippines Facebook has become a platform for unscrupulous businessmen to sell wildcaught animal species, an official of the Department of Environment and Natural Resources-Biodiversity Management Bureau (DENRBMB) said. On Friday the DENR-led Philippine Operations Group on Ivory and Illegal Wildlife Trade (Pogi) in cooperation with the National Bureau of Investigation-Environmental Crimes Division (NBI-ECD) arrested Ronald de Vera during a buy-bust operation around 1:30 p.m. along
Hermosa Street, in Tondo, Manila. De Vera, who uses the Facebook account name Dlanor Areved, is selling illegally caught native birds in various Facebook groups. According to the DENR-BMB, the suspect has been under surveillance by wildlife law-enforcement agents from the DENR-led Pogi and NBI-ECD before the buy bust. Josefina de Leon, the division chief of the Wildlife Resources Division of DENR-BMB, said the suspect was selling two hornbills for P16,000.
Seized from the suspects are two brahminy kite (Haliastur indus), also known as the red-backed seaeagle and two tarictic hornbills. The Task Force Pogi said they received a report from a confidential informant, a netizen, who tipped them about the illegal activities of de Vera. Charges were filed by the NBI against the suspect for violation of the Wildlife Resources Conservation and Protection Act. “Wildlife trafficking transactions are now done through the social media,” de Leon said. She asked netizens, especially those who are active in Facebook, to help prevent illegal activities by reporting to the DENR-BMB. The official advised netizens to make their report clear by identifying the suspected violator, what is the violation or the crime being committed, when and where it hap-
pened, so that they can place the suspect under surveillance. The DENR-BMB through the Task Force Pogi and the NBI-ECD have had successful buy-bust operations targeting unscrupulous businessmen engaging in wildlife trade through the social media over the past years. De Leon assured they would protect the identity of those who report violators. “The identities of our informants are strictly confidential,” she said. The official said the help of netizens will be a big boost in the campaign against illegal-wildlife trade, which is one of the drivers of biodiversity loss, not only in the Philippines but other parts of the world. The Philippines is one of the leading users of social-media platforms, particularly Facebook.
DOLE prompts regularization of 20,000 C. Visayas workers
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VER 20,000 workers in Central Visayas were regularized by the Department of Labor and Employment (DOLE) as part of its ongoing campaign against illegal contractualization. This number is already 95.54 percent of the 21,000 target number of
workers to be regularized this year by the DOLE Region 7. “As of June 14, 2018, the region has tallied a total of 20,065 workers regularized voluntarily by more than 200 establishments engaged either in bilateral or trilateral employment arrangements,”DOLE-
Region 7 Regional Director Alvin M. Villamor was quoted in a statement as saying. Villamor said the inspected firms were required to submit appointment papers of their regularized workers; enrollment of the said workers in their payroll; and proof of
remittance for Social Security System, PhilHealth and Pag-IBIG fund. Villamor attributed the increase of regularized workers in their jurisdiction to their “intensified workplace inspection in industries with large concentration of contractual employment.” Samuel P. Medenilla
The World BusinessMirror
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Trade war hits Trump heartland as China targets farms and mines
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hina’s response to US tariffs aims to hit the Trump administration right in its natural resources. The world’s largest commodities consumer on Friday said it will levy a first round of tariffs on $34 billion worth of US agriculture products, as well as automobiles, starting July 6. Another $16 billion in goods, including coal and oil, will be subject to tariffs later. The escalating dispute sent the prices of everything from soybeans to copper lower and hit the shares of US coal producers while boosting the prospects for alternative suppliers like Brazil. By focusing on agriculture and energy, the tariffs target rural communities in states that voted for Trump in 2016. Beijing’s announcement came less than 12 hours after the United States released its list of $50 billion worth of Chinese products subject to tariffs. As recently as May, the Asian nation said it would seek to buy more US agricultural and energy products as part of a tentative trade truce between the two countries.
Agriculture
Farm commodities have been a key battleground in the trade war between the world’s two biggest economies. In April the Asian nation started
levying additional taxes on American fruit, nuts, pork and wine in response to Trump tariffs on steel and aluminum. Products affected include soy, corn, wheat, rice, sorghum, beef, pork, poultry, fish, dairy products, nuts and vegetables. The list covers almost all farm products imported from the US, said Li Qiang, chief analyst with Shanghai JC Intelligence Co. Ltd. “Given China’s big trade surplus with the US, it will be more difficult and complicated for China” in the future to retaliate if Washington expands the tariff to cover more products, said Li. The new list includes more agricultural produce, including dairy, alfalfa and seafood, than its initial list published in April. In 2017 China’s agriculture imports from the US were worth $24.1 billion, the People’s Daily reported on May 24, citing customs data. That’s about 19 percent of total farm imports worth $125.86 billion, according to Ministry of Agriculture and Rural Affairs data.
Coal
The coal tariffs strike at the heart of Trump’s energy agenda. Since he
was elected, the president has been trying to make good on a campaign promise to revive America’s coal industry. They also come as US miners have grown increasingly dependent on foreign markets for growth. US coal exports jumped by 61 percent in 2017 as shipments to Asia more than doubled. A few weeks ago, China was looking at buying more from the US. While it’s pursuing a long-term goal of using less coal, the country still produces, consumes and imports more than any other nation. It purchased 271 million metric tons from overseas last year, according to customs data. The US exported about 3.2 million short tons to China, data from the Energy Information Administration show. The total value of US coal exported to China last year was about $395 million, based on an average price of $122 per ton, according to Bloomberg Intelligence. About 90 percent was metallurgical coal, which is used to make steel.
Crude
China has been a key recipient of American oil since a 40-year US ban on exports was ended by then-President Barack Obama in 2015. The Asian nation is helping drive a surge in exports from the US—China imported 18.4 million barrels of American crude and oil products in March, making it the third-biggest customer behind Mexico and Canada.
For China, the biggest importer of oil in the world, US crude is just a small part of its portfolio, with major suppliers like Saudi Arabia and Russia having the biggest shares. China spent $162.3 billion on crude purchases in 2017, with just $3.16 billion of that going to the US.
Gas
China also said it would place tariffs on imports of natural gas, but its list only specifies the fuel in gaseous form, not the liquefied natural gas that it currently imports by ship from the US. China is the third-largest buyer of US LNG, after Mexico and South Korea. Record production from America’s shale plays has allowed the US to become a net exporter of the fuel for the first time since the 1950s. The Asian nation is set to become the world’s largest importer of LNG in the next decade, and several proposed US export projects are seeking long-term buyers to finance construction. Bloomberg New Energy Finance forecasts China’s imports will grow to 82 million tons a year by 2030, but the country has long-term contracts to supply just 42.5 million tons by then. There have been signs of growing cooperation between the two countries. Earlier this year, China National Petroleum Corp. signed a 25-year deal with Cheniere Energy Inc. to buy US gas. China Petrochemical Corp. has signed a joint develop-
ment agreement with a proposed export plant in Alaska, and China Gas Holdings Ltd. has agreed to purchase 3 million tons of LNG a year from Delfin LNG’s proposed plant in the Gulf of Mexico.
Cars, whiskey
While US automakers import few vehicles into China, the tariffs pose a significant threat to BMW AG and Daimler AG’s American factories that make vehicles both for domestic buyers and export markets. Tesla Inc. also builds all of its vehicles in Fremont, California, and the tariffs could compromise affordability in its second-biggest market in the world. Revenue from deliveries to China surged 90 percent last year to $2.03 billion. Other iconic American products on the list, like whiskey, may be more symbolic. Last year China imported only $12.8 million worth of US spirits, about 70 percent of which was whiskey, according to the Distilled Spirits Council. Brown-Forman Corp., the maker of Jack Daniel’s, doesn’t even list China as a top 10 market, though net sales growth there was in the double digits last year. On Saturday China’s Commerce Ministry announced it will collect anti-dumping deposits on imports of hydriodic acid and ethanolamine from the US, of which Iofina Chemical Inc. and Dow Chemical Co. are major suppliers. Bloomberg News
Republicans risking conservative backlash over immigration issue
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EW YORK—The push toward immigration votes in the House is intensifying the divide among Republicans on one of the party’s most animating issues and fueling concerns that a voter backlash could cost the GOP control of the House in November. To many conservatives, the compromise immigration proposal released this past week by House Speaker Paul Ryan, R-Wis., is little more than “amnesty.” One tea party group described the Republican plan as “the final betrayal.” Fox Business host Lou Dobbs, who is close to President Donald J. Trump, tweeted on Friday that Ryan is “trying to open our borders even more and give illegal immigrants the biggest amnesty in American history.” Passage of the bill could alienate conservatives and depress turnout at a time when enthusiasm among Democrats is high. Yet, scuttling the bill could turn off independent voters, an especially important bloc for House Republicans competing in dozens of districts that Democrat Hillary Clinton won in the 2016 presidential election. “The GOP’s in a tough spot,” said Republican pollster Frank Luntz. “The hardcore Trump voter has a different point of view than the everimportant independent voter, and there doesn’t seem to be a middle ground.”
The draft legislation, resulting from intense negotiations between moderates and conservatives, includes a path to citizenship for an estimated 1.8 million young immigrants in the country illegally. The plan includes $25 billion for a wall along the US-Mexico border and other security measures sought by the White House. “While the bill contains some positive provisions, including full funding for the border wall and closing loopholes in current law that sustain illegal border surges, it is still a mass amnesty,” said RJ Hauman, of the conservative Federation for American Immigration Reform. “This bill hardly fulfills President Trump’s bold promise to fix immigration, and sure isn’t a winning message for the GOP in the midterms,” Hauman said. Trump will meet with House Republicans next week to discuss the issue just days after his comments during an impromptu Fox News interview on the White House driveway nearly derailed the planned House vote, according to a House GOP official who spoke on condition of anonymity to discuss the plans ahead of an official announcement. Trump had said in the interview that he wouldn’t sign what was described as the “moderate” immigration bill, even though the version written by House
The Capitol is seen in Washington on June 15. The push toward immigration votes in the House is intensifying the divide among Republicans on one of the party’s most animating issues—and fueling concerns that a voter backlash could cost the party control of the House in November. To many conservatives, the compromise immigration proposal released by House Speaker Paul Ryan with the White House’s apparent blessing is little more than “amnesty.” AP
leadership is based on his own priorities. White House officials later said the president had misspoken and didn’t realize he was being asked about the compromise bill. The meeting is scheduled for 5:30 p.m. on Tuesday, the person said. Skittish conservative lawmakers have indicated there’s little chance they would support the current plan unless Trump were to give it a full embrace. “House Republicans are not going to take on immigration without
the support and endorsement of President Trump,” said Rep. Patrick McHenry, R-N.C., the GOP’s chief deputy vote counter. The politics of the immigration debate have grown more heated since the administration adopted a “zero tolerance” approach at the Southern border. The policy is leading to an increase in the number of detained immigrants being separated from their children. Trump has tried to blame Democrats for his own administration’s
policy, tweeting on Saturday that they “can fix their forced family breakup at the Border by working with Republicans on new legislation, for a change!” Facing a national uproar, House GOP leaders included a provision in the immigration proposal that would require families to be kept together for as long as they are in the custody of the Homeland Security Department. The proposed fix won approval from moderate House Republicans locked in difficult reelection battles, but not from Republican Senate candidates running competitive races in GOP-leaning states. None spoke in support of the bill. “We’re studying the proposal,” said Arizona Rep. Martha McSally, who is viewed as the GOP establishment’s favorite in one of the top Senate races. “I try not get swayed by what the emotions are or the pressure. I really try to look at the policy issues.” Kelli Ward, one of McSally’s main opponents in the Arizona Senate primary on August 28, was more scathing in her assessment. “Compromising on the rule of law to grant amnesty to millions of illegal immigrants is the wrong path to take,” she said of the House plan. “Congress should focus on border security and stop talking about amnesty as a solution.” AP
Abe: Trump-Kim summit built foundation for denuclearization
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he summit between President Donald J. Trump and North Korean leader Kim Jong Un built a foundation for denuclearization on the Korean Peninsula, but the process needs to be verifiable and irreversible, Japan’s Prime Minister Shinzo Abe said in a television interview on Saturday. Japan will contribute to the cost of denuclearization, but the money will go toward supporting the activities of the International Atomic Energy Agency (IAEA), not directly to North
Korea, Abe reiterated in the interview on Nippon TV’s Wake Up! Plus morning program. He said bearing the cost is natural because Japan feels the threat from the North’s nuclear arsenal and stands to benefit from peace. “The agreement should have included complete, verifiable and irreversible denuclearization,” but in order to do that, “the deliberations take time,” Abe said. “For now, a conversation has begun. Let’s build trust on both sides.” The prime minister’s comments
built on those he made immediately following the historic June 12 summit in Singapore, that the agreement to work quickly toward complete denuclearization was a “first step.” Trump lauded the success of the first meeting between a sitting US head of state and a North Korean leader, but a lack of detail in the statement has kindled skepticism over what he was able to accomplish. During his post-summit press conference, Trump said Japan and South Korea as neighbors would help
the North “very greatly” in paying the costs of denuclearization, while the US wouldn’t need to contribute financially. Asked for details the following day, Japan’s Chief Cabinet Secretary Yoshihide Suga said at a news conference in Tokyo that the government would provide financial support for IAEA inspections. In Saturday’s TV interview, Abe also said Japan will not provide economic assistance to North Korea until the abduction issue is solved. Abe has said he thanked Trump for
raising the topic in his meeting with Kim, although it wasn’t included in the statement. Abe has made the return of abductees a key political issue. Tokyo officially lists 17 of its citizens as having been kidnapped by North Korea in the late-1970s and early1980s, five of whom returned home in 2002. As of April 2017, more than 12 million people had signed petitions from the families urging Abe to continue efforts to bring the rest home. Bloomberg News
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Rescue ship docks in Spain carrying 270 migrants
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ALENCIA, Spain—The first ship in the Aquarius aid convoy docked on Sunday at the Spanish port of Valencia, ending a weeklong ordeal for hundreds of people who were rescued from the perilous Mediterranean only to become the latest pawn in Europe’s battle over immigration. Medical staff boarded the Italian coast guard vessel Dattilo after it arrived just before 7 a.m. on Sunday and the 270 migrants onboard soon began to disembark. The rescue ship Aquarius and another Italian navy ship, the Orione, will arrive in the coming hours, discharging 630 migrants in all. The Aquarius, operated by the aid groups SOS Mediterranee Sea and Doctors Without Borders, was stuck off the coast of Sicily on Saturday when Italy refused it permission to dock and demanded that Malta do so. Malta also refused. After days of bickering and food and water running low on the rescue ship, Spain stepped in and offered to grant the rescue boat entry some 1,500 kilometers (930 miles) away. The journey across the Mediterranean to Valencia took nearly a week. David Noguera, the head of Doctors Without Borders in Spain, said he was glad that Spain allowed these migrants in but he’s worried that more European nations will close their ports to those rescued at sea in the future. “I have mixed feelings,” he told The Associated Press on Sunday as the first boat arrived. “I am happy that the journey [for the Aquarius migrants] is over—a journey that was too long—and I am worried for the situation in the Mediterranean and the closing of European ports.” The migrants were met by emergency workers, health officials, Red Cross volunteers and psychologists at the city’s marina. Each were assigned to a translator and authorities worked to determine their identities before they were sent to welcome centers. The first migrant was a 29-yearold man from South Sudan. Valencia emergency official Jorge Suarez said some of the migrants were in a state of shock. “They are very shaken,” Suarez said. “Put yourself in their position, you get off a ship and the first people who greet you are wearing masks.” Spanish authorities say they will examine the migrants case-by-case to see who may qualify for asylum. AP
Greece, Macedonia to resolve name dispute
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SARADES, Greece—Greece and Macedonia are about to sign a deal that, if ratified, will resolve a decades-old dispute concerning Macedonia’s name. The two countries’ prime ministers, Greece’s Alexis Tsipras and Macedonia’s Zoran Zaev, will attend the signing of the deal on Sunday by the two countries’ foreign ministers, along with UN and EU officials. The village of Psarades, on the shore of the Great Prespa Lake, was chosen as a symbolic site, since it lies near where the borders of the two countries, as well as Albania, meet. Zaev is to arrive by boat from across the lake, to be greeted by Tsipras. Police have cordoned off all approaches to the village to prevent protesters from reaching the site. A protest by nationalists will be staged almost 40 kilometers (25 miles) away. AP
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Banking&Finance BusinessMirror
DOF: Cutting VAT to 10% without lifting exemptions will torpedo fiscal position
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By Rea Cu
@ReaCuBM
EDUCING the value-added tax (VAT) rate from the current 12 percent without removing its list of exemptions will have a negative effect on the country’s fiscal position, the Department of Finance (DOF) said. Finance Secretary Carlos G. Dominguez III told financial reporters that reducing the VAT rate while keeping all its exemptions will impact the expenditure program and drastically cut revenues. “It will be bad of course; I don’t know exactly the effect in the numbers, but it’s going to be negative [for our fiscal position],” Dominguez said.
Some lawmakers have called for reducing the country’s VAT rate since last year. In November 2017 Sen. Panfilo M. Lacson Sr. proposed the amendment to reduce the VAT rate from 12 percent to 10 percent, saying the economy is improving, with gross domestic product growth at 6.9 percent. Senate Bill 1671 filed by Sen. Risa Hontiveros in early-2018 also proposes to slash the VAT rate to
Perspectives System-wide thinking to integrate and intervene
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EOS in the human services sector see early intervention and integration within human services and with the healthcare system as among the top opportunities for reform in the next five years. When seen from the perspective of the customer and through the lens of a single health and care system, these two opportunities are deeply interlinked. A system-wide perspective is critical to ensure that human services work effectively. For governments this may involve enabling data sharing, managing the market or commissioning the right services at the right time. However, providers and nongovernment organizations can also think at a system level. Understanding the role of your organization in the ecosystem is critical to performing effectively. It enables an organization to manage demand for services, interact with related services to improve the quality of care and to ensure sustainability. The need to intervene early is not an issue that organizations can manage on their own as it requires investment and commitment from across the health and care system. Few organizations provide the full spectrum of services from universal to specialist and across health and human services. Even fewer are the sole provider in their area, so implementing change requires working with partner organizations. Integration is not necessarily the result of this but it does solve part of the financial issue, one of the key barriers to committing to early intervention. Early intervention requires upfront investment in services that are designed to reduce the workload of more intensive and acute parts of the health and care system. These are not always the organizations that provide the initial investment which significantly weakens the business case to invest in early intervention. If health and
human service organizations are integrated, the improved outcomes and financial benefits that accompany them will eventually flow back to the pot from which the investment came. Full system integration is not usually a viable option as it encompasses a huge variety of not-forprofit organizations, community organizations, caregivers and families, as well as governments and private providers. Instead, leaders in local systems should assess where organizational integration is needed and where the same benefits can be gained from dedicated formal liaison teams and pooled budgets. The key to any form of financial integration is a clear and fair mechanism for how the effects of the intervention will be measured and how rewards will be allocated. Small underspends or surpluses are quickly swallowed up by organizations under pressure and human services systems are not neatly linear to show the positive outcomes of prevention work. However, while the financial case is important, the clear aim of early intervention is to improve outcomes for people and so use of a proxy or an imperfect mechanism should not prevent leaders from acting to reform the system. Provided it is clear and agreed in advance, systems should act now. The article “System-wide thinking to integrate and intervene” was taken from the publication entitled Listen, learn, lead: 2018 Human and Social Services Outlook. © 2018 R.G. Manabat & Co., a Philippine partnership and a member-firm of the KPMG network of independent member-firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the Philippines For more information on KPMG in the Philippines, you may visit www. kpmg.com.ph.
10 percent from the current 12 percent, to help the poor cope with the impact of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law. The first package of the government’s Comprehensive Tax Reform Program (CTRP) or the TRAIN was signed into law by the President in December last year, paving the way for its implementation in January 2018. The TRAIN lowered personal-income tax from 32 percent to 25 percent while implementing offsetting measures to cover the revenue loss, including the increase in excise tax for fuel, tobacco and automobiles, among others. Dominguez reiterated before the weekend that the DOF is amenable to reducing the VAT rate so long as all VAT exemptions are removed in the process. “Actually, that is the proposal of Ping Lacson. You know, we support that [reducing the VAT]
provided that all the exemptions are removed. That is something that we are willing to support, but you know, if you are not going to remove the exemptions...we are going to lose money and our projected expenditures will, of course, be affected,” he added. He pointed out that a VAT reduction will require amendments to the VAT Reform Act, or Republic Act 9337, and all the other laws providing VAT exemptions. Amendments to RA 8424, or the National Internal Revenue Code of 1997, will also have to be done, he added.
Not just a TRAIN amendment
“That’s not an amendment to the TRAIN, that’s an amendment to the original law plus to all the laws that are giving the exemptions. I’m not sure if it’s doable this year or not,” Dominguez pointed out. A form of sales tax, the VAT is a tax on the sale or exchange of
goods and services in the Philippines and on the importation of goods into the country. The expenditure program set by the government for this year is at P3.364 trillion, higher by 15.6 percent compared to the 2017 target of P2.909 trillion. The government expects to spend around P1.1 trillion a year until 2022 for infrastructure projects, including that of the Duterte administration’s “Build, Build, Build” program, touted as meant to usher in the “golden age of infrastructure” in the country. Last week the government’s top budget manager said that a broader tax base should be in place before tweaking the VAT to 10 percent from its current 12 percent. Budget Secretar y Benjamin E. Diokno of the Department of Budget and Management explained the government believes the VAT system remains a more effective system than collecting personal-income tax.
‘Remittance-receiving families should be empowered to build sustainable future’
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N the heels of a United Nations resolution highlighting the key role remittances play in sustainable development, a global funding agency has asserted the need to help remittance-receiving families build a sustainable future for themselves and their communities. The call was made by Gilbert F. Houngbo, president of the International Fund for Agricultural Development (Ifad), on the eve of the International Day of Family Remittances observed on June 16. Houngbo’s message followed the UN General Assembly’s adoption of a resolution endorsing the International Day originally created by Ifad’s Governing Council. In 2017, according to a press brief by Ifad, 200 million migrants sent $481 billion to remittances-reliant countries—of which $466 billion went to developing countries, helping sustain about 800 million people across the world. This amounts to more than three times the annual official development assistance that countries give in aid. According to Ifad estimates, $6.5 trillion in remittances will be sent to developing countries between 2015 and 2030, involving over 1 billion senders and receivers. Close to half of remittances will go to rural areas, where poverty and hunger are the highest. “Remittances are vital for millions of families, helping them to address their own development goals, but we can help them do more and build their longer-term future,” Houngbo said.
Basic needs
According to Ifad analysis, families spend about 75 percent of their remittances on basic needs, such as food, housing, education and health.
Remittances help reduce hunger and malnutrition, improve education and health levels, and lift people out of poverty. By doing so, remittances contribute directly to the Sustainable Development Goals (SDGs) set by the international community three years ago. According to Ifad, the remaining 25 percent, over $100 billion, can be invested in financial and tangible assets, such as savings or small business development that help families build their future. These productive activities can also create jobs and transform economies, in particular in rural areas. “Given appropriate investment options, customized to their circumstances and goals, remittance families will invest more and become agents of change in their communities,” Houngbo said.
Remittances for development
To this end, more than 400 decisionmakers, representing the public and private sectors, civil society and Ifad, attending the Global Forum on Remittances, Investments and Development in Kuala Lumpur in May, endorsed a set of recommendations to make remittances a full engine for development. The recommendations propose ways to develop access to basic financial services, such as saving and credit, which are fundamental for families to make productive use of their money. Today, most remittances are still received in cash and consumed immediately. Recommendations were also made to develop investment mechanisms and opportunities tailored to the needs of diasporas keen to invest back home.
In recognition of the high cost of sending remittances, Ifad called for a further reduction in transfer fees on the eve of the international day on June 16. While the cost of sending money has been reduced by half over the last five years, it still represents, on average, 7.13 percent of the amount sent. In many places, costs are much higher, for example in Sub-Saharan Africa senders can spend as much as 9.3 percent. It is estimated an additional $20 billion would be available to families in developing countries if the 3-percent fee target set by the international community in SDG 10, reducing inequalities, was reached. According to Pedro de Vasconcelos, senior remittance expert at Ifad, mobile technologies and digital money could potentially transform markets radically, reduce costs and time for sending remittances, in particular to rural areas. However, their development is still hampered by a lack of harmonization of regulations between countries.
Monday, June 18, 2018
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Senior citizens’ group seeks SSS pension loan
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SENIOR citizens’ organization has asked the Social Security System (SSS) to heed the clamor of pensioners for a pension loan designed especially for the needs of the elderly and other retirees. “We urge SSS to provide pension loans to help us in our present financial needs. I know how much SSS loves us, so we hope that they will soon give these loans for our pensioners,” said Federation of Senior Citizens Association of the Philippines (Fescap) President Jorge Banal Sr. during the recent Pensioners’ Day held at the SSS Main Office. Banal added that the SSS pension loan would put a stop to the growing incidence of pensioners falling victims to loan sharks. “There are hard-up pensioners who borrow money even at a high interest rate from these loan sharks and they are asked to surrender their ATM cards with their monthly pension in it to ensure payment,” said Banal. SSS President and Chief Executive Officer Emmanuel F. Dooc said that the SSS is cognizant of the plight of its pensioners, and in response to their clamor for the urgently needed support, the Social Security Commission is considering offering a pension loan program. “We acknowledge the need of our pensioners for financial assistance to help defray daily expenses. Being a senior citizen myself, I also have needs for my medicines, vitamins and other expenses for my daily needs,” said Dooc. Dooc added that SSS recognizes the need to safeguard pensioners from loan sharks who take advantage of them in the guise of being good Samaritans during financial distress. “We want to thank Mr. Banal and Fescap for being our partner in continuously bridging our relationship with our pensioners. We assure them that SSS loves them and we will always look after their welfare,” said Dooc. The SSS Pensioners’ Day, which was held in cooperation with Fescap, was attended by more than 300 SSS pensioners from Metro Manila. To date, SSS has 2.3 million pensioners. PNA
Case clippings
By Justice S J Ranada Jr.
SEARCH & SEIZURE–security measures on buses A bus, a hotel, beach resort and a shopping mall are all private properties whose owners have every right to exclude anyone from entering. At the same time, however, because these private premises are accessible to the public, the State, like the owner, can impose non-intrusive security measures and filter those going in. Imposition of security measure by the owner emanates from ownership; and by the State, from police power. Saluday v. People 03 Apr 2018
GR 215305 Carpio, CJ
Green Monday BusinessMirror
A8 Monday, June 18, 2018
www.businessmirror.com.ph • Editor: Lyn Resurreccion
DENR: Time to ditch single-use plastic in Boracay
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By Jonathan L. Mayuga
@jonlmayuga
how to best implement proper solid-waste management anchored on the principle of 3Rs—or reduce, reuse and recycle—as mandated by RA 9003. For his part, Leon Dulce, national coordinator of KalikasanPeople’s Network for the Environment (Kalikasan-PNE), described Cimatu’s policy pronouncement as “tokenism” amid the lack of sound science and rehabilitation policy.
nvironment Secretary Roy A. Cimatu on June 12 issued a statement disclosing the plan to impose a single-use plastic ban on the pollution-challenged Boracay Island to help address its growing solid-waste management problem. This followed his statement early this month urging the general public to refrain from using disposable plastic products that clog water ways or worse, ocean pollution. Besides garbage, Boracay is faced with the challenge of water pollution brought about by the direct discharge of untreated wastewater from households and tourism establishments.
Plastic pollution
Ne x t to China and Indonesia, the Philippines placed third on the list of countr ies w ith most ocean plastic pollution, according to a 2015 study conducted by the Universit y of Georg ia and repor ted by Ocean Conser vancy and McK insey Center for Business and Env ironment. The finding came not as a big surprise considering the poor implementation of Republic Act (RA) 9003, or the Ecological Solid Waste Management Act of 2000, which was approved and signed into law more than 17 years ago. Around 20 percent of the 9,000 tons of garbage generated in Metro Manila alone, for instance, find their ways into vacant lots or into canals, creeks and rivers, and end up either in Laguna de Bay or Manila Bay. The bulk of this garbage is single-use plastics, which could no longer be recycled or may likely end up as residual waste.
Boracay garbage woes
In seriously considering a ban on single-use plastic items in Boracay, the DENR chief is aiming to address its growing garbage problem. The island generates an estimated 90 tons to 115 tons of garbage a day, but only 30 tons to 40 tons are hauled out to mainland Malay, Aklan, he said. He added that a large portion of Boracay’s trash is composed of single-use plastics—such as grocery bags, toothbrush, bottled water, sachets of shampoo and condiments and soap wrappers. Prohibiting the use of singleuse plastics would not only help solve the island’s solid-waste prob-
Consider carrying capacity
lem but also plastic pollution that threatens the area’s marine environment, the official said.
Environmental degradation
“Plastic, particularly those for single-use packaging, has greatly contributed to the degradation of the environment. Plastic pollution continues to poison our oceans and injure marine life. When not properly disposed of, they clog waterways and cause flooding,” he said. According to Cimatu, hotels will be encouraged to use dispensers for their liquid soap, shampoo and conditioner; while stores will be asked to sell condiments like soy sauce, vinegar and cooking oil through refilling stations. “Let us go back to basics. We used to bring a glass bottle to the sari-sari store when we buy cooking oil and vinegar. Let’s do the same now,” he said.
Threat to marine life
O c e an plastic pollution is a serious threat to the coastal and mar ine ecosystem, inc lud ing marine wildlife. According to Marine Wildlife Watch of the Philippines (MWWP), ingestion of plastic can be considered a driver of biodiversity loss. MWWP led by its founder, AA Yaptinchay, said the impact of ocean plastic pollution has varying degrees to the marine ecosystem, including its ingestion by marine species. “The effect depends on the species as some are more susceptible than others,” he said. Interviewed via social media on June 12, Yaptinchay said 693 marine species were documented of having encountered plastic debris globally, with around 400 species having entangled or have ingested plastic. “This includes all marine turtle species and half of marine mammal and bird species. Any reduction in marine debris, particularly plastics, will be beneficial for marine wildlife,” he said.
Welcome development
Yaptinchay believes that the plan to impose a single-use plastic
This March 22, 2012, photo shows a polluted Bulabog Beach on Boracay Island. BusinessMirror photo file
ban in Boracay is a welcome development, especially because its surrounding waters are frequented by marine turtles. However, he said the plan should transcend local coverage and become a policy that is national in scope and coverage. “We are glad that DENR Secretary Cimatu is willing to partially address the marine debris problem in the Philippine seas by banning single-use plastics on Boracay Island. However, single-use plastics in the marine environment is not a problem exclusive to Boracay Island, but a problem in the whole country. This move may contribute to the solution of Boracay Island’s solidwaste problems, but it is not able to address the marine-debris problem in the country,” he pointed out. “This needs to be taken at a national level. We need to follow the EU [European Union], UK [United Kingdom], India, among others, who are leading the way in ridding their societies of the single-use plastics menace,” he added. Sought for reaction, Vince Cinches, ocean and political campaigner of Greenpeace Southeast Asia-Philippines also lauded the plan and said the DENR chief should not think twice to enforce a ban on single-use plastic on Boracay. Like Yaptinchay, Cinches said the policy should be enforced across the country.
Integrated management plan
How e v er , he said such policy
should be integrated into the master plan for Boracay. “We hope that Secretary Cimatu will not think twice in implementing a single-use plastic ban in Boracay, but it should be integrated within the whole solid management in the area, including the development plan of Boracay. Meaning, it should be integrated or not separate. It is a step in the right direction because Boracay has many problems,” Cinches told the BusinessMirror in a telephone interview on June 10. He said Cimatu should also pursue single-use plastic ban across the country, noting that the Philippines is now faced with the serious problem of ocean plastic pollution. “We are now the third major source of plastic pollution [globally],” he noted.
Multistakeholder approach
A ddr e ssing the solid-waste management issue in Boracay should have a multistakeholder approach. “They should invite more NGOs [nongovernment organizations] and involve the LGUs [local government units],” Cinches said. However, he cautioned the DENR and LGUs against putting up a waste-to-energy plant, saying the process of converting waste into energy is a violation of the Clean Air Act. Cinches said characterization of garbage on Boracay would give various actors a clearer picture of the problem and a better idea on
“A single-use plastic ban in Boracay is positive but underwhelmingly tokenism. Whatever type of waste produced would still choke the island’s ecosystem if the amount generated is beyond carrying capacity,” Dulce told the BusinessMirror via e-mail. Dulce said a cap on daily tourist entries and a moratorium on construction of new large-scale tourism infrastructure would better address the root of solid, liquid and all other waste generation problems on the island. “There should be an executive policy that categorically bans the construction of mega-casinos in Boracay. This [mega-casinos] will triple the number of tourists flocking to the island way beyond its carrying capacity. There should be a full-blown independent investigation into the previously reported forest clearings and possibly other continuing construction activities despite the closure. It must be ascertained if this is a case of incompetence or collusion with big-business interests,” he said.
Greener Boracay
Various stakeholders on Boracay Island are supportive of the plan to ban single-use plastic. Ethel Tornberg, general manager of WaterColors Dive Resort, said the campaign against plastic started long ago. Tornberg said she has actually initiated a campaign to lobby in the halls of the Sanggunian (Legislative councils) in the municipality of Malay and Aklan province to pass an ordinance that will ban single-use plastic on Boracay. She told the BusinessMirror through social media that the resort is advocating an environment-friendly business practice. The company has started to do away with, among others, the use of plastic straws, disposable, single-use bathroom amenities, disposable water bottle, and has started to conserve and promote energy sustainably. “At WaterColors, we realize the potential impact of the hospitality industry on the environment, especially on a small island like Boracay,” the company’s web site explains. Tornberg welcomes such plan coming from no less than the country’s top environment official.
“We’ve started years ago here in Boracay and for many years, I’ve been tr ying to inf luence local legislators but no one seems to bite the idea. As an avid diver and having been born and raised in Metro Manila who fell in love with Boracay, I see the problem caused by these practices [that lead to ocean pollution], which is aggravated by multinationals that accommodate the tingi [retail] trend,” she said. She said since some of her friends have won a seat in the last election, the campaign against single-use plastics has gained traction, but only for a while. “Since we are fixing Boracay anyway, maybe we can be the first to ban disposables, one-time use hotel toiletries and amenities,” she added. She narrated that a friend who works at the garbage dump has said it is obvious who are the big producers of the types of garbage based on their brand. “Disposable slippers, toothbrush, combs, toothpaste tubes, toiletry bottles, shavers, shower caps were all used and dumped after an average of two-nights stay [at hotels]. Just imagine!” she lamented. Unfortunately, Tornberg said all the noise they made so far seemed to have no effect or simply fell on deaf ears, failing to translate into a local policy, at the very least.
Not in Boracay alone
In calling to ditch single-use plastic, Cimatu was not talking about Boracay alone. Environment Undersecretary Jonas R. Leones believes that the DENR chief wants the policy implemented and enforced not just in Boracay but also in other areas, as well, noting that the country has everything to gain in protecting its rich marine biodiversity. “Perhaps the DENR secretary wants to test it first in Boracay because it has become his mission—given by no less than President Duterte—so he is focused on Boracay. But eventually, it will translate into a national policy,” he said. Leones, the DENR’s undersecretary for policy, planning, international affairs and foreignassisted projects, said some LGUs have, in fact, imposed the ban through local legislation as they realized the adverse environmental impact of improper disposal of single-use plastics. “Other LGUs have started to impose a ban on single-use plastic already,” he said. With Cimatu’s recent statements, a national policy pronouncement d itching singleuse plastic for good may be in the offing.
This Palawan tourist site uses bamboo–not plastic–straws R
eusable drinking straws made of bamboo, rather than the usual plastic, are quickly becoming the gifts visitors to the Lio Tourism Estate in idyllic northern Palawan bring home to friends. The items, which come with a cleaner, are not only novel and affordable, their availability also signals the transformation of this thriving Ayala Land Inc. (ALI) community toward being a plastic-free tourist destination. Along with the plastic straws sold at Lio’s artists’ village, the ubiquitous disposable plastic water bottles favored by travelers can no longer be found there or in the neighboring sitios of El Nido municipality following the implementation in December 2018 of an ordinance banning single-use and other plastics. Mariglo Laririt, director for sustainability of ALI subsidiary Ten Knots Development Corp. (TKDC), said that respecting the natural environment has always been a
cherished value of the company since its founding in the 1980s. Ayala Land acquired the subsidiary in 2010. She says: “Implementing the ordinance was a natural progression of our other ecofriendly initiatives. These have included creating awareness among TKDC staff and the surrounding community the dire need for conservation, water recycling, sewage treatment, solid-wwzwaste management and related topics.” Waste management is such a serious business in Lio and the island resorts that the company consciously measures its gains in this area. Joey Bernardino, TKDC group director for sales and marketing, said that by the end of the year, its properties will have cut back on the annual use of 20,000 pieces of plastic straws and 65,000 pieces of disposable plastic bottles. The straws have been replaced with paper ones; and the plastic bottles,
with reusable water flasks guests may refill in water stations throughout the resor ts. In the guest rooms, plastic containers for shampoo and soap have been exchanged for refillable pumps that hold the cleaning agents. Bernardino relates that employees in the four El Nido Resorts and the four boutique hotels in Lio have also been banned from bringing sachets or plastic bottles of shampoo. “ Th i s a n d o t h e r m e a s u re s h ave drastically limited our output of singleuse plastics into the ecosystem.” Single-use plastics are not biodegradable, Laririt pointed. They end up in landfills where they are buried or, through waterways, find their way into the ocean. “As much as 90 percent of all trash in the oceans are made of plastic,” she said citing a study. Moreover, plastic waste in the ocean
do not respect geographic or national boundaries. “Even if Bacuit Bay, which hosts seven of our eight resorts, has been a protected area since the 1980s, its 855 species of fish, over 400 corals and five of seven marine turtle species have remained at risk because of plastics mindlessly strewn into the oceans.” Besides prohibiting the use of plastic disposables, TKDC has been actively protecting its immediate environment by creating awareness for the unique ecosystem of Bacuit Bay, “a huge slab of ancient reef from the Asian mainland.” Its island-hopping tours and other activities have been supervised by guides carefully schooled in the different aspects of biodiversity, geology and geography. “Our tours to the Big and Small Lagoons and other iconic spots raise our guests’ aspiration to see Bacuit Bay remain a showcase for biodiversity for decades to come,” she said.
Bamboo straws at Lio Tourism Estate
Biodiversity Monday BusinessMirror
Asean Champions of Biodiversity Media Category 2014
Monday, June 18, 2018
Editor: Lyn Resurreccion • www.businessmirror.com.ph
A9
ACB chief pushes for marine biodiversity protection, conservation in Southeast Asia
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By Jonathan L. Mayuga @jonlmayuga
he Asean Centre for Biodiversity (ACB) is pushing for collective efforts in protecting and conserving Southeast Asia’s marine resources. ACB Executive Director Theresa Mundita S. Lim highlighted the need to establish the interconnectivity of the Asean marine ecosystems to rally support at the regional level. “As I take on the challenge as the executive director of the Asean Centre for Biodiversity, I hope to encourage more collective efforts in protecting and conserving the rich marine resources, not just of the Philippines, but of the entire Asean region. If we can establish the interconnectivity of the Asean marine ecosystems, it would be easier to support it at the regional level,” Lim, a former director of the Department of Environment and Natural Resources (DENR)’s Biodiversity Management Bureau (BMB), said in an ACB news release.
Protection of Tañon Strait
Lim added that there is a need to scale up the effort and learn from the experience in the Tañon Strait in the Visayas where three provinces came together for its protection “because vital marine resources, such as fisheries and other migratory species,
transcend political boundaries.” She likened the protection of the Tañon Strait Protected Seascape (TSPS) to the protection of Southeast Asia’s vast marine region, “where cooperation is needed among 10 countries to protect common sea areas, for marine biodiversity to thrive and better benefit the people of the region.” Lim spoke at the Fourth AsiaPacific Coral Reef Symposium (APCRS) in Cebu City early this month. The event was led by the DENR and the University of the Philippines-Marine Science Institute. With the theme, “Coral Reefs of the Asia Pacific: Working Together A midst Contemporar y Challenges,” the APCRS aims to encourage collaborative actions a mong sc ient ists, educators, managers, environmentalists, and relevant local stakeholders from key organizations in the Asia Pacific in conserving and sustainably managing the region’s marine resources. Lim was recognized by APCRS for her leadership as director of the DENR-BMB which was instrumental in the protection of the
German Ambassador to the Philippines Dr. Gordon Kricke (left) speaks during the 10th anniversary of International Climate Initiative at the ambassador’s residence on May 30. Alysa Salen
PHL, German embassy mark 10 yrs of climate, biodiversity initiative
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uests from Philippine government agencies, nongovernment organizations, German experts and members of the media celebrated with the German diplomats and experts in the Philippines the 10th anniversary of International Climate Initiative (IKI) on May 30. German Ambassador Dr. Gordon Kricke welcomed the friends of IKI at his residence in Forbes Park to celebrate the 10 years of Philippine-German cooperation in the fight against climate change and for the conservation of biodiversity. The intimate but cheerful IKI anniversary reception brought together partners engaged in climate action with very diverse backgrounds—but all of them united through their involvement in Philippine-German joint efforts. The IKI is a program of the German government that was established in 2008 with the Philippines as one of the program’s focus countries in Southeast Asia. Since then the German Federal Ministry
for the Environment, Nature Conservation and Nuclear Safety (BUM, or Bundesministerium für Umwelt, Naturschutz und nukleare Sicherheit in German) has supported projects in the Philippines with over €62 million. In addition to this, the BMU is dedicating more funds of up to €35 million for new activities following the Philippine government’s declared focus, as part of Germany’s stepping up its climate engagement to the country. In his welcome remarks, Kricke highlighted the important achievements of IKI in the Philippines in the last 10 years. The ambassador said he is “satisfied” that the Philippines is one of IKI “key” partners. He cited the improved management of and livelihood in 60 out of 240 protected areas, successful protection of coastal environments and wildlife, and ambitious climate activities like the development of the Philippines national Reducing Emissions from Deforestation and Forest Degradation plus strategy.
Asean Centre for Biodiversity Executive Director Theresa Mundita S. Lim (center) was recognized for her exemplary efforts in the protection of Tañon Strait Protected Seascape as the then-director of the Department of Environment and Natural Resources-Biodiversity Management Bureau. ACB photo
TSPS and in the advancement of marine conservation efforts for important coastal ecosystems. Oceana Philippines, international conservation group Rare and the DENR-BMB have worked together in crafting and implementing strong laws and policies that address problems in the oceans and building lasting solutions to protect marine habitats and rebuild the fisheries sector. Their approaches focused on behavior change, community engagement, establishing networks of marine-protected areas, habitat protection, institutional strength“I saw several projects myself,” he said. He noted that the protection of biodiversity is on top of the efforts. Impressed by the diversity of the projects in the Philippines, Kricke wishes for the continued success of IKI in the country and the strengthened cooperation between the two countries. “We all know that the Philippines is affected by the consequences of global warming,” he said, referring to the extreme weather conditions, such as the supertyphoons that struck the country in recent years. For the Philippine government, Socioeconomic Planning Secretary Ernesto M. Pernia, who is also the director general of the National Economic and Development Authority, confirmed the Philippine government’s appreciation for the German support through IKI. For Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the main implementing agency of IKI activities, its Philippines Country Director Irina Scheffmann illustrated the different initiatives from the 60 project areas in the PhilippineGerman climate partnership. She cited that a project in Panay mountain region has resulted in 36-percent improvement in income of local beneficiaries. IKI is a key element of Germany’s climate financing mechanism and the funding commitments made under the United Nations Framework Convention of Climate Change, and the Convention on Biological Diversity. The initiative focuses on climate-change mitigation, adaptation to the impacts of climate change and the protection of biological diversity. These efforts provide various cobenefits, particularly the improvement of living conditions in partner countries. The main IKI implementing organizations in the Philippines are GIZ, United Nations Development Programme, UN Food and Agriculture Organization, UN Habitat, Plan International, Renewables Academy AG, Rare Inc., International Council for Local Environmental Initiatives-Local Governments for Sustainability and World Wildlife Fund for Nature-Philippines. The resounding message at the event: the first 10 years of IKI collaboration have brought intensive cooperation—to be continued in the coming years.
ening and coastal resilience.
Community participation
“ W e learned a lot from the Tañon Strait ex per ience—especially about the importance of community participation in its management and conservation. Let us continue this practice in other marine areas, as well,” said Atty. Gloria Estenzo R amos, v ice president of Oceana Philippines. “K now ing that we have honest and dedicated public ser vants and partners, gives us an assurance that together, we can make things happen,”
she added. Among their undertakings was the SMARTSeas Philippines project funded by the Global Environment Facility and executed by the United Nations Development Programme. This worked with the Protected Area Office and 17 local government units in promoting sustainable fisheries inside a marine key biodiversity area. They also partnered on the Coastal and Marine Ecosystems Management Program, which include capacity building of various DENR staff, including protectedarea supervisors and regional offices to run behavior change and social-marketing campaigns. They developed the General Management Plan of Tañon Strait, which ensured that no commercial fishing operates within the area. The collaborative activities and strategies at Tañon Strait addresses the challenge of “severe under-representation of ma r ine habitats a nd ecosystems,” the ACB reported in the Protected Areas Gap Analysis in the Asean region. The activities are also in line with the resolution on a network of marine-protected areas initiated by the ACB and passed by the Philippine government during the 12th Conference of the Parties to the Convention on the Conservation of Migratory Species of Wild Animals in Manila in October 2017. The resolution urged governments to “continue the development of transboundar y areabased conservation measures,
including marine-protected areas, particularly in the Asean region,” and encouraged them to uphold the development and implementation of ecological networks.
A third of world’s coastal and marine habitats
The Asean region is home to a third of the world’s coastal and marine habitats that include coral reefs, mangroves, estuaries, sandy and rocky beaches, seagrass and seaweed beds and other soft-bottom communities. These habitats and their resident species provide breeding, nursing and feeding grounds for marine plants and animals, food and resources important to livelihoods of coastal communities. It is estimated that the total potential sustainable annual economic net benefits per square kilometer of healthy coral reefs alone in the region range from $23,100 to $270,000, coming from fisheries, shoreline protection, tourism, recreation and aesthetic values. However, the continuous overexploitation of coastal and marine resources, habitat change, pollution and climate change, among many other drivers of biodiversity loss threaten the rich marine resources of the region. An intergovernmental organization that facilitates cooperation and coordination among the Asean member-states with relevant national governments, regional and international organizations on the conservation and sustainable use of biological diversity, the ACB is the sole Asean center being hosted by the Philippines.
‘More plant-based food will help save people’s and the planet’s health’
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n v ir o nm e n t a l i s t s , y o u t h , women, farmers and consumer advocacy groups in the Philippines last week called the attention of local officials to the need for providing citizens with healthier food options, both for their health and the environment. Greenpeace and par tner groups spearheaded the celebrations for World Meat Free Week in the Philippines. They called on parents, school administrators and public officials to “free” students, employees and workers from dependence on industrialized meat, and instead support healthier plant-based meals in public schools and government institutions, Greenpeace said in a news release. “Public institutions are some of the biggest purchasers of industrial meat. By encouraging them to ser ve less and better meat, and more plants in their canteens and during meetings and events, we reduce bulk demand for meat,” said Virginia Benosa-Llorin, G re e n p e a ce P h i l i p p i n e s’s fo o d a n d ecological agriculture campaigner. “It is high time for our policy and decisionmakers to heed the call, to take concrete and proactive actions,” she added. High red meat consumption has been linked to cancer, heart disease, obesity and diabetes. Five million deaths each year— nearly nine people dying a minute—could be avoided by 2050, if people around the world would shift to healthier diets with more veggies and legumes, and less meat, the news release said. “The evidence is powerful from a health and environmental perspective; people need to shift their consumption toward more plant-based diets. Governments, towns, cities and companies need to p ro v i d e t h e e n a b l i n g e nv i ro n m e n t to help people to make this change,” said Pete Smith, Aberdeen University professor and former convening lead author for the Intergovernmental Panel on Climate Change.
According to a recent report from Greenpeace International, global meat and dairy production and consumption must be halved by 2050 to avoid dangerous climate change. Livestock releases as much greenhouse gases as all cars, trucks, planes and ships put together. In Quezon City, a food truck served plant-based siomai, gyoza and siopao, prepared by the women of Batis Aware (Association of Women in Action for Rights and Empowerment). Batis Aware received mentoring on plant-based snacks preparation, as part of their fundraising and livelihood development, from vegan kitchen advocacy group Me and My Veg Mouth. In partnership with the Quezon City Health Department, the groups also engaged city officials by giving them baskets of vegetables from the Peoples’ Food Movement, a group of individuals and organizations that seek to address fundamental problems in the country’s food system. The city officials also received Power Plant Vegetable Posters and Recipe Cards made by Alessa Lanot, surface pattern designer and watercolor artist, and other professional visual artists. Dr. Rolando Balburias, a practitioner of Func tional Medicine and Health Optimization, in his Wellness Talk, Health and the Food We Eat, said, “In any healthy ecosystem, most par ticularly in our country, plant-based nutrition can be a lasting solution that will address the health inequity affecting many Filipinos.” He ex p l a i n e d t h at t h e m a j o r i t y of chronic diseases—diabetes, heart disease, cancer, etc.—afflicting millions of Filipinos, are related to poor eating choices and habits. All plant-based foods are nutrient-dense and contain many phytochemicals: the two main reasons why we say that food is medicine. “I truly believe that whatever we do to our earth, creates an impact on our health. Eating plant-based food is not only vital to
our body but our planet, as well. Eating more plant-based proteins, for example, could reduce greenhouse-gas emissions by up to 55 percent,” he added. M e a n w h i l e , i n B a c o l o d C i t y, Greenpeace Volunteers and Bacolod Vegans held a cooking demo and talks on organic farming at the Bacolod City New Government Center. In Iloilo, the Zarraga National High School community joined ecological farmers as they prepared plant-based snacks and formulated their weekly meal plans. In Camarines Sur, the youth and agriculture advocacy group #IAmHampasLupa Youth, the Rinconada Movement for Environment and Sustainable Agriculture, the Bicol Youth for Climate Action, and the Disaster Resilience and Environment Network held an awareness campaign about the benefits of reducing meat consumption at the Iriga City Friendship Plaza, for the city’s Independence Day celebrations, Greenpeace said. They also treated Irigueños with “freedom-from-meat” snacks. On June 14, La Tierra Agua, a movement that aims to protect the land and water, held a unique Iftar for the Muslim community of Western Mindanao State University in Zamboanga City, during the “VeggIftar 2018: Meet on World’s Meat Free Day.” E a r l i e r, o n J u n e 1 0 , t h e I l o i l o Mountaineering Club celebrated World Meat-free Week in Jaro, Iloilo City. A yoga practitioner’s talk on his journey toward a meat-free diet was followed by a yoga session. G re e n p e a c e I n t e r n a t i o n a l g a ve recognition earlier this year to Pasig City, which has enacted an ordinance making it illegal to serve or advertise unhealthy food to students on or near schools during school days which, in effect, is a promotion of plant-based meals in schools. The ordinance applies not just to school canteens, but to stalls, stores and fast food outlets within 50 meters of schools, Greenpeace said.
A10 Monday, June 18, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
www.businessmirror.com.ph
editorial
How is the economy really doing?
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N a gentler perhaps better time, the vast majority of ordinary citizens lived their lives without ever knowing about, much less discussing, ideas such as “GDP,” “interest rate policy” and “economic growth.”
Even a casual glance at any major newspaper and you would have a difficult time missing those topics. It is not that economic news is unimportant. But what do we really know about the economy from what we are given by the government and the press/media? Read this statement from a well-recognized economic research firm: “The Philippine economy grew at an annual 6.8 percent year-on-year in the March quarter of 2018, following a downwardly revised 6.5-percent expansion in the previous quarter.” What exactly does that mean? Is that good, bad or neutral? What impact does that “fact” have on the lives of average Filipinos? The reality is that these numbers fall into one of the categories of the wise old saying that no one remembers who first said it. “There are three kinds of lies: lies, damned lies and statistics.” Any time any government anywhere releases economic data, the “opposition” immediately turns it into a political issue. The growth is not large enough. The growth is not “inclusive.” The growth is not sustainable. Of course, the sitting government responds just as politically with “No, you are wrong!” Assume for a moment that the economy can accurately be measured. By the way, that is a huge assumption. Initially, what do we measure as “economic growth?” Do we count all the income made by individuals and companies? Should we count all the spending by individuals and companies? Alternatively, do we measure the production such as how many kilos of palay were grown or how many kilowatts of electricity was produced? Should we use some sort of combination of these? The economic experts tell us, “No problem. We have it all figured out.” But the truth is, their expertise is nothing more—and nothing less— than a judgment call as to what they think is an accurate representation of the economy. Then comes the question of how we value all this. The production cost, for example, of electricity changes constantly as does the selling price. Do we value the production cost of a pig, the farm-gate price to the farmer, or the retail price of a kilo of crispy pata at our favorite restaurant? Yet, it gets even more complicated. For the first quarter of 2018 the total “value” of the economy—according to the Philippine Statistics Authority—was P2.15 trillion. But that is “at constant 2000 prices,” meaning the value of pork is computed at the per kilo price in 2000. “At current prices” the total value of the economy is P3.92 trillion. Both numbers are “accurate” but it is not the same as giving your weight in kilograms and pounds. However, in order to make national comparisons, most research converts a nation’s economic value into US dollar terms. Based on average exchange rates, the Philippine economy in 2017 was worth about $352 billion. If we measure economic growth based on nominal numbers in US dollars, the economy grew by 76 percent between 2010 and 2017. Using the Famous Big Mac Index, based on the number of Big Macs the total economy could buy in 2010 versus 2017, the economy grew by 50 percent. Based on a per-capita basis—dividing the economy by the population—the growth was 32 percent. How is the economy really doing? It all depends on what statistics you care to look at. Since 2005
BusinessMirror A broader look at today’s business
Beginning a zero-waste lifestyle Atty. Jose Ferdinand M. Rojas II
RISING SUN
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t’s the rainy season once again and that also means it’s the season of flooding. Filipinos have, perhaps, gotten used to it by now and we have learned to simply ignore the images and stories that have become familiar this time of year. We have learned to ignore the images of trash in the estero, plastic waste blocking the drains, garbage floating in the floodwaters, etc. In the oceans we see sea creatures dying because of too much plastic and other trash in the water. Looking at our own household, we would have an idea of how much trash we generate on a daily basis— in our country and in the world. It doesn’t take much to conclude that we have indeed become a society that consumes too much. Our landfills are overflowing, many businesses just don’t care about their use of non-biodegradable materials and the way they dispose of their trash.
CPD and innovation John Michael Angelo Z. Lopo
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Aside from this, the landfills are toxic—the toxins leach into the soil and poison our oceans. Governments are doing what they can and organizations are making huge contributions, too. Apparently, all this is not enough to save the planet. Each person needs to do his or her share to minimize the waste and to help protect our only home. There are many efforts to this end,
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ecessity is said to be the mother of invention. Under the current Continuing Professional Development law, the CPD has become a necessity and hence, we now feel an impetus for invention. Some quarters call for abolishing the CPD law, thereby doing away with the “necessity.” But the problem with this “solution” is that we can only abolish the law within the jurisdiction of our own country— the Republic of the Philippines. The CPD law, however, was crafted pursuant to the International Education Standards (IES) of the International Federation of Accountants, and in support of Asean Mutual Recognition Arrangements—which cover all Asean members. In the case of the accounting profession, the Ifacies requires 120 hours of CPD training for CPAs of all membercountries. In other words, this is not a localized need that can be practically and unilaterally addressed by a localized “solution.” In reality, the 120 CPD hours are not the ultimate necessity. The 120 CPD hours are just a means to the end of becoming an Asean Chartered Professional Accountant who
is professionally mobile and recognized within the Asean integration. Philippine CPAs face the necessity to level up, together with the CPAs of Singapore, Malaysia, Indonesia, Brunei Darussalam, Cambodia, Lao PDR, Thailand, Myanmar and Vietnam, lest they be dismissed as below par in the global stage. The question then is how do we innovate our way to addressing the 120-hour CPD necessity? How do we make CPD training accessible in terms of schedule and location? How can we make the cost fair and not prohibitive? Last, how do we make sure we are upholding the intent of the CPD law—producing CPD seminars that actually increase the international competitiveness and really sharpen and upgrade the knowledge, skills and expertise of the Filipino CPA community? Ever since the Internet was introduced to the public in 1991, we have seen an unprecedented
Authorities on environment conservation have declared that recycling is only a small part of the solution, because only a small percentage of plastic, for example, is actually recycled. So it is really better to reduce first or to reuse. Some people say the first line of defense is to actually refuse. Refuse single-use items, refuse plastic straws, refuse plastic bags, refuse too much packaging and refuse the things that you don’t really need. both locally and worldwide. One of these is the campaign to live a zero waste lifestyle. In the Philippines there are communities and individuals trying to reduce the amount of waste they produce on a daily basis. As we enter another wet season, it would be good to consider joining the movement to be an Earth warrior and to learn what we can do to help save our planet. Authorities on environment conservation have declared that recycling is only a small part of the
The question then is how do we innovate our way to addressing the 120-hour CPD necessity? How do we make CPD training accessible in terms of schedule and location? How can we make the cost fair and not prohibitive? Last, how do we make sure we are upholding the intent of the CPD law—producing CPD seminars that actually increase the international competitiveness and really sharpen and upgrade the knowledge, skills and expertise of the Filipino CPA community? acceleration in innovation. Today the typical Filipino has reaped the benefits of Internet innovation even in day-to-day activities like shopping (Lazada), commuting (Grab), navigating through traffic (Waze), doing homework (Google), vacationing (Airbnb), and socializing (Facebook). Previously unheard-of concepts such as a “sharing economy,” “blockchain verification” and “crowdsourcing,” are now gaining traction. It is expected that the rate of disruption and innovation will only keep on increasing through the years. It is this same spirit of innovation that must spark our solutions to the CPD dilemma. A number of CPD providers are already standing up to the call for innovation. One such company, Accelera Inc., is a Board of Accountancy-accredited CPD provider currently working to bring about innovative solutions for Filipino CPAs
solution, because only a small percentage of plastic, for example, is actually recycled. So it is really better to reduce first or to reuse. Some people say the first line of defense is to actually refuse. Refuse single-use items, refuse plastic straws, refuse plastic bags, refuse too much packaging and refuse the things that you don’t really need. Evaluate the things that you need so you can reduce them. How many pairs of shoes do you really need? How many types of cleaners, for example, do you have in your home? Do you still use tissues or have completely transitioned to handkerchief? Buy wisely and ask yourself first if you really need something before you pay for it. If you can make do with a used or second-hand item rather than getting a new one, then that would be better. I will share more tips on living a zero waste lifestyle in my next column. In the meantime, let’s all start thinking about how we can reduce the waste in our daily lives. To be continued
by utilizing technology to deliver its courses. It launched its courses in early-2018 on its web site www. accelerapro.com and now provides quality, reasonably priced seminars to CPAs through an Internet-based platform. Accelera believes that the cost of CPD training can go lower and lower as more professionals adopt the online platform. Once a person enrolls in the online courses, the training modules can be accessed in “bite-sized” portions anytime and anywhere—at the convenience of the enrollee. Upon completion of a course module, a tamper-proof, independently verifiable, shareable, blockchainbased certificate is immediately emailed to the enrollee. This is just the beginning of innovation and there’s a pervading outlook of excitement over what the future holds for the CPD trainings of the future. Accelera foresees more convenient, easy access to a shared pool of knowledge and expertise— made possible through technology —ultimately leading to even more growth and innovation. John Michael Angelo Lopo is a lecturer of Accelera, a senior financial analyst at San Miguel Brewery, an assistant professor at San Beda-Alabang and a part-time Lecturer at University of Asia and the Pacific. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.
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It’s Trump sanctions, not Opec, that’s boosting oil By Julian Lee Bloomberg Opinion
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S the Organization of Petroleum Exporting Countries (Opec) oil ministers prepared to meet in Vienna later this week, President Donald J. Trump fired another twitter-shot across their bows. But it is his decision to slap sanctions back on Iran that is the real driving force behind the rising price of oil. The US president has accused Opec of being “at it again” for the second time in as many months through his favored 280-character diplomatic channel. Quite what “it” is, he has never specified. I am always a bit confused about what people actually mean when they accuse the group of artificially raising the price of oil. Opec doesn’t set it—and hasn’t done so for more than 30 years. Perhaps the president is railing at the fact that some members of the group have spent millions of dollars creating production capacity that they aren’t using. Seen in another light, that surplus is a vital safety valve in the event of a sudden loss of supply—such as the one that occurred when US-led forces invaded Iraq in 2003, or when Western-backed rebels overthrew Libya’s Moammar Al Qaddafi in 2011. Opec’s spare capacity has been used to compensate for sudden supply disruptions more often than America’s strategic petroleum reserve. There is no reason that Opec should pump as much oil as Trump, or anyone else, wants. The organization exists to look after the interests of its members. Some of them might see appeasing the United States as being in their best interests. Others clearly do not. It was less than two years ago that candidate Trump’s energy adviser Harold Hamm told Bloomberg Businessweek that Opec was “irrelevant.” A little over a month later the same Harold Hamm said it was “high time” for the irrelevant Opec to agree on a production
freeze to raise prices. No one expects politicians, or their advisors, to be consistent. And oil at $67 a barrel is very different to oil at $46. Back then, US shale oil production was on the slide and needed a savior. It found one in Saudi Arabia’s then-Deputy Crown Prince Mohammed Bin Salman and oil minister Khalid Al-Falih, who reversed the kingdom’s “pump-at-will” policy and began to set oil prices on the path to recovery. Now Saudi Arabia is once again at the forefront of a group of Opec countries urging other members to do as America wishes—this time by raising output. The about-face comes hard on the heels of AlFalih’s assertion just eight weeks ago that Opec’s market-balancing job wasn’t yet done and that output restraint needed to be prolonged. What changed in that eight weeks? The outlook for the availability of Iranian oil. Trump’s decision to pull out of the nuclear deal and reimpose sanctions will reduce the volume of crude available from the country by an unknown amount. I have said from the outset that the amount of Iranian oil that will be forced off the market will be more than when sanctions were previously in force— even without the European Union bans on purchases that accompanied US curbs last time around. Analysts are now starting to ratchet up their forecasts of the volume that could be lost. The curbs will be more extensive than under President Obama—targeting Iran’s exports of condensates as well as crude oil—and waivers will be harder to come by. Tanker owners and insurers may already be reacting to the imposition of sanctions, even before they come into effect. It is the fear that the world is about to lose as much a million barrels a day of Iranian crude oil exports by the end of the year, and possibly another 500,000 barrels from Venezuela, that has really driven oil prices higher—not Opec.
Perfect strangers Siegfred Bueno Mison, Esq.
THE PATRIOT
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ll of us would naturally experience first day jitters every time we join a new company. Human resources managers should provide newcomers with a comfortable atmosphere, which will hopefully lead into a seamless adjustment to the new company. In my professional career, I encountered various onboarding techniques to welcome new employees. In the Army and in most government agencies, for instance, the tradition of paying courtesy calls to the new leader allows a formal meet-and-greet kind of an interaction. In one private company, I was given a guided and personalized tour of the company premises by no less than its president. In another company, my coworkers and I treated a new employee to lunch during his first week. All of these engagements structured or otherwise are designed to somehow manufacture stronger if not longer lasting relationships in the workplace, at least at the professional level. Donald Clifton is the person behind a specialized company built to find exceptional employees popularly known as Gallup. One of his legacy innovations is Q12— a measure of 12 survey items that are supposedly the best indicators of employee engagement. One survey question that somehow baffles executives then and now was: “Do you have a best friend at work?” In his book, The Best Place To Work, author Ron Friedman shares valuable insights on the art and science of turning strangers in the office into a community of friends. Friedman believes that the ingredients in making friends are physical proximity, familiarity, similarity
and self-disclosure. He thinks that acquaintances, that common start point in all employee relationships, can mature into friendships given the correct recipe. One study quoted by Friedman in his book revealed that employee retention increases by 50 percent whenever employees have friends at work. Another study has shown that informal connection among colleagues enhances work productivity. After all, happier workers, those presumably with friends at work, produce a better output on the job. Without knowing what Friedman espoused in his book, some of my work colleagues initiated a series of activities in my house to simply unwind, relax and enjoy the fellowship of each other. What they did not know was that such activities were somewhat aligned with Friedman’s formula of creating long-lasting friendships. My work colleagues, Kooks and Jan, thought of doing a sleepover that entailed a potluck dinner, a home-cooked breakfast, an impromptu visit to the farm and baking carrot cupcakes—all in a span of 24 hours. My
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For some, exposing personal secrets and vulnerabilities to a work colleague can be taken as a sign of weakness, or worse, a source of gossip. But, for me and for Friedman, such sharing of emotionally sensitive information in confidence is when we fortify the relationship and acquire real friends in the workplace. In turn, forged friendships in the workplace lead to enhanced work productivity. work colleagues even surprised me with a Happy Father’s Day celebration in advance, complete with the proper balloons, meaningful gifts, and community singing. Following Friedman’s formula, since most of us were located at the same floor at work, we practically interacted with each other on a daily basis. Due to sheer physical proximity and familiarity, I discovered some common interests among my colleagues at work, Kooks and Jan in particular. Over time, I learned that Kooks shares my passion in dogs and that Jan shares my passion in teaching. Over a few breakfasts and lunches in the office, I learned that both Kooks and Jan enjoy cooking and baking. Over the weekend, I learned that Kooks took some culinary courses whereas Jan taught home economics. But, according to Friedman, one final component, which is the core of meaningful relationships, is selfdisclosure. That is, sharing of one’s secrets. By analogy, if Friedman’s physical proximity, familiarity, and similarities are the flour, sugar, and butter to Kooks’ recipe for a carrot cupcake, then self-disclosure is the carrot, both of which are the essential ingredients. That’s why I was de-
PDIC: Closure, receivership and liquidation of UDB was valid MAIL
This refers to the On The Contrary column of Mr. Michael Makabenta Alunan, entitled “Chilling Signals from PDIC,” which appeared in the BusinessMirror on April 5, 2017. Allow us to inform you that the receivership and liquidation of the closed Unitrust Development Bank (UDB) were conducted above board, in compliance with the orders of the courts, and consistent with the standard policies and procedures of the Philippine Deposit Insurance Corp. (PDIC) in the receivership and liquidation of closed banks. For your information, the validity of the closure, receivership and liquidation of UDB was upheld with finality by the Supreme Court in its Resolution dated July 29, 2015 in GR 217899 after the petition filed by Francis Yuseco Jr. (Yuseco), was dismissed. Entry of Judgment was entered in the Books of Entries of Judgments on November 5, 2015. Thereafter, Yuseco filed a motion to reopen case but was denied by the SC in its Resolution dated September 28, 2016 affirming further that the petition had already attained finality. Allow us to go through the facts that form part of the court records: 1. Under Republic Act (RA) 7653 or the New Central Bank Act, only the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has the mandate to order bank closures and to designate the PDIC as Receiver of the closed bank. Pursuant thereto, the Monetary Board, in its Resolution 19 dated January 4, 2002, prohibited UDB from doing business in the Philippines and placed the
bank under PDIC receivership. 2. PDIC exerted all efforts to pursue the rehabilitation of UDB by tapping strategic third party investors (STPIs) who were required to comply with standard requirements for rehabilitation, cognizant that this is a more advantageous alternative to liquidation insofar as the interests of the bank’s creditors and uninsured depositors are concerned. The process of rehabilitating UDB was carried out consistent with standard procedures. The Yuseco group and three banks signified interest to rehabilitate UDB. For the record, all these STPIs failed to comply with the requirements for UDB’s rehabilitation. The PDIC Board of Directors extended the deadline for the submission of the final determination if UDB may still be rehabilitated in order to afford more time for STPIs to comply with the requirements. The grant of extension is warranted whenever there is a rehabilitation proposal submitted to the PDIC. Unfortunately, the only STPI that signified interest to the rehabilitation also failed to comply with the requirements. 3. The Monetary Board issued Resolution 64 dated January 20, 2005, directing the liquidation of the bank after determination that it cannot resume business with safety to its depositors, creditors and the general public. 4. In accordance with Section 30 of RA 7653, PDIC filed on April 25, 2005, a petition for assistance in the liquidation of the closed UDB with the Regional Trial Court, Branch 59 of Makati City (reraffled to RTC Branch 137, Makati City, after Judge Winlove Dumayas issued a resolution on February 16, 2015, voluntarily inhibiting himself from hearing the case). PDIC’s Receivership Report was attached to the PAL filed with the Court and is a public document contrary to allegations that after 15 years, no official report has been made on UDB’s case; and that PDIC has refused to open up those records.
The PAL is a proceeding in rem that requires public notification hence, published in a newspaper of general circulation. In this case, the Court Order dated July 6, 2005, was published on August 18 and 25, 2005. Thus, all interested parties and claimants were deemed notified of the proceedings. 5. The judicious and expeditious liquidation of the remaining assets of UDB will benefit and protect the interests of the bank’s creditors and uninsured depositors through settlement of their claims. Merely two years after the PAL was filed, PDIC was ready to partially settle the uninsured portions of the deposits pertaining to the UDB depositors which the liquidation court approved in March 2007. The Yuseco Group, however, moved for reconsideration of the approval, which was denied in July 2011. Due to the pendency of the motion for reconsideration, only a handful of depositors claimed payments. 6. In 2012 PDIC was ready to pay the entire principal claims and surplus dividends to depositors and creditors. Due to several dilatory motions, it was only when the liquidation court (RTC Makati City Branch 59) issued the resolution dated October 1, 2014, that PDIC was authorized to effect the payment of the remaining balances of the claims of depositors and creditors against the assets of UDB. To date, all payments were accounted for and reported to the court, the latest of which was contained in the Supplemental Manifestation and Omnibus Motion filed with the Regional Trial Court of Makati City Branch 137, on April 21, 2017. Based on the foregoing facts, PDIC categorically denies all the baseless allegations and malicious imputations of corruption, the truth of the matter being: a. PDIC, as Receiver of UDB, was tasked to determine within the period of receivership whether the bank can still be rehabilitated with
safety to the depositors, the general public and the community. To present a fair estimated recoverable or realizable value of the assets if sold or assigned as payment to creditors, PDIC adjusted the assets and liabilities to be settled by UDB. While UDB showed capital of P153.39 million in its Consolidated Statement of Condition as of closure date on January 4, 2002, UDB’s financial health was far from stable. Further evaluation showed that after factors such as appraised value of the assets, collectability of receivables, additional/unaccounted liabilities and the minimum capital requirement of P325 million for a thrift bank in Metro Manila at that time were considered, UDB’s capital was deficient by P270.11 million to be allowed to rehabilitate and resume business with safety to the depositors, the general public and the community. b. UDB’s closure, receivership and liquidation were declared valid by no less than the SC. c. No closed bank funds were disbursed to PDIC personnel. PDIC, as the Statutory Receiver/ Liquidator of UDB, has the authority under Section 12 of RA 3591, as amended, implemented through standard policies and guidelines for all closed banks, to charge fees and expenses against the assets of UDB, relative to liquidation including salaries of personnel responsible for the liquidation of said bank. The receivership and liquidation (R/L) fees and expenses were advanced by PDIC and reimbursed from the bank’s funds/ resources only upon approval by the liquidation court. d. As of end 2016, R/L fees and expenses charged against UDB totaled to about P41.18 million and were incurred over a period of 14 years from the time of the bank’s closure in January 2002 or an average of P2.94 million per year. e. PDIC, as Deposit Insurer, is mandated to protect the Deposit Insurance Fund, the funding source for payment of deposit
insurance. Hence, as a creditor of the closed bank, it is entitled, under the PDIC Charter, to claim for subrogated deposits equivalent to the total amount of deposit insurance paid to the UDB depositors as well as surplus dividends. The Supplemental Manifestation and Omnibus Motion filed on April 21, 2017, reported total payments to PDIC in the amount of P194.43 million by way of subrogated deposits, both in liquidating and surplus dividends. A total of P0.15 million, was likewise, paid to PDIC for claims for UDB’s unpaid deposit insurance assessment at the time of closure. f. Under Presidential Decree 679 otherwise known as the Unclaimed Balances Act, deposits, credits, and balances which remain unclaimed for more than 10 years ore escheated in favor of the national government through the Bureau of the Treasury. As of 2014, a total of 7,897 accounts in the amount of P67.65 million representing depositors who failed to file their claims, depositors whose payments are unclaimed, as well as surplus dividends for these claims were reported to the BTr. To date, P12.06 million have been declared escheated to the national government, while escheat proceedings for the remaining unclaimed deposits are still pending with the court. g. The mandate of PDIC, as liquidator, is to efficiently manage closed banks based on standard procedures to help ensure that recoveries of creditors of their claims are maximized. As of December 2016, PDIC paid the liquidating and surplus dividends due to the depositors and creditors of UDB amounting to P324.32 million, in addition to the total amount of P67.65 million escheated or for escheat to the national government. The total amount of P41.14 million remains unclaimed. Funds and properties equivalent to the unclaimed amount have either been earlier consigned or shall be consigned
lighted near the end of our bonding activity seeing Kooks encouraging everyone to share their “pits and peaks” experienced during the first half of the year. In the Bible, John 15:14-15 tells us: “You are my friends if you do what I command. I no longer call you servants, because a servant does not know his master’s business. Instead, I have called you friends, for everything that I learned from my Father I have made known to you.” Jesus has shared to us everything that any of His friends should know through His Word. He even gave us a helper, the Holy Spirit within us, to assist us in knowing more about Him. In turn, we should genuinely reciprocate. As I continue to walk in faith, I share my personal struggles to Him through constant prayers in the same way I try to study the Bible every chance I get. Every time we disclose our innermost secrets to Him through confession, we inevitably get closer to Him. Our relationship with Him gets stronger. For some, exposing personal secrets and vulnerabilities to a work colleague can be taken as a sign of weakness, or worse, a source of gossip. But, for me and for Friedman, such sharing of emotionally sensitive information in confidence is when we fortify the relationship and acquire real friends in the workplace. In turn, forged friendships in the workplace lead to enhanced work productivity. I truly appreciate those who openly revealed their emotionally sensitive struggles both at work and at home during that pits and peaks. These kinds of sharing, especially when done with sincerity, are the moments where perfect strangers can turn into lifelong friends. For questions and comments, please e-mail me at sbmison@gmail.com.
with the court as reported in the Supplemental Manifestation and Omnibus Motion. h. Yuseco filed separate complaints against PDIC officers before the Ombudsman for alleged graft and corruption which were dismissed, and disbarment case versus the PDIC and the BSP lawyers which was, likewise, dismissed by the IBP Board of Governors for lack of merit. Only referral for syndicated estafa filed with the National Bureau of Investigation remains unresolved. Notwithstanding all efforts to delay the liquidation of UDB, PDIC was able to distribute the bank’s funds and assets to depositors and creditors as directed by the liquidation court. At the cost of being repetitive, PDIC reiterates that all these facts are verifiable from court records and that all the funds and assets of UDB, which were distributed to the depositors and creditors are all accounted for. In pursuit of PDIC’s public policy objectives of protecting the interests of depositors and helping maintain financial stability, PDIC consistently carries out its mandate in accordance with law and within the bounds set by pertinent rules, regulations and court orders. While the freedom of the press is one of the cherished hallmarks of our democracy that engages everyone to strive to protect and respect, the same freedom must be balanced with responsibility and guided by conscience and careful thought through investigation, verification and solid research to avoid public misinformation. In the spirit of fair and responsible journalism, PDIC will highly appreciate having this letter printed in its entirety to set the record straight and enlighten the public. Thank you very much for your usual support, time and attention. Jose G. Villaret, Jr. Vice President PDIC Corporate Affairs Group