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Thursday, June 22, 2017 Vol. 12 No. 252

UNWTO execs help PHL soothe nerves of visitors

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Labor mobility in Asean: Free or unfree?

By Ma. Stella F. Arnaldo

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@akosistellaBM Special to the BusinessMirror

FFICIALS of the United Nations World Tourism Organization (UNWTO) advised the Philippines to keep promoting the country to its Asia-Pacific neighbors to further boost its visitor arrivals, despite perceptions over security and safety issues in the country.

GOVT WINS COURT OF APPEALS CASE ON ‘MILE LONG’ PROPERTY

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HE Court of Appeals (CA) has ruled in favor of the government on the case involving the controversial “Mile Long” property in Makati City. This was the very property that President Duterte cited when he lambasted the Rufinos and Prietos for getting the property, to the disadvantage of the Philippine government and for which the President accused them of tax evasion and nonpayment of rentals. In a decision penned by Associate Justice Jose Reyes Jr., the CA’s Fifth Division ruled in favor of the government, as it dismissed one of the two cases on the ground of lack of jurisdiction of the Regional Trial Court (RTC) in Makati to hear the petition. It granted relief to the plea of the government to dismiss the case after

the RTC issued a temporary restraining order (TRO) on August 13, 2016, that halts the ruling of the Metropolitan Trial Court, which ordered Sunvar Realty to vacate the premises and pay back rentals amounting to P478,200,600 as of May 15, 2015, with monthly rental of P3,209,400 beginning on June 15 up to and until defendant shall have vacated the premises. Reyes ordered that another case involving Sunvar Realty Development Corp.’s property, supposedly owned by the Philippine Daily Inquirer, be remanded to the RTC in Makati, Branch 141 in the sala of Judge Maryann Corpus-Manalac, which has the authority to hear and decide on the main case.

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@c_pillas29

lectronics and semiconductor investments in the first quarter of the year nearly doubled, giving industry players more confidence that they will increase exports by up to 6 percent this year. This also bodes well for the public-private efforts to increase the share of the manufacturing sector

About 1,000 statisticians and tourism officials from some 60 countries are in Manila for the Sixth International Conference on Tourism Statistics at the Grand Ballroom of the Marriott Hotel, Newport City, Pasay City. UNWTO officials had hoped that in pushing through with the three-day conference here, the global tourism agency would send a strong message to world travelers that the Philippines is a safe destination.

Rene E. Ofreneo

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LABOREM EXERCENS

conomic community-hood is the primary goal of the Association of Southeast Asian Nations (Asean). The idea is to transform the economies of the 10 Asean countries into one Asean Economic Community (AEC). The expected outcomes: the AEC as a single market of over 600 million people and the AEC as one production base that can compete with those of the European Union, China, Japan and the United States. Continued on A12

See “UNWTO,” A2

BMReports

PHL oceans in trouble: Overfishing, pollution, climate change ail our seas

See “Govt,” A12

Seipi sees 6% hike in exports this year By Catherine N. Pillas

RIFAI: “You haven’t lived if you have not experienced the Philippines. We are here, ladies and gentlemen, to tell the world to come to the Philippines.”

in total employment to 15 percent via upscaling of the sector’s gross value added (GVA). Phi l ippine Economic Zone Authority (Peza) Director General Charito B. Plaza, in her address at the 14th Philippine Semiconductor and Electronics Convention and Exhibition (PSECE) 2017 at the SMX Convention Center on Wednesday, said fresh capital infusion in the electronics and Continued on A2

PESO exchange rates n US 50.0640

Negros Occidental residents take turns in guarding their valuable marine resource, the Carbin Reef—a huge, tongue-shaped, white sandbar 15 kilometers from Sagay City and is near the Asuncion Pass and the Visayan Sea. Above the water, the reef seems to be a mere strip of sand, but below the surface is a wealth of natural beauty. It is the center of the 32,000-hectare Sagay Marine Reserve. The sanctuary was established in 1999 and abounds with a wide variety of underwater species, such as coral formations, turtles and large schools of fish. NONIE REYES By Jonathan L. Mayuga @jonlmayuga

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Conclusion

ITH a limited budget and a great need to boost programs to protect and conserve the ocean, the government is revisiting its coral reef-rehabilitation strategy. Instead of just transplanting corals and installing artificial coral reefs, the Department of Environment and Natural Resources

(DENR) is looking at expanding and strengthening protection measures for national marineprotected areas (MPAs). Establishing additional MPAs with stronger protection measures is “more cost-effective” than rehabilitating damaged corals through coral transplantation or construction of artificial coral reefs to boost fish production. Vincent Hilomen of the DENRBiodiversity Management Bureau (DENR-BMB) said the establish-

ment and protection of more MPAs would allow corals to recover naturally and would not drain the DENR-BMB’s limited resources. Coral-reef rehabilitation would cost the government around P500,000 to as much as P5 million per hectare, depending on the damage or areas to recover or restore, according to a report by the Coral Reef Targeted Research & Capacity Building for Management. Hilomen, DENR-BMB marine

key biodiversity areas project manager, said such costs can be avoided by identifying areas that can recover faster on their own without human intervention. He said this strategy is also the same in the case of mangroves, wherein scientists observed the resilience and faster recovery of natural mangrove forests than man-made mangrove forests, especially if the reforested area is planted with the wrong species. Continued on A2

n japan 0.4493 n UK 63.2408 n HK 6.4180 n CHINA 7.3306 n singapore 36.0406 n australia 37.9435 n EU 55.7463 n SAUDI arabia 13.3518

Source: BSP (21 June 2017 )

A2 Thursday, June 22, 2017

BMReports BusinessMirror

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PHL oceans in trouble: Overfishing, pollution, climate change ail our seas Continued from A1

According to DENR-BMB Director Theresa Mundita S. Lim, the establishmentt of MPAs to protect more areas, including the existing corals, would allow faster recovery of the country’s spawning grounds for fish and other marine life. Lim said, because threats are multifaceted, the DENR is addressing the problem “in an integrated and holistic manner”. The DENR-BMB is now focused more on establishing networks of MPAs, she added. Lim explained that MPAs may be at the national level or at the local level. She also underscored the importance of identifying the country’s remaining rich marine ecosystems to enable the state to secure these areas. To do so, these areas can continue to be a spawning ground for important marine and fishery resources and, eventually, contribute to the recovery of surrounding degraded marine ecosystems, Lim explained. She added the DENR-BMB is looking at “interconnectivities” of the marine ecosystems to develop

networks of MPAs that will support every stage of the life cycle of keystone marine species. Lim said strengthening law enforcement will require interagency cooperation to eliminate the threats to important marine ecosystems. Thus, it requires closer interagency cooperation, which will include law-enforcement agencies to boost protection and reduce or eliminate poaching. Lim said aside from National MPAs, the DENR is also banking on various initiatives of local government units (LGUs) in identifying and establishing local MPAs.

Regional cooperation

TWO years ago, at the Asia Pacific Economic Cooperation (Apec) meeting held in Manila, former Environment and Natural Resources Secretary Ramon J.P. Paje pitched the call for stronger cooperation among Apec member-economies to achieve the full potential of the socalled Blue Economy in the region. Environment and Natural Resources Undersecretary Jonas R. Leones said the Philippines remains com-

mitted and active in supporting various regional cooperation and initiatives on ocean conservation and protection. Leones, DENR Undersecretary for the Environment and International Environment Affairs, cited the foremost commitment is the Coral Triangle Initiative on Coral Reefs, Fisheries and Food Security (CTI-CFF), a multilateral partnership of six countries formed in 2007 to address the urgent threats facing the coastal and marine resources. Aside from the Philippines, countries committed to the CTICFF are Malaysia, Indonesia, Papua New Guinea, Solomon Islands and Timor Leste. The Philippines is also part of the Partnerships in Environmental Management for the Seas of East Asia (Pemsea), which was created to foster and sustain healthy and resilient coasts and oceans, communities and economies across the Seas of East Asia through integrated management solutions and partnerships. The Pemsea has provided solutions for effective management of coasts and oceans across seas

shared by countries in East Asia. The Pemsea acts as the regional coordinating mechanism for the Sustainable Development Strategy for the Seas of East Asia (SDS-SEA), which is a shared marine strategy among 14 countries, the Philippines included, in the region.

Alphabet soup

LEONES said the Philippines is also part of another regional initiative called Cobsea (Coordinating Body on the Seas of East Asia), which steers the East Asian Seas Action Plan (Easap) approved in 1981. The Easap was stimulated by concerns on the effects and sources of marine pollution. Regional cooperation, he said, is a must to successfully protect and conserve the ocean. “We are coordinating with neighboring countries to protect the ocean. Fish has no nationality. They are pelagic,” Leones said. “We want to protect our habitats. Countries, particularly in the Coral Triangle, must protect the ocean.” He explained that under the CTICFF, the Philippines coordinates

Seipi sees 6% hike in exports this year Continued from A1

semiconductor industr ies increased by 85.19 percent versus year-ago levels, a signal of the industry’s continued expansion and growth. This is despite the disruptive political events and spate of violence that threaten the entry of foreign investments into the country. Plaza said investments in the electronics and semiconductor industries reached P7.6 billion compared to P4.1 billion in the same period last year. Exports of electronics and semiconductors monitored by Peza,

AFP. . .

Continued from A12

“Please be reminded that this is the only official depository account and please do not give, especially financial donations, to any other supposed solicitations,” Abella said. Casualties from the government side swelled to 66 already, as fighting in Marawi City continues in spite of claims by the authorities that the conflict is nearing its end. For those willing to donate for families of soldiers killed

meanwhile, saw an increase of 11.5 percent, from $5.109 billion in the first months of 2016 to $ 5.97 billion this year. Semiconductors and Electronics Industries of the Philippines Inc. (Seipi) President Dan C. Lachica told reporters these figures will likely redound to a 5-percent to 6-percent growth in exports for the whole year. “Investors have seen what happened, and we’re still business as usual. Investors continue to come in and, even as there has been like the martial law and the attack in Resorts World, the center of manufacturing of electronics is at Calabarzon,”

Lachica said in a news conference. In terms of long-term targets for the industry, Trade Secretary Ramon M. Lopez said the government and the private sector are aiming to increase the GVA of the electronics sector to manufacturing. “We want to increase the GVA to around 20 percent to 23 percent, coming from what we have now of 17.7 percent GVA, and [the] employment share of manufacturing from 8 percent to 15 percent,” Lopez added in his remarks at the opening ceremony of the PSECE. Aligned with this move is the funding provided by the Department of Trade and Industry to the

Seipi of around P3.8 million for the commissioning of the association’s Product and Technology Holistic Strategy project. “This is to move the industry to higher-value activities,” Lopez said of the project. Generally, the project is to add more design-based activities on the value chain in the country. For the longest time, the local industry has concentrated specialization on testing and assembly. The Seipi now wants to see more activities in the area of integrated circuit designs. In the Asean region, the semiconductor and electronics sector take up 20 percent to 50 percent of total value of exports in most countries.

in action, you may deposit your financial aid at account name AFP Marawi Casualty, account number 00000552107128, at any LandBank branch. For those willing to donate for displaced persons of Marawi City, you may deposit their financial aid at account name Marawi IDP, account number 00000552107136, at any LandBank branch. Meanwhi le, President Duterte said in an interview with reporters in Cagayan de Oro City he will call Widodo on Wednesday to inquire about Indonesian nationals reportedly fighting on the side of Maute Group terrorists.

“I’ll be talking to Widodo [on Wednesday]. He will ask questions and I have so many questions for him,” Duterte said. “Most of them [Maute Group terrorists] are believed to be Indonesian nationals.” Duterte revealed the information after he was asked if he is still keen on expanding his martiallaw declaration to the Visayas, to which the Chief Executive said is “not called for at this time”. However, he said it is necessary to suspend the privilege of writ of habeas corpus in the Visayas to prevent the Islamist militants from gaining a foothold in the middle third of the Philippines.

Mindanao is presently under martial law, with the privilege of writ of habeas corpus suspended. I ndonesi a n aut hor it ies i n early June said there are about 1,200 Islamic State (IS) operatives rounding the Philippines as part of the IS in Iraq and Syria’s effort to establish a caliphate in Southeast Asia. According to Indonesian Defense Minister Ryamizard Ryacudu, 40 of the 1,200 IS fighters in the Philippines are of Indonesian nationality. Security forces has slain foreign fighters in the ongoing conflict in Marawi City, Lanao del Sur, as some were identified to be Malaysian, Indonesian, Yemeni, Saudi Arabian and Chechnyan. Defense Undersecretary Ricardo A. David Jr. said foreign fighters might have used backdoor channels in the Sulu and Celebes Seas to join their fellow IS-pledged militants in southern Philippines. “That’s why they were able to muster the operations in the area of Marawi City,” David said in a security forum in early June. As a response to the emerging security crisis, the Philippines on Monday entered into a trilateral maritime patrol with Indonesia and Malaysia in the Sulu Sea to heighten the region’s war against terrorism and transnational crimes. The trilateral maritime patrol allows Philippine security forces to cross Indonesian and M a l ay s i a n b orde r w ate r s i n cases of hot pursuit and vice versa. Aside from this, the three countries will have an exchange of liaison officers and sharing of assets, such as patrol ships, under the agreement. The joint patrol is intended to foil terror attacks and activities of the Maute and Abu Sayyaf groups in Mindanao, which are notorious for kidnapping tourists, fishermen and sailors in the Sulu Sea.

with institutions to finance various programs. The Philippines is the chairman of the CTI-CFF, which is based in Indonesia. Efforts to protect the Coral Triangle Region, Leones said, is coordinated with the Philippines playing an important role. Coral rehabilitation, he added, is relatively new for the Philippines, as the country focused more on coastal rehabilitation. The latter involves the reforestation of degraded mangrove and beach forests. “We are now also pursuing coral and sea-grass rehabilitation,” he said. Like degraded forest, if you let it recover naturally, it will recover but the recovery will be slow, according to Leones. “We need to continue assisting the recovery of our mangroves, sea grass and coral reefs.”

Expanding areas

LEONES said that, while the DENR is looking at reducing, if not eliminating, the threats to existing coastal and marine ecosystems, it will continue to pursue various programs to expand the areas for rehabilitation.

UNWTO. . . Continued from A1

At a news conference on Wednesday, UNWTO Director for Asia and the Pacific Xu Jing encouraged the Philippines to continue selling the country to its AsiaPacific neighbors, noting the 90-percent increase in Chinese travelers to the Philippines. “The problem is not perception, it’s awareness about the country,” he said. Terror threats and security concerns have hounded the Philippines in recent months, flagging travel advisories from various foreign governments. For his part, former UNWTO Director General Marcio Favilla also said statistics indicated at least 80 percent of international tourist arrivals are inter-region travelers. “So it’s important for the Philippines to promote itself in China, Japan, Korea.” Data from the Department of Tourism (DOT) show almost 4 million tourists from Asia and Australasia/Pacific arrived in the Philippines in 2016, accounting for over 65 percent of the total 5.97 million visitor arrivals for the year. The DOT hopes to increase visitor arrivals from 7 million in 2017 to 12 million in 2022. Favilla also reiterated the UNWTO’s position that travel advisories issued by governments versus countries must be precise and time-bound. While acknowledging that governments are after the protection and safety of their citizens, he said travel advisories should be issued on a “geo-reference basis. They should not blanket the whole country. They should be clear where the problems are, and should be timebound. It should not take forever.” He also said the governments should “consult with the countries” to make the travel advisories more precise and updated. The UNWTO announced 1.24 billion international tourist arrivals in 2016, of which 25 percent traveled to the AsiaPacific region, including the Philippines. During the opening ceremony of the conference at the Newport Performing Arts Theater of the Resorts World Manila, UNWTO Secretary-General Taleb Rifai enjoined delegates to enjoy their time in the Philippines. “You haven’t lived if you have not experienced the Philippines,” he told the delegates. “We are here, ladies and gentlemen, to tell the world to come to the Philippines and make no mistake about it. Anybody who tries to present any other version of the story should come and see with your own eyes. All of the countries of the world that have experienced difficulties have come back and have shown their best and their beauty comes out,” he added. The UNWTO head said the year’s gathering is a “homecoming” and a milestone since Manila last hosted a WTO conference in 1980, which produced the Manila Declaration, a document that continues to be a reference for the global tourism industry. “The world is lucky to have the Philippines. Culture, nature and upbeat people give the country so much life. The Philippines is a country to travel and respect,

“The irony is that we are trying to rehabilitate the degraded area, but we failed to protect the existing [areas],” he said, explaining government will continue to look at ways to strengthen protection and conservation measures of existing coastal and marine ecosystems while identifying more areas for rehabilitation and development. More important, Leones said t he gover nment is now t ap ping on the expertise of various academic institutions. “Now, we are partnering with various institutions, such as the UP Marine Science Institute and other state colleges and universities, because they have the expertise on coastal and marine rehabilitation.” The DENR also continues to partner with various stakeholders in the implementation of national programs and projects, Leones added. After all, the government has everything to lose and much to gain in protecting its rich coastal and marine resources and, right now, the only way to save the oceans is to ensure broader stakeholder support and participation. and its greatest gift is its people,” he stressed. Rifai, it should be noted, was the one who impressed on the current DOT dispensation to keep the “It’s More Fun In the Philippines” country slogan. The opening ceremony was attended by Senate President Aquilino Pimentel III; Philippines Tourism Secretary Wanda Corazon T. Teo; tourism ministers from Thailand, Cameroon, Costa Rica, Fiji, Bangladesh, Sri Lanka and Seychelles; and 721 international and local delegates. During her opening remarks, Teo continued to push sustainable tourism on a global level by urging leaders to support tourism-related policy-making. “We hope that the Manila Call for Action will be adopted at this forum to demonstrate our common resolve to create a better world for our children and future generations,” she said. In a statement, President Duterte also thanked UNWTO for choosing the Philippines as the venue for the conference. “More than just a proof that the Philippines remains a safe destination for meetings, conferences and other tourism activities, it also affirms the Philippines’ effort to promote tourism as a vehicle for a nation’s sustainability and inclusive progress,” he said in a statement read by the DOT chief. Pimentel, likewise, assured the delegates that the situation in Mindanao is temporary. “I am confident that once this crisis is over, we will have peace and security in that region, [which] will result in more tourists visiting Southern Philippines,” he said, in reference to the martial law in Mindanao, which was prompted by armed encounters between the government and Islamist jihadist rebels in Marawi City, Lanao del Sur. Marawi is 813 kilometers away from Metro Manila by air and 1,500 km by road. During the three-day conference, tourism ministers will develop a statistical framework to integrate sustainable tourism on a global level. Tourism Undersecretary Rolando Cañizal said the conference would look at the “environmental impact of tourism”. At the news conference, UNWTO’s Xu expressed his“happiness to be back in the Philippines as a professional and also as a traveler. I’ve been coming to this country many times…it’s always more fun to travel in the Philippines.” He noted the “progress” made by the Philippines in the tourism sector “as we were driving through the Skyway from the airport”, as well as the renovations at the Ninoy Aquino International Airport terminals. “The Philippines continues to be a prime tourism destination not only in Asia, but in the world.” According to a news statement by the UNWTO in April, the Philippines “has become a reference in the region with regard to tourism measurement and a role model in the development of effective inter-institutional collaboration to develop tourism statistics. The commitment of the country, shown in the development of the Tourism Satellite Account framework, explains the decision to host the discussion on the [Measuring Sustainable Tourism] initiative.”

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US-PHL conservation group urges social enterprises to engage in forest protection By Roderick L. Abad @rodrik_28 & Renee Cuisia Special to the BusinessMirror

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NVIRONMENT stalwart Forest Foundation Philippines (FFP), funded by both the Philippine and the US governments, called for more social enterprises to engage in forest preservation with their winning ideas. The group is encouraging for-a-cause businesses, either start-ups or those still at the concept stage, to join in their pitch session dubbed “Forest Fest PHL”, where enterprising thought leaders are gathered to craft targeted and innovative solutions to help protect and preserve the country’s forests, which are now among the most neglected resources nationwide. “We hope a lot of social entrepreneurs will come forward with their ideas,” FFP Executive Director Jose Andres Canivel told the BusinessMirror at the sidelines of their news briefing in Makati on July 21. He said social entrepreneurs, advocacy groups and other related individuals will be given the chance to present their innovative concepts before a panel of judges. FFP looks for participants with agricultural and ecological types of projects. Also, initiatives involving craftsmanship of indigenous people, as well as forestry- and climate change-related ideas are expected. “Hopefully, we’ll have around 20 participants and then, we’ll pick a grand winner,” he said. Experts from different sectors will also share their views and help mentor the participants to come up with the best idea. The winner will receive a grant prize of P450,000. But the forest-conservation movement assures the event won’t be a “one-shot” activity. “The pitch fest is envisioned to be a longterm partnership. We would like not just to give the reward, but track their work and see how we can scale it up and expand it to our other focal areas, as well,” Canivel said. “[So] we won’t be working with just the winner, but with all participants. They may not win the prize this year, but we will continue to work with them.” This one-day event is part of a bigger development spearheaded by FFP—a five-year program plan aimed at providing assistance to organizations that empower people to protect forests in four key areas: Sierra Madre and Palawan in Luzon, Samar and Leyte in the Visayas and Bukidnon and Misamis Oriental in Mindanao. An estimated P480 million has been allocated for this undertaking to conserve these identified sites known for their ecological significance and importance to surrounding communities. Canivel said this allocation should be enough to cover forest conservation in no less than 1 million hectares in the four focal areas cited. Including social enterprises in its conservation funding and planning was one of the fundamental lessons the foundation learned throughout the years, he said. The FFP director said that, while community-centered livelihoods, such as organic

honey and rice production, were successfully established in the past, their markets could not progress beyond the family or community level because of the lack of link to the market. “Social enterprise is perhaps the gap that will help not just us, but the communities to become more economically resilient, that’s why we’re bringing [enterprises] in,” he said. Meanwhile, the low number of social enterprises in the country proves to be both a challenge and an opportunity for the foundation, he said. “We believe that, with the current crop of social entrepreneurs, that’s a good start. Plus I think one way of increasing the number of social entrepreneurs or those engaged in social enterprises is to start linking them up with communities,” Canivel said. “If we encourage communities to go into agri-forestry and generate livelihood, I’m sure social entrepreneurs, either from the community or from the neighboring urban centers, like Puerto Princesa, will start to tap them, or will start working with them,” he said. Forest Fest PHL is part of the bigger five-year program plan (2017-2021) of the FFP centered at providing grants to organizations that empower people to protect forests, especially in the focal areas. “By encouraging the youth through their passion points—social entrepreneurship, ecotourism, environmental conservation, and arts and culture—we hope to shape a generation of social entrepreneurs who will champion the cause of Mother Nature above everything else,” said Dr. Antonio G.M. La Viña, FFP chairman. Despite being one of the most biodiverse nations in the world, the Philippines continues to lose a major part of its forestland due to rapid urbanization. “By the time the need to aggressively regenerate our forests was realized, deforestation has already reached an all-time high and efforts to promote reforestation were met by a variety of challenges,” Canivel said. Established in 2002, the FFP aims to conserve and restore the country’s remaining forests by promoting and supporting projects that improve the conditions of Philippine forests. From 2005 to 2016, the group funded around P400 million to P450 million for the conservation of around 1.4 million hectares of forest landscapes in Palawan, Northern Luzon, Davao, Bicol and Samar. “The Philippines remains a vital player in the global forest-conservation advocacy by virtue of our being a global hot spot and mega-diversity area,” Canivel said. As the nation’s ally for this, the US has been collaborating with the Philippine government for 15 years by working with the Department of Finance and the Department of Environment and Natural Resources to oversee the FFP. “The United States has always been a staunch supporter and advocate of environmental conservation,” US Ambassador to the Philippines Sung Kim said. “Together with partners like the Philippines, we carry the responsibility to lead the global advocacy to make environment our No. 1 priority.”

200 BIFF members attack civilian outpost in N. Cotabato By Rene Acosta @reneacostaBM

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T least 200 members of the breakaway Bangsamoro Islamic Freedom Fighters (BIFF) attacked a civilian outpost in North Cotabato on Wednesday, forcing the evacuation of civilians in two barangays, police and military officials reported. The terrorists, led by five commanders of the BIFF, attacked the outpost of the Barangay Peacekeeping Action Team (BPAT) at Barangay Malagakit in Pigcawayan, North Cotabato, at around 5 a.m., triggering a firefight. The barangay security personnel were reinforced by elements of the Army’s 34th Infantry Battalion and members of the Pigcawayan Municipal Police Force, prompting the attackers to withdraw into a public-school building and take 12 students as human shields, said Capt. Arvin Encinas, spokesman of the 6th Infantry Division. Reports, however, quoted BIFF Spokesman Abu Misry Mama as denying the use of the civilians as human shields by the terrorists, adding they took them to remove them from harm’s way as they exchanged gunfire with government troops.

During the firefight, policemen and municipal government employees evacuated residents from Malagakit and the adjoining barangay of Banucagon into the municipal building, a report from the Police Regional Office 12 said. Local officials received reports about the planned attack on Tuesday night, prompting them to evacuate most of the residents of the two barangays, the police report added. Encinas said they also alerted military detachments in Pigcawayan a day before the attack, which is why the government successfully repulsed it. “Our soldiers managed to react on time because we monitored all their movements, including their planned harassment. All Army detachments, BPAT were notified that is why the BIFF fighters were not successful in their harassment and withdrew immediately,” Encinas said. “The sad thing is they used as human shields our civilians when they withdrew.” Encinas reported no casualty from the government side. In Camarines Norte a soldier was killed while four others were wounded during a firefight between government troops and members of the New People’s Army.

Editor: Dionisio L. Pelayo • Thursday, June 22, 2017 A3

Malampaya gas plant in Palawan set for more maintenance shutdown

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By Lenie Lectura

@llectura

HE Malampaya naturalgas facility in Palawan will undergo another maintenance shutdown in July and September this year, but power supply in Luzon will not be affected, the Department of Energy (DOE) said on Wednesday.

On July 15 and 16 engineering works at the offshore platform will be conducted to prepare for the scheduled Pipeline Inspection Guage (PIGing) in August of the 504-kilometer subsea pipeline, which connects the offshore platform to the onshore gas plant in Batangas.

PIGing intends to eliminate accumulated deposits that affects the overall productivity of the facility. Another two-day maintenance work is scheduled on September 23 and 24 to give way for preventivemaintenance and corrective-maintenance works, which include testing of shutdown valves, emergency

depressurization system test and heat-exchanger repair. For the four-day shutdown in July and September, supply in Luzon won’t be affected because the maintenance works will coincide with the planned shutdowns of First Gas plants, the DOE said. Moreover, the said dates fall on weekends so demand for power is anticipated to be low. The gas facility fuels the following gas plants: 1,000-megawatt (MW) Santa Rita; 500-MW San Lorenzo; 1,200-MW Ilijan; and 97-MW Avion plant. These power plants supply an aggregate capacity of 3,211 MW to the Luzon grid, with 2,565 MW supplied to the Manila Electric Co.’s franchise area. The gas plants on scheduled shutdown are two units (250 MW each) of Santa Rita and one unit (250 MW) of San Lorenzo. One unit (600 MW) of Ilijan plant will not be supplied with natural gas on September 23 and 24.

The PIGing activity, which will be concluded for a total of 31 days, will not affect the gas supply. In August the PIGing activity will involve the 504-km subsea Malampaya gas-export pipeline. It is estimated to last for 21 days in August. The 10.5-km Tabangao onshore gas plant to the Santa Rita power plant will also undergo PIGing activity for one week in September. From August 19 to 21, the DOE said there would be another PIGing activity of the 14.6-km Tabangao onshore gas plant to the Ilijan power plant. On these days, 900 MW of the plant’s capacity will be out, the DOE said. The Malampaya facility underwent a shutdown early this year from January 28 to February 16, which affected the supply of natural gas to the power plants of Ilijan, Santa Rita, San Lorenzo, San Gabriel and Avion.

Approved PRDP projects in Mindanao benefit 10,930 co-op members By Manuel T. Cayon Mindanao Bureau Chief

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AVAO CITY—More than 10,000 members of cooperatives across Mindanao stand to benefit from the recently approved projects of the World Bank-funded Philippine Rural Development Program (PRDP). The PRDP said it has approved 43 projects costing P184.21 million under its Investment for Rural Enterprise and Agricultural Productivity (I-Reap) portfolio. One project, the Cassava Granules Production and Marketing Project, is currently going on in South Cotabato. It said there were 10,930 farmer beneficiaries from 110 cooperatives in these projects, and they would act as proponent groups and imple-

menters of the project. Some 41 projects were already issued with the No Objection Letter (NOL) 1, “which means these projects are now approved”. These projects have a funding of P151.14 million One project, the P4.98-million Rubber Expansion and Marketing Project in North Cotabato, was also issued with the NOL 2, “which means the project can proceed to the procurement process”. “We are doubling our efforts to move all the approved enterprise projects into its procurement stage within the year so that the farmer-beneficiaries can start reaping the project gains,” PRDP Mindanao Project Director Ricardo Oñate Jr. said. He said all enterprise projects would like to increase the incomes

of farmers and enhance their productivity “by strengthening market linkages”. Enterprise projects are classified into micro, small and medium, or start-up enterprises. He said Region 12 has been issued with NOL 1 for four enterprise projects for coffee, coconut and abaca, with funding of P56.98 million. Three enterprise projects in Region 11 were given NOL 1 with funding of P25.08 million for its champion commodity cacao. Region 13 has also been issued with the NOL1 for its abaca enterprise with P22.89 million. Region 9 has one NOL 1-approved project with a cost of P13.4 million for cacao. In Region 10, aside from the P8.78-million NOL 1-approved

project in Lanao del Norte, 31 microenterprises with a total of P43.38 million have been issued NOL 1 in Bukidnon. These approved subprojects have been classified under microenterprises that address the El Niño-affected areas, he said. Eighteen of the 27 Mindanao provinces have enterprise projects both approved and pipelined or those undergoing review, the PRDP said. PRDP Mindanao I-Reap component head Basila Siago said the PRDP has assisted in the forging of 30 marketing agreements between proponent groups and buyers, including two international buyers. “While we help our cooperatives achieve increase in the production of their yield, it is equally important to ensure there is a ready market for their products,” she said.

Govt launches Green Public Procurement road map

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HE Philippine government is now at the forefront of buying green through the implementation of the Green Public Procurement (GPP) Regime. It is an initiative that is part of the Philippine Development Plan (PDP) 2017-2022’s Strategic Framework to Ensure Ecological Integrity, Clean and Healthy Environment. It bears on the country’s commitments to the Sustainable Development Goals put forth by the UN, contributing to the development of high-priority national policies on clean air and water, health and quality of life, waste reduction, security of energy supply and development of local economies. Through this GPP program, supplies, equipment and services secured by government agencies are subject to specifications that ensure reduced environmental impact throughout their life cycle. Budget Secretary Benjamin E. Diokno said, “The government is buying green products toward our goal of sustainable production and consumption. The traditional view is that the government should do this through regulation but, in addition, [the] government should do this by example.” “We have a responsibility to those who come after us, so we want to make sure that the future environment will be better than how it was transmitted to us,” he added. Executive Director Dennis S. Santiago of the Government Procurement Policy Board-Technical Support Office (GPPB-TSO) said, “As the single largest buyer in the market, government procurement policies influence the direction that manufacturing takes. When

BUDGET Secretary Benjamin E. Diokno shares why the Philippine government is buying green during the launch on June 7 of the Green Public Procurement Regime.

environment-friendly processes and technologies are encouraged by public-sector demand, more growth in green manufacturing is expected. Ultimately, this lowers the costs for green products, benefiting the public and easing pressure on the environment in the long run.” While needs assessment and contracting mechanisms remain the same, GPP provides green criteria through technical specifications that reduce environmental impact over conventionally produced goods or services. Initially,

the focus will be on simple, green core criteria across 20 product categories. The criteria may expand in comprehensiveness in later years as industries adjust to government’s needs. “Through life-cycle costing, you lessen your cost every step of the way. When manufacturers incorporate green criteria in production, distribution and disposal, these costs are reduced. By incorporating green criteria with the life-cycle approach, you reduce costs and maximize profits,” Executive Director

Bingle Gutierrez of the Department of Budget and Management Procurement Service said. For GPPB-TSO Deputy Executive Director Melissa A. SantiagoYan, “In addition to being able to contribute socioeconomic benefits, implementation of GPP will show government’s commitment as a responsible procurer—responsible not only in delivering service to the public, but also responsible to the preservation of the environment for future generations to enjoy.”

Economy

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BusinessMirror

Senate bill seeks collegial, transparent ERC leadership By Butch Fernandez

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@butchfBM & Lenie

Lectura

@llectura

O ensure electricity consumers pay “fair and reasonable” power rates, the Senate is poised to pass a law compelling the Energy Regulatory Commission (ERC) to open to the public rate-setting deliberations that ERC commissioners usually hold behind closed doors. In filing Senate Bill (SB) 1490, Sen. Sherwin T. Gatchalian also proposed live Internet streaming of the hearings on rate adjustments in the ERC web site. Once enacted into law, it will, likewise, mandate transcript of stenographic notes and minutes of the meeting be made available to the public within one week from the date of the ERC hearing. Gatchalian’s bill, however, acknowledged the need to “protect trade secrets and competitively sensitive information that are strictly confidential in nature” and included a provision the bill that allows ERC to conduct executive sessions “upon a majority vote” of the commission after the reason for such confidentiality is identified in an open meeting.

The senator added that Executive sessions will, likewise, be allowed to “discuss the disciplining or dismissal of complaints or charges brought against a public officer, employee or staff of ERC.” “These reforms will give life to the constitutional rights of our citizens to have access to public information, which directly affects the power costs they see in their monthly electricity bills. It’s like a mini-FOI [freedom of information] bill, which specifically targets the energy-regulation sector,” he said. Gatchalian, who chairs the Senate Committee on Energy, added he is keen on getting the ERC to “open its deliberations to the general public

to guarantee that consumers get fair and reasonable power rates.” To be known as the ERC Governance Act of 2017, he said the proposed law aims to ensure transparency and greater accountability in the regulation of the distribution and transmission sector of the country’s power industry. He pointed out in the bill that “the ERC, as the regulator, has a definitive role in safeguarding the interests of the public”, and should, therefore, “provide greater confidence that regulatory decisions are made on an objective, impartial and consistent basis, without conflict of interest, bias or improper influence.” According to Gatchalian, SB 1490 was also crafted to better enhance ERC’s independence and increase public accountability, as it “seeks to overhaul the governance structure of the ERC in a bid to equally distribute its regulatory powers and management functions among its officers.” To carry it out, the senator added a provision stripping the chairman of “control over the management of the ERC, and delegates his role as CEO to the executive director, who shall be appointed by the commission, acting collectively.” He said the commission, which includes the chairman and four commissioners, shall serve as the

ERC’s decision-making authority, and act as arbitrators for petitions, issues or matters related to the regulation of the distribution and transmission sector, such as, but not limited to, applications for power-rate adjustments. “The executive director, on the other hand, will serve as the ‘manager’ of the regulating body and lead the management of the daily operations of the ERC, assume full responsibility for the overall supervision and control of all divisions, units and services of the ERC, and initiate investigations and recommend administrative sanctions against erring employees, among others,” the senator added. “Recent controversies surrounding the ERC have shown the need to overhaul its organizational structure to provide greater checks and balances in the exercise of the body's significant regulatory powers. I am confident that these reforms will help restore public confidence in the integrity of the institution,” the senator said. Gatchalian said SB 1490 retains the Joint Congressional Power Commission, composed of members of the Senate and the House of Representatives, whose members shall exercise oversight powers over the implementation of the provisions laid out under the proposed law.

Group reaffirms support for Duterte’s reform drive

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highly spirited group of individuals from the country’s various regions has issued a manifesto strongly supporting President Duterte’s platform for “genuine reform”, particularly his antipoverty programs, the fight against corruption, illegal drugs and criminality. The Solid Duterte Supporters Group (SDSG), now popularly referred to as the SDSG D’ Originals, organized and led by Mar Masanguid, who was also elected as its national president, has, likewise, vowed support for Duterte’s declaration of martial law in Mindanao “as a means to quell the clear and present danger of terrorism in the country”. Masanguid, a barangay chairman in Davao and a close ally of Duterte, will be remembered as the bold organizer of the Rodrigo Roa Duterte for 2016 President Movement, long before Duterte ever contemplated running for President. The movement subsequently precipitated and generated popular and overwhelming nationwide support for his presidential bid. Launched a week ago at the Shangri-La North Edsa attended by local and national government officials, the private sector, students and ordinary workers, the SDSG issued a manifesto of support for Duterte during the organizational meeting of its Marikina chapter on June 18 at the Marikina City Hall.

The manifesto was signed by the more than 50 pioneering members of its Marikina Chapter. SDSG issued its manifesto during the organizational meeting of its Marikina Chapter on June 18 at the Marikina City Hall, led by Greg Conde and Harry FM Singh, chapter chairman and vice chairman, respectively. The manifesto was also signed by all the more than 50 pioneering members of the SDSG Marikina Chapter, led by councilors Bojie Bernardino and Jojo Banzon. Quoting the manifesto, Masanguid said, “The thirst of the Filipino people for genuine reform has not been quenched.... Amid these trying times, we rally behind you in the war the government wages against poverty, against illegal drugs…against lawless elements, against grave and imminent threat of terror…” The manifesto also stressed: “We strongly adhere to your position to place Mindanao under the state of martial law to effectively quell the uprising by Muslim extremists… the threat of local and foreign terror is a clear and present danger to the security of the country.” Masanguid said SDSG also concurs with Duterte’s foreign policies and the “bid to rid every street in the entire country of the shadows cast by criminals hardened by illegal drugs so that families will feel free and secured.” PNA

Go forth and multiply Agriculture Secretary Emmanuel F. Piñol and Sen.

Cynthia A. Villar lead the initial dispersal of 5 million fingerlings of various fish species in Laguna de Bay, during the launching of the Department of Agriculture-Bureau of Fisheries and Aquatic Resources Basil: Balik Sigla sa Ilog at Lawa Program in Los Baños, Laguna, on Monday. To the right is Jaime Medina, general manager of the Laguna Lake Development Authority. PNA

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DOE exec backs NEA’s bid to expand mandate A Department of Energy (DOE) offical is supporting the National Electrification Administration (NEA) in its plan to expand its authority over power distribution utilities (DUs). Energy Undersecretary Benito Ranque has committed to help NEA’s lobby to Congress to extend the agency’s mandate by including private investors owned utilities (PIOUs) and private distribution utilities (PDUs). “If you plan na ang NEA ay magiging authority at hindi administration lang, tutulungan ko kayo para lahat na service provider under na ng NEA. National Electrification Authority na ’yon, hindi na administration, susuportahan ko ’yon. Maglo-lobby ako sa Congress, sa Presidente, para isa na lang [If the move is to elevate NEA’s scope of mandate from administration to authority, then you can expect my help in the lobby efforts from Congress to the Palace],” Ranque said. Ranque was the guest speaker at the Rural Electric Cooperatives

Board of Directors Association (Recoboda) in the Philippines-National Center of Electric Cooperative Consumers Inc. (NCECCO) Conference hosted by the Benguet Electric Cooperative Inc. (Beneco). NEA Administrator Edgardo Masongsong earlier expressed the agency’s readiness to the electric cooperatives’ (ECs) call to convert the NEA from an “administration” to an “authority”, which means all power DUs in the country, not just electric cooperatives, will be placed under its supervision. “A National Electrification Authority, isang authority lang to supervise all DUs whether you are electric cooperative or you are private,” he said. “Maybe we can do that, especially [now] that we have a President who is pro-people, pro-electricity consumers. Maybe this is the time for us to lobby that we will have one agency supervising all DUs.” The NEA supervises 121 electric cooperatives all over the country. Lenie Lectura

DBM slashes NIA’s 2018 budget proposal

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he National Irrigation Administration (NIA) said its proposed budget for 2018 was slashed by the Department of Budget and Management (DBM) by nearly a quarter, from P56.95 billion to P45.8 billion. Despite the 24.34-percent cut, NIA’s budget was still 19.36 percent higher than the agency’s allocated funding for this year of P38.37 billion. NIA Administrator Ricardo R. Visaya said the P2-billion allocation for implementing the government’s free irrigation service is already part of the P45.8-billion initial budget recommendation by the DBM. “Right now, we want to triple [the allocation for projects] to hasten the construction of our dams. We still have about 41 percent irrigation areas to be developed and we would like to fast-track the development of these areas so we will triple that to about P36 billion, which will be used for projects for 2018,” Visaya told reporters at a news briefing on Wednesday. In 2017 NIA was allocated P12.72 billion for its projects component, he added. If the P45.8-billion proposed budget will be approved by Congress, then this will be highest budget that NIA would be receiving, according to Visaya. Data from NIA showed there are still still 1.27 million hectares to be serviced nationwide, or 49 percent of the 3.12 million hectares total irrigable land. At present, NIA hectares developed 1.85 million hectares of irrigable areas in the country. Visaya said the NIA is eyeing to irrigate all irrigable areas in the country before President Duterte steps down from office in 2022. He added that this would be possible if the government will continue to increase NIA’s budget from 19 percent to 20 percent annually. “We are planning to reach that by 2022. Hopefully, the increase in our budget would be continu-

24.34%

DBM’s estimated cut on NIA’s outlay for next year, from P56.95 billion to P45.8 billion ous, as well as the improvement of modern equipment and additional manpower,” Visaya said. The NIA chief said one of the woes he has encountered is the hiring of highly skilled personnel and repair and restoration of irrigation systems. “The restoration part is really hard because there are dams that are destroyed. Then, you have natural calamities, which is a threat,” Visaya said. “Another problem is that we are finding hard time in recruiting highly skilled personnel, because we have not yet implemented our salary standardization. That’s thing we are working out to attract the personnel we want,” Visaya added. The NIA chief also said he is hoping the current P2-billion subsidy for the irrigation services fees would increase to expand the coverage of the government’s free irrigation program. “It’s still P2 billion next year. We want it higher so that we can support also the communal irrigation [CI] systems,” he said. “Meaning, the areas wherein the area being irrigated is less than 1,000 hectares. I hope the budget would still increase so that we can support the CIs.” Visaya didn’t disclose any figure when asked how much additional funding would NIA be needing to cover also CIs in the free irrigation scheme. For this year, NIA is targeting to develop 23,115 of new irrigation areas and restore 13,507 more. Jasper Emmanuel Y. Arcalas with Christine B. Francisco and Rikka D. Daquipil

SLSU to keep tabs on WB-funded PRDP infrastructure subprojects in Southern Leyte By Elmer V. Recuerdo | Correspondent

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ACLOBAN CITY—Southern Leyte State University (SLSU) became the first academe in the Visayas region that will be involved in monitoring subprojects of World Bank-funded Philippine Rural Development Program (PRDP) being implemented by the Department of Agriculture (DA). A memorandum of understanding (MOU) has been signed between SLSU President Prose Ivy Yepes, DA Regional

Director U-Nichols Manalo and Southern Leyte Gov. Damian Mercado. The MOU signals the university’s participation in the monitoring of PRDP subprojects implemented in the province. “We take it as an opportunity for our students to learn new things. Aside from letting them undergo formal training about the PRDP’s monitoring process, their specific roles and the application of the project’s science-based monitoring and transparency tools, they will also be exposed to on-field experiences,” Yepes said. “This will hopefully

instill in them the value of quality work.” Yepes said the participation of SLSU in project monitoring is a part of its exercise of social responsibility. It will be one of the major activities that will be placed under the university’s Extension Program and will be integrated in the students’ on-the-job training. Southern Leyte is a recipient of various enterprise and infrastructure subprojects funded under the PRDP. One of the projects currently being implemented is the 19.4-kilometer farm-to-market road in the town of Liloan, which is the biggest

PRDP infrastructure project in the country amounting to P232 million. Franco Villaruel, monitoring and evaluation unit head of PRDP Project Support Office for the Visayas cluster, said under the agreement, faculty and students are expected to partner with barangay leaders of areas where ongoing subprojects are being implemented to form a citizens’ monitoring team. This team will monitor compliance with the prescribed infrastructure design or specifications, quality standards and timeline, among others.

AseanThursday BusinessMirror

news@businessmirror.com.ph

Editor: Max V. de Leon • Thursday, June 22, 2017 A5

Thai firms bypass military rule to invest a record-high $13 billion in other countries

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ogged down by policy uncertainty under military rule, companies in Thailand are spreading out. Thai businesses invested a record $13 billion abroad in 2016, dwarfing inflows of $1.6 billion, according to the United Nations Conference on Trade and Development (UNCTAD). In contrast, companies in Singapore and Indonesia cut investment overseas last year, while deals by Malaysian firms slumped to the lowest in a decade. Three years after the military seized power in a coup, Thailand’s economy is losing its might with growth rates that are lagging peers in Southeast Asia. As consumers rein in spending, companies including Asia’s biggest cement maker, Siam Cement Pcl., are turning to overseas markets. Investment abroad totaled $2.9 billion from January to April, according to the central bank. “With robust but moderating growth in the home market, Thai companies have been comparatively more ambitious in seeking to become regional or even global champions,”

Eugene Gong, head of mergers and acquisitions for Southeast Asia at Deutsche Bank AG, said in an e-mail. Siam Cement, or SCG, the largest producer in Asia by market capitalization, bought a Vietnamese manufacturer of building materials in March in a deal valued at $440 million, while BCPG Pcl., an owner of clean-energy projects, announced plans in April to pay as much as $358 million for a stake in Singapore’s Star Energy Group Holdings. Overseas acquisitions announced by Thai companies totaled $1.5 billion this year, compared with $1.7 billion in the same period a year ago, according to data compiled by Bloomberg. That figure stands at almost $48 billion in the past five years, compared with $19 billion in the previous period.

Weak sentiment

The biggest areas of investment from 2011 to 2016 were in finance,

extraction of crude petroleum and natural gas, manufacturing of beverages and food and wholesale trade, according to the central bank. The top destinations were countries in Southeast Asia, particularly Cambodia, Lao PDR, Myanmar and Vietnam. In contrast, domestic conditions remain subdued. Consumer confidence has weakened, while private investment has slumped this year. A stronger currency and rising

cash pile are also helping to drive investors overseas. Thai companies hold about $36 billion in cash, 44 percent more than five years ago, according to data compiled by Bloomberg. Bangchak Petroleum Pcl, owner of BCPG, said the baht’s appreciation provides it with an opportunity to invest overseas at a cheaper cost. The downside is that revenue from abroad is lower when converted to the local currency, it said in an e-mail.

The baht, little changed on Tuesday, has gained more than 5 percent against the dollar this year, the best performer in Southeast Asia. The currency was also among the few gainers in Asia in 2016. In 2015 outward investment slid to $1.7 billion at the same time that the currency lost almost 9 percent. Thai companies benefit from factors, like strong domestic cash flows and access to debt capital at highly

attractive terms, David Aronovitch, Morgan Stanley’s cohead of investment banking for Southeast Asia, said in an e-mail. “Business owners are increasingly confident to make significant forays overseas,” Aronovitch said. “This, of course, is due to attractive growth rates available in adjacent markets, with large populations characterized by high expected growth and attractive potential returns.” SCG sets aside about $1.5 billion a year on capital spending for its overseas projects in Southeast Asia, which includes a plant in Vietnam and a packaging business in Indonesia, the company said in an e-mail. Cement plants in Myanmar and Lao PDR started operating this year, it said. The surge in outflows is set to continue with significant investment in projects starting from scratch, said Astrit Sulstarova, an analyst at UNCTAD in Geneva. “Greenfield investment is a driving force of Thai companies’ international expansion,” Sulstarova said. “Total investment of announced greenfield projects amounted to $15 billion in 2016, a historical high. The implementation of these projects will result in a large amount of outward FDI [foreign direct investment] from Thailand.” Bloomberg News

Singapore Myanmar’s train line: A slow ride through (and around) Yangon arrests 2 police over plan to join Syria conflict

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Singapore auxiliary police officer, who planned to join the armed conflict against Syria’s government, has been arrested along with one of his colleagues, the Home Affairs Ministry said on Tuesday. Muhammad Khairul bin Mohamed, 24, was arrested earlier this month under the country’s Internal Security Act, which allows indefinite detention without trial, the ministry said in a statement. It said Khairul was “radicalized and had the intention to undertake armed violence in Syria” by traveling there and joining the Free Syrian Army. The group, founded by defectors from the Syrian Armed Forces, aims to overthrow the Syrian government led by President Bashar Assad. His colleague, 36-year-old Mohamad Rizal bin Wahid, was also arrested in June under the Internal Security Act, but was released under a restriction order that forbids him from moving to a new address or traveling without approval, the ministry said. Rizal “did not share Khairul’s desire to participate in armed violence”, but had been aware of his plans since 2015 and did not alert authorities, and “even suggested to Khairul various ways to get to Syria and to die there as a ‘martyr’”, it said. The ministry said Khairul perceived the conflict to be a sectarian struggle between Sunni and Shiite Muslims, who follow different interpretations of Islam. “Being a Sunni Muslim, he wanted to fight against the Shiites in Syria by joining the Free Syrian Army,” the ministry said. “His readiness and proclivity to resort to violence in pursuit of a religious cause makes him a security threat to Singapore.” The two men were employed by AETOS, a private security company that provides security guards to companies and auxiliary police to the Singapore Police Force. At the time of his arrest, Khairul was involved in traffic enforcement at Woodlands Checkpoint, which separates Singapore from neighboring Malaysia. The ministry said he did not carry a weapon in that role. Since 2015 Singaporean authorities have detained 15 Singaporeans suspected of being Islamic State (IS)group sympathizers. The city-state’s immediate neighbors, Indonesia and Malaysia, have large Muslim populations, and hundreds of IS group sympathizers are estimated to have traveled to Syria from the two countries. AP

ANGON, Myanmar—To ride Yangon’s charmingly decrepit Circle Line train is to ride through history. Built more than 60 years ago to connect rural suburbs and townships to the city’s commercial heart, its trains—some almost as old as the line itself—move nearly 100,000 people a day, in a slow, 28-mile loop around Myanmar’s biggest city. Like much else in the country, which is still emerging from decades of isolation under military rule, the Circle Line is a functioning, if fading, piece of the past. But modernization is on the way, and commuters who take the train daily say it cannot come soon enough. Some of the trains are Hungarian imports from the 1960s. Newer ones, from Japan, were introduced in 2007, but even those were old, decommissioned trains. Comforts are scarce in the oldest carriages; the bench seats are hard, and many of the fans seem to be broken. The older trains hobble along at what can seem little more than jogging speed. Passengers sometimes hop on and off while the train is still in motion. My trip started on Platform 7 of bustling Yangon Central Station, Myanmar’s largest train station, built by the British in 1877. Heading counterclockwise, the train crawled through sprawling rail depots and repair yards. Soon the larger, national trains branched off and headed north, and the six tracks thinned to two, servicing the Circle Line alone. As the train moved up Yangon’s east side, mildew-stained buildings started to give way to farmland. The carriages gradually emptied out as the train looped around the city’s northern reaches, past open fields, a golf course, a military base and palm huts where some of Yangon’s poorest live. Railway employees are supposed to wear crisp, white Myanmar Railways shirts with epaulets. But at some of the route’s 38 stations, like Danyingon in the north, they frequently strip down to their undershirts to keep cool in the sweltering ticket booths and control rooms, which often do not have a working fan. Coming down along the city’s western edge, the train passed Insein Station and the notorious prison of the same name, where the military regimes locked up dissidents — even monks, after the so-called Saffron Revolution in 2007. Approaching downtown, the train began to fill up again, with stylishly dressed professionals in jeans and pressed shirts. Finally, it pulled into Yangon Central Station, completing the circle, a little less than three hours after its departure. At just 15 cents to ride the entire loop, the Circle Line train is affordable even for the poor—and for many years, few others would use it, said Moe Moe Lwin, director of the Yangon Heritage Trust. “The public impression is that it is dirty,

A passenger looks out of a Circle Line train, as others who just disembarked walk along the tracks in Yangon, Myanmar. The charmingly decrepit line, built more than 60 years ago to connect rural suburbs to the city’s commercial heart, is a functioning, if fading, piece of the past; daily commuters say that a promised modernization cannot come soon enough. Adam Dean/The New York Times

The older trains hobble along at what can seem little more than jogging speed. Passengers sometimes hop on and off while the train is still in motion. slow, unreliable,” Moe Moe Lwin said. “Only the poorest people used it because they had no choice, but it was very irregular and inefficient,” she added. “The far satellite towns only had the railway network to access the city, because the buses would not service them.” “It was mainly used by vendors taking their goods to market, so blue-collar workers would not use it because it was too dirty and full of produce,” Moe Moe Lwin said.

But that equation has changed in recent years, as economic growth and neglected infrastructure have resulted in crushing traffic on Yangon’s streets. More and more commuters now see the Circle Line as a sensible alternative to spending hours in a car. A bus service introduced in January has proved so inefficient that it seems to have caused even more people to use the train. Daily ridership has since soared to 95,000, from 75,000, said Zaw Lwin, a divisional traffic manager for Myanmar Railways, which operates the Circle Line. With its archaic fixtures and slice-of-life appeal, its crowded carriages with vendors selling fruit and newspapers, the train has become a draw for tourists seeking a picturesque experience. But commuters would gladly trade all that for a more efficient service. “We need more trains, and modern trains,” Khin Hnin Oo, 41, a teacher, said as he rode the Circle Line home toward Mingaladon, north of the city. “It will be good for us. Yangon has too many cars, and the buses are overcrowded.” Myanmar Railways plans major changes for the Circle Line by 2020, funded in part

by a $212-million loan from Japan’s development agency. All of the trains are to be replaced, along with the aging tracks, and the manual, push-button signaling system is to be automated. Trains would run more often—substantially reducing waiting times at the stations, like busy Danyingon. A large market next to that station overflows onto the platforms and tracks, where villagers sell their mangoes, potatoes, watercress and other kinds of produce. Officials hope to nearly triple the line’s daily passenger numbers, to 263,000. Htun Aung Thin, general manager of Myanmar Railways, told local news outlets that the new service would be faster, with trains completing the circuit in under two hours. Modernization would put an end to many of the Circle Line’s anachronistic charms. That might make it less appealing to foreigners looking for a slice of old Yangon, or Rangoon, as it was once called. But most commuters would welcome the trade-off. “Upgrading the public transport system is the best solution for the city,” Moe Moe Lwin said. New York Times News Service

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Thursday, June 22, 2017

Duterte administration banks on reform

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By Jovee Marie N. dela Cruz, Catherine Pillas & Rea Cu

hen President Duterte assumed office in July last year, his economic team bared 10 specific programs aimed at achieving inclusive growth and lifting millions of Filipinos out of poverty. The President’s menOFdubbed this as the 10-point 6/6/2017 DEPARTMENT FINANCE socioeconomic development agenda.

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

In summary, tax reform is needed to fund the ten-point socioeconomic agenda

6/6/2017 To

achieve its goals, the government would need to pour huge resources into public infrastructure projects, as well as health, education and social-protection programs. Finance Undersecretary Karl Kendrick T. Chua said the Duterte administration would need an additional P2.2 trillion to ensure there will be healthier, better educated and more prosperous Filipinos by 2022. From now until 2022, the government would need to raise and set aside more than P400 billion. Under the business-as-usual scenario, the Duterte administration believes this would not be possible. Tax collections have been below target owing to inefficiencies in the current system. To address these inefficiencies, the Department of Finance came up with a proposed Comprehensive Tax Reform Program (CTRP). House Committee on Ways and Means and PDP-Laban Rep. Dakila Carlo Cua of Quirino said the CTRP will make the tax structure “more progressive” by rationalizing the internal revenue system. “[The CTRP] seeks to ensure that the government is able to provide better infrastructure, health, education and social protection [through this program],” Cua said. During the BM Coffee Club forum last Tuesday with the ALC Media Group and Action for Economic Reforms at the Sandari Batulao office in Makati City, Chua said half of the P2.2 trillion needed by the government will come from tax reforms, while the remaining amount will be sourced from sustainable borrowings and budget reforms. “Package 1 of the CTRP covers around half of what we need [in terms of funds], because Packages 2 to 5 would yield lower revenues. It’s more about fixing inherent problems,” he said. “So the estimate we have for Package 1 is around P157 billion per year, the House version that was passed is P133 billion. So our challenge is to make sure the Senate listens and passes the

OF FINANCE DOFDEPARTMENT version. Packages 2 to 5 will contribute the balance, which we will present in the coming months through December,” Chua added. Finance Secretary Carlos G. Dominguez said now is an opportune time to reconfigure the tax system that is “crying out for reform” as a way to make Philippine communities safe and more prosperous. Dominguez said the tax-reform program is necessary to realize the administration’s vision of inclusive growth, provide relief to wage earners, broaden the revenue base, raise spending on infrastructure and human capital, attract more investors and sustain the upward trajectory of the economy. But while the government wants personal and corporate income-tax rates reduced, it also needs to generate more revenues by also doing away with the kind of public underspending in the past that has prevented the benefits of growth from being felt by the Filipino majority, according to Dominguez. “We will pursue a tax-reform package that will enhance inclusive growth, bring relief to our wageworkers and bring more into the tax loop without courting a credit rating downgrade,” he said. The CTRP is composed of five packages: Package 1 seeks to lower personal income-tax rate; Package 2 seeks to cut corporate tax rates to 25 percent while rationalizing fiscal incentives; Package 3 deals with property taxation; Package 4 focuses on capital income taxation; and Package 5 consists mainly of offsetting measures, such as slapping taxes on fatty food products, luxury items, mining operations, and winnings from the lottery and casinos. The DOF’s goal is to generate P366 billion annually from these tax reforms. Chua said he is optimistic that the first package, pending in the Senate, will be passed by October. Chua said the DOF will submit to Congress Package 2 of the CTRP by October. The remaining three packages will be submitted in the fourth quarter of 2017

or by early 2018. The DOF hopes 10 that all the components of the CTRP will get Congressional approval before 2019. Cua said the lower chamber is open to talking to the DOF about the details of the other packages under the CTRP. Under the 1987 Constitution, all tax measures must originate from the House of Representatives. “I think it will be better if [the DOF] will speak with the legislators before coming up with these packages, because when you’re in a basketball team, you talk to all the players, not just the coach,” he added.

5 Karl Kendrick Chua, chief economist and Department of Finance undersecretary, shares his insights on the government’s tax-reform program, during the BusinessMirror’s Coffee Club forum. NONIE REYES

As of 06/06/2017

Package 1

Cua said the first package of the CTRP will provide “equitable relief” to taxpayers in order to improve their levels of disposable income and increase their economic activity. It also seeks to raise revenues through the expansion of the value-added tax (VAT) base, increase of the excise taxes on petroleum and automobiles, impose an excise tax on sugar-sweetened beverages and adopt measures to improve tax administration. Before adjourning in May, the lower chamber approved House Bill (HB) 5636, or the Tax Reform for Acceleration and Inclusion Act (TRAIN), which seeks to lower personal income-tax rates, expand the value-added tax base, adjust excise taxes on petroleum and automobiles, impose excise tax on sugarsweetened beverages and ease the rates of estate and donor’s taxes. The bill, which was certified as urgent by the Palace, is now pending before the Senate Ways and Means Committee, headed by Sen. Juan Edgardo M. Angara. Under HB 5636, workers earning P250,000 will be exempted from paying personal income taxes, while the “ultra-rich,” or those earning more than P5 million, would be taxed 35 percent. Also, an 8-percent tax on self-employed and professionals will be imposed on gross receipts in excess of P250,000. The measure provides au-

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DEPARTMENT OF FINANCE

tomatic adjustment of taxable Under the proposal the exincome levels and their correcise will be implemented in two sponding base every three years schedules. For the lower brackExpanding base by beginning 2022the basedVAT on a threeet, limiting if the net exemptions manufacturer’s year cumulative consumer price price/importer’s selling is and using the budget to provide subsidies price to the index inflation rate. P600,000, the excise tax will be 3 poor. The bill raised the tax exemppercent by 2018 and will increase tion for 13th-month pay and other to 4 percent by 2019. Exemptions will be removed, No. of VAT No. of VAT benefits to P100,000 from P82,000 For the higher bracket, if the Exempt Zerounless sold by firms whose gross Sectors/Institutions and afall unitary 6 percent for net manufacturer’s price/importSpecial rating sales belowrate theof VAT threshold. estate andare: donor’s taxes. er’s selling price is over LawsP3.1 milLaws Examples The proposed measure inlion, the excise will be P1,468,000 Agriculture 8 1 cludes a P6 tax on petroleum prodplus 90(SUCs percent of the value in exEducation and High ucts that could cause prices of basic cess of P3.1 million in132018. For3 Schools) goods to rise. The P6-per-liter ex2019, Zones/Freeport if the net manufacturer’s Economic 7 cise-tax increase will come in three price/importer’s selling4 price is MSMEs/Cooperatives tranches of P3, P2 and P1, respecover P3.1 and million, will be Govt Agencies GOCCs the excise 15 tively, in three years starting 2018. P1,824,000 of the BOI Enterprises plus 120 percent 5 Power Sector 2 1 It provides new schedules and value in excess of P3.1 million. Housing Sector sugar-sweetened 1 brackets for auto excise tax in the Also, beverShipping Sectorbe levied an excise 2 package. The DOF is pushing for ages will tax of Girl Scout, Others the excise on vehicles to address P10 (i.e.per literBoyof volume 21 capacity,1 Scouts, etc) traffic in the country. subject to a yearly 4-percent rate Total

*numbers subject to review

78

6

Exemptions of senior citizens and PWDs will NOT be removed

increase after the effectivity date of January 1, 2018. The bill said the lease of a residential unit with a monthly rental not exceeding P10,000 shall no longer be subjected to VAT exemptions. The measure, however, imposed conditional removal of VAT exemption for socialized housing. Under the bill, the removal of VAT exemption for socialized housing will depend upon the establishment of a housing voucher system which should benefit buyers of socialized housing. As for reforms in tax administration, the proposed TRAIN has provisions on e-receipts issuance and transmission, fuel marking, point-of-sales machines linkage to the Bureau of Internal Revenue (BIR) and linkage between the BIR and other government agencies, bureaus and offices. Cua said these tax administrations will address perennial taxadministration problems, such as sales underdeclaration, among others. Penalties are also prescribed and/or made more effective for infractions related to fuel marking, nonissuance of receipts, and underdeclaration of sales through sales suppression devices.

Other packages

Package 2 of the DOF-proposed CTRP is focused on cutting corporate taxes to 25 percent from 30 percent and rationalizing fiscal incentives. This includes limiting VAT-zero rating to direct exporters, the provision of full VAT refund in cash to abolish the grant of tax credit certificates, and replacing the 5-percent gross income earned tax rate to a reduced corporate income tax rate of 15 percent. From the initial proposal sub-

aderLook

sMirror

www.businessmirror.com.ph | Thursday, June 22, 2017

A7

ms in tax system to cut poverty in PHL

As of 06/06/20

As of 06/06/2017

Lessons from the past

As of 06/06/2017 Inflation remains low and stable despite significant increase in diesel prices in 2016

Lessons from the past

January Inflation remains low2017 and year-on-year stable despite significant increase in diesel prices inflation rates in 2016 75.9 80 60

80

75.9

January 2017 year-on-year inflation rates

40 60 20 40 20

0

0 Diesel*

Diesel*

2.7

3.4

2.7 Inflation

3.4 Food

Inflation

Source: DOE, PSA *January y-o-yDOE, change Source: PSA in diesel price

Food

Jan 25-29 2016: y-o-y 18.25change in diesel price *January Jan 25-29 2016: 18.25 Jan 29 2017: 32.10

6/6/2017

6/6/2017 6/6/2017

2.4

1.8

2.4 1.8 Transport Electricity, Gas, Transport Electricity, Gas, Housing, Housing, Water Water

Jan 29 2017: 32.10

DEPARTMENT OF FINANCE

6/6/2017

37

37

DEPARTMENT OF FINANCE

Rice priceisisnot not driven driven byby oiloil price Rice price price 15 15

DEPARTMENT OF FINANCE DEPARTMENT OF FINANCE

As of 06/06/2017 DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

How to fund the investment deficit

ompared to Thailand or ietnam, the Philippines is nderinvesting by around 10 ercent of GDP annually. ven with substantial mprovements in tax and ustoms administration, nderspending addressed, nd sustainable borrowing, HP 366 billion (2.3 percent f GDP) annually is still eeded to catch-up starting 017.

Tax policy reform Tax administration 366 billion (22%) 433 billion (26%) [2.7% of [2.3% of GDP] GDP]

Investment deficit compared to Thailand:

Borrowing

6/6/2017

NFA rice (Regular milled) NFA rice (Well milled) Diesel

Customs 1.7 trillionadministration

(28%) [3% of GDP]

208 billion (12%) [1.3% of GDP] 100% spending efficiency 188 billion (11%) [1.2% of GDP]

: DBM, PSA, DOF staff estimates he investment deficit was estimated as the difference between the investment levels of the Philippines and a benchmark country (Thailand). The 6/6/2017 ce of around 10 percent of GDP, which is equivalent to 1.7 trillion in 2017, can be funded by improvements in tax and customs administration, 6/6/2017 g efficiency, and borrowing. However, these are not enough. The country needs an additional PHP 366 billion or 2.3 percent of GDP from tax eform to fully fund the gap. 6/6/2017

NFA rice (Regular milled) NFA rice (Well milled) Diesel

DEPARTMENT OF FINANCE

6/6/2017

Percent growth Change in price (Php) Remarks -0.08 36.77 to 36.74 no impact 0.65 41.58 to 41.85 minimal impact 47.08 20.75 to 30.52

Percent growth Change in price (Php) Remarks DEPARTMENT OF FINANCE -0.08 36.77 to 36.74 no impact 0.65 41.58 to 41.85 minimal impact 47.08 20.75 to 30.52

38

As of 06/06/201

Self-rated poverty and crude oil prices are not correlated DEPARTMENT OF FINANCE

19

38

Since 2000, correlation is -0.4, indicating very weak relationship. 70

65 DEPARTMENT OF FINANCE

Self-rated poverty and crude oil prices Self-rated poverty (SWS)

Crude oil price per barrel (right)

As of 06/06/2017 60 16 16

DEPARTMENT OF FINANCE

5

6,000

5,000 4,000

8 55 8

3,000

50

2,000

45

1,000

40

0

Sources: SWS and World Bank

9/27/2016

DEPARTMENT OF FINANCE

Price effect of excise on inflation

6/6/2017

6/6/2017

DEPARTMENT OF FINANCE

mitted by the DOF in Congress last September, the revenues expected to be generated from its second package is estimated at P33.8 billion by 2019 and a loss of P34.8 billion. Package 3 also seeks to lower the rate of transaction taxes on land. The offsetting measures include the rationalization of valuation of properties, meaning increasing valuation closer to market prices. The estimated revenues from the third package amount to P43.5 billion and a loss of P3.5 billion. The fourth package focuses on capital income taxation and aims to reduce taxes imposed on interest income earned on peso deposit and investments to 10 percent from 20

percent. Its offsetting measures include the harmonization of capital income-tax rates for dollar deposits and investments, dividends, equity and fixed income rates to 10 percent. And it also includes increasing tax on stocks traded in the stock market from 0.5 percent to 1 percent on its gross selling price. Under the initial proposal of the DOF, an estimated P1 billion in losses will stem from this package with no gains. But this is expected to be offset by the fifth package, which could generate additional revenues of P129.4 billion. “There are actually two ways to generate the funds: policy and administration. In the tax policy side our goal is to reach P366 billion, of which Package 1 will contribute

DEPARTMENT OF FINANCE

P157 billion, and then Packages 2 to 5 will contribute the balance,” Chua said. 6 He added that the growth in 3 the CTRP will not revenues under be a fixed figure since the economy grows on a daily basis. Revenues are projected to grow by 10 percent to 15 percent annually. But the government is prepared to resort to official development assistance (ODA) and borrowings to ensure the continuity of its social programs. Citing as an example Thailand, Chua said the Philippines will need to generate P1.7 trillion in revenues just to match the growth of its Southeast Asian neighbor. He noted that Thailand has invested heavily in infrastructure, education and health. “If the entire CTRP is implemented by 2019, our GDP is P17 trillion, so 10 percent of that is 6/6/2017

P1.7 trillion. I will get P366 billion from tax policy, P433 billion from BIR, P208 billion from customs administration, P188 billion from nonunderspending, with a remaining balance of P478 billion still,” Chua said. “That is why we have ODAs. So that is the big picture, a combination of sources to achieve development like Thailand,” he added.

Pros and cons

The proposed TRAIN provided that 40 percent of the annual incremental revenue generated from the proposed petroleum excise tax would be allocated to social benefits programs and the grant of fuel vouchers to qualified transport franchise holders for four years. It also indicated that for the same period, the remaining yearly incremental revenues will go to infrastructure, health, education and

DEPARTMENT OF FINANCE

35

social-protection expenditures. properties equivalent to 12 percent For taxes collected from of the product or property sold. sugar-sweetened beverages, 85 The measure, however, indipercent will be allocated to govcated that suppliers will get a VAT 2018 (maximum effect) refund within 90 days, but they ernment priority programs. The remaining amount will be chanhave expressed concern that this Net impact of excise to prices Share of neled to programs aiming to benmay not be observed given the gov(%)2,3 Share petroleum CPI Inflation efitCommodity sugar farmers. of CPI products ernment’s record in processing pa2016 makrate (%)4,5 According to (%) the local as input perwork. Diesel Gasoline LPG Kerosene (%) 1 ers of electronics products, the While the Peza said it supports proposal to impose VAT on local the DOF’s aim to plug revenue 1.1 they0.6 163 CTRP10 0.9quo on0.9 Food for exports under the input leaks, prefer0.7 a status will be disadvantageous to small Peza’s incentive package offered to 3.3 1.9 6 128 30 2.0 2.7 28 Transportation businesses that supply materials foreign locators. 0.4 tax 0.5 to exporters. 0.8 “Efficient collection 124 0.6 should0.7 Electricity The Philippine Economic Zone be the top priority, and whatever 17 Others 0.7 0.4 51 135 0.4 especially 0.6 Authority (Peza) agreed with the6 incentives we give, to0.6 Total 100 144 Semiconductors and Electronics foreign investments, should be re-0.9 Notes: Industries in the Philippines Inc. tained because this is exactly the 1. Transportation share is the daily average of jeepney and bus operation in Metro Manila based on the National Tax Research Center computation. Electricity (Seipi) that VATof Energy on local input attraction why they’re here,” the share is based on thethe Department power statistics. 2. The net impact of the excise is obtained by multiplying the share of oil as input and the price increase as a result of the excise. would serve asasaa result “major government added. 3.for The exports increase in the price of the petro products of an increase in excise tax using the petroofficial prices in Metro Manila in 2016 4.deterrent” Weighted net impact offoreign the increase in excise tax on each commodity computed based on weights below using HECS 2011C. Lachica to investments. Seipi President Dan 5. Overall inflation computed from the weighted average of commodity inflation based on the share of CPI “We computed this and saw expressed concern about the im6/6/2017 DEPARTMENTpact OF FINANCE that if we removed the exemption of the measure on the local36 1 on VAT and started collecting 12 suppliers. “This tax-reform bill is percent, our locator-industries may really very critical, what we’re conjust as well import everything, becerned about is the levying of VAT cause that’ll now become a cheaper on local suppliers to exporters or option. This will be a big loss to multinational companies in the our local suppliers, or our indirect Peza zone.” exporters,” Peza Director General “That will kill our local suppliCharito B. Plaza told reporters on ers and small-medium enterprises. Wednesday. The concern with the VAT refund Annual local purchases of insystem is if it will be efficient,” puts by Peza-registered locators Lachica told reporters during the are estimated to amount to P24 14th Philippine Semiconductor billion, which could be wiped out if and Electronics Convention and the VAT exemption is removed, acExhibition. cording to Plaza. The Seipi chief said of the The TRAIN approved by the $28.8-billion electronics products House seeks to impose VAT on sale, exported by the Philippines, $22 barter, or exchange of goods or billion consists of imports. 18

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Thursday, June 22, 2017

briefs Handel wins Georgia special election

ATLANTA—Karen Handel, a veteran Republican officeholder, overcame a deluge of liberal money to win a special House election in Georgia on Tuesday, bridging the divide in her party between admirers of President Donald J. Trump and those made uneasy by his turbulent new administration. Handel, 55, fended off Jon Ossoff, a 30-year-old Democrat and political newcomer who emerged from obscurity to raise $25 million from progressives across the country eager to express their anger at Trump. That fervor quickly elevated what would otherwise have been a sleepy local race into a high-stakes referendum on Trump and the most expensive House campaign in history. And it showed that Republicans skeptical of Trump remained comfortable supporting more conventional candidates from their party. With 207 out of 208 precincts reporting, Handel had 52.6 percent of the vote to Ossoff’s 47.4 percent. New York Times News Service

2 more French govt ministers resign

PARIS—The French news reports that two more French government ministers, including the minister of justice, are targeted in possible probes and have resigned, following on the heels of the defense minister. Justice Minister François Bayrou and European Minister Marielle de Sarnez told the French news on Wednesday that they are leaving the government to allow newly elected President Emmanuel Macron to push his goal of cleaning up politics. Bayrou has long headed the small centrist party called Modem, and de Sarnez was his top collaborator. Like the ex-Defense Minister Sylvie Goulard, they could be subjects of investigations over the use of parliamentary assistants who were improperly paid. AP

Toshiba picks Bain-Japan group as preferred chip unit buyers

T

oshiba Corp. picked a group led by Bain Capital and Japanese investors as the preferred bidders for its memory-chip business, bringing much-needed cash into the Japanese company to make up for losses in its nuclear operations.

T he par ties are a iming to reach final agreement by June 28 and close the transaction by March, Toshiba said in a statement on Wednesday. The consortium has indicated that it is willing to pay ¥2.1 trillion ($19 billion) for the semiconductor unit, people with knowledge of the matter have said. Backing for the bid by statesupported Innovation Network Corp. of Japan (INCJ) and Development Bank of Japan (DBJ) a re considered essent i a l for winning government approval for an acquisition. Economy, Trade and Industry Minister Hiroshige Seko said he welcomes Toshiba’s decision on the bid, following the announcement. Although the chip unit is Toshiba’s crown jewel, the Tokyo-based company will be left with more than 600 different businesses, including elevators, a general hospital and software services. Toshiba’s Westinghouse Electric nuclear division has filed for bankruptcy after losses piled up from project delays, forcing Toshiba to predict an annual loss of ¥1.01 trillion. A ll of this is a humiliating predicament for one of Japan’s oldest businesses, which made the country’s first light bulb and grew into a behemoth that made everything f rom wa sh i ng m ac h i nes a nd medical equipment to laptops and nuclear plants. “Toshiba has determined that the consortium has presented the best proposal, not only in ter ms of va luation, but a lso

$19B The amount the consortium has indicated that it is willing to pay for Toshiba’s semiconductor unit

in respect to certainty of closing, retention of employees and maintenance of sensitive technology in Japan,” the company said in the statement. Toshiba shares fell 1.3 percent as of 12:57 p.m. in Tokyo. Toshiba is up about 15 percent this year. While Bain, INCJ and DBJ will contribute cash and equity, South Korean chipmaker SK Hynix Inc. will join the group by providing only loans to avoid antitrust hurdles, another person familiar with the matter has said. Toshiba didn’t mention SK Hynix in Wednesday’s statement. INCJ confirmed Toshiba’s decision in an e-mailed statement and said it’s working with the consortium to finalize the details of the deal. The other leading contender was US chipmaker Broadcom Ltd., which made an offer of about ¥2.2 trillion, according to people with knowledge of the matter. The closing of the deal may be complicated by objections from Western Digital Corp., which

Toshiba Corp. President Satoshi Tsunakawa bows during a news conference at the company’s headquarters in Tokyo on April 11. Troubled Japanese electronics giant Toshiba Corp. has chosen a US-Japan consortium as the preferred bidder in its attempt to sell its lucrative memory-chip business. AP/Shizuo Kambayashi

jointly owns certain chip assets with Toshiba. The US company has sought to prevent the business falling into the hands of rivals and opposed Broadcom in particular. On Wednesday Western Digital reiterated that Toshiba is violating its rights and that it will press forward in seeking an injunction against a sale of the chip unit. “We still have the Western Digital lawsuit, so it’s not as if this will make everything alright,” said Naoki Fujiwara, chief fund manager of Shinkin Asset Management Co. in Tokyo. For potential chipmaker buyers, control of Toshiba’s output

Uber founder Kalanick resigns as CEO T ravis Kalanick stepped down on Tuesday as CEO of Uber, the ride-hailing service that he helped found in 2009 and that he built into a transportation colossus, after a shareholder revolt made it untenable for him to stay on at the company. Kalanick ’s exit came under pressure after hours of drama involving Uber’s investors, according to two people with knowledge of the situation, who asked to remain anonymous because the details were confidential. Earlier on Tuesday, five of U b e r ’s m a j o r i n v e s t o r s d e manded that the CEO resign i m m e d i at e l y. T h e i n v e s t o r s included one of Uber’s biggest shareholders, the venture capital firm Benchmark, which has one of its partners, Bill Gurley, on Uber’s board. The investors made their demand for Kalanick to step down in a letter delivered to the CEO while he was in Chicago, the people with knowledge of the situation said. In the letter, titled “Moving U ber For ward ” and obtained by The New York Times, the investors wrote to K alanick that he must immediately leave and t h at t he compa ny ne e de d a change in leadership. Kalanick, 40, consulted with

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at least one Uber board member and, after long discussions with some of the investors, he agreed to step down. He will remain on Uber’s board of directors. “I love Uber more than anything in the world and, at this difficult moment in my personal life, I have accepted the investors’ request to step aside so that Uber can go back to building rather than be distracted with another fight,” Kalanick said in a statement. U ber’s boa rd sa id in a st atement t h at K a l a n ic k h ad “a lw ay s put U ber f i rst ” a nd t h at his stepping down as CEO wou ld g ive t he company “room to ful ly embrace this new c h apter i n U ber ’s h i stor y ”. A n U ber s pokesm a n dec l i ned to com ment f u r t her. T he move caps mont hs of questions over the leadership of Uber, which has become a prime example of Silicon Valley startup culture gone awry. The company has been exposed t h is yea r a s h av ing a workplace culture that is rife w it h se x u a l ha rassment a nd discrimination, and has pushed the envelope in dealing with law enforcement and even partners. That tone was set by K alanick, who has ag g ressively tur ned the company into the world ’s

dominant ride-hailing ser vice and upended the transportation industr y around the globe. Kalanick’s troubles began earlier this year after a former Uber engineer detailed what she said was sexual harassment at the company, opening the floodgates for more complaints and spurring internal investigations. In addition, U ber has been dea ling w ith an intel lectua lproper t y lawsuit from Way mo, the self-dr iv ing car business that operates under Google’s parent company, and a federa l inqu ir y into a sof t ware tool that Uber used to sidestep some law enforcement. Uber has been trying to move past its difficult history, which has grown inextricably tied to K a l a n ic k . In recent mont hs, Uber has fired more than 20 employees after an investigation into the company’s culture, embarked on major changes to professiona lize its workplace and is searching for new executives, including a CEO. Kalanick last week said he would take an indefinite leave of absence from Uber, partly to work on himself and to grieve for his mother, who died last month in a boating accident. He said Uber’s day-to-day management would fall to a committee

of more than 10 executives. But the shareholder letter indicated that his taking time off was not enough for some investors who have pumped millions of dollars into the ride-hailing company, which has seen its valuation swell to nearly $70 billion. For them, Kalanick had to go. The five shareholders who demanded Kalanick ’s resignation include some of the technology industry’s most prestigious venture-capital firms, which invested in Uber at an early stage of the company’s life, as well as a mutual fund firm. Apart from Benchmark, t he y a re Fi r s t R ou nd C a p i t a l, L owercase C apit a l, Men lo Vent u res a nd Fidel it y Investme nt s , w h ic h to ge t he r o w n more t ha n a qu a r ter of U ber’s sto c k . B e c au s e some of t he investors hold a t y pe of stoc k t h a t e n d o w s t h e m w it h a n outsi ze nu mber of votes, t hey have about 40 percent of U ber’s vot ing power. Kalanick ’s resignation opens questions of who may take over Uber, especially since the company has been so molded in his image. And Kalanick will probably remain a presence there, since he still retains control of a majority of Uber’s voting shares. New York Times News Service

of memory chips is crucial in making any investment worthwhile. A nd investment fir ms need to guarantee they have enough capital available to continue to upgrade Toshiba’s plants and production in an industry where billions of dollars a year are needed to stay competitive. T he sale of the chip business helps reduce the risk of delisting for Toshiba, but the company has yet to get a clean bill of health from the Tokyo Stock Exchange. The company in March submitted a report to authorities detailing how it plans to improve internal controls after years of misstating

profit. It then delayed earnings announcements multiple times, eventually filing results without a sign-off from its auditors. P rox y adv i ser Gl a ss L e w i s a nd Co. bl a sted Tosh iba’s board for poor gover nance a nd recom mended i nvestors vote aga i nst a l l d i rec tors at t he comp a ny ’s s h a re holde r s meet i ng l ater t h i s mont h. “Delisting triggered by excess debt is no longer a risk, but Toshiba hasn’t yet cleared the issues related to earnings results,” said Hideki Yasuda, an analyst at Ace Research Institute. “That will be the focus of attention going forward.” Bloomberg News

Security high at Brussels stations after explosion

B

RUSSEL S —Secur it y was high around Brussels rail facilities on Wednesday the morning after a man blew up an explosive device at the city’s Central Station in yet another attack this week in a European capital. The man was shot by soldiers after detonating a small device there late on Tuesday in what prosecutors are treating as a “terrorist attack ”. He lay still for several hours while a bomb squad checked whether he was carrying more explosives, and later died. No one else was hurt. Central Station reopened at 0800 (0600 GMT) on Wednesday. A police command car and several officers were still at the stat ion, a n A ssociated Press photographer said. Burn and blood marks remained on the floor at the scene, as workers continued to clean up and paint the area. Belgium has been on high alert since suicide bombers killed 32 people at the Brussels airport and a subway station on March 22, 2016. Belgian Interior Minister Jan Jambon suggested to state media that a second, larger device at the scene did not go off. “The big blast did not happen,” Jambon said. He refused to provide

details or to identify the suspect. Belgian media say the suspect was a 37-year-old man from the Molenbeek neighborhood, the home and transit point for many of the suspects linked to bloody attacks in Brussels and in Paris in November 2015. Jambon told a VRT broadcaster that it is important to address security concerns but also a avoid over-reacting. He warned “against a society where we always and everywhere will be checked. If we do that, it would be fulfilling the aim of the terrorists.” “If you protect yourself everywhere against anything, in the end we will end up in a police state,” Jambon said, before taking part in a meeting of Belgium’s national security council. Belgium’s Crisis Center said on Wednesday that it sees no need to raise the national security alert level, which has been on its second-highest rung for more than a year. It said no public events would be canceled, but additional police and troops have been mobilized. Federal prosecutors, who examined the scene at the Central Station overnight, were due to hold a news conference at 0900 GMT. AP

The World BusinessMirror

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Thursday, June 22, 2017

A9

Saudi king names son as heir to throne in shake-up

S

audi A rabia’s Deput y Crown Prince Mohammed Bin Salman replaced his cousin as heir to the throne, a shock announcement that consolidates the 31-year-old leader’s power in the world’s biggest oil exporter. In a royal decree, King Salman relieved Crown Prince Muhammad bin Nayef from his post, according to state-run television. The king’s decision to elevate his son, who already controlled the defense, oil and economy portfolios, was supported by 31 out of 34 members of the Allegiance Council, made up of senior members of the ruling Al Saud family. “Pr ince Mohammed bin Sa l m a n h a s re a l ly b e e n t he powerful man in Saudi Arabia ever since his appointment as deputy crown prince,” Ghanem Nuseibeh, founder of Cornerstone Global Associates, said by phone. The decision “removes impediments that he had, in that he had someone more senior to him who was perhaps a bit more conservative. Now he’ll have a freer hand,” Nuseibeh added. The change gives Prince Moha mmed bin Sa l ma n g reater authority to pursue his plan to reduce the kingdom’s reliance on oil, which includes selling a stake in oil giant Saudi Aramco and putting other assets under the control of a sovereign wealth fund he also heads. As defense minister, the prince oversees the war in Yemen against pro-Iranian Shiite rebels. He’s also

a key figure in the current standoff with Qatar. King Salman also reinstated all allowances and bonuses that were canceled or suspended to civil servants and military personnel, the Saudi Press Agency reported early this morning. The king’s decision was taken due to special circumstances and was backed by Prince Muhammad bin Nayef in a letter to the monarch, according to a senior Saudi official source, who spoke on condition of anonymity. T he dec ision set t les wh at many political analysts have described as a power struggle between the king’s son, known as MBS in diplomatic circles, and his uncle, who controlled the Saudi security apparatus and was a key figure in its war against al-Qaeda and Islamic State threats. “Though this was hardly surprising it does amount to a political earthquake,” said Amir Handjani, senior non-resident fellow at the Atlantic Council. Saudi Arabia has been grappling with a drop in crude prices that have plunged 60 percent in the past three years. Oil prices were little changed af ter tod ay’s announcement. MSCI Inc. last night included the kingdom in its watch list for potential upgrade to emerging markets index. The benchmark Tadawul stock index has fallen 3.6 percent this year. Trading resumes at 10 a.m. in Riyadh. Bloomberg News

May faces new political reality with Brexit-heavy program

P

rime Minister Theresa May would make her first attempt to engage w i t h B r i t a i n ’s n e w p o l i t i c a l landscape as she publishes a legislative program heavy on Brexit, and likely to be light on anything controversial. Queen Elizabeth II will read out the plans to lawmakers at 11:30 a.m. on Wednesday in London in an occasion stripped of most of its usual pageantry, marking the start of a two-year parliamentary session. May’s office has announced a series of bills aimed at showing that her government is engaging with people’s concerns. Besides allowing space rockets to be launched from British soil, the measures include converting thousands of European Union rules into British law, cutting the cost of whiplash claims to motor insurers and banning letting fees on rented houses and apartments. Hanging over the whole event is the question of how long May can stay as prime minister, having unexpectedly lost her parliamentary majority in the June 8 election. The first test is simply winning votes next week on the contents of the speech itself. Negotiations for the support of Northern Ireland’s Democratic Unionist Par ty (DUP)—giving May sufficient votes to pass key legislation in the House of Commons— were still going on Tuesday evening. But after that hurdle will come higher ones, as May has to get Brexit bills through a Parliament that, to a large extent, doesn’t support her vision. “The election result was not the one I hoped for, but this government will respond with humility and resolve to the message the electorate sent,” May said in an e-mailed statement. “First, we need to get Brexit right. That means getting a deal that delivers the result of last year’s referendum, and does so in a way that commands maximum public support.”

Brexit settlement

W hat such a settlement looks like is a live question even within May’s Co n s e r vat i ve Pa r t y. H e r c h a n ce l l o r of the exchequer, Philip Hammond, argued again on Tuesday that it means a focus on suppor ting the economy, with transitional measures to smooth Britain’s departure from the EU. That’s at odds with May’s focus before the election on reducing immigration. More than 50 lawmakers from Jeremy Corbyn’s main opposition Labour Party signed a letter on Tuesday calling for

Britain to stay within the EU’s single market. That’s a position opposed by many Conservatives, but supported by others within the Tory party, some of whom refused to back May in parliamentary votes on Brexit before the election. As well as the legislation to reduce the cost to insurers of paying whiplash claims, something the Conser vatives say could cut motorists’ premiums, the less controversial, non-Brexit measures in the government program include tighter rules around claims-management companies, and a draft bill to help curb domestic violence. May’s office is tagging it “a government at the service of ordinary working people.”

Votes next week

The Queen’s Speech is followed by several days of debate, and then votes on June 28 and 29. While the opposition Labour Party will put down amendments, May can probably count on her own lawmakers next week. And though the DUP may try to keep negotiations with the Tories going for as long as possible to squeeze out extra spending pledges, it is also likely to fall in line. “The DUP wants the deal, because they want the cash for Northern Ireland, but they will stretch it out; they are used to grandstanding, they are used to latenight talks,” said University of Liverpool professor Jonathan Tonge, who coauthored a 2014 book on the Northern Irish party. “The DUP holds 90 percent of the cards— Theresa May’s fear of another election is much greater than the DUP’s. Not much would change under Corbyn. It’s about the cash. The DUP will milk it for all of its worth. A deal still is more likely than not.” Polls have suggested Labour might replace the Tories as the largest party if a new election were held now. We d n e s d a y ’s s t a t e o p e n i n g o f Parliament was postponed from June 13, as May sought a deal with the DUP. It will see the monarch arriving by car instead of by horse-drawn carriage, and she won’t be wearing her crown as she reads out the speech written for her by the government. Such pared- down ceremonial has precedents—November 1939, after the outbreak of World War II, and March 1974, after an early election called amid a state of emergency over widespread labor unrest also produced a hung Parliament. Bloomberg News

Indians buy dry fruits from a roadside vendor at a market in New Delhi, India. Indian businesses are in a tizzy trying to comply with a long-awaited reform in the country’s sales regime. The government said the Goods and Services Tax going into effect on July 1 will boost the economy by streamlining business within a single market. Traders and business owners are still trying to figure out how it will work. AP/Altaf Qadri

Shopkeepers rush to comply as India switches to single tax

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EW DELHI—The daily bustle of tourists and shoppers has died down in an upscale market of central New Delhi, but one toy-shop owner is still busy poring over the new Indian tax rules that take effect next month. The new tax regime—replacing the messy mix of state and federal taxes built up over seven decades of Indian commerce— will affect the final price on every board game and baseball bat on sale in Sanjiv Mehra’s cramped shop in Khan Market. The government promises that the transition to a single, nationwide tax on goods and services w ill streamline business and boost the economy. Mehra is just trying to figure out how it will all work. “This is such a major tax reform, but there has been little effort to explain how it works to the traders,” Mehra said while he and his son sorted through piles of invoices, receipts and price lists, trying to decide how each item should be taxed under the new system. T he gover nment published lists last month for how almost ever y item on sa le in Ind ia, from shampoo to tea to automobiles, should be taxed within four broad categories—at rates of 5 percent, 12 percent, 18 percent or 28 percent. It had a lready ordered a l l businesses in Januar y to adopt or upgrade cash reg isters a nd computer systems, so they are able to file ta x retur ns that comply w ith the new ta x reg ime. For millions of tiny neighborhood shops that often don’t even use a calculator, this technology leap seems nearly impossible, and many hoped the July 1 rollout date would be delayed.

28%

The highest percentage bracket in India’s new tax regime that will take effect in July

“It’s a tough time for small traders like us,” the gray-haired Mehra said. “The government says we should all become computer savvy. Then give us the time to do so.” Big businesses are also worried they’ll take a hit. Those producing goods to be taxed in the highest, 28-percent bracket—including sodas, shampoos and household appliances—have argued that the new categories are unfair. “ T his increase w il l have a negative ripple effect and hurt the entire ecosystem of farmers, retailers, distributors and bottlers in India,” the Indian Beverage Association said in a statement last month. Unbranded food staples—including vegetables, milk, eggs and flour—will be exempt from sales tax, along with health and education services. Tea, edible oils, sugar, textiles and baby formula will attract a 5 percent tax. Luxury items, including motorcycles, perfume and shampoo, will

be taxed at 18 percent or higher. They account for about 19 percent of all taxable items. India’s sales-tax reform has been a long time coming. First proposed in 2003, the idea was bogged down for years in bipartisan debate, with various governments trying to push it forward while opposition politicians dragged it back. Before Prime Minister Narendra Modi and his Bharatya Janata Party came to power three years ago, they were staunchly against the move. Now, Finance Minister A r un Ja it ley a nd ot hers in Mod i ’s gover nment a re prom ising it w ill boost the economy by a full 2 percent by ma k ing t a x at ion more ef f ic ient, a nd br ing ing sma l l t raders into t he ma inst rea m economy. Jaitley has acknowledged that there may be “teething troubles” with many businesses, as well as state governments still scrambling to get ready. But he assured that the effort would eventually help reduce rampant tax evasion. Overall, financial analysts agreed. Applying uniform sales taxes should draw more revenue without singling out any classes or sections of society. Only 12.5 million Indians—or 1 percent of the population—pay income taxes. Many evade taxes by hiding profits within antiquated accounting systems, while hundreds of millions are simply too poor and don’t earn enough to qualify as income-tax payers. With the new Goods and Services Tax (GST) “we can expect indirect tax collection to increase by 30 [percent] to 40 percent,” said tax adviser Suresh Rohira, a partner at Grant Thornton India, a consulting firm in Mumbai. Some will necessarily suffer. Manufacturing centers in the states of Maharashtra, Tamil Nadu, Andhra Pradesh and Gujarat are bracing for losses as taxes are charged at the point of consumption, though the federal govern-

ment said it would reimburse those losses for five years. Most of India’s 29 states have passed local laws to implement the new tax regime, but some have pleaded for more time. The government last week dismissed that idea, but at least one industry grouping—the Associated Chambers of Commerce and Industry of India—urged a delay, saying the government’s own computer networks were not yet ready for the change. The Finance Ministry said that preparations were on track for implementation on July 1, but that authorities would show leniency on businesses filing online until September 1 In some parts of India, business associations are holding workshops for small and medium businesses on how to get ready for the new regime. “Nobody can anticipate all the problems in implementing such a major overhaul,” said economist Rajiv Kumar of the Pahle India Foundation, a New Delhi-based think tank. Indian businesses are also still recovering from the government’s snap decision to remove 86 percent of its currency from circulation overnight on November 8. In t he mont hs that followed, India replaced t he old c u r renc y notes w it h newly designed bills. But the move caused chaos within the country’s cash-dependent economy, hur t ing industr ies l i ke construction and tourism, and hitting poor people the hardest. Still, Kumar said India was right to push forward with the new tax regime, even if it was painful. “ Traders will not w illingly accept any reg u l ar i zat ion of their business activities,” said Kumar, a former economic adviser to the Finance Ministry. “Given the magnitude of the reform, the way forward is to take the plunge—implement the GST—and deal with the problems as they come up.” AP

A10 Thursday, June 22, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

When good news gets trumped

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he ratio of bad news to good news that ordinary people consume every day is around 9 to 1. This means that 90 percent of the news we get from media sources is negative. Things get more alarming when we include social media, where we are being overwhelmed by negative and fake news. Journalists seem blind to the good things happening in this country because these events don’t sell newspapers. That’s why negative news trumps good news all the time. When you watch the evening news on TV, for example, you always run the risk of ingesting unpleasant things, such as crime and all forms of violence. Here’s a whiff of fresh air to drub the negative things coming our way: Just recently, a series of good news affecting the lives of millions of power consumers almost went by unnoticed because of the ongoing Marawi siege and the Resorts World Manila attack, among others. For two months in a row the Manila Electric Co. (Meralco) reduced power rates. These reductions came on the heels of the power company’s announcement of a P7-billion refund. Meralco said consumers must expect to see on their June and August billings a refund of P0.79 per kilowatthour (kWh). This came about after the approval by the Energy Regulatory Commission of the utility firm’s petition to refund the over-recoveries for the previous year. Meralco’s announcement of a significant reduction in power rates for the month of June was certainly good news, especially because it came following an earlier power-rate reduction in May of P0.29 per kWh, which means that a household that consumes 200 kWh saves up to P58. For the month of June, Meralco said electricity rates went down up to P2 per kWh. This means that households consuming 200 kWh get to save about P300 for the month of June. Meralco said that, while electricity rates went down previously only up to P1 per kWh, the reduction in June reached P1.43 per kWh. Meralco Spokesman Joe Zaldarriaga said the June power-rate reduction is the second lowest since December 2009, thanks to the significant cut in generation charges in the spot market and from the power plants where Meralco sources its power supply. Manufacturers also benefit from Meralco’s decision to cut rates. This gives producers a good opportunity to ramp up production of essential goods while electricity rates are low. This means lower overhead and operational costs, something they can pass to consumers in the form of lower prices of manufactured products. As schools open in June, Meralco could not have chosen a better month to give consumers a pleasant news, considering how hard it is to budget limited funds for myriad expenses, like tuition fees, school supplies, books and other school needs. This looks like a little Christmas bonus in June because consumers who spend less money on electricity will have more money to throw at other expenses. For example, the minimum P300 savings in their June bill can buy them several kilos of rice. The series of good news from Meralco, which is tantamount to putting more money in the pockets of its customers, fortunately coincides with the first year anniversary of the Duterte administration. We hope this will inspire the government to fast track programs seeking to help the poor and ensure the effectiveness of reforms and other needed actions to achieve national financial-inclusion goals. Since 2005

BusinessMirror A broader look at today’s business

Housing costs determine election outcomes John Mangun

OUTSIDE THE BOX

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umber crunching is boring. The problem is that a good accountant, for example, can make the numbers sing and dance any way he or she wants, producing some amazing conclusions. Just ask the shareholders of Enron in the US or, locally, Victorias Milling a decade or so ago. Galileo Galilei wrote, “Measure what is measurable, and make measurable what is not so.” But then again, Mark Twain quoted British Prime Minister Benjamin Disraeli, saying, “There are three kinds of lies: lies, damned lies and statistics.” We are now in the age of big data. This data stuff is great if you need to count the number of things for a particular purpose. We also need to use data to be able to look at the historical changes in the numbers to recognize a pattern or trend. But our ability through this concept of big data, to better understand the

world we live in, may make for some particularly poor judgment calls and errors. Extremely large data sets are being analyzed to gain insights into human behavior through the patterns and trends that these numbers are supposed to reveal. But then again, recently, there have been some monumental failures in election polling by firms that have all the knowledge, experience and money in the world to make accurate forecasts. Election polling is based on the assumption that like minds vote the same. And because of huge

Cecilio T. Arillo

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the largest percentage. Trump won 26 of the 27 least costly states. Conversely, Hillary Clinton carried 15 of the 16 states with the most expensive housing. In a 2016 paper entitled “Residential Building Restrictions, Cost of Living, and Partisanship”, Dartmouth professor of government Jason Sorens asked: “Why have richer US states become more Democratic and poorer states more Republican?” The simple average cost of house was a better predictor of election outcomes than all the other big data factors. Both rich and poor, men and women, high and low income and even race voted more for Trump in the lower-cost housing areas. The recent elections results in the UK between the Labour (similar in policy to the Democrats) Party and the Conservative Party (Republican) showed the same thing. Labour made bigger gains in areas with more expensive property. Now, what about the Philippines?

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

Why President Marcos declared martial law

✝ Ambassador Antonio L. Cabangon Chua Publisher

databases, we can go from “man” and “woman” to incredibly more specifics. A “man” can become a “42-yearold male with two children married less than 14 years earning...” and on and on. If you find one and can identify how he will vote, then all the others that fit his description can be measured. But it is not working perhaps because, when it comes to marking the ballot, not everyone votes the same way for the same reasons, throwing the projections of the database analysis out of whack. A new study about the 2016 US presidential election offers some interesting conclusions based on “small”, rather than large, data, and it seems historically accurate. The simple conclusion was that in areas where younger people can afford to buy a house, be married, and have children earlier, they vote for the Republican Party candidate most often. Being less able to afford a home, they marry later, have fewer children and vote more Democrat. In the state with highest home price—Hawaii—Donald J. Trump received the lowest percentage of votes. In the cheapest housing state—West Virginia—he received

Part One

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OR the past 45 years now, the lingering question in the hearts and minds of our people, especially the young generation, has remained an enigma as to why former President Ferdinand E. Marcos declared martial law in 1972. Only former Senate President Juan Ponce Enrile, now 93 and already retired from politics, has the credible answer to that question in this series of articles as the one tasked by the President to plan and administer it himself to save the country from further ruin. Early in December, after the presidential election in 1969, Marcos asked Enrile to see him in Malacañang. “He asked me to study the limits of his power under the commander in chief provision of the 1935 Constitution. According to him, he foresaw the escalation of violence and disorder in the country, and he wanted to know the extent of his power as commander in chief of the Armed Forces.” The study must be done discreetly and confidentially,” Marcos told Enrile, telling him at the same time “to enlist whoever I needed to help me, but he made it clear that anyone who would participate in the study must be told not to talk about it with others”. “The next day, I asked Efren Plana to help me. He was my brilliant, discreet and unobtrusive assistant in the Department of Justice. He graduated

magna cum laude from the University of the Philippines [UP] College of Law. I briefed him on the desire and instruction of President Marcos. I asked him to look for another that could be trusted to work with us on the project. He suggested Minerva Gonzaga Reyes, also a magna cum laude graduate from the UP College of Law and a lawyer in the Department of Justice. I eagerly agreed, and the two of them formed my team that did the research for President Marcos,” Enrile recalled. After more than two years, Enrile presented to President Marcos a thick volume on the extent and limit of his power as the commander in chief of all the armed forces of the country. Enrile said: “Only one copy of the research was prepared. I never saw or heard of that copy again thereafter.” “I knew President Marcos to be a fast reader. Apart from his natural talent, he was also familiar with the technique of fast reading. However, I could not vouch that he read the voluminous written material I submitted to him,” he added. Not long after Enrile submitted

his work, Marcos called him again to Malacañang. This time, he asked Enrile to draft the necessary implementing documents to install martial law in the country. “My immediate problem was how to begin. There was neither precedent nor model to guide me. I plainly had to start from scratch. Daunting as the task was, it had to be done and it was I that had to do it and no one else,” he said. Visualizing the process in his mind, Enrile added: “My initial step was to carefully describe in a document the status of the national security situation in the country, which became the basis to proclaim martial law. Then, the next step was to identify the primary problems to be addressed and the government agencies to address them. This was how the proclamation, the general orders and the letters of instructions that were issued later on by President Marcos, evolved”. Recalling that event, Enrile said: “I had to work alone, mostly at night, and at home after office hours. The only one who joined me in my drafting work, with the knowledge and consent of President Marcos, was Simplicio Taguiam, who was his private and confidential secretary. Taguiam was a very good stenographer and a skillful typist. I dictated to him the documents that were used to install martial law in the land. “The condition of law and order in the country deteriorated immensely after the presidential election of 1969. Social and political tension intensified critically. Violence was widespread and uncontrollable. Local police forces were overstretched and no match for the guns of private armies. The infiltration of high-powered guns could not be abated despite the dedicated efforts of the government to stop it. “The combined armed capability of

the government at that time was less than 60,000. Most of it was deployed in Central Luzon against the communist insurgents, while the rest was scattered in the other parts of the country. A vivid example of the national security situation of the country then was what happened in Congress in the evening of January 26, 1970. President Marcos was in Congress that evening to deliver his State of the Nation Address before a joint session of the House of Representatives and the Senate. He went there to fulfill his constitutional duty under the 1935 Constitution. The Congress, at that time, was on Padre Burgos Avenue (now Katigbak Street) in Metro Manila. As a consequence, the members of Congress, the President and his First Lady Imelda R. Marcos, the Chief Justice and members of the Supreme Court, the Cabinet officials who attended the affair and foreign ambassadors and other dignitaries and visitors, who were invited to the occasion, were all trapped inside the Congress building. The Manila police and the armed forces were summoned and ordered to restore order and rescue the trapped public officials and guests. President Marcos and the First Lady waded their way out to the front door of the building with the help of the soldiers and policemen who surrounded them. When the president and the first lady were outside the building, the irate and disorderly demonstrators there threw stones and exploded Molotov bombs at them. A cardboard coffin was hurled at President Marcos, which struck his back as he was boarding the presidential car.

To be continued

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

Opinion BusinessMirror

opinion@businessmirror.com.ph

Why martial law for Mindanao?

Fear not

DECISION TIME

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one in the Russian Federation on May 23, Executive Secretary Salvador C. Medialdea, on behalf of President Duterte, declared a state of martial law and suspended the writ of habeas corpus in Mindanao via Proclamation 216. As basis, the President referred to acts of invasion and rebellion in the region, which had its early underpinnings when the Maute Group allegedly violently attacked a military outpost in Lanao del Sur in February 2016, and the mass jailbreak in Marawi City in August 2016. The proclamation then focused on the May 23 incidents, where the same terrorist group took over a hospital in Marawi City, established checkpoints within the city, burned government and private facilities and flew the Islamic State of Iraq and Syria flag in several areas. This narrative was used to lay the foundations of a factual finding of invasion and rebellion, which are deplorable criminal acts under Article 134 of the Revised Penal Code. To make the scenario complete, the President called out the Armed Forces of the Philippines (AFP) to fulfill its constitutional function of preventing and suppressing lawless violence. Each step in the constitutional provision was dissected and brought to life.

Trauma in our past

The trauma produced by the Marcosian martial law stirred the usual public outcry against Proclamation 216 and its potential horrors and pitfalls. Various groups went to the Supreme Court (SC) to question the validity of the proclamation. The group of Rep. Edcel C. Lagman of Albay stated that the Maute terrorist acts are not synonymous to a rebellion, because it has no intention to take arms for the purpose of removing allegiance to the government or depriving the President or the legislature its powers. At most, the government itself, in fact, launched the war in Marawi City. It was essentially a military operation and not a crusade to topple the administration. On the other hand, other petitioners belonging to the Human Rights and Activists segment allege that there was no actual rebellion, but only a looming threat. Most of petitioners argued that the President was given a fact sheet that was inaccurate and its contents, even denied by some key personalities, like the medical director of the Marawi City hospital.

Rationale for the declaration

The government’s position was fully articulated by Solicitor General Jose C. Calida, who categorically denied that the martial law in Mindanao is akin to that of Marcos’s

Proclamation 1081. He even assured the SC that the human rights of the Filipino people, especially those in Mindanao, shall be fully respected and protected. Calida explained that the Marawi attack staged by the Maute Group was a clear case of rebellion and a part of a bigger plot to make Mindanao an Islamic state. He mentioned that all the important elements for the crime of rebellion were present. The facts on the ground were established and communicated by the AFP to the President and the latter had to act decisively and quickly to address the growing crisis. The linkage between the Maute and other terrorist groups in the Asian region cannot be underestimated.

Highest legal imprimatur

The SC now has an extremely difficult but significant task, as any ruling on this matter will impact so many lives and the economic and political future not only of Mindanao, but the entire nation, as well. The closed door interpellation facilitated by the High Court for it to fully appreciate the intelligence and confidential information provided by the Department of National Defense and the AFP may fill the gaps in the factual basis for the martial-law declaration. Those who are on the ground, actually supervising and leading our military operations must be trusted by the courts to tell the story. Our President has spoken that his action was not a knee-jerk or flimsy reaction to the Maute offensive. Martial law is not a simple matter. We have loads of history on this issue and our government is fully aware of that. In the meantime, the Marawi war is now on its fifth week, and about 350 people have died. Ordinary citizens and our military are suffering because of this terrorist menace. The risk of it spreading to other areas is present. Those in the area live it and feel it. Day by day, we are confronted with rising number of Maute militants, with some foreigners even joining the fray. We wonder why there appears to be more of them in every nook and cranny in Marawi City and nearby places. The blatant attack against the state must end. Clarity on the legal framework to fully enable our government to fight terrorists and lawless elements will certainly help. So help us God. For comments and suggestions arielnepo.businessmirror@gmail.com.

Let’s not get carried away By David Brooks

New York Times News Service

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was the op-ed editor at The Wall Street Journal at the peak of the Whitewater scandal. We ran a series of investigative pieces, raising serious questions (as we say in the scandal business) about the nefarious things the Clintons were thought to have done back in Arkansas. Now I confess I couldn’t follow all the actual allegations made in those essays. They were six jungles deep in the weeds. But I do remember the intense atmosphere that the scandal created. A series of bombshell revelations came out in the media, which seemed monumental at the time. A special prosecutor was appointed and indictments were expected. Speculation became the national sport. In retrospect, Whitewater seems overblown. And yet, it has to be confessed that, at least so far, the Whitewater

scandal was far more substantive than the Russia-collusion scandal now gripping Washington. There may be a giant revelation still to come. But as the Trump-Russia story has evolved, it is striking how little evidence there is that any underlying crime occurred—that there was any actual collusion between the President Donald J. Trump campaign and the Russians. Everything seems to be leaking out of this administration, but, so far, the leaks about actual collusion are meager. There were some meetings between Trump officials and some Russians, but, so far, no more than you’d expect from a campaign that was publicly and proudly pro-Putin. And, so far, nothing we know of these meetings proves or even indicates collusion. I’m not saying there shouldn’t be an investigation into potential RussiaTrump links. Russia’s attack on American democracy was truly heinous, and

Do not be afraid Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

Ariel Nepomuceno

Thursday, June 22, 2017 A11

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he mission of mercy on which Jesus sent His apostles, then as now, both tests and develops the faith of His followers (Matthew 10:26-33). We need to meditate on the cost of discipleship and the risk inherent in living the Gospel in the midst of the world.

A little flock The company Jesus sent out to all nations was and is only a little flock; in the actual alignment of power and resources easily dwarfed by the surrounding world and, in terms of truly committed members, a tiny band. Discrimination, rejection and violent repression have always been the lot from the very beginning of those who carry the name of Jesus and proclaim His good news of salvation. Even now, two millennia later, Christians are still confronted by a world that in places and times is outright murderous. Bishops, priests, church workers and believers have been abused and physically attacked also in countries with the majority

of people baptized. The good news of salvation does not appear “good” for many who have different agenda. It radically questions the world that would forget or pretend there is no God. It challenges any kind of life built upon values contrary to God’s law. It is inevitable that confrontation would take place. When Jesus sent his disciples into the world to share in His mission, he graphically referred to them as “sheep among wolves” (Matthew 10:16). They are programmed to be at odds with the status quo, as they follow the radical ethics that Jesus Himself lived and died for. To really live according to the gospel is professedly to be a counterculture.

Tax privileges of PWDs

But Jesus does not send His followers out just on their own and defenseless. In the gospel text, we have a triple injunction for the disciples not to be afraid. The first assurance that they will not just be suppressed is because “Nothing is concealed that will not be revealed, nor secret that will not be known.” What is here meant is that the teaching of Jesus, though now hidden and known only to a few, would be spread everywhere. It cannot be stifled and would be proclaimed from the housetops. “Take courage, I have conquered the world” (John 16:33). The second injunction against fear concerns the bloody persecution against the faithful. Physical violence indicates the gospel is truly being delivered to a world that needs it but still unwilling. When Christianity no longer rocks the boat but has become lukewarm and conformed to the world, evidently there would be no more violent reactions. But murderers can harm only the body, not the soul, not man’s eternal destiny. To be feared is being lost in Gehenna. The third injunction of Jesus to His followers against fear is the love of God as a Father, who deeply cares for them. The comparison with

Reiterating the provision of the law, the regulations state that qualified PWDs are entitled to claim at least 20-percent discount on their purchases from enumerated suppliers for some specified transactions. As usual, the enjoyment of this 20-percent discount is subject to the presentation of the necessary proofs of entitlement to this privilege, most important of which is the presentation of PWD Identification Card. Among the establishments that are mandated to provide this 20percent discount to PWDs include hotels and similar establishments; restaurants and recreation centers; theaters and other similar places; all drugstores; government and/or private hospitals and medical facilities; domestic air and sea transportation;

land transportations, like PUBs, PUJs, taxis, AUV, the Light Rail Transit, the Metro Rail Transit and the Philippine National Railway; and funeral and burial services for the death of PWDs. Aside from the 20-percent discount, the same transactions are also entitled to exemption from valueadded tax (VAT). The selling establishment should therefore treat its sale to a PWD as exempt from VAT. Accordingly, no VAT shall be passed on to the PWD. The most that the PWD will be required to pay to the selling establishment shall be 80 percent of the selling price, net of the VAT. Note, however, that the law does not exempt sales to PWDs from other transaction taxes. Accordingly, the regulations also

emphasized that the exemption will not cover other indirect taxes that may be passed on by the seller to a PWD, such as percentage and excise taxes. In this regard, smaller establishments, especially those with gross annual sales, or receipts not exceeding P1,919,500, are usually not VAT registered. They are subject to the percentage or gross receipts tax (GRT). They cannot therefore claim exemption from the percentage or GRT on their sales to PWDs. It follows that the said tax may be passed on the PWD. Aside from the discount and the VAT exemption privileges, a PWD may qualify as a dependent of his benefactor, provided that the PWD is a Filipino citizen, not gainfully employed, within the fourth civil degree of the benefactor and chiefly dependent upon and living with the benefactor. In such case, the benefactor of a qualified PWD may claim additional exemption of P25,000 for each PWD, regardless of age. The tax benefits and privileges accorded to PWDs and their transactions are basically the same as those of senior citizens. One of the apparent differences, though, is that unlike a PWD dependent, a senior citizen who is not gainfully employed, living with and dependent upon his benefactor for chief support, although treated as dependent, will not entitle the benefactor to claim the additional personal exemption. With respect to the treatment by the selling establishment of the 20-percent discount, the new regula-

if the Trump people were involved, that would be treason. I’m saying, first, let’s not get ahead of ourselves and assume that this link exists. Second, there is something disturbingly meta about this whole affair. This is, as Yuval Levin put it, an investigation about itself. Trump skeptics within the administration laid a legal minefield all around the president, and then Trump— being Trump—stomped all over it, blowing himself up, six ways from Sunday. Now, of course ,Trump shouldn’t have tweeted about Oval Office tape recordings. Of course he shouldn’t have fired James Comey. But even if you took a paragon of modern presidents—a contemporary Abraham Lincoln—and you directed a democratically unsupervised, infinitely financed team of prosecutors at him and gave them power to subpoena his staff and look under any related or unrelated rock in an attempt to bring him down,

there’s a pretty good chance you could spur even this modern paragon to want to fight back. You could spur even him to do something that had the whiff of obstruction. There’s just something worrisome every time we find ourselves replacing politics of democracy with the politics of scandal. In democracy, the issues count, and you try to win by persuasion. You recognize that your opponents are legitimate, that they will always be there and that some form of compromise is inevitable. In the politics of scandal, at least since Watergate, you don’t have to engage in persuasion or even talk about issues. Political victories are won when you destroy your political opponents, by catching them in some wrongdoing. You get seduced by the delightful possibility that your opponent will be eliminated. Politics is simply about moral superiority and personal destruction.

The politics of scandal is delightful for cable news. It’s hard to build ratings arguing about health insurance legislation. But it’s easy to build ratings if you are a glorified court TV, if each whiff of scandal smoke generates hours of breaking news intensity and a deluge of speculation from good-looking former prosecutors. The politics is great for those forces responsible for the lawyerization of American life. It takes power out of the hands of voters and elected officials, and puts power in the hands of prosecutors and defense attorneys. The politics of scandal drives a wedge through society. Political elites get swept up in the scandals. Most voters don’t really care. Trump rose peddling the politics of scandal—oblivious to policy, spreading insane allegations about birth certificates and other things—so maybe it’s just that he gets swallowed by it. But

Atty. Ronald S. Cuberto

Tax Law for Business

R

evenue Regulations (RR) 5-2017 was recently issued to provide guidelines in the implementation of the tax privileges and incentives provided under Republic 10754, An Act Expanding the Benefits and Privileges of Persons with Disability (PWD). For clarity, PWDs are those who have long-term physical, mental, intellectual or sensory impairments, which in interaction with various barriers, may hinder their full and effective participation in society on an equal basis with others. Disability, in turn, shall mean a physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual, or activities of such individuals.

sparrows is poignant, when its literal meaning is considered. “Not a single sparrow lights upon (lumalapag) the ground without your Father’s consent”—not “falling” but “alighting” to pick up a grain. God’s constant and protective love for His precious ones is powerfully pictured in this care with which the ordinary movements of a common bird are accompanied by the Creator. For us, this is dramatized by the observation that every hair of one’s head is accounted for to God. Real trust in the Father liberates the disciples from the crippling grip of fear and empowers them to serve wholeheartedly the cause of the Gospel. Alálaong bagá, to be on mission for Jesus Christ is to bear witness to Him. It includes questioning things and being a challenge to others. But one need not be afraid, if one is faithful to the Lord. To acknowledge Him before others, even willingly to die for Him, if necessary, is to be guaranteed that Jesus is our mediator before the judgment seat of God. At that last moment, we shall hear from Him for the last time, “Do not be afraid!” Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on dwIZ 882, or by audio-streaming on www.dwiz882.com.

tions also adopted the same rule as applied to the 20-percent discount granted to senior citizens. In the earlier implementation of the senior citizen discount, there had been controversies in the treatment of the discount—whether as tax credit, a deduction or some other classification. It took a judicial intervention to uphold the treatment of the discount as a mere deduction in the computation of taxable income. Adopting similar treatment, RR 5-2017 made it clear that the 20-percent PWD discount shall be included in the gross sales. At the same time, it shall be allowed as among the itemized deductions. This means that there is no direct deduction from sales, nor the discount should form part of the cost of sales. In essence, while the discount will be claimed as deduction in the computation of regular income tax, it is not considered in the computation of the minimum income tax. On a final note, it is essential to remember that a PWD, who is at the same time a senior citizen, can only claim one 20-percent discount on a particular purchase transaction. The author is a senior associate of Du-Baladad and Associates Law Offices, a member-firm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at ronald.cubero@ bdblaw.com.ph, or call 403-2001 local 350.

frankly, on my list of reasons, Trump is unfit for the presidency, the Russiacollusion story ranks number 971, well below, for example, the perfectly legal ways he kowtows to thugs and undermines the norms of democratic behavior. The people who hype the politics of scandal don’t make US government purer. They deserve some of the blame for an administration and government too distracted to do its job, for a political culture that is both shallower and nastier and for fostering a process that looks like an elite game of entrapment. Things are so bad that I’m going to have to give Trump the last word. On June 15 he tweeted, “They made up a phony collusion with the Russians story, found zero proof, so now they go for obstruction of justice on the phony story.” Unless there is some new revelation, that may turn out to be pretty accurate commentary.

2nd Front Page BusinessMirror

A12 Thursday, June 22, 2017

www.businessmirror.com.ph

AFP warns public of scammers organizing Marawi fund-raisers

E

By Elijah Felice E. Rosales

@alyasjah

ven during crisis, opportunists find a way to take advantage of the situation—this time at the expense of dead and wounded soldiers and displaced persons.

The Armed Forces of the Philippines (AFP) on Wednesday warned the public to be wary of people masking as representatives of charity groups to amass money for their own pockets. AFP Spokesman Restituto F. Padilla made the call in a news briefing after the military received reports of scammers reportedly using the crisis in Marawi City, Lanao del Sur, for their modus operandi. “For my first item of the day, I [would like to] send over a notice to the public that there has been an

PADILLA: “I [would like to] send over a notice to the public that there has been an observable increase in scammers trying to raise money for our soldiers by way of benefit dinners, lunches or what have you.”

observable increase in scammers trying to raise money for our soldiers by way of benefit dinners, lunches or what have you,” Padilla said. To this, Padilla has one instruc-

tion: “Please do not believe them.” The military spokesman said these are illegitimate fund-raisers and there is only one valid bank account intended for soldier casualties and affected civilians of the crisis. “As a warning to the public, again, we would like to ask everybody to be on the lookout for these scammers and let your telcos know of the numbers they’re using so that they can be blocked and cannot go on with their nefarious activities,” Padilla said. The government on Monday has

Govt. . .

Continued from A1

SUSTAINABLE TOURISM The three-day Sixth International Conference on Tourism Statistics, with the theme “Measuring Sustainable Tourism”, is being held in Pasay City. It is held in time for the United Nations International Year of Sustainable Tourism for Development. Leading the event in the Philippines are (from left) Xu Jing, regional director for Asia and the Pacific of the United Nations World Tourism Organization (UNWTO); Marcio Favilla, executive director of UNWTO; and Rolando Cañizal of the Department of Tourism. See story on A1. STEPHANIE TUMAMPOS

The CA’s decision refuted reports on the Internet that Reyes ruled against the government, as there was forum shopping, forcing the magistrates to dismiss the case. “Common to the two petitions is the issue of forum shopping. Petitioners opined that private respondent Sunvar is guilty of forum shopping when it filed a petition for injunction with one court and an appeal [on the merits] with another court,” the CA ruled. In fact, Reyes directed Manalac “to continue with the proceedings of the appeal and to resolve the same with reasonable dispatch”. Petitioners the government and National Power Corp. (NPC) are the registered owners of several parcels of land between Pasong Tamo and Vito Cruz Extention in Makati City, with a total area of 125,607 square meters, more or less covered by four Transfer Certificates of Title. On December 26, 1997, the government and the NPC leased the properties to the Technology Resource Center Foundation Inc. (TRCFI) for a period of 25 years beginning January 1, 1978, and ending on December 31, 2002, renewable for another 25 years, upon mutual agreement of the parties. Commencing on different dates, TRCFI granted Sunvar the option to sublease all portions of the property. During the period of its sublease, Sunvar introduced improvements consisting commercial

Labor mobility in Asean: Free or unfree?

This transformation will not happen on the basis of the news releases issued by the Asean Secretariat in Jakarta. It will take years, if not decades, for real integration requires a leveling of development across the region and, yes, the creation of one seamless Asean economy. What the various Asean economic integration programs have accomplished is the general opening up of the economies of the 10 Asean member-states (AMSs), which are at 10 different levels of development. The Asean Free Trade Agreement (Afta); Asean Investment Agreement (AI A); Asean Framework Agreement on Services (Afas) and other integration/liberalization agreements do not necessarily close the development gaps among the 10 AMSs; they may even exacerbate the gaps, if the laggards, like Myanmar and Laos, are unable to keep up in the growth process with the developed ones, like Singapore and Malaysia. Moreover, integration blueprints and programs, approved at the regional level, have to be translated into the national policies, programs and operational measures of the individual AMSs. This translation process is neither

easy nor smooth. For example, liberalization in the trade of goods under Afta appears successful because of the reported tariff reductions achieved by all the AMSs; however, nontariff barriers are common and trade disputes among AMSs are settled in the World Trade Organization, not in the Asean, which has no established settlement body. Nowhere is the gap between formal Asean declaration and implementation reality on the ground more pronounced than in the case of the migrant workers. In 2007 the Asean adopted in Cebu a historic Declaration on the Rights of Migrant Workers. And yet, today, the Asean is still unable to provide teeth to the declaration because the AMSs are unable to agree on an implementation instrument, which both labor-receiving and labor-sending countries must observe. In the case of the well-publicized MRAs to promote the “free flow of skilled labor” or professionals, the situation is worse. Accordingly, the free flow of skilled labor is necessary to allow Asean companies easy access to needed skills and talents wherever they

operate in the region. For this purpose, the Asean, under “Mode 4” (movement of natural persons) of the Afas framework on “trade in services”, instituted the “mutual recognition agreements” (MRAs) for different professions. The MRAs are a system of equivalency and recognition related to the education, skills and qualifications of various professions. For example, a dentist in Hanoi can move freely to Kuala Lumpur to practice dentristy once his or her professional credentials from Vietnam are acknowledged to be acceptable and equal with those in Malaysia. Among the first to be covered by the Asean MRAs are architectural services, accountancy services, nursing services, surveying qualifications, medical practitioners, dental practitioners and tourism professionals. The MRAs for these professionals were adopted between 2005 and 2012 (See Table 1). The implementation progress for the MRAs was mainly in the creation of implementing offices and bodies at the regional and national levels. However, there is tremendous backlog in the “operation-

Signing Date

Engineering services

December 2005

Nursing services

December 2006

Architectural services

December 2007

Framework Agreement for the

December 2007

Mutual Recognition of Surveying Qualifications MRA Framework on Accountancy Services

February 2009

Medical Practitioners

February 2009

Dental Practitioners

February 2009

Tourism Professionals

November 2012

Source: ASEAN Secretariat

alization of MRA principles into detailed regulations, plans, procedures and mechanisms” that professionals can use when applying for registration and recognition. The ADB-MPI study also cited the different requirements imposed by the AMSs, such as languageproficiency requirements, holding a degree from a recognized or accredited institution, minimum years of study and passing of national licensure exams. But is it not a fact that there is greater movement of skilled labor today within the region? The

See “AFP,” A2

buildings that are known today as Premier Cinema, Mile Long Arcade, Makati Creekside Building, Gallery Building and Sunvar Plaza. On June 3, 2002, the NPC notified the Philippine Development Alternative Foundation (PDAF) of its decision not to renew the contract of lease, as NPC’s assets will be privatized and the proposed renewal, which shall be P1.25 per sq m per annum, is grossly prejudicial to the interest of the government, as the value of the said lands as of 1997 stood at P125,000 per sq m. In February 22, 2008, the Office of the Solicitor General (OSG) advised Sunvar to completely vacate the property within 30 days, or it would take legal action against it before the court. When Sunvar refused to vacate the property, the government and the NPC filed a complaint for unlawful detainer. The two cases with Judges Dumayas and Manalac were consolidated but they both resolved the same on merits prior to the consolidation. The trial courts sided with Sunvar, prompting the OSG to seek redress before the appellate court. Justice Reyes reversed and set aside the ruling of the local court. “While there was identity of parties and relief prayed for between the petition for injunction and the appeal, the third element of litis pendencia is wanting,” he said. “The RTC cannot render proper judgment to the injunction case that would amount to res judicata to the judgment rendered on the appeal, as the RTC in the first place has no jurisdiction to entertain the injunction case.”

Continued from a1

Table 1. ASEAN Mutual Recognition Agreements For Select Professions (2005-2012)

MRA

opened two bank accounts—one for soldiers and the other for displaced persons—under the Land Bank of the Philippines to serve as depository for the casualties of the conflict. As of Tuesday, the depository for soldiers killed-in-action jumped to P508,500, according to Presidential Spokesman Ernesto C. Abella. On the other hand, the charity fund for displaced persons soared to P187,500, just two days after the bank account was opened.

answer is yes, but not in the context of the MRAs. Highly educated migrants have been circulating within the region even without the Asean MRAs. Countries like Singapore and Malaysia even encourage their entry during boom times for they help moderate wage surges and provide these countries needed talents in scaling upward the technology ladder. A number of Filipino professionals and skilled workers go out as tourists on Asean visa (good for 21 days) and then apply directly to employers in the other Asean countries.

The point is that the MRA system is not working and is facing difficulties because of differences in national regulations and recognitions of the professions. In the case of the Philippines, which is a large labor-sending country, the Constitution is quite clear: the practice of professions is “limited to Filipino citizens” (Section 14, Article XII). This is reinforced by Article 40 of the Labor Code, which says that no “employment permit” can be issued to a “nonresident alien”. Permits are only given to the managerial-technical personnel of firms in “preferred areas of investments” and to foreign professionals who do work where there is no available Filipino “who is competent, able and willing” to perform the said work. And yet, there is “freer” movement of skilled labor today within the Asean, fueled largely by the selective demand needs of countries like Singapore and Malaysia. However, all workers, particularly the low-skilled or semi-skilled migrants, are still subject to the visa, reportorial and other requirements of the host countries. There is no free flow of skilled labor, only freer circulation.