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Thursday, May 24, 2018 Vol. 13 No. 222

Neda thumbs down hike in NFA palay-buying price

By Cai U. Ordinario

@cuo_bm

he National Economic and Development Authority (Neda) and economists on Wednesday expressed their opposition to the proposal of the National Food Authority (NFA) to increase its support price for palay by P8 per kilogram (kg).

Neda Undersecretary for Policy and Planning Rosemarie G. Edillon and Regional Development Office Assistant Secretary Mercedita A. Sombilla said increasing the

procurement price to P25 per kg, from P17 per kg will accelerate inflation. Sombilla said the Neda is now getting updated production cost figures to determine whether

₧17 per kilo

there is a need for an increase and, if it is necessary, by how much. “The cost is obvious: inflation and NFA debt pileup but the benefits are unclear. We will ask for an intensive cost-benefit analysis first before we can agree [to the increase in buying price],” Edillon said. She added that, during a recent meeting with rice traders, the private rice traders informed the government that should the NFA hike its support price, they will follow suit. See “Neda,” A8

Managing land and population in protected areas Rene E. Ofreneo

laborem exercens

ivil-society environmental advocates are questioning the recent decision of Environment Secretary Roy A. Cimatu lifting the suspension in the issuance of Sapa certificates to individuals, groups and/or corporations seeking to develop areas of the protected areas of the country for various “special uses.” Sapa stands for “Special-Use Agreement in Protected Areas.” Special uses include the establishment of ecotourism facilities, campsites, aquaculture, agro-forestry projects and tree plantations. Sapas may also be issued to corporations setting up communication facilities, erecting transmission lines, building irrigation canals/waterways and carving rights-of-way for roads and various infra projects. The Sapa issuance program was suspended in 2011 or at about the same time that the Department of Environment and Natural Resources (DENR), under the Aquino administration, launched the “National Greening Program” (NGP), an ambitious program seeking to reforest the country through the planting of 1.5 billion trees.

House OKs bill requiring firms to get legislative license to operate mines

@jearcalas

See “Hog,” A2

P25.00 nationwide | 6 sections 40 pages | 7 days a week

Continued on A8

By Jasper Emmanuel Y. Arcalas

business news source of the year

The current support price of the NFA for palay

Hog output rose in Q1 on strong pork demand he country’s hog production in the first quarter rose by 2.4 percent to 558,720 metric tons (MT) on the back of the increasing demand for pork and the improvement in the purchasing power of Filipinos. The Philippine Statistics Authority (PSA) reported that hog production in the January-toMarch period expanded by 13,050 MT. Output in the same period last year reached 545,670 MT. Historical data from the PSA showed that the figure is the largest first-quarter production recorded by the local hog sector. Pork Producers Federation of the Philippines Inc. (ProPork) President Edwin G. Chen told the BusinessMirror that the sustained increase in demand for meat encouraged hog raisers to hike their production. In its report, titled “Swine Industry Performance Report,” t he PSA sa id Cent ra l Lu zon recorded the highest output at 109,400 MT, which was 4.62 percent higher than the 104,566 MT it produced last year. Central Luzon accounted for about 19.58 percent of total production during the period.

2016 ejap journalism awards

By Jovee Marie N. dela Cruz

logistical dilemma Lee Gill, group vice president of Global Retail Industry Strategy, shares insights into the advancement of disruptive technology, the generational shifts among shoppers, the wave of formidable competition, hyper-personalization and shifting consumer expectations that disrupt the marketplace at the JDA Day Manila media briefing on Wednesday. The event encourages businesspeople to develop strategies to remain profitable, attract, capture and retain market share, and still be flexible in the age of the digital-supply chain at a hotel in Pasay City. ROY DOMINGO

PHL to retool workers to counter threat of AI By Elijah Felice E. Rosales @alyasjah

he government will recalibrate the country’s work force in the business-process outsourcing (BPO) sector to turn the threat posed by the entry of artificial intelligence (AI) into an opportunity for employment generation. In a news briefing on Wednesday, Trade Secretary Ramon M. Lopez admitted the introduction of AI into BPOs

PESO exchange rates n US 52.3130

is a threat to laborers employed in the multimillion-dollar sector. He said the government is looking at possible ways to address it, and the most available right now is the retraining of contactcenter agents. “Business developments, AI, robotics and any new developments taking place are posing a threat to this industry. Some are saying that practically about half in the BPO industry might get laid off because of these developments, especially in the

AI technology,” Lopez said. As a dollar-generating industry, Lopez said it is a given for BPO firms to look for ways to make their operations more efficient. With the entry of AI—a technology that can accomplish basic tasks, such as logging in information, setting schedules, and copying and pasting files—BPO firms are keen on acquiring this system to improve their capacity and efficiency. See “PHL,” A2

“By requiring mining firms to acquire a legislative franchise, the people, through their elected representatives, would be able to scrutinize the applicants, their capability and track record.”—Alvarez

@joveemarie

AWMAKERS on Wednesday opened the door so miners can continue to operate in the country and can effectively overhaul an existing law that has a predilection for resource conservation. This after the House Committee on Legislative Franchises and House Committee on Natural Resources jointly endorsed for plenary approval a measure requiring the acquisition of legislative franchises for all mining operations in the country. The two committees unanimously passed at the committee level the still-unnumbered substitute bill, which seeks to amend the Philippine Mining Act of 1995. The bill was principally authored by Speaker Pantaleon D. Alvarez. The bill requires all private contractors to secure a legislative franchise as a prerequisite before they could apply for a large-scale quarrying permit or an exploration permit for pur-

poses of entering into a mineral agreement, or financial and/or technical-assistance agreements. The bill also provides that contractors presently holding exploration permits, mineral agreements, financial and/or technical-assistance contracts and large-scale quarrying permits shall have two years from the effectivity of the proposed law to secure a legislative franchise. Failure to do so shall render said permits void and agreements terminated. The bill also proposes a measure to extend the duration of a minerals-processing permit up to 10 years from the current five. The permit, however, shall not exceed a total term of 30 years. See “House,” A8

n japan 0.4718 n UK 70.2930 n HK 6.6647 n CHINA 8.2183 n singapore 39.0687 n australia 39.6271 n EU 61.6247 n SAUDI arabia 13.9494

Source: BSP (23 May 2018 )

News

BusinessMirror

A2 Thursday, May 24, 2018

www.businessmirror.com.ph

Senate to ensure adequate protection for OFWs By Butch Fernandez

@butchfBM

enators on Wednesday moved to ensure adequate standard operating procedures are in place to avoid diplomatic complications when rescuing distressed overseas Filipino workers (OFWs).

“Clearly, there is a need to change the status quo and improve the condition of Filipino workers abroad,” Sen. Emmanuel Joel J. Villanueva, chairman of the Senate Committee on Labor, told reporters after presiding over a joint hearing with the Committee on Foreign Relations and on Economic Affairs tackling reported abuses and deaths of OFWs abroad. Villanueva added: “This was why our deliberations on these issues are important, because it can help

us to get to the root causes of the problem and find solutions to the problems our OFWs face.” At the outset, Villanueva acknowledged the issue confronting the committee became clearer “because of the recent incidents in Kuwait, particularly the brutal death of [OFW] Joanna Demafelis. It was really shocking and saddening beyond words.” He lamented that OFWs “still have to make a choice between abuse and unemployment,” citing

In this September 17, 2017, file photo, returning overseas Filipino workers (OFWs) fall in line at the immigration counter of the Ninoy Aquino International Airport Terminal 1 in Parañaque City. Senators on Wednesday vowed to institute measures to protect OFWs. NONIE REYES

reports reaching his committee that recorded no less than 185 cases of deaths in Kuwait between 2016 and 2017. The senator said it was made clear to the Senators at the hearing that the government should

promptly address the situation of OFWs abroad. “Many continue to take a chance on illegal recruiters. OFWs resort to posing as tourists just to skirt regulations. There are recruiters who transfer OFWs from one employer

to another, making them vulnerable to abuse,” he said in Filipino, citing his committee’s final findings at the Senate hearing, adding: “Clearly, our OFWs need help.” Interviewed after the hearing, Villanueva listed “several needs” that, he said, should be promptly addressed. “We need an intensified training for household workers. We need to give them skills to at least minimize cases of runaways. We even need to check the veracity of NCs [national certification] of our 262,000 NC holders. We need to look at the imposition of exorbitant fees for medical exam, visa stamping, among others. We may need to put up performance bond for employers and require the training of foreign employers. We need to revisit all existing bilateral agreements, since many of these agreements are already outdated,” he said. “We also need to monitor and confirm if Kuwait is deemed fully

PHL Navy still lags behind neighbor’s armadas By Rene Acosta

@reneacostaBM

ESPITE its ongoing capability-upgrade program, the Philippine Navy will remain a laggard in terms of sea power when compared with the rest of the naval forces in Southeast Asia. This candid admission was made by Navy chief Vice Admiral Robert Empedrad during the 120th foundation anniversary of the Navy on Tuesday. The commemoration was marked by a demonstration of amphibious operations, counterterrorism and hostage rescue by the Naval Special Operations Group and the Marines Special Operations Group. While the Navy has set out to improve its c apabi l it y by

Hog. . .

Continued from A1

“This was followed by Calabarzon and Northern Mindanao with 91,080 MT and 48,330 MT, respectively,” it said. “The production in these regions accounted for approximately 45 percent of the country’s total hog production.” Chen noted that expansion in the output of Northern Mindanao was driven by higher demand for pork not only in Luzon but also in the Visayas region. “Mindanao hogs are usually being [shipped] to Luzon. Farmers also supply the VisMin area,” he said. “The output of Cebu and

PHL. . .

Continued from A1

However, this comes with a price. Once AI takes over tons of tasks in the sector, it is expected to displace workers in BPOs, as most of the work they have been doing can now be completed by the technology. With this, Lopez said the Departments of Trade and Industry and of Information and Communications Technology are working on

acquiring assets and equipment under its “Sail Plan 2020,” it would still be unable to match the firepower of the navies of its neighbors. The country may never even redeem its previous status as a regional naval power. “We are slowly regaining our maritime character as a nation and our vision of ‘Becoming a Strong and Credible Navy’ that our maritime nation, the Philippines, will be proud of by the year 2020,” Empedrad said. “Be that as it may, we are still too far behind compared to other navies in the region.” Nonetheless, the Nav y was proud to display what it’s made of during its anniversary, even holding a fleet review of vessels—the first in two decades—and a flyby

of fixed and rotary naval aircraft, including the recently acquired TC-90s. The Philippine Navy held its last fleet review in 1998. Before World War II, the Philippine Navy was considered as one of the most powerful navies, not only in Southeast Asia but even in the Asia Pacific region. “However, six decades later, we are one of the weakest even in the Southeast Asian region,” Empedrad said. “Maritime nations like Malaysia, Indonesia, Japan and Singapore, and even Vietnam and Myanmar, have upgraded their naval capability while the Philippine Navy went to obsolescence,” he added. The Navy chief underscored the need for the Navy to modernize, as it is supposed to be a maritime nation,

Davao also went up.” Data from the PSA showed that the country’s total swine inventory as of April 1 expanded by 1.92 percent to 12.753 million heads, from the previous year’s 12.514 million heads. “Stocks in backyard far ms slightly increased by 0.34 percent, while inventory in commercial farms increased by 4.82 percent,” the PSA said. “The top 3 regions in terms of inventory were Central Luzon with 16.91-percent share, Calabarzon with 12.29-percent share, and Western Visayas with 9.92-percent share to the country’s total swine inventory,” the PSA added. Swine population held by back-

yard raisers, which accounted for 63.81 percent of the total inventory, reached 8.139 million heads, which was slightly higher than their inventory of 8.111 million heads a year ago. The remaining volume of about 4.614 million heads was held by commercial raisers, which was 212,000 heads more than last year’s record of 4.402 million heads. Commercial swine inventory accounted for about 36.18 percent of the total inventory. Data from the PSA also showed that the average farm-gate price of hogs in the first quarter rose by 14.03 percent to P113.56 per kilogram, from P99.59 per kg a year ago.

recalibrating the would-be displaced workers. “Instead of AI replacing jobs in the BPO industry, which is estimated to affect half of the 1.3 million jobs in the sector, the workers will be trained and upskilled to make use of AI-enabled systems. Basically, it’s making the AI system become the solution to the problem,”he explained. Under the solution proposed by the two agencies, the government will employ impact sourcing by reallocating workers into different levels of labor. This will reportedly allow 482,000

unskilled workers to handle low-skilled work; 525,000 low-skilled workers to perform midskilled work; and 309,000 mid-skilled workers to do high-level work. “The Philippines is the first country to launch this kind of initiative. Instead of looking at AI as a threat to the BPO industry, the Duterte administration is using AI to provide more opportunities for inclusive growth. We will train and enable our work force, regardless of their background and experience, to use AI to perform smarter and complete difficult tasks, and help them move up the value chain. The training will make them employable, operating even in the rural areas to make this program truly inclusive,” Lopez said. The trade chief cited as example contact center agents. Under the plan, Lopez said they will be retooled to give them a different skill set, all the while making them still useful for the firm. “The entire industry market is worth $262 billion and only $79 billion is outsourced. With the government’s initiative and push for innovation, we will be able to benefit from this market to open up more job opportunities for the Filipinos, which is the priority of President Duterte,” Lopez said. The BPO industry is one of the country’s major economic drivers, as it has provided 18 million employment opportunities nationwide over the past 15 years. However, the sector is now moving forward with the entry of automation in business operations.

having the fifth-longest coastline in the world, which is twice longer than that of the United States. The country is also dotted by more than 7,100 islands, which is the “third most” in the world. The country’s maritime waters cover an area that is seven times bigger than that of its land area. “But, more important, we are the No. 2 seafaring-producing country in the world next to China. Our interest therefore is not only limited through our maritime waters but extends globally,” Empedrad said. He also noted that the West Philippine seas and the Sulu Sea are two of the most busiest and important sea lanes in the world. During the past months, the Navy has acquired or received three

additional TC-90s from Japan and a missile system from Israel, which will become operational after the weapons systems are integrated into the Nav y’s multipurpose attack craft. Japan has earlier donated two TC-90s. The Navy is also expecting the delivery of the 1980s-era Pohangclass corvette from South Korea by the third quarter of this year, while two anti-submarine warfare helicopters will become operational by May next year. Empedrad said the two brandnew frigates ordered from South Korean firm Hyundai Heavy Industries Co. Ltd., whose combatmanagement systems were earlier questioned, will be delivered in 2020.

TPB backdates documents to show funds available for Buhay Carinderia project Continued from A8

checking the documents, noticed: “They [TPB] inserted [the project] in a budget that will lapse, hence backdated. It cannot be because [the project was] approved March 2018.” The first document (BUS 2017-12-3246) indicated “sponsorship payment for PH Home Cook Food Fair 2018 from April until December of 2018,” and was under the heading of “Strategic Special Projects.” The amount originally typed was P75 million, but later crossed out by hand, and written “80” over the “75.” Said BUS was signed by Cesar R. Villanueva, officer in charge for the Domestic Promotions Department of the TPB. Said BUS failed to indicate the “necessity and legality of charges under his supervision” (Box A) and that “funds were available for the purpose indicated” (Box B), as required by the GAM. There was no signatory, as well, in Box B. Another BUS (2017-12-3246B) as for the “payment for the 15percent downpayment of Buhay Carinderia Project as part of the TPB Domestic Food Tourism Campaign plus value-added tax [VAT]” amounting to P13,440,172.80. With the same heading as Strategic Special Projects-Buhay Carinderia Project, the handwritten portion indicated that the funds would be charged to “Marcom SAGF-D” department/ budget, with the account code bearing “5-0299-010.” Box A remained unfilled, but this time, Box B indicated that the

“budget available and earmarked/ utilized for the purpose indicated above.” The requesting officer was Montano as TPB COO, while Marian Sarah C. Garate, budget officer V, certified that funds were available for Buhay Carinderia. A third BUS (2017-12-3246A) was for the “payment for the 35 percent of Buhay Carinderia Project as part of TPB Domestic Food Tourism Campaign plus value-added tax” amounting to P31.36 million, again signed by Montano with Garate having certified “budget available and earmarked/utilized for the purpose indicated above.” Box A, again, remained unfilled. A fourth BUS (2017-12-3246C) was for the “payment for the 40 percent of Buhay Carinderia Project as part of TPB Domestic Food Tourism Campaign plus value-added tax” in the amount of P35.48 million. All disbursement vouchers covering said amounts, however, were dated March 19 (P13,440,172.80); March 20 (P31.36 million); and April 4 (P35.48 million), for a total amount of P80.28 million. It should be noted, as well, that the last disbursement voucher for and final check payment to Marylindbert was prepared seven days before the actual project launch of the Buhay Carinderia project. (See, “TPB to bring lowly ‘carinderia’ food to the world,” in the BusinessMirror, April 13, 2018.) All disbursement vouchers were signed by Montano, Garate and then Teo.

compliant as required by Republic Act (RA) 10022. We need to ensure that accountability when our workers are abused is shared among foreign recruitment agency, local recruitment agency and even foreign employers. We need to ensure that our protocols—especially in rescuing OFWs in distress—are being followed. We also need a database of undocumented or abused Filipino workers and, perhaps; we can tap our centers or Polos [Philippine Overseas Labor Offices] to gather information about undocumented workers. We need information sharing among all agencies, we need to collaborate and convene the interagency group,” Villanueva added. Above all, Villanueva said, “It seems we just need to implement our existing laws which have been in place for 23 years, specifically Section 20 of R A 8042, which requires the establishment of a shared government information system for migration.”

DENR unit to expand scope of study on Boracay By Jonathan L. Mayuga @jonlmayuga

he Ecosystems Research and Development Bureau (ERDB) is expanding the coverage of its ongoing study that will determine the carrying capacity of the world-famous Boracay Island. The ERDB, a staff bureau of the Department of Environment and Natural Resources (DENR), was tasked to conduct a study to determine the carrying capacity of Boracay Island in the municipality of Malay, Aklan. The island resort is now closed to tourists for six months to fast-track government efforts to rehabilitate the island and allow it to recover from environmental degradation. ERDB Director Henry A. Adornado told the BusinessM irrror at the sidelines of celebration of the 2018 International Day for the Year of Biodiversity at the National Museum on Tuesday that they have already completed the study to determine Boracay’s carrying capacity as early as last week, but it only covers the portion classified as alienable and disposable land. He said the study they conducted covered only the alienable and disposable portion of Boracay because it is the area that is supposed to be developed on the island. Forest lands, he added, are areas set aside for conservation. Adornado said it was suggested during a recent executive committee meeting of the DENR when he presented the results of the study to include the areas classified as forest lands. “For the study to give a clear and comprehensive picture, it was suggested to include forest lands, so we are now working on it double time,” Adornado said. He said Environment Secretary Roy A. Cimatu will make the result of the study available to the public once the ERDB has completed the study. He added the scope of study covers an inventory of all existing structures on the island, including the number of hotels, resorts, restaurants and other business establishments, residential buildings, number of vehicles, road networks, available parking space, current population density, including the residents and tourists, the volume of water used daily, as well as waste generation, both solid and liquid, considering the land area and health of the surrounding environment, including forest and coastal ecosystem. Adornado added the ERDB will come up with a recommendation as to the maximum allowable number of structures on the island, whether it has reached the maximum limit and whether to allow more buildings to be constructed. He said the number of structures, population, the capacity of the island to absorb pollution, both solid and liquid, the number of vehicles, traffic and waste generation, solid and liquid, are factored in. “The calculation of the carrying capacity uses a mathematical model that will determine if the carrying capacity is exceeded,” Adornado said.

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Editor: Jun B. Vallecera • Thursday, May 24, 2018

Labor tells government to address unintended outcomes of CTRP

By Samuel P. Medenilla

@sam_medenilla

he country’s largest labor group on Wednesday said the government should first address the so-called unintended consequences of the implementation of Comprehensive Tax Reform Program (CTRP) on inflation before pushing for its Package 2.

At a news conference, Trade Union of Congress of the Philippines (TUCP) Vice President Luis Manual Corral said the economic managers were unprepared for the full impact of the TRAIN, which has boosted inflation to 4.5 percent in April or higher than the 2-percent to 4-percent inflation target for 2018. “The economic managers [of the administration] should take a step back because we are telling them they creating a social problem. They are adding to the economic hardship of our people,” Corral said. He said this could have been prevented had authorities first implemented the so-

called tarrification of rice. “The No. 1 increment for inflation for families in the D and E segments of the population is rice. About 20 percent of their income goes to rice,” Corral said, citing figures from the Philippines Institute for Development Studies (PIDS). Based on its market monitoring, the TUCP said the different varieties of rice have already increased by 7 percent. Under their proposed tariff measure, importation would no longer be under a government-to-government arrangement, but would instead be based on the initiative of the private sector.

“Some may criticize us why we are looking at market mechanisms. [That’s] simply because it is rational and will bring down the cost of rice to allow the private sector to import rice,” Corral said. The TUCP said the decline in rice prices would “induce a positive shock on the disposable income of the poor.” Corral said the government could generate P28 billion from rice tariffs. He said the amount could be used to establish a Rice Competitiveness Enhancement Fund and boost the competitiveness of 1.3 million local farmers by providing technical support to move to high-value crop or to provide them with mechanized implements. “ The key here is that the process should be participatory because we believe that it is the farmer themselves who can identify the best use of the Rice Competitiveness Enhancement Fund,” Corral said. To further arrest the rising inflation, Corral said the government should reduce electricity charges and provide subsidies to more workers affected by the CTRP. “If they are able to address the issues on rice and electricity in the coming weeks, they could see its impact on the people by

S&P unit rejects overheating claims By Bianca Cuaresma

@BcuaresmaBM

he financial information and analytics firm S&P Global Ratings dismissed concerns over an allegedly overheating Philippine economy based on such textbook signs as the current account deficit, sustained strong growth and uptrending inflation. A unit of the sovereign credit watcher Standard & Poor’s (S&P), it said in a Web cast on Wednesday that, while red flags went up on particular economic indicators, the country’s growth story remains “healthy” and sustainable. “Our view is that we are not really concerned about overheating in the Philippines,” S&P Economist for the Asia-Pacific Vincent Conti said. S&P Director for the Sovereign and

I nter n at ion a l P ubl ic Fi n a nce R at ings A ndrew Wood said the alleged overheating of the economy is best v iewed by look ing at t he economy as a package. Officials in one of the three major credit watchers downplayed the impact of the widening current account deficit, saying the shortfall was due to import demand resulting from the government’s infrastructure buildup—a move seen boosting the capacity of the Philippines to sustain its growth momentum. Conti also said rising investments as a share of local output or the GDP can only boost the country’s capacity to expand. The growing labor force as dividend of a demographic happenstance also mitigates concerns against potential overheating in the economy.

Case clippings

By Justice S J Ranada Jr. JUDICIAL ETHICS–gambling in casinos Under Circular 4 of the Court of Appeals and Admin Matter 1544-0, it is clear that the prohibition from entering and gambling in casinos is applicable only to judges of inferior courts and court personnel. Stated differently, the aforesaid issuances do not cover justices of collegial courts for the simple reason that they are neither judges of the inferior courts nor can they be described as personnel of the court Complaint v. Justice Pizarro 13 Mar. 2018

AM 17-11-06-CA Martires, J

Interest-rate outlook compels investor shift to bonds

PI Asset Management and Trust Corp., a fully owned subsidiary of the Bank of the Philippine Islands, is firm on its long-term bullish outlook of the global equities market as global economic growth continues. As manager of the largest funds in the country, it has seen global fund flows into equities since the start of the year reaching twice that of bonds. “This is already a reversal of the higher net flows we have seen in bonds last year,” company President and CEO Mario Miranda said. “This is indicative of strong investor optimism for global growth as a whole. Fundamental data, such as higher-thanexpected corporate earnings, exports and manufactur ing t hroughout t he globe supports our position, despite recent volatility attributed to geopolitical

risks and protectionist signals out of the US,” he added. The company manages BPI Global Equity Fund-of-Funds, which it claims to be the largest global equity investment fund in the country. It has assets under management of more than $85 million and is structured as a fund-of-funds that aims to generate returns over the MSCI World Index. It ended last year with a net return of 23.87 percent. “Investors should diversify beyond domestic borders and wean out of their home-bias to improve investment returns given the prevailing weakness in the local market. Today, more than ever, there is an abundant supply of affordable global investment funds with various strategies that clients can choose from,” Miranda said. VG Cabuag

Worries centered on the above-target inflation in the country were similarly dismissed by S&P, saying these were transitory in nature and will be easily tamed by the recent 25-basis-point hike in the Bangko Sentral ng Pilipinas’s (BSP) main policy rate. S&P also projected two more policy-rate adjustments by the BSP this year as part of the broader goal of containing inflation within forecast range. Uptrending inflation has sent investors into a tizzy. Similarly, S&P anticipates an undershooting of this year’s growth target of 7 percent to 8 percent. However, experts at S&P also said the government has taken “steps toward the right direction” to achieve a higher growth trajectory over the medium to long term. Also, prospectively higher policy rates from both the BSP and the United States Federal Reserve should moderate growth projections over the near term. Conti said the personal income-tax cuts that formed part of the first package of the tax reform should also help boost disposable income and lead to greater consumption activities. “This will serve to mitigate whatever dampening impact the BSP tightening” would have on consumers, Conti said. The BSP, after nearly four years, raised its policy rates at the rate-setting meeting of the Monetary Board on May 10 as so-called inflation expectations needed anchoring.

the next quarter,” Corral said.

Maintaining the status quo

THE TUCP made the statement amid the ongoing deliberation in Congress for Package 2 of the CTRP, particularly on lowering the corporate-income tax, from 30 percent to 25 percent, but removing the various tax subsidies and incentives on selected industries. Corral said they oppose the measure because this might lead to a mass displacement of workers. “We fear that radical change in the tax regime at this time may also cause locators currently operating in economic zones to look for better tax shelter arrangements in the Asean [Association of Southeast Asian Nations]. If these locators move, there is this real fear that jobs will be lost,” Corral said. The TUCP said they expect the removal of tax incentives would mostly affect companies in the export sector. The National Economic Development Authority (Neda), however, gave assurance on Tuesday the tax incentives should lead to minimal displacement, since only 4,000 companies avail themselves of it nationwide.

Pro-labor incentives

Instead of removing the tax incentives,

Corral said the government could recast the requirements to include pro-labor policies like full employment and tradeunion rights. “The reality is, in these ecozones there, is so much violation of trade-union rights. There have been so many case of union busting, and if you are giving incentives to corporations, they have to give full employment and trade-union rights as well,” Corral said. He said the conditions should include the number of their direct employees, contractual workers, presence of a productivityincentive scheme, or a stock-dispersal policy. “We are pushing for labor representation in the fiscal incentives review boards, which will be in charge of the kind of incentives that will remain for these industries,” Corral said. He said associating the tax incentives with labor-friendly companies is also in compliance to conditions set in the existing free-trade agreements with Europe and the United States. “The continuation of our exporting of our goods to the United States and Europe is precisely tied with respect for these tradeunion and labor rights,” Corral said. The Neda earlier said it is already considering such reforms under the “rationalization” of the tax incentives.

Insurers report double-digit Q1 premium sales growth

he Insurance Commission (IC) said the insurance industry posted a double-digit increase of 34.38 percent in total premium in the first quarter, with strong performances exhibited by the life, nonlife and mutual benefit association (MBA) sectors. Based on quarterly reports submitted by the life, nonlife companies and MBAs during the period, the total premium collection in the first quarter rose by 34.38 percent to P76.64 billion, from P57.04 billion posted during the same period in 2017. Broken down, the life-insurance sector posted P61.79 billion in premium collected as of end-March, up 40.18 percent from P44.08 billion last year. Insurance Commissioner Dennis B. Funa traced the rise in premium collection to the sale of variable life insurance (VUL) products which grew by 51.24 percent for the period. “While the premium generated from both traditional life-insurance products and variable life-insurance products posted doubledigit growth, the increase in the premium collected of the life sector is attributed to the 51.24-percent growth in the sale of variable life insurance products,” Funa said. The premium of the nonlife-insurance sector also grew by 13.29 percent to P12.34 billion, from only P10.89 billion in the first quarter last year. The IC explained that premium generated from motor and fire insurance products accounted for the majority share in the total premium collected by the nonlife-insurance sector. Income generated from contributions/ premium by MBAs reached P2.51 billion

in the first three months of the year, up by 21.75 percent from the P2.06 billion posted during the same period last year. Meanwhile, the insurance industry’s net income showed double-digit growth of 26.72 percent or P8.03 billion in the first quarter this year from only P6.34 billion last year, with net income from the life-insurance sector growing by 31.16 percent. “The life-insurance sector posted an increase of 31.16 percent to P6.31 billion, from P4.81 billion during the same period, brought about mainly by the increases in premium income, underwriting income and gross investment income,” he added. The net income of the nonlife-insurance industry, on the other hand, showed a reduction of 19.21 percent during the quarter. “The 19.21 percent decrease in the reported net income of the nonlife-insurance sector from P580.5 million to P469.0 million was due to the decreases in premium and commissions earned coupled with the increases in losses incurred, commission expenses and other underwriting expenses,” he said. The MBA sector poted a net surplus of P1.26 billion for the quarter, according to the IC. The insurance industry’s total paid-up capital grew by 10.88 percent to P52.87 billion, from P47.68 billion year-on-year, due to the significant increases in the paid-up capital of four life-insurance companies. The IC further said the insurance industry’s total investments hit P1.32 trillion in the first quarter, up 6.85 percent from P1.24 trillion last year. In terms of total assets, the insurance industry posted an increase of 8.81 percent to P1.55 trillion from P1.42 trillion last year. Rea Cu

National government borrowed less in Q1

he national government reported gross borrowings in the first three months worth P207.917 billion, with the bulk, or P146.140 billion, from offshore lenders and onshore accounts of another P61.777 billion, data from the Bureau of the Treasury (BTr) showed. Based on recent data, the borrowings represented a contraction by 2.44 percent from last year amounting to only P213.121 billion. Of the total gross borrowings for the quarter, funds borrowed from foreign markets reached P146.140 billion, expanding by 16.97 percent from only P124.939 billion in the first quarter of 2017. This includes project loans amounting to P10 billion, program loans worth P21.44 billion, Chinese yuan bonds of P12.014 billion and global bonds exchange of another P102.682 billion. Domestic borrowings during the quarter reached P61.777 billion, a contraction by 29.94 percent from P88.182 billion in the same period in 2017.

Treasur y bills (T-bills) and fixedrate Treasury bonds (T-bonds) formed part of the borrowings from domestic sources. T-bills accounted for P18.004 billion of the total domestic borrowings, while fixed-rate T-bonds settled at P43.773 billion. National Treasurer Rosalia V. de Leon told financial reporters the mandate for the second global bonds issuance eyed this year may come out in June. “Maybe around the first week of June. No rush at all. We just want to put everything on the table as preparation. We just have to put the approvals in place so that once we want to strike, we can do so,” de Leon said. De Leon added the government may recalibrate its bond-sale program in the succeeding quarters to make up for lost increments or tap other funding mechanisms to cover the gap. Such mechanisms include upsizing the bond sale, tap the overseas rather than the domestic debt market or simply roll over maturing bonds.

“If we see that markets would continue to behave this way we could either retain or look for other options, not necessarily through the auction,” she said. In March the Philippines became the first Asean sovereign to issue Panda bonds, with the sale of three-year Panda bonds with a 5-percent coupon, a tight spread of only 35 basis points above benchmark, when it sold in the onshore Chinese bond market on March 20. The government’s inaugural sale of renminbi-denominated bonds proved a hit, with bids reaching RMB 9.22 billion compared with the government’s debt offering of only RMB 1.46 billion. In January the Philippines returned to the international capital markets with a $2-billion 10-year global bond offering. The transaction marked the first time the Republic issued a 10-year dollar-denominated bond since 2014. The bonds were offered concurrently with a one-day accelerated switch tender offer for 14 of the Republic’s outstanding dollar bonds maturing between 2019 to 2037.

TheBroa Why investing in this earthq A4

Business

Thursday, May 24, 2018

By Roger Pe

T is one of the fastest-growing cities in the Philippines because of its vibrant tourism industry. As one of the Philippines’ major tourist drivers, it is in a class by itself. A World Heritage Site and countless other new and undiscovered wonders of nature can be found here. The city has never been hit by a major earthquake in the last 500 years. This gives someone something that money can’t buy: peace of mind. Seldom visited by typhoons, it is shielded by eastern Philippine islands from the Pacific side. Puerto Princesa City is the next big thing in real-estate development after Clark, Cebu and Davao. To begin with, it has a spanking-new international airport that can accommodate advanced-technology jetliners. Prior to the temporary closure of Boracay Island, domestic airlines fly in and out of the city 125 times a week or 18 times a day from major cities like Manila, Cebu, Davao, Iloilo and Clark, including chartered flights from China, Korea and Taiwan. With 28 to 34 flights a day today, it is easily the busiest provincial city airport in the Philippines. Right now, it is also the cruiseship capital of the Philippines and its port continues to undergo modernization and upgrade.

Carbon-neutral

DIVERSE mineral and other natural resources abound in Palawan’s only city. Perhaps the only city in the country with a large forest cover still intact, the many treasures you will find in Puerto Princesa come in the form of affordable real estate. The burgeoning city expands north to south. Primed for growth, these areas are all poised to experience an economic boom from 2020 and beyond. Inventory of move-in-ready properties that are suitable for retirement and investment purposes is on the upswing, and they are also relatively inexpensive. Puerto Princesa originally failed to command the attention of big stakeholders, but the reverse is happening now. In recent years, the city’s real-estate market is beginning to throb and it is getting an eyeful from those who are thinking about the future. Why not? The city is the center of communication, education and public administration for Palawan. It is a carbon-neutral city, has good and stable peace and order, warm and committed people, diverse and skilled manpower.

Investment haven

AFTER Camella Homes, Brighton Homes of Robinsons Land Corp., Regatta Bay of Cabanilla Marketing and Development Corp., Imperial Palace of Phil De Meer Corp., Shojin Herbal and Wellness EcoResort of Ai World Corp. and Harbor Springs of Santa Lucia Land are just some of the big brands that landed on the city. To date, the city’s investment portfolio has amounted to P3.380 billion. According to City Tourism Officer Aileen Cynthia Maggay-Amurao, two of them are brand names known worldwide and the rest have a good reputation in the Philippines. Amurao cited for example Imperial Palace Hotel, a 9-hectare hotel and resort development in Honda Bay, with a 4-hectare floor area, and a total of 162 guest rooms, majority of which are composed of villas. Another big investor in the city that she cited is Ai World, a mountain resort nestled in a vast highland in Bacungan. The resort-

and-park-in-one is under the development of Neogreen and being operated by World Ai Corp. It opened publicly on March 4, 2017, and has continuously drawn influx of tourists every day since. Santa Lucia and Century Properties have also ventured into Puerto Princesa. John Eric D. Escanillas, VP for national sales and marketing at Santa Lucia, explained that they are investing in the city to further expand the company’s footprint. Santa Lucia President Exequiel Robles has been quoted in reports as saying his company’s entry to Palawan is brought about by the demand it got from its offices abroad. According to Robles, there’s a “strong clamor” from overseas Filipino workers for national developers to come to Puerto Princesa.

Sitel, China

SITEL Group Philippines has also established a countryside expansion program in the city. Its latest addition to Sitel’s Philippine operations opened a thousand new jobs not only in Puerto Princesa but for the whole Palawan province. Meanwhile, a group of Chinese businessmen led by Zhang Yuxiang visited the city last year to explore possible investment ventures related to trade and tourism. Yuxiang, chief manager of the China State Construction Engineering Corp. (CSCEC), was quoted as saying that “China wants to bring more Chinese tourists to the city through tourism infrastructure investments in the province.” Another group arrived a week later to check the possibility of investing in aquaculture, particularly in the rearing of high-value export commodity fish. “The businessmen checked on five marine aquaculture parks in the city for the possibility of establishing hatcheries for high-value species of groupers,” Roberto Abrera of the Regional Fisheries and Aquatic Resources said. The proposed sites are located in barangays Santa Lucia and Binduyan. The reciprocal visit was upon the orders and guidance of President Duterte to look for mutual economic support opportunities in fisheries development. Last year, retail, banking and real-estate giant SM opened its 64th mall in Puerto Princesa.

Pack leader

BEHIND most of these developments is Lucilo R. Bayron, mayor of Puerto Princesa. Bayron told the BusinessMirror his political experience formally began when he became the alter ego of then-Mayor Edward S. Hagedorn. “I functioned like the mayor. ’Pag sinabi kong meeting, meeting talaga [when I say that we need to meet, it was serious]. I was always on time,” he said. “I was in charge of all problems in the city hall.” From 1992 to 1995, he organized city events, announcements, “down to the nitty-gritties.” “I conceptualized ‘Oplan Linis’ [cleanup plan] and the city’s housing program.” Bayron said his team focused on the coastal areas because people were polluting the bay. There they found out that there were more

IMPERIAL Palace

than 8,000 families in the coastal area from Bagong Sikat to Abaniko, San Pedro. “We made an inventory—previously not ever done—of the coastal areas and a comprehensive census, how many families lived in those areas and where they worked,” Bayron said. “We prepared a map and turned it over to the barangays to avoid nonstop relocation.”

Family, roots

BAYRON was born in Muntinlupa, inside the New Bilibid Prison Hospital. His father used to work with the Bureau of Prisons under the Department of Justice where he started as a prison guard. His mother is a Palaweña, born in Coron and belonged to a big family—the Rodriguez, Fernandez and Ponce de Leon clan. “There were five of us, I am the only boy among four girls, and second to the eldest.” His father was then transferred to Iwahig Penal Colony “and that’s where I grew up.” Bayron was six years old when he arrived in Iwahig. He started Grade 1 and finished his elementary education there. His father became the superintendent of Iwahig Prison and Penal Farm before he retired. His mother was a teacher who later became the principal of Iwahig Elementary School. He took up high school in Letran College but transferred to Silliman University, where he graduated. He attended college at Silliman University but transferred to the University of the East, where he acquired a Bachelor of Science in Business Administration degree, major in Marketing. Bayron said his mother was a strict disciplinarian, but his father was a little tolerant—“a combination that was really perfect for us, I think.” “My father was a practical guy whom I learned many things. I learned a lot in Iwahig because it was like a communist camp where nobody owned anything and everybody worked,” he narrated. “I learned how salt was made, how fish ponds were being developed, how to harvest bangus [milkfish], as well as coconuts and process them into copra.”

REGATTA Bay development

Political roots

WHILE waiting for a pharmaceutical company in Manila, Bayron’s father asked him to come home. “He talked to the late Governor Salvador Socrates and I was taken in as a casual employee earning P8 a day. My heart was not exactly into it as I seldom came to the office, indignant that it was not commensurate to what my father had spent for me in college,” Bayron told the BusinessMirror. “But I persevered upon my father’s prodding.” One time, the governor met with all fresh graduates from different Manila universities. According to Bayron, they were given an assignment from which he was able to come up with a better and faster output than the rest was able to. “The governor said, ‘This guy is worth developing.’ They then sent me to several trainings conducted by the USAID [United States Agency for International Development],” he narrated. “And that’s how I learned about local government unit operations.”

Hagedorn’s take

BAYRON also considers Hagedorn

as having performed a crucial role in his entry into government service. According to him, Hagedorn asked him to join the government when he won against Victor S. Oliveros—Bayron’s uncle—in 1992. He said Hagedorn appointed him as city administrator where Hagedorn’s wife was a subordinate when he was working at the provincial capitol. “I was reluctant at first because my business was doing good,” Bayron said. “But then, his relatives came to me and pleaded to work with him.” Bayron said he and Hagedorn had an agreement he would work only for a year. “I wanted to leave after his first term and told him, ‘I’m leaving because there are no more mountains to climb,’” Bayron said. “‘You’re doing good, there is no need for me to stay,’ I added. So I left.” Bayron was Hagedorn’s city administrator when he ran for reelection in 1995. “He wanted me to be his campaign manager at the same time,” he said, “so I told him, ‘I can do only one job. You choose, either you retain me as city administrator or you get me as campaign manager.”

ONE of the country’s most beautiful airports, Puerto Princesa International Airport

When Bayron was declared winner, he left Hagedorn. “He could not say anything because he knew that I was serious.” Bayron was out of the city for 18 months and went back to his business that, he said, suffered tremendously “while I was working with the city government.” After Hagedorn asked for his

aderLook

sMirror

www.businessmirror.com.ph | Thursday, May 24, 2018

quake-free paradise matters

SABANG integrated wharf development

vincial capitol to Abrea Road, close to the old airport. Bayron added they also give a five-year tax holiday to investors. “We will push for our ‘nighttime economy’ but, at the same time, provide peace and order to make visitors enjoy their stay in Puerto Princesa as they always do.”

Underground River

THE silent and hardworking mayor of Puerto Princesa, the “Dad” of the city.

help, Bayron said he accepted. “I accepted to join him again in the government and I got stuck.”

Governance style

BAYRON was a vice mayor for nine years before he was elected mayor in 2013. “I made sure I was visible and more accessible. I am the person peo-

ple see in city hall. I decide fast. I tell people straight that if it is not possible, it is not possible,” Bayron said. “I plan where the city government is headed. I steer the ship to its direction. I do my own strategizing.” Currently, Puerto Princesa is considered a first-class city. “It is highly urbanized but our facilities belie the fact; but I am working on it,” he said. “People have seen many changes through our many projects that are all visible.” According to Bayron, he began with a health program by combing all barangays. “We told them, we did not come here because of politics. We are here to serve the people,” he said. “I brought all councilors with me with our program for the neglected, poor, teachers, students and senior citizens.” Bayron looks at education as the great equalizer in life. “I, for one, believe that being poor is not an excuse to achieve knowledge,” he said. “Kahit anak ka ng mahirap, kung nag-aaral kang mabuti, baka malagpasan mo pa ’yong mayaman na bulakbol [Even if you are poor, your chances of getting ahead are much better than a rich kid who doesn’t take his studies seriously]”

Future moves

ACCORDING to Bayron, his govern-

ment plans to put up a Biodiversity Museum that will house Palawan birds, animals, marine life, insects and plants similar to the Natural Museum in Washington D.C. There’s also a plan to build a 12,000-capacity to 15,000-capacity convention center with adjacent hotels near the Puerto Princesa Bay area, patterned after Sydney’s. “We would like to increase our hotel occupancy to 10,000,” he said. “For once, we will be ambitious and build the tallest tower in the Philippines—a modern structure with a dancing fountain and synchronized lighting technology.” Bayron is also expecting that Balayong Park will be a big attraction. When the Palawan Cherry Blossoms trees fully grow and bloom in the city’s 1,000-hectare park, it will be a spectacular sight, he added. “When it happens, we will beat Zamboanga, known as ‘ciudad del flores,’” Bayron said. “It’s just a matter of time and it will come.” “The USAID is helping us attract investments,” he added. “At the moment, we have incentives for tourism-related businesses,” Bayron said. “We give priority to tourism, agriculture and renewable energy.” The local government is also developing its own “Tourism Mile” along Rizal Avenue, from the pro-

CAPACITY is also in Bayron’s mind for the Puerto Princesa Underground River (PPUR). “Because of the PPUR’s limited carrying capacity, our expansion plans are tied down,” he explained. “But we do not stop finding creative solutions on how to further develop the area,” Bayron said, citing as example increasing the entrance fee to the site so as not to lose opportunities to earn. “How much is P500 in dollars? $10. How much do you spend when you go to a destination in the US or in other parts of the world? That’s hundreds of dollars,” Bayron said. “But here, you are only charged a pittance.” He believes by increasing the entrance fee to the PPUR—declared as a World Heritage Site in 1999, Puerto Princesa can generate P210 million a year from the present P70 million per year. “We can use the money to protect the World Heritage Site by taking care of people who take care of the park,” Bayron said. “By increasing the number of forest rangers, they will be more effective.” “Ang tao hihintayin na tumalikod ka bago putulin ang kahoy [When you are not around, people cut trees],” he added. Hence, Bayron said they plan to “change that mindset, the desire to cut down trees because they earn from them.” “Let’s give it back to them in whatever form,” he explained. “When people see that it is being plowed back to them, they will protect nature for the next generation.” Bayron said the local government is also coming up with ideas for more man-made destinations.

Paleco problem

IN May last year, the city government proposed filing a class suit against officials of the Palawan Electric Cooperative (Paleco), according to Bayron. “Our meeting produced a res-

olution of mounting a signature campaign demanding the resignation of Paleco officials should they fail to end the power problem in 15 days,” he said. “The problem with Paleco is it is good at passing the buck and giving reasons for its line and distribution failures. They say that its plant capability is 81 MW [megawatts] and the requirement is only 43 MW, but brownouts still happen,” he added. To address this problem, Bayron and Energy Secretary Alfonso G. Cusi signed a contract for the country’s first waste-to-energy facility. It’s a project that is gaining praise and pillory. “As population, tourism and development grow at a rapid pace, we decided to pursue a novel and sustainable solid-waste management system that converts waste to energy, thereby, hitting two birds with one stone,” Bayron said. He defended the project as doing away with the need to construct another expensive sanitary landfill. Bayron also said Puerto Princesa’s coffers could have an additional income of P20 million a year as share from project revenue. He added the city will also save P40 million annually, which is its budget allocation for solid-waste collection since Austworks Corp. “will do the actual waste collection themselves.” Austworks is the developer of the waste-to-energy facility.

Past deeds

ADDRESSING the city’s financial problems is what Bayron considers an accomplishment he’s most proud of during his first term. “I attended to the city’s financial problems when I got elected,” he said. “We had to tighten our belts and did away with unnecessary expenditures.” Bayron said the city cut down on free convention dinners. “Why should the city government spend for convention-goers—engineers, lawyers, businessmen? They can easily afford a P500 plate,” he explained. “I would rather spend them for the poor. They would be happy with P200 worth of food.” According to Bayron, the local government was able to turn around the city’s financial problem after 18 months, earning it a recog-

nition for fiscal management from the Department of the Interior and Local Government (DILG). Puerto Princesa was awarded a Good Financial Housekeeping plaque three times. Twice the city won a Seal of Good Governance from the DILG. Bayron said Puerto Princesa’s financial status and tax collection is “doing good, unlike before when the city owed a lot of money.” “Do you have collectibles from the city? How much? P50 million? You’ll get paid. Not on staggered basis,” he said. “We have funds stashed away in the bank. Our local budget for infrastructure is P400 million; that’s money we earned.” Bayron said the city also stopped contracting road projects. “It is more efficient, cost-wise. We’ve eliminated the contractor’s profit margin and VAT [value-added tax]. So we saved at least 25 percent.”

Future perfect

BY 2028, Bayron said many would not recognize Puerto Princesa. “The way I see it, the city is like an airplane, it has taken off and destined to fly higher and farther. It’s a fast-growing city; rapidly urbanizing,” he said. “The population is equally increasing because of migration from other parts of the country. We have become the country’s melting pot.” This led Bayron to note that Cuyono, once their local language, “is not anymore.” “We’ve become a Tagalogspeaking city. People from all over the country have settled here.” He noted that rapid urbanization equals worsening traffic and garbage problem. “This also equals more services and facilities,” he added. “We never fear the daunting task. We are here to find an out-of-the-box solution for the challenges in the present and ahead of us,” Bayron said. Bayron’s confidence is emboldened by what he considers his greatest strength: palabra de honor. “When I say something, I do it. Word of honor is important to me,” he said. “I am a working mayor who is always on time; I am dependable. I have good work ethics and not an absentee. I lead by example.” Bayron said because he’s a family man, he also likes people to call him “Dad.” “I have become the father figure to the city by that name.”

A6 Thursday, May 24, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

We can end corruption

ourism Secretary-designate Bernadette Fatima Romulo Puyat can’t help but cry on national TV after she found out how the budget of the Department of Tourism was spent by its former officials. She said in Filipino: “I am shocked because everyday I discover something, so I feel sad because we are talking about huge amounts of money, not just 1 million, but hundreds of millions.” The message is clear: There’s corruption going on at the DOT.

In fairness to the former DOT officials who are being publicly denounced for allegedly cheating the government of its resources, Romulo Puyat must do her duty not only as tourism chief but as a taxpayer: File corruption charges against these former officials. We have comprehensive laws on corruption, and as long as the evidence of their wrongdoing is strong, we have to give not only these former DOT officials but all other public servants who view their public office as a profitable trust the biggest lesson they deserve—let them rot in jail. In this country, however, our fight against corruption is just expressed in words and never backed by deeds. For example, what happened to the NBN-ZTE deal? The diversion of Philippine Charity Sweepstakes Office funds to finance fictitious expenditures? The fertilizer scam involving Department of Agriculture officials? The anomalous issuance of tax credit certificates to oil companies, among others? In her paper, “An Advocate’s View of Corruption,” lawyer Lalaine D. Benitez said: “If we are to take a proactive role in our fight against corruption, we have to start in ourselves. Parents have to start their children early. Leaders have to lead by example. We have to take a reassessment of our priorities and our values. We have to strengthen our virtues. Let us go back to the basics, teaching and imbibing honesty, continuous learning and strengthening our age-old virtues. What is at stake is the future of our children, peace in our country and peace of our minds. Indeed, not until we truly realized this can we truly implement the constitutionally enshrined principle that public office is a public trust and all public officers and employees must at all times be accountable to the people.” Benitez added: “The existence of institutions to fight corruption is not enough. Total individual reorientation and determination is called for. If every Filipino can think in terms of giving back, of paying back, of putting up with the corrupt system, of staying and fighting on and not giving up, corruption can, in many ways, be shut up.” Because not all investigations yield indictments, many corrupt political leaders feel no compunction to step down, even if they become so loathed that constituents rise up by the millions to demand their exit. In terms of impunity, corruption in the government is seemingly increasing in scale. That’s because those involved are seldom jailed. This brings to mind a joke about a kindergarten class that went on a field trip to a local police station, where a kindly police officer showed them about. Stopping in front of a “Ten Most Wanted” poster, he explained how citizens often help bring about arrests. “Are those pictures of the bad guys?” one 6-year-old asked. The officer said they were. “Well,” pursued the kid, “why didn’t you hold him after you took his picture?” Sometimes, we can learn some valuable lessons from kids. We have to “hold” corrupt officials while we can. If we encourage a proactive approach to fight corruption, if Filipinos get involved in the fight, no big fish can manage to escape. It’s worth remembering that our indifference brings out the worst in our corrupt leaders. Since 2005

BusinessMirror A broader look at today’s business

Beware the man from China John Mangun

OUTSIDE THE BOX

peaking at a locally held economic forum in 1990, I was asked by a retired high-ranking military official—retired because he was on the “wrong” side of Edsa—“What about China?”

My answer was that when China’s GDP per capita, then at $730—rose to the same level as the Philippines, then at $1,525— China would begin to be unstoppable. A per-capita GDP of $1,500 would still qualify a “basket” case, but with the size of China’s population, it would add billions in wealth. At the end of 1998, the per-capita GDP of China was at $1,542. The hysteria about the Chinese military landing its H-6K bombers on Woody Island goes far beyond “Chicken Little” screaming “the sky is falling!” Even the Office of the Vice President was not able to figure out that the Chinese have controlled Woody Island since 1958 and that the only dispute in that area is with

Vietnam and Taiwan. The older version—the H-6—has been in use by the PLA Air Force since 1958, based at Jialaishi Airbase on Hainan Island. Jialaishi is 1,295 kilometers from Manila, and the H-6 has a combat range of 1,800 km, loading out 9,000 kilograms of bombs. So the Philippines has been within bombing range of the Chinese for 60 years; but we shouldn’t let that fact ruin a great political agenda narrative. If any one bothered to think further back than last Tuesday’s “Miss Q and A” segment on It’s Showtime!, the rise of China and its current foreign policy was fully predicted. British philosopher and one of the foremost “thinkers” of the 20th century—Bertrand

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proportion of the overall budget allocated to education has been increased by one percentage point every year since 1998. Russell goes on to write, and this is important for the future. “In order to understand the international position of China, some facts concerning its 19th-century history are indispensable. China was, for many ages, the supreme empire of the Far East, embracing a vast and fertile area, inhabited by an industrious and civilized people.” In 1820 China accounted for 35 percent of the global economy far surpassing second-place India (27) and Europe (25). The US was a distant fourth at 5 percent. Today the percentages are China (18), Europe (16), the US (15) and India (9). In 1922 “The position of China among the nations of the world is quite peculiar, because in population and potential strength China is the greatest nation in the world, while in actual strength at the moment, it is one of the least.” What a difference 100 years can make. 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.

Abolishing the PCGG can be interpreted as a whitewash

✝ Ambassador Antonio L. Cabangon Chua Publisher

Russell—wrote a book in 1922 titled The Problem with China. Russell wrote: “China, by her resources and her population, is capable of being the greatest Power in the world after the United States. It is much to be feared that, in the process of becoming strong enough to preserve their independence, the Chinese may become strong enough to embark upon a career of imperialism.” “All the Great Powers, without exception, have interests which are incompatible, in the long run, with China’s welfare and with the best development of Chinese civilization. Therefore the Chinese must seek salvation in their own energy, not in the benevolence of any outside power.” That perfectly describes China in 2018. How would China get to this point? “The three chief requisites, I should say, are: (1) the establishment of an orderly government; (2) industrial development under Chinese control; and (3) the spread of education.” That is the history of China since Mao Zedong destroyed the feudal system with his brand of communism, the economic development under Deng Xiaoping and the educational policies of Jiang Zemin and Hu Jintao. The

database

BOLISHING the controversial Presidential Commission on Good Government (PCGG) by Congress without requiring it to explain in writing what it did to the more than 800 corporations, subsidiaries and other suspected ill-gotten wealth worth billions or perhaps trillions of pesos in today’s value might be interpreted as a cover-up. The Constitution, in Section 1, Article XI, commands that: “Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives.” This is an absolute constitutional order that Congress, the branch that represents the will of the people, and other agencies, must comply and not offer excuses. On May 15 the House voted 16210 to pass House Bill 7376 on third and final reading to abolish the PCGG. The bill will then be forwarded to the Senate and the Office of the President for enactment into law. Between February 28, 1986, and July 26, 1987, the last day of former

President Corazon C. Aquino’s revolutionary government and beyond, more assets, including cash, jewelry, treasury bills, shares of stocks, trust funds, bearer certificates, real-estate properties, aircraft, vessels, buildings, condominiums, apartments, houses, newspapers, radio and TV stations, were quietly sequestered, confiscated and surrendered. Subsequently, many of these assets either mysteriously disappeared or were taken over by Mrs. Aquino’s own relatives, friends and cronies. Others were transferred to the Asset Privatization Trust. Even more reprehensible, as detailed in the best-selling book, Greed & Betrayal, republished in 2011 by Amazon, one of the world’s largest publishing houses and authored by

this writer, was the wholesale granting by the Aquino regime of immunity from civil and criminal prosecutions to scores of Marcos friends and cronies who should otherwise have been thoroughly investigated and indicted. Because of this, the PCGG earned the sobriquet “Pestilential Combination of Graft and Greed,” as some of those empowered by the Aquino government to sequester the alleged ill-gotten wealth of Marcos and his cronies transformed themselves, in just a few years, from virtual paupers, after emerging from their hideouts in the United States and other places with empty suitcases, to veritable taipans and arrogant politicians, complete with mansions, expensive cars and millions of pesos in bank accounts. Worse, while the number of poverty-stricken people increased by the day, their proud and bejeweled wives shamelessly flaunted their newly acquired wealth and often graced the front and society pages of the country’s newspapers and TV channels. The chairmanship of the PCGG in President Aquino’s time had changed hands five times—from former Senate President Jovito R. Salonga, to Ramon A. Diaz, to Adolf S. Azcuna, to Mateo T. Caparas, and to David M. Castro. And yet, not one of them and President Aquino had rendered to

the nation a complete individual accounting of the purloined assets. As of today, the PCGG, exactly 32 years after its creation, is still enmeshed in a web of legal controversies, onerous compromise deals and accusations of graft and corruption. The quasi-judicial body, with vast powers to sequester, issues summonses and grants immunity from prosecution. It was also mandated to prevent concealment, destruction and dissipation of assets, investigate cases of corruption and adopt safeguards to ensure that the plunder shall not be repeated in succeeding administrations. To ensure success, the Aquino regime initially allotted P649 million for its recovery efforts, set up offices here and abroad, employed more than 1,500 foreign and local lawyers, accountants, intelligence agents, fiscal agents and asset monitors, and gave the PCGG unhampered access to all branches of government. But what happened? In six years ending June 30, 1992, the PCGG recovered only P4,216,654,434.09 in cash, less than P10 billion in kind and $356 million in Swiss bank pledges out of the $10 billion the Aquino government claimed Marcos, his relatives, friends and cronies had plundered in 20 years. Despite the indispensable body of See “arillo,” A7

www.businessmirror.com.ph

Opinion

Dangerous times

Into the union of the Trinity

BusinessMirror

Msgr. Sabino A. Vengco Jr.

Val A. Villanueva

Businesswise

t is sad and heartbreaking to see that parts of our country’s territories in the West Philippine Sea are being gobbled up by Beijing with nary a whimper from our government.

I shudder in shame that our neighbors, Vietnam and Indonesia, would have the guts to stand up to Beijing’s illegal occupation of what is clearly and patently illegal based on the Hague-based ruling which invalidated Beijing’s claim to the entire West Philippine Sea. But what can we expect from the Commander in Chief who has no respect to the Philippine Constitution which he has sworn to uphold? Sometime in June last year, he had said that the “Constitution is worthless to him.” In his speech at the Presidential Security Group’s 120th founding anniversary, Duterte implied that he will disregard the Constitution “to protect the Filipino people.” Time and again, in his almost threeyear reign, President Duterte has shown his preference for shortcuts, undermining the rule of law to get what he wants. The extra-judicial killing of those suspected to be involved in drugs, the jailing of his fiercest critic, Sen. Leila M. de Lima, the unconstitutional ouster of Chief Justice Maria Lourdes A. Sereno, among many other acts not in consonance with justice and fair play. But his acquiescence to China confirms what many of his critics are saying all along. He doesn’t have what it takes to be a true leader. He has dismissed suggestions from experts to at least assert our rights—through diplomatic channels and international pressure—to these islands which China has so far occupied and militarized. Saying that war is the only option that he is not wont to wage against a military giant exposes his myopic view and limited understanding of skillful diplomacy. Acting Supreme Court Justice Antonio T. Carpio has been urging the Philippine government to formally protest China’s deployment of bomber aircraft in the West Philippine Sea, saying that failure to do so is just like giving China the blessing to further militarize the region. That China broke its vow to Duterte that it will not militarize its occupied islands should have already convinced the President that Beijing cannot be trusted as a friend. The People’s Liberation Army Air Force recently taxied a H-6K long range bomber, capable of carrying nuclear-armed cruise missiles, on Woody Island. It is China’s largest garrison on the Paracel Islands. Carpio warned that Beijing’s bomber could also land and take-off from any of its “big three” islands in the Spratly group—Mischief Reef, Subi Reef and Fiery Cross Reef, which are all within the Kalayaan Island Group. Duterte, by his action, makes him the most serious threat to Philippine national security. In exchange for massive and expensive loans from China to fund his “Build, Build, Build” program, he has effectively surrendered the country’s sovereignty to China without the latter firing a single shot. His action has emboldened the onslaught of Chinese mainlanders into the country causing property price upsurge.

Arillo . . .

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evidence, the availability of state witnesses and its awesome investigative and prosecutory powers, the Aquino regime failed to get a final conviction for any of the Marcoses and their more than 400 codefendants. Worse, there was no effort on the part of the Aquino administration to correct this brazen irregularity as the Sandiganbayan began lifting the writs of sequestration on some multibillion-peso corporations and other assets for failure to implead them before the constitutional deadline and

God knows what these Chinese will do next once they have comfortably settled here. Are they sleepers? Are they documented? He is in fact defending China’s action and mobilizing government agencies “to shoot down” those who have flagged Beijing’s aggressive action. This prompted Carpio, former Foreign Secretary Albert del Rosario and former Rep. Roilo Golez to suggest that the Philippines asserts its sovereignty over the Spratlys in a diplomatic but firm manner. Undeniably, China’s brazen landing of nuclear-capable bombers on an island in the disputed South China Sea is a show of force to reinforce its territorial claims while the other weaker claimants are divided and the US being preoccupied by North Korea. Bonnie Glaser, a China expert at the Center for Strategic and International Studies in Washington, says the unabetted stockpile of military assets in the occupied islands—believed to have significant oil and natural gas deposits—allows China to “influence its weaker neighbors in peacetime.” She says: “Through the use of a large number of law enforcement ships, for example, it can pressure Vietnam and the Philippines not to unilaterally extract energy in waters that China claims jurisdictional rights. In wartime, China’s military assets on these islands will increase the risk to the US of intervening militarily.” The United Nations Conference on Trade and Development estimates that roughly 80 percent of global trade by volume and 70 percent by value is transported by sea. Of that volume, 60 percent of maritime trade passes through Asia, with the West Philippine Sea carrying an estimated one-third of global shipping. The high intensity of commercial goods passing through the tapered Strait of Malacca is worrisome because of its weakness as a tactical chokepoint. It is claimed that some $5.3 trillion worth of goods journeys through the South China Sea annually, with $1.2 trillion of that total accounting for trade with the US. What is disconcerting is that China could create an air defense detection post to monitor movements into its claimed “sovereign airspace.” It already did in the East China Sea in 2013 amid a dispute over the Senkaku Islands with Japan. Beijing could also establish a base for nuclear submarines as the deep waters around the Spratlys afford it a suitable camouflage. The Philippines, which sought and won the Hague-based ruling, should have been at the forefront of assertive diplomacy in which its Asean neighbors could make as a rallying point to put international pressure on China’s aggressive stance. But Duterte’s “friendship” and its appeasement to China has made it all too difficult to muster international support.

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

other violations such as the issuance of writs of sequestration on the signature of just one commissioner. Strangely, many of these corporations and conglomerates took the Aquino administration a record time of one day, just one day, to investigate and settle the assets of billionaire and confessed Marcos crony and front man Jose Yao Campos. The hasty settlement of the 99 corporations and subsidiaries worth billions of pesos in Vancouver, Canada, saw the PCGG inordinately acting as investigator, prosecutor and judge, rolled into one. To reach the writer, e-mail cecilio.arillo@ gmail.com.

Alálaong Bagá

he solemnity of the Most Holy Trinity presents us with the fundamental option of entering into the communion of the Triune God. We are given the choice to live in union with God as followers of Jesus (Matthew 28:14-20).

Defined by baptism Excluded from among the Jews by the mid-80s AD, the gospel according to Saint Matthew sought to define the proper identity of Jesus’ followers. They are their own distinct ekklesia or God’s assembly with its own mission, order and authority. Gathered around the risen and glorious Jesus to whom “all power in heaven and Earth has been given,” they have been commissioned by Him to go and make disciples of all nations. (The non-Jewish world is part of Matthew’s gospel from the start as dramatized with the story of the Magi from the East searching for the newborn Messiah.) Mandated to invite the nations to the fellowship of the victorious

Jesus, the disciples are to perform initiation with the familiar Jewish rite of washing with water. But more than just the ritual purification it originally signified, Christian baptism is effective of the new life of union with God. Entrance and membership in Jesus’ own ecclesial community is characterized by this rebirth in water and in the mystery of the Triune God. It is to be “in the name of the Father and of the Son and of the Holy Spirit.” What the death and resurrection of Jesus brings about in his community is entrance into the Father’s love and life that adopts the believer, so that one can now cry “Abba” (Father)! It means participation in the love and life of the Son, so that he/she is redeemed

Thursday, May 24, 2018 A7

by Jesus Christ and incorporated into Him. And it means as well union with the Holy Spirit, so that the faithful is sanctified and guided by the “Breath of the Father and the Son.” Baptism in the power of the Christ’s Paschal Mystery fructifies in the definitive reconciliation and communion between God and humankind.

Evangelizing others

The entire process means discipleship, a way of life in imitation of Jesus, configured to Him in word and in deed. The gospel scene of Jesus on a mountain giving worldwide mission and authority to His followers to teach and baptize recalls the theophanies in the Old Testament. The setting on a mountain for many of the important events in Matthew’s gospel (4:8; 5:1; 17:1) implies that what Jesus commands carries divine power. It is this full authority ascribed to the Son of Man (Daniel 7:14) and claimed by Jesus (Matthew 11:27; 26:64; 25:31) that His followers are backed up with when they go about their mission. He mightily promises to be with them always until the end of the world. But to evangelize others demands that the followers themselves are evangelized and truly His disciples. This is what the evangelist implies

Online businesses and value-added tax Atty. Jose Emilio M. Teves

Tax Law for Business

S of 2017 there had been an increase in the share of adults who not only use the Internet, but also make online purchases. Based on reports, purchase transaction through the Internet has grown from 6.3 percentage points to 9.9 in 2017. With the rise of online business stores and with the undeniable convenience they present, it is easier than ever to sell and purchase goods and services online.

In 2013 the Bureau of Internal Revenue (BIR) released Revenue Memorandum Circular (RMC) 552013, reiterating the taxpayers’ obligations in relation to online business transactions. What is relevant to my discussion is the portion which states that existing tax laws and revenue issuances on the tax treatment of purchases (local or imported) and sales (local or international) of goods (tangible or intangible) or services shall be equally applied with no distinction on whether the marketing channel is the Internet/digital media or the typical and customary physical medium. This brings us to the topic on value-added tax (VAT). As so provided in our Internal Revenue Code, any person or entity, who, in the course of trade or business, sells, exchanges or leases goods or properties, or renders services, and any person who imports goods shall be

liable for VAT. VAT is generally imposed on sale of goods in the Philippines as well as importation of goods into the Philippines. Likewise, VAT is imposed on receipts from services rendered in the Philippines. Instead of the VAT, the 3-percent percentage tax may be imposed upon persons selling items and services who make sales/receipts of not more than P3,000,000 a year. How would the government be able to ensure compliance with the remittance of VAT or percentage tax for online transactions? RMC 55-2013 reminds that business establishments or persons who conduct business have certain obligations to fulfill, one of which would be to register with the BIR and another to file applicable tax returns on due dates and pay the corresponding taxes. However, this would address only the situations where the sellers are actually situated in the Philippines.

In cases of cross-border transactions, where our tax authority has no jurisdiction over the seller, requiring the sellers to register and pay their taxes will be difficult if not impossible to implement. As a result, many online transactions remain untaxed. The challenge is more apparent in cases of services sold through the Internet. First, receipts from services are subject to VAT only if the service is rendered in the Philippines. In determining whether a service fee is subject to VAT in the Philippines or not, the important question to be addressed is—is the service considered rendered in the Philippines? Specifically, in cases of Internet-related transactions, are the online services that are viewable and accessible in the Philippines by the intended customers considered rendered in the Philippines? Unfortunately, the Philippine tax laws had not caught up with the developments in the Internet commerce. Tax laws were not developed to address the changes that continue

when at the start of the encounter with the risen Jesus on the mountain, He noted the lack of faith of some. They are not perfect; they also must struggle and learn to believe in Jesus with all their hearts. And it is a lifelong process of maturation and transformation, a growth in willingly surrendering oneself to Him completely, opposite the original self-willed independence of the first man and woman in “paradise lost.” Alálaong bagá, in Jesus’ death and resurrection, God takes the initiative to reconcile us with Him. It is now possible for humankind to be regenerated and recreated in baptism into a life of communion with the Trinity. The Father gladly adopts us; the Son generously includes us among those He has redeemed; and the Holy Spirit dynamically pours upon us the abundance of divine gifts. Our counterpart to this mysterious love that is God must be our readiness to respond in kind and love back in an offering of our self-willed independence in exchange for the recreating dependence of a true Christian disciple on God’s power and love. 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.

to take place with the developments/ changes in technology. Although these are already common situations that are usually encountered by taxpayers and by the tax authorities/tax implementing agencies, our laws are still far from addressing these issues. Second, even if the service is considered rendered in the Philippines and therefore subject to VAT, usually, the sellers involved are nonresidents. The rules require that in such case, the payor of the service fee shall be considered as a withholding agent and be responsible in remitting the VAT. This may be easier to comply in a business-tobusiness transaction. Individuals, however, constitute a significant number of online customers, making it difficult for the tax authority to implement the payment through the withholding-tax system. This is just among the many situations involving online transactions where tax rules are deficient. As technology continues to evolve, it brings new challenges. So, too, must the law adapt to the circumstances of the times. The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at josemilio. teves@bdblaw.com.ph or call 403-2001 local 150.

Lawmakers officially forget the financial crisis

he United States Congress might have just set a record for shortness of memory: Just 10 years after a crisis that nearly brought down the global financial system, it’s loosening the safeguards designed to prevent a repeat. Now it’s up to regulators— and specifically the Federal Reserve (the Fed)—to ensure that the backsliding doesn’t go too far. Prodded by President Donald J. Trump to “do a big number” on the 2010 Dodd-Frank reform, the House and Senate have agreed on a bill, the Economic Growth, Regulatory Relief, and Consumer Protection Act. It’s not a major rollback, and it provides some welcome relief for community banks, but it does take aim at a crucial guarantor of financial resilience: the equity capital that allows banks to absorb losses in difficult times. The bill eases capital require-

ments for “custodial” institutions such as State Street and Bank of New York Mellon. These are among the most systemically important because they facilitate other banks’ transactions. What’s more, it does this by complicating a key measure of capital, known as the leverage ratio, which is meant to be a simple supplement to more easily manipulated regulatory metrics. The bill also frees regional banks with less than $250 billion in assets from company-run stress tests and from special Fed supervision. That threshold is too high: Many of those banks are large, and institutions in this category required billions of dollars in taxpayer support to get through the last crisis. The changes could be viewed in a more positive light if the banks had plenty of capital. They don’t. Some barely squeaked by in the last round

The changes could be viewed in a more positive light if the banks had plenty of capital. They don’t. Some barely squeaked by in the last round of stress tests, and the largest have as little as $6 in equity for each $100 in assets—not nearly enough to avoid distress in a severe crisis. The loosening is also poorly timed: risks in the financial system are mounting, and banks have been reducing their reserves against bad loans.

of stress tests, and the largest have as little as $6 in equity for each $100 in assets—not nearly enough to avoid distress in a severe crisis. The loosening is also poorly timed: risks in the financial system are mounting, and banks have been reducing their

reserves against bad loans. If none of this worries legislators, it should concern the Fed. The central bank is responsible for ensuring the stability of the banking system, and has been granted the necessary powers. It can, for example, increase capital requirements in exuberant times to help prepare banks for the inevitable downturn. Even under the new bill, it can impose added scrutiny on banks with less than $250 billion in assets, effectively bringing the threshold down to a more reasonable $100 billion. Lately, though, the Fed has been considering easing off on capital demands, much as it did ahead of the last crisis. This is unfortunate. If the Fed won’t retain an institutional memory of the 2008 debacle, who will? A forgetful Congress is bad enough. The economy can’t afford to see the Fed go the same way. Bloomberg View

2nd Front Page BusinessMirror

A8 Thursday, May 24, 2018

TPB backdates documents to show funds available for Buhay Carinderia project By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

ANY steps were taken by several officials in the Tourism Promotions Board (TPB) to ensure that funds amounting to P80 million were facilitated and released to Marylindbert International Inc., an event organizer, for the controversial Buhay Carinderia project. Documents obtained by the BusinessMirror showed that the sponsored amount by the TPB was to be charged to the agency’s marketing communications budget savings in 2017. As per TPB Board Resolution 157, Series of

2018, “Resolved as it is hereby resolved to authorize and approve the allocation and disbursement of the budget for the Phase 1 of the Project [Buhay Carinderia] amounting to 80 million plus [sic] plus value-added tax and other

₧80 million The amount released to an event organizer for the Buhay Carinderia project

taxes based on savings to the 2017 corporate operating budget.” The resolution was approved on March 14 by then-Tourism Secretary Wanda Corazon T. Teo, chairman of the TPB; then-TPB COO Cesar D. Montano, vice chairman; lawyer Mark Steven Pastor, representing the Department of Transportation; Consul General Leo M. Herrera-Lim (Department of Foreign Affairs); Undersecretary Nora K. Terrado (Department of Trade and Industry); Vanessa L. Suatengco (general manager, Diamond Hotel, representing accommodation sector); and Eduardo F. Pelaez (president, Mapawa Nature Park—tourism estates sector). Upon c loser inspect ion of

said documents, however, four budget utilization slips (BUS) were backdated to December 29, 2017, with the payee indicated as Marylindbert International. All four documents bore the remark “AIP-Unliquidated Obligations.” Several government sources familiar with the Government Accounting Manual (GAM) and project approva ls by gover nment-owned and -controlled corporations pointed to the irregularity in the way the documents themselves were prepared, with one commenting: “ The antedating of the Budget Utilization Report to December 29, 2017, is not proper. The project was approved only in March 2018.” The same source, stressed, “It appears that they obligated the funds on December 29, 2017, when there was no approval yet or even a program to speak of.” Another source, a lawyer, upon Continued on A2

Neda. . .

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“This means that the NFA will still not be able to get a big market share, but for sure, the price of rice will really go up. And since rice has a big weight in the consumer basket, then yes, [it will result in] high inflation,” Edillon said. In March 2008, when the NFA jacked up its buying price to P17 per kg from P11 per kg, inflation nationwide was only at 5.9 percent. The following month, inflation quickened to 7.3 percent. Data from the Philippine Statistics Authority (PSA) indicated that the increase in commodity prices in 2008 even reached double digit, with the highest registered in August at 10.5 percent. Inflation is currently on the uptrend following the implementation of the Tax Reform for Acceleration and Inclusion, which slapped higher taxes on a number of products, such as sugarsweetened beverages. With this, even local economists had warned against hiking the procurement price to P25 per kg, saying it is “too steep” a price for the government to pay for unmilled rice. University of Asia and the Pacific Center for Food and Agribusiness head Rolando T. Dy said if the NFA will increase its support price, rice prices would double. The average retail price of regular milled rice and well-milled rice is at P40.04 per kg and P43.86 per kg, respectively. “It’s cheaper to import if minimizing NFA losses is the goal. But there are other goals,” Dy told the BusinessMirror on Wednesday. Philippine Institute for Development Studies Senior Research Fellow Roehlano M. Briones said increasing the support price could cost the government P25 billion if it would buy 5 percent of farmers’ harvest. Briones said this estimate takes into account the NFA’s previous procurement target of 1 million metric tons (MMT). “The government has no funds to buy significant quantities of palay. [There will be] no impact on the rice market but it will widen deficit,” Briones said. If the NFA will just resort to importation, Sombilla said this will also entail increasing its borrowings. The food agency’s current debt is pegged at P160 billion. The only “true solution”, Sombilla added, is to convert the country’s quantitative restriction into tariffs and restructure the NFA. “The impact of increasing support price by P8 per kg is huge.”

wasted by conflict Weeds grow among the ruins in Marawi City in southern Philippines exactly a year after Filipino Muslim militants laid siege to the city. Philippine officials say hundreds of displaced residents remain in emergency shelters as the threat of militants and unexploded bombs lingers in the ruins of a southern city that was held by Islamic State group-aligned fighters for five months last year. The May 23 siege that troops crushed last October killed more than 1,100 mostly militants, sparked President Duterte’s most serious crisis and reinforced Asia’s fears that the Islamic State group is gaining a foothold in the region. AP Photo

House. . .

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The bill also provides fiscal and nonfiscal incentives for private contractors performing domestic mineral processing. It added that to further promote the domestic processing of raw ore, an export tax regime shall be imposed based on the selling price or the gross value of raw ore exported, whichever is higher. A 20-percent export tax shall be imposed two years upon the law’s effectivity; 40 percent on the third year; and 60 percent on the fourth year onward. The bill requires private contractors to fully rehabilitate the areas they used for mining within 10 years from the expiration of their permits. Failure to do so would mean a penalty of P100 million per hectare that has not been rehabilitated. The measure also prohibits all types of mining activities in critical watersheds. Meanwhile, the bill said any public official or employee who facilitates the approval of permits in areas that are closed to mining operations shall be slapped with a fine of P2 million for each permit, or suffer six to 12 years of imprisonment, or both.

According to Alvarez, the bill creates a rigid process that weeds out the underserving companies from securing a mining permit, which, in turn, could ensure that the “country and its people shall be the first to benefit from the extracted minerals.” “By requiring mining firms to acquire a legislative franchise, the people, through their elected representatives, would be able to scrutinize the applicants, their capability and track record, in order to make sure that only responsible mining firms are allowed to operate in the country,” Alvarez said. “One of the reasons pointed out for the insignificant contribution of the mining industry to the country’s economy, is the fact that mineral ores in the country after being mined or extracted, while still unprocessed, are already exported directly to foreign countries as raw materials,” he added. The bill—among the priority bills of Congress—was authored by Minority Leader Danilo T. Suarez of Quezon, Majority Leader Rodolfo Fariñas Sr. of Ilocos Norte, Deputy Speaker Frederick F. Abueg of Palawan, Deputy Speaker Ferdinand L. Hernandez of South Cotabato, Deputy Speaker Romeo Quimbo of Marikina, Deputy Speaker Raneo S. Abu of Batangas, House Committee on

Natural Resources Chairman Arnel Ty of LPGMA, Rep. Joel Almario of Davao Oriental, Rep. Abdullah Dimaporo of Lanao Del Norte, Rep. Raul Daza of Northern Samar, Rep. Ronaldo Zamora of San Juan, Rep. Manuel Jose Dalipe of Zamboanga, Rep. Juliet Ferrer of Negros Occidental, Rep. Arnolfo Teves Jr. of Negros Oriental, Rep. Emmanuel Billones of Capiz, Rep. Erlpe John Amante of Agusan Del Norte, Rep. Luis Jose Campos Jr. of Makati, Rep. Jose Atienza Jr. of Buhay, Rep. Allen Jesses Mangaoang of Kalinga, Rep. Johnny Pimentel of Surigao del Sur and Rep. Luis Raymund F. Villafuerte Jr. Some of these co-authors said the mining industry can contribute more to the government through its fare share in the revenue generated. Earlier, Rep. Teodoro B. Baguilat Jr. of Ifugao said requiring mining firms to secure legislative franchises could “be a conflict of interest.” “I’ve stated all along that this could be a conflict of interest because many of our colleagues have mining investments, either as direct investor or their families closely connected to business investments in mining,” he said. “Would they be willing to divest themselves of these investments?” Baguilat asked.

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Managing land and population in protected areas Continued from A1

The “special uses” or Sapas can cover large swaths of the nation’s protected areas. A 2015 publication of the DENR’s Biodiversity Management Bureau says that the country has around 240 “protected areas” under the National Integrated Protected Areas System or Nipas. These protected areas have an aggregate area of 5.5 million hectares, or roughly one-sixth of the country’s total land area of 30 million hectares. These protected areas constitute the nation’s last bulwark against the steady onslaught of deforestation and environmental degradation. They are also heavenly gifts to the Philippines. Among the PA’s are the following: Batanes Protected Landscape and Seascape, Northern Sierra Madre Natural Park, Mounts Banahaw-San Cristobal Protected Landscape, Mount Makiling Forest Reserve, Tubbataha Reefs Natural Park, Mount Kanlaon Natural Park, Central Cebu Protected Landscape, Mount Malindang Natural Park, Mount Kitanglad Natural Park and Mount Apo Natural Park. The criticism of environmentalists is that the lifting of the suspension is based on a poor premise: the government is not earning enough from these protected areas. According to one study cited by the Biodiversity Management Bureau, the issuance of Sapas to interested private corporations can raise billions to the government’s coffers. And yet, these areas have been declared “protected” precisely because they are supposed to be protected from the exploitation and commercialization of the forests, in order to preserve and nurture the natural environment. Imagine if the Ayalas, Sys, Aboitizes, Consunjis, Villars and other big business families shall all be allowed to establish their respective big-ticket “ecotourism” or agro-forestry or plantation projects in the 240 or so protected areas. Once these big business families are able to set up these projects, what will be the shape of development in these protected areas? Imagine how commerce shall transform these protected areas. What happens to the twin issues of sustainability and environmental renewal? The bureau, however, also cites other eligible applicants to Sapas. They include the indigenous peoples (IPs) and “tenured migrant communities.” Individually or in groups, they can also apply for Sapa tenurial certificates for special uses. The truth is that all these protected areas are already populated. The original forest inhabitants, mostly IPs, are steadily being outnumbered by the landless and jobless migrants from the lowlands. The DENR made a good decision to adopt the “rainforestation” concept in the conceptualization and implementation of the NGP. As developed by the Visayas State University and demonstrated in practice by Haribon, rainforestation calls for the transformation of forest dwellers into forest keepers. Through the NGP, the communities in the watershed areas have been transformed into partners in the development of tree nurseries, planting of seedlings in areas delineated by DENR field staff and maintenance of the forests and the newly planted areas. If there are reports of failure of greening in some areas, blame this on the usual culprit—corruption among some government personnel and “cooperating” community organizations. This brings us to a bigger development challenge facing the office of DENR Secretary Cimatu: How to develop and institute a holistic and integrated program of land management and environmental care for the protected areas based on the framework of the existing NIPAs law. First and foremost among the policy issues is how to secure the ancestral domain rights of the IPs. Numbering over a hundred, the various IP tribes or communities are claiming around 2.5 million hectares of their ancestral domain under the IP Reform Act of 1997. In some watershed areas, there are already conflicts with the poor migrants over land usage and “land boundaries” for farms and housing. There have also been bloody incidents involving mining and quarrying companies. With the arrival of new SAPA investors, conflicts are likely to multiply. Another issue is how to deal with the migrants, who have been pouring into the forestlands in waves through the decades and building virtually semipermanent or permanent communities, some of which have already been recognized by the LGUs as sitios or even barangays. These communities have been growing in terms of population just like what is happening in the lowlands. Many do not even understand that there is such a thing as a Sapa program. This is why the old provision of the Revised Forestry Code, issued as Presidential Decree 705 in 1975 by the unlamented regime of President Ferdinand E. Marcos Sr., on the importance of having a comprehensive and reliable survey and inventory of public lands, remains timely and relevant. Section 52 of the Code provides for the following: “A complete census of kaingineros, squatters, cultural minorities and other occupants and residents in forest lands with or without authority or permits from the government, showing the extent of their respective occupation and the resulting damage, or impairment of forest resources, shall be conducted.” We still have to see or be informed of the existence of a DENR census or comprehensive report on the various occupants of public lands. Thus, before the full operation of the Sapa program, it is incumbent on the DENR to tell the public what is really the situation on the ground. Ultimately, what is needed is a comprehensive development or redevelopment program for the protected areas and the whole forestry sector of the country. The Sapa program should be defined or delineated based on the requirements of the nation for an inclusive, pro-poor and ecologically sustainable program of forest management. A recommendation to Secretary Cimatu: Please conduct public consultations on the Sapa program and other issues involving the protected areas.