Businessmirror october 26, 2017

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Thursday, October 26, 2017 Vol. 13 No. 15

Govt vows to prioritize local contractors in infra program

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By Catherine N. Pillas

@c_pillas29

espite the planned liberalization of the construction sector, the government will still prioritize Filipino contractors in its massive “Build, Build, Build” (BBB) program, which is seen to require an additional 2.5 million construction workers up to 2021.

TIME FOR ‘COOPETITION’ AS GLOBE, PLDT SEEK TO ADVANCE CASHLESS PHL

By Lorenz S. Marasigan

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TINIO: “If we don’t bring out technologies like these, at the very least, we are saying that these unbanked and uncarded Filipinos are excluded.

At this stage, it’s not about competition, but coopetition.”

@lorenzmarasigan

ome may call it a war between two digital companies.

But, for them, it is a matter of “coopetition” to attain what India and China have achieved—an almost cashless society.

Wednesday saw Globe Telecom Inc. and PLDT Inc. clashing and agreeing on financial technology, separately announcing the use of quick response (QR) codes for retail purchases.

QR codes are two-dimensional bar codes originally designed to process data. It is now widely used in China and India—with about 450 million and 250 mill ion users, respect ively—for their retail payments.

On one hand, Globe, through its subsidiary Globe Fintech Innovations Inc., launched its QR code service, which enables its users to pay for products and services using its mobile-wallet application called GCash.

PLDT unit PayMaya Philippines Inc., on the other hand, announced the expansion of its QR code service, which was launched in May this year in select schools and establishments.

Mynt President Albert O. Tinio said the aim of the service is to allow those who are unbanked and uncarded to enjoy the benefits of digital banking.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that 7 of 10 Filipinos do not have bank accou nts, depr iv ing t hem of the potential gains from financial tools, such as credit, savings and insurance.

Continued on A2

PESO exchange rates n US 51.5130

11 agencies removed from Neda Board need not fret

By Cai U. Ordinario @cuo_bm

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he 11 agencies that were removed from the list of regular attendees to National Economic and Development Authority (Neda) Board meetings will continue to have a voice in the government’s highest policy-making body, chaired by the President, particularly on matters that concern them.

Socioeconomic Planning Secretary Ernesto M. Pernia, in a text message to the BusinessMirror, said the rationalization of the composition of the Neda Board—as stated in President Duterte’s Administrative Order (AO) 8—is only meant to streamline and speed up the approval process.

“A streamlined membership would speed up the approval process, as it would be easier to secure quorum in meetings and come up with collegial decisions,”Pernia noted. This, he added, is in accordance with the President’s directive to cut red tape in the government. The President has criticized the Continued on A2

2.5M The estimated number of additional construction workers that the BBB program would require

“To me, the local industry has a lot of players already. If we can allow the local players to prosper first and get a crack at the projects

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ot all in the business community are happy with the excesses of modern capitalism and the deepening social and economic inequality that they generate. Such excesses and inequality naturally subvert the stability of society and markets.

They breed resentment, unrest, revolts and, most worrisome to some governments, secessionist movements and even fanatical terrorism.

Instability is an enemy of business.

Those seeking reforms in the architecture of present-day capitalism include capitalists with a heart, those who bleed when they see so many wallowing in poverty, hungry and homeless. They readily join charity and relief campaigns for poor communities or the victims of natural disasters.

Continued on A2

Continued on A11

Decoded: Xi Jinping’s theory of (almost) everything in China

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hinese President Xi Jinping’s status was elevated even further during a twicea-decade gathering of the Communist Party that ended on Tuesday.

Not only did he give a lengthy speech where he laid out his vision for China as a global power by 2050, his name and ideology were written into the party’s charter. Only one other leader, Mao Zedong, managed that while still in office. Others had their ideology included as a guiding principle, but after they stepped down. Related stories on B7.

With his policies permeating all aspects of the party, giving Xi a status that allows him to effectively rule well beyond the end of his current term in 2022, what does “Xi-ism” mean in a practical sense?

Xi’s ideology is “a strategy for turning the Chinese Communist Party into an ideologically unified, pristine organization that, under the leadership of a charismatic leader, will bring about the economic, political, social and cultural rejuvenation of the great Chinese nation,” according to David Zweig, a political science professor at the Hong Kong University of Science

Chinese President Xi Jinping claps while addressing the media, as he introduces new members of the Politburo Standing Committee at Beijing’s Great Hall of the People on Wednesday. The seven-member Standing Committee, the inner circle of Chinese political power, was paraded in front of assembled media on the first day, following the end of the 19th Communist Party congress. AP/Ng Han Guan

and Technology. The aim is for “China to reassert its rightful place as a leader of the world,” he said.

What is Xi’s main theory?

A key phrase inserted into the constitution was: “Xi Jinping thought on socialism with Chinese characteristics for a new era.” That makes

Xi the architect of a third major period for China under Communist rule since 1949, and builds on former leader Deng Xiaoping’s earlier mantra of “socialism with Chinese characteristics.”

The first era, under Mao, saw the unification of China after See “Decoded,” A2

n japan 0.4523 n UK 67.6778 n HK 6.6008 n CHINA 7.7662 n singapore 37.8049 n australia 40.0514 n EU 60.5947 n SAUDI arabia 13.7365

Source: BSP (25 October 2017 )

BMReports BusinessMirror

A2 Thursday, October 26, 2017

www.businessmirror.com.ph

Govt vows to prioritize local contractors in infra program Continued from A1

first, then we can produce a better breed of contractors and ensure employment,” Trade Secretary Ramon M. Lopez said.

He noted that there are about 10,000 local contractors that have secured accreditation from the Philippine Contractors Accreditation Board. This was in response to Socioeconomic Planning Secretary Ernesto M. Pernia’s announcement that sectors with foreign-participation barriers, including the construction industry, would be opened up in the upcoming Regular Foreign Investment Negative List.

‘Myth’

But DMCI Holdings Chairman and President Isidro Consunji said the idea that the domestic construction industry is closed to foreign participation is a myth rather than a reality, as local contractors are already being undermined in some areas.

“The government has been lenient in giving special licenses to foreign contractors where there is no local expertise involved,” Consunji lamented.

Moreover, government-funded infra-

structure projects should still be governed by the 60-40 equity arrangement, Consunji said, as Filipinos should benefit from projects funded by their own taxes.

Keeping foreigners at bay

Construction Industry Authority of the Philippines (CIAP) Undersecretary Ruth B. Castelo clarified that the industry has the Quadruple A, or “AAAA,” license category to ensure protection for local contractors.

The Quadruple A license category allows new domestic corporations with foreign ownership of up to 100 percent to get a regular license, provided it has at least P1 billion in capitalization.

“That was a regulation for foreign contractors because we have a lot of contractors with smaller capitalization. We have a lot of SMEs [small and medium enterprises] in the industry, as well. We have more local contractors with P10 million.

We don’t need P10-million investments from foreign contractors; we need the bigger investments in the country. We don’t want the small foreign contractors com-

peting against small local contractors,” Castelo explained Further, the CIAP chief said that with the deluge of Chinese-funded infrastructure projects in the country, Filipino contractors will already face participation barriers, so support for the local industry should be prioritized.

“It’s up to the Chinese partners, or their government, to allow participation because it’s their money. Of course, if it’s their money, they will have preference to choose the contractors they want,” Castelo pointed out.

Nonetheless, if these projects are somehow opened up to competitive bidding, Castelo said, the Department of Trade and Industry (DTI) will lobby for Filipinos to be given a chance to vie for the projects.

2.5 million more

Castelo said the BBB program will be needing as much as 2.5 million skilled and nonskilled workers in the construction industry, twice the number of workers currently employed in the business-process outsourcing sector today.

And to address the massive deployment

TIME FOR ‘COOPETITION’ AS GLOBE, PLDT SEEK TO ADVANCE CASHLESS PHL

Continued from a1

“If we don’t bring out technologies like these, at the very least, we are saying that these unbanked and uncarded Filipinos are excluded,” he said. “At this stage, it’s not about competition, but coopetition.”

For Manuel V. Pangilinan, who chairs PLDT, the time is ripe to push financial inclusion further, given the steady increase in smartphone and digital-services adoption.

“For digital-payments technologies to be widely adopted, it is important to foster the right conditions, build the ecosystem,” he said.

The QR service for GCash is currently available in about a hundred stores in Glorietta 4 in Makati. It will soon be available in all of the establishments of the mall by November 11.

Tinio said the service will be available in all of Ayala Corp.’s malls nationwide before the end of 2017.

“Our intention is for people to use it, because the problem is adoption. So what we want to do is not just make the service available in fat-tail merchants —your food and big retail establishments—but also in the long-tail ones —your micro businesses,” he said.

Roughly 4,000 stores will be equipped with the QR service by end-

December, Tinio specified.

PayMaya’s QR service is available in a number of retail establishments in Metro Manila, Baguio, Cebu and Davao.

Soon, the payment option will be available in popular food chains, supermarkets and malls, such as McDonald’s, Army Navy, Domino’s Pizza and Gaisano Supermarkets, among others.

It will also be available in vendors in the provinces.

“As PayMaya continues to grow nationwide, we take a giant step for our customers by making QR code payments available to all kinds of merchants,” PayMaya President Orlando B. Vea said. To use the QR services of both companies, one need only to scan the QR code of the merchant they are buying from, indicating the amount of their purchase.

Tinio noted that this provides customers and merchants a better level of convenience, as transactions done through the QR code are quicker than cash-based ones.

For one, he explained, it removes the pain of having to give change to bills. It is much faster, as well, because customers will no longer have to whisk through a wad of cash to pay.

“What we did was we made it a tool

for people to pay quickly, securely and conveniently,” Tinio said.

Currently, there are about 5 million GCash users in the Philippines, resulting in about P6 billion worth of transactions per month.

Its user base, according to Tinio, is expected to double to 10 million in a year’s time, given that more and more Filipinos are receptive to digital services. PayMaya, on the other hand, had a customer base of 6 million users last year, processing a total of P200 billion in 2016. The QR service, however, requires users to have access to the Internet. This, on the other hand, created what experts called as the digital divide, which then deprives those who do not have Internet access to education, information and communication and finance.

“Innovation is a good thing. We just wish that the duopoly was equally as aggressive in innovating for better service quality and value for money for their Internet-connectivity services,” Pierre Tito M. Galla, who founded Internet freedom group Democracy.PH, told the BusinessMirror.

Currently, 6 of 10 Filipinos have access to the Internet, according to consultancy firm We Are Social.

of Filipino workers in the construction industry to better-paying countries, the private sector is mulling over a substantial increase in pay for workers in the sector.

Also, Castelo said that with the gaping need for skilled and nonskilled construction workers in the near future, the jobskills mismatch in the industry has to be addressed.

“The industry says we need around 2.5 million workers until 2020 or 2021, but this demand will diminish slowly as the projects are completed. We currently have 3.3 million workers in the industry, then we need another 2.5 million in addition to be able to meet the demand of this golden age [of infrastructure],” Castelo said in a chance interview with reporters at the Asean+6 Construction Forum.

According to Castelo, 70 percent of the 3.3 million workers in the construction industry are in the nonskilled sector, or those doing basic construction works.

The demand in the forthcoming infrastructure boom will still be in that category.

However, the relocation of Filipino construction workers to other countries with better

Decoded. . .

Continued from A1

a protracted civil war that followed the country’s occupation by foreign powers since the Opium Wars of the 1840s. Mao established China as a Communist state with a socialist economy.

The second era is associated with Deng consolidating the party’s power with the careful introduction of capitalism into the economic structure and the pursuit of a broad goal of prosperity for citizens.

So what is socialism with Chinese characteristics?

Exactly that. Socialism, but with a Chinese bent. It differs from Soviet socialism in the larger role for markets in the allocation of resources, an emphasis on decentralization and a smaller role in the economy, in theory, for state-owned enterprises.

Setting out a vision for China as a global economic and military power by 2050, with a thriving middle class, strong militar y and clean environment, builds on what Xi has said before about achieving a “Chinese dream” of national rejuvenation.

That all points to a more expansionist China, using initiatives, such as investment in countries

compensation poses another major hurdle.

To keep workers here, the DTI is studying—with the Department of Labor and Employment—to possibly increase the minimum wage of construction workers by P200 to P300.

“We’re studying [this proposal] initiated by the private construction industries.

[Aside from the increase], we’re looking at a possible scheme to make workers stay for at least two years in the Philippines after their training,” Castelo said, noting the long-standing challenge of Filipino construction workers migrating to other countries after training.

With the count of the unemployed Filipinos at 10 million, the government official said the CIAP’s resources are being poured into training to ensure an adequate amount of workers in the industry.

“We’re doing massive training now; we’ve collaborated with the Tesda [Technical Education and Skills Development Authority] to do these. There are a lot of private construction companies, as well, that have their own training facilities, so we also encourage them to do parallel work,” Castelo added.

along trade routes (known as the Belt and Road Initiative) to Europe to grow clout.

Xi will continue modernizing the military with a focus on projecting force outward, namely a bigger and better navy and air force. Under his rule, China is set to remain assertive on territorial claims in disputed areas, including the South China Sea and East China Sea.

What else can we glean from Xi’s words?

The “new era” under Xi is expected to include a greater focus on tackling social inequality—rather than economic growth for growth’s sake—in part to guard against the risk of social unrest and threats to the party’s power.

Xi’s speech and the revisions to the party charter suggest the market will still play a “decisive role” in the economy, but with the party paramount when it comes to policy.

The president has set out sign posts to be achieved along the way: build a moderately prosperous society by 2020, join the most innovative countries by 2035 and achieve a first-class military by 2050.

What does it mean for the economy?

A greater focus on quality of life reflects a recognition by Xi that

along with China’s massive increase in wealth, the divide between rich and poor has widened. Failure to meet the needs of a growing middle class seeking clean air and the angst of those left behind by development risks undermining the legitimacy of the party.

Economists say this suggests policy-makers have more leeway to let near-term growth slip as they focus more on environment and social equality. The inclusion of the phrase “advance supply-side structural reform” in the constitution could suggest a greater emphasis in this area.

It’s been part of Xi’s focus on cutting overcapacity and reducing leverage, while boosting domestic demand. At the same time, Xi’s reference to developing an “open economy” could mean more measures to attract foreign investment.

What does it mean for Chinese companies?

There’s been a clear message: The world’s second-largest economy must achieve balanced growth that reduces inequality.

Jack Ma, China’s richest person and founder of Alibaba Group Holding Ltd., told a state publication that entrepreneurs who’ve obtained affluence have a responsibility to help others catch up.

Bloomberg News

11 agencies removed from Neda Board need not fret Continued from A1

Neda for taking a long time to evaluate and approve projects. Pernia assured that the “voice” of the agencies that were removed from the Neda Board and the Investment Coordination Committee (ICC) will still be heard.

These agencies, including the department of Agriculture, Science and Technology and the Housing and Urban Development Coordinating Council (HUDCC), will be called by the Neda Board and ICC from time to time, depending on the agenda of the meeting. Their removal from the Neda Board, Pernia said, does not in any way send the message that the Duterte administration no longer prioritizes the development areas that these agencies represent.

“These sectors remain priorities of this administration, as explicitly stated in the Philippine Development Plan 2017-2022 and covered in various programs and projects of agencies concerned,” Pernia said.

“The Neda Board will nevertheless still invite participation of other departments and agencies in its meetings as necessary,” he added.

Based on AO 8, the Neda Board will now be composed of the President as chairman, the socioeconomic planning chief as vice chairman and the Executive secretary, Cabinet

secretary, deputy governor of the Bangko Sentral ng Pilipinas, chairman of the Mindanao Development Authority and the secretaries of budget, finance, public works, transportation, energy and trade as members.

The secretaries of interior, agriculture, environment, science and tourism will no longer participate in the Neda Board meetings.

Also removed were the chairman of the Metropolitan Manila Development Authority; chairman of the HUDCC, secretary of the Presidential Communications Development and Strategic Planning Office, undersecretary of the Presidential Management Staff, governor of the Autonomous Region in Muslim Mindanao and the president of the Union of Local Authorities of the Philippines.

The Neda Board is considered the country’s premier social and economic-development planning and policy coordinating body. It evaluates the fiscal, monetary and balance-of-payments (BOP) implications of major national projects. It also recommends to the President the timetable of their implementation on a regular basis.

The ICC also advises the President on matters related to the domestic and foreign-borrowings program, and submits a status of the fiscal, monetary and BOP implications of major national projects.

The Nation BusinessMirror

www.businessmirror.com.ph

Editor: Vittorio V. Vitug • Thursday, October 26, 2017 A3

White House: Trump likely to skip EAS while in Manila

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By Jonathan Lemire | The Associated Press

EW YORK—President Donald J. Trump will skip a key Asia summit at the end of his trip to the region next month.

The White House said on Tuesday that Trump will be returning to the United States on November 14, which is the same day as the East

Asia Summit (EAS) in the Philippines. Trump is slated to attend the Asean summit, which is also in the Philippines, the day before but he

will not stay the extra day.

Another US delegation that will attend the EAS, which will include more than a dozen Asian nations, as well as Australia, New Zealand and Russia. The White House did not give a reason as to Trump’s absence.

The Philippines will be the final stop of Trump’s 12-day, fivenation trip—his first to Asia. The trip is expected to be dominated by Trump demanding that American allies in the region increase pressure on North Korea to abandon

its nuclear weapons ambitions.

But for all of President Trump’s overheated talk about North Korea’s Kim Jung Un and the country’s nuclear program, Trump will likely not make the customary presidential visit to the heavily fortified border between North and South Korea known as the Demilitarized Zone or DMZ. Trump has derided Kim as “Little Rocket Man” and threatened to unleash “fire and fury” on Pyongyang if its leaders do not abandon the weapons program.

If Trump doesn’t go while in

South Korea, he would be breaking from recent presidential custom.

All presidents but one since Ronald Reagan have visited the DMZ, which has separated the North and South for 64 years.

He will also advocate American economic interests during his trip, which include stops in Japan and China before traveling to Vietnam for the Asia-Pacific Economic Cooperation (Apec) meetings.

The trip will conclude in the Philippines, where the president i s sl ated to meet w it h

President Duterte, who has been accused of human-rights abuses, including killing suspected drug dealers. The W hite House said Trump could raise concerns about the program.

The Washington Post first reported Trump decision’s to skip the EAS, which mostly focuses on general strategic issues rather than the economic matters at Apec. The White House said Trump may attend some meetings related to the East Asia Summit before the gathering officially begins.

Duterte receives military equipment from Russsia

By Elijah Felice E. Rosales @alyasjah

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ilateral relations between Manila and Moscow continue to flourish under President Duterte, as Russia on Wednesday donated tons of military equipment to the Philippines, including thousands of high-powered rifles.

Maj. Gen. Aleksandr Kshimovskiy of the Russian Ministry of Defense handed over vehicles, rifles, bullets and helmets to the Department of National Defense, received at the Port of Manila by Defense Undersecretary Raymundo D.V. Elefante. The turnover was witnessed by President Duterte, Defense Secretary Delfin N. Lorenzana and Russian Defense Minister Sergey Shoygu.

Russia donated 20 multipurpose vehicles, 5,000 AK-74M Kalashnikov assault rifles, 1 million 1943-type cartridges with

steel core bullets and 5,000 steel helmets. The turnover came a day after Lorenzana and Shoygu signed an agreement on military and technical cooperation.

A side from w itnessing the turnover, Duterte also toured the Russian antisubmarine ship Admiral Panteleyev docked at the Port of Manila.

In a chance interview, National Security Adviser Hermogenes C. Esperon Jr. said the country will continue to allow warships from its bilateral partners to dock in domestic ports as part of the Duterte administration’s pursuit for an independent foreign policy.

“We have already said that all ships of friendly countries are welcome to the Philippine ports. We have had Chinese ships, Japanese ships, American ships and Russian ships,” Esperon said.

The President in May visited

Russia to meet with Russian President Vladimir Putin and Prime Minister Dmitry Medvedev. However, the trip was cut short due to the botched military arrest of selfstyled Daesh leader Isnilon Hapilon in Marawi, Lanao del Sur, which led to the eruption of conflict in the Islamic city.

Like Chinese President Xi Jinping, Putin backs Duterte’s war on drugs and has instructed his defense officials to open a Russian Office of Defense Attaché in Manila.

According to Foreign Affairs Assistant Secretary Maria Cleofe R. Natividad, the President is hell-bent on improving the country’s bilateral relations with Russia.

“In spite of this almost 41 years [of diplomatic ties], our bilateral engagement is still at nascent stage in practically all areas of cooperation,” Natividad said in a previous news briefing.

Clearing operation

Soldiers assist the Inter-Agency Council for Traffic and personnel of the Metropolitan Manila Development Authority during a clearing operation in Sucat, Alabang, on Wednesday. PNA/Avito C. Dalan

PHL, UN celebrate 72-year partnership Aguirre admits Aegis Juris fratman to WPP

By Recto Mercene @rectomercene

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he Philippines and the United Nations celebrated 72 years of partnership on UN Day with cultural performances, video presentation and ceremonial lighting of the Filipino Sustainable Development Goals (SDG) cubes.

A reception for the diplomatic corps and top government officials was held at the Market! Market! mall in Taguig City.

The program was, likewise, held to ensure that Philippine SDG commitments are pursued and achieved by 2030.

The SDGs is a set of 17 goals that seek to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. These goals build on the successes of the Millennium Development Goals and seek to address the economic, social and environmental aspects of development.

The celebration featured a video presentation in Filipino of “We the People for the Sustainable Development Goals,” showing local celebrities and influencers, as well as students, humanitarian workers and volunteers actually involved in promoting the SDGs. The event highlight was the cer-

emonial lighting of the Filipino SDG cubes as a symbolic kickoff to the launch of the 17 SDGs in Filipino, and as a means to impress upon the people the importance of SDG awareness and implementation.

T he prog ra m a l so feat u red cultural performances, including song numbers and folk dances depicting Philippine commitments to SDGs, like protecting people, promoting prosperity, preser ving the planet, building peace and forging partnerships.

Foreign Affairs Undersecretary Jose Luis G. Montales, who delivered the keynote message on behalf of Foreign Secretary Alan Peter S. Cayetano, stated that the country “adopted the 2030 SDG agenda and harmonized its goals with policies that will benefit the Filipino people,” adding that the socioeconomic objectives in the SDGs are very close to the heart of Filipinos.

He said that “poverty alleviation and addressing hunger, providing quality education, gender mainstreaming, environmental protection, promotion of lasting peace, equitable and impartial justice of vulnerable groups and strong institutions are some of the aspects of governance and society that need affirmative action which the country is trying to address.”

UN Philippines Resident Coordinator Ola Almgren underscored that “ for over seven decades, the United Nations and the Philippine government have been working together to support development, humanitarian and peace building efforts at the global level, as well as in the Philippines.”

He said the United Nations has a strong partnership with the Philippines, with 18 UN funds, programs and specialized agencies present in the country. Almgren added that the UN will continue to support the achievement of the SDGs to end poverty, safeguard the planet and guarantee prosperity for all Filipinos.

The Philippines is one of the states which actively participated in the formulation and adoption of the SDGs in September 2015. For the last two years since the SDGs were launched, the Philippines has made great strides in integrating the SDGs into the plans and programs of the government within the Philippine Development Plan (PDP) framework.

The PDP agenda is geared toward achieving inclusive growth, a high-trust and resilient society and a globally competitive economy through the PDP’s three main pillars of malasakit, pagbabago and patuloy na pag-unlad.

By Joel R. San Juan @jrsanjuan1573

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MEMBER of the Aegis Juris fraternity has surfaced before the Department of Justice (DOJ) to express his readiness to testify against his fraternity brothers in connection with the fatal hazing of University of Santo Tomas law freshman Horacio “Atio” Castillo III on September 17.

At a news briefing on Wednesday, Justice Secretary Vitaliano N. Aguirre II said Aegis fratman Mark Ventura was accompanied by his mother, Merlene and counsel, lawyer Ferdie Benitez, to his office to personally signify his intention to be accepted to the witness-protection program (WPP).

Aguirre said Ventura provided detailed accounts on what transpired from the time that Castillo was admitted as neophyte until his untimely death in the early morning of September 17.

“Mr. Ventura gave us the names of the persons who were present during the initiation rites of Mr. Atio Castillo III. After hearing the narration of Mr. Ventura, I immediately decided to place him under provisional acceptance into the WPP,” Aguirre said.

Aguirre told reporters that he had

approved Ventura’s application to be placed under the WPP following his execution of a sworn-affidavit.

Ventura, according to Aguirre, revealed more names who were present during the initiation rites aside from the 37 who have already been charged and undergoing preliminary investigation before the DOJ. In light of this, Aguirre said, he would be issuing another Immigration lookout bulletin order covering a new set of suspects.

The DOJ chief added that a corroborating witness may no longer be necessary considering that Ventura’s testimony is sufficient to convict those responsible for Castillo’s death.

“Even without any corroborative testimony, I believe his statement will stand in court,” Aguirre added.

Aguirre said Ventura admitted that he took part in the actual initiation rites of Castillo.

The DOJ chief added based on Ventura’s account, Castillo, together with 11 initiators, were already at the frat library in Laong-Laan, Manila, on the night of September 16 until the victim was brought to the Chinese General Hospital in the morning of September 17.

Prior to his death, Ventura disclosed that Castillo underwent a

three-stage initiation rites.

These include the initiators taking turns in punching Castillo on the arms until they are swollen, then striking his arms with spatula to calm the muscles, and the last part was hitting him in the back of the thigh with the use of a wooden paddle.

Ventura said Castillo was supposed to be given 11 paddles, but he collapsed after receiving the fourth paddle.

He said one member suggested that they drip candle wax on his body to see if he will respond to pain, but the effort to revive him failed, prompting them to summon another frat member John Paul Solano to check on Castillo.

When Solano efforts proved futile, Ventura said they agreed to rush Castillo to the hospital.

“Mr. Ventura’s decision to seek admission into our WPP is a most welcome development in this case as we all endeavor to give justice to Atio’s untimely demise,” Aguirre said.

Charges of murder, violation of Republic Act 8049 (anti-hazing law), perjury and obstruction of justice have already been filed against the 37 Aegis officials by the Manila Police District and the Castillo family.

Enhanced PPP to fund ₧6.3-T ‘Build, Build, Build’ program­—solon

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roposed creative reforms and refinements in the country’s public-private partnership (PPP) scheme embodied in House Bill (HB) 788 now pending in Congress will help enable the government to fund up to P6.3 trillion worth of big-ticket infrastructure projects under President Duterte’s ambitious “Build, Build, Build” (BBB) development program.

Authored by Rep. Joey S. Salceda of the Second District of Albay, HB 788, or the PPP Rationalization Act, is designed to propel and accelerate the implementation of the Philippine Development Plan (PDP) 2017-2022.

It covers giant transport and indus-

trial projects that are envisioned to usher in the country’s “golden era” of Philippine infrastructure that will make it on a par with its neighbors in the global economic race.

Salceda said the measure prescribes “clearer parameters on government undertakings,” and allow the “creation of a risk-management fund to ensure fiscal sustainability and enhance the ability of implementing agencies in the discharge of their mandates and contractual obligations.” It, likewise, seeks to provide the necessary “investment-recovery schemes” within allowable brackets that are “revenue-based, availability-based

and other nonmonetary payments, such as commercial-development rights, or the grant of a portion or percentage of reclaimed lands.”

HB 788 sets the maximum allowable revenue/return at posttax weighted average cost of capital based on comparable businesses using established methodologies, such as capital asset pricing model or CAPM. The reforms seek to introduce include the following: 1. Clearer and simpler rules leading to faster decision points which are “time-bound and decision maker-specific procedures on project approval, reduced current project timetable of 30 months

to 18 to 24 months and increased threshold amount of PPP projects to be approved; 2. Enhanced competition and protection of public interest, with new framework on unsolicited projects [USP], which would allow their inclusion in the priority list, or convert USP into solicited projects subject to reasonable compensation of the original proponent, and provide a more competitive challenge period—sixmonth maximum and the adoption of best and final offer rule; 3. Promotion of public infrastructure and financing, with the inclusion of joint venture as a PPP variant and harmonize all PPP modalities under

one legal framework; exemption from taxes, fees and charges for selected PPP projects of national significance; provision of incentives for the private sector to enter into PPP; standard guidelines on taxes and permits for all PPP projects; and inclusion of PPPs in the Investment Priority Plan; and 4. Good governance.”

Based on the PDP 2017-2022, Salceda said the country would require “an intensified infrastructure spending and select infrastructure investments to support a higher growth trajectory and improved quality of life in both urban and rural communities.”

With the Duterte administra-

tion’s ambitious BBB program “private sector’s resources now await investment oppor tunit ies t hat wou ld t ra nsl ate to more jobs and higher economic growth,” he added.

“Now is the time, indeed, to forge more public-private partnerships to deliver critical projects that will usher the country’s ‘golden age of infrastructure,’” and based on this bright prospects, there is a need to update the “existing law through critical reforms needed to incorporate the lessons learned from the past, and to adopt the best practices as currently observed,” Salceda said.

Economy

A4 Thursday, October 26, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Mining chamber welcomes MICC recommendation to lift open-pit ban

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By Jonathan L. Mayuga

@jonlmayuga

he Chamber of Mines of the Philippines (COMP) welcomes the recommendation of the Mining Industry Coordinating Council (MICC) to lift the open-pit mining ban for select ores, including gold, copper and silver, and complex ores.

In a text message, COMP Executive Director Ronald S. Recidoro said the MICC recommendation is a “positive development” for the mining industry, which experienced what he described as “a policy storm” under the watch of environmentalist Regina Paz L. Lopez during her short stint as chief steward of the country’s environment and natural resources.

Department Administrative Order 2017-10, which imposes a ban on open-pit mining method for select ores, was signed

by Lopez on April 27 more than a month before her rejection by the Commission on Appointments.

Prior to the open-pit mining ban, Lopez launched a crackdown against irresponsible mining and has recommended the closure or suspension of a total of 26 large-scale operating mines that failed audit criteria that includes social, environmental and biodiversity considerations.

COMP, which represents the big players

in the country’s mining industry, is seeking a reversal of what they described as Lopez’s “antimining” policies, with the ban on openpit mining being their priority.

COMP Chairman Gerard H. Brimo, in an earlier interview, said surface or open-pit mining is the only way to mine in the Philippines because most of the deposits are low grade and are situated near the surface.

Environment Secretary Roy A. Cimatu, who cochairs the MICC along with Finance Secretary Carlos G. Dominguez III was quoted in news report as expressing hope that the open-pit mining ban will be lifted before the end of the year.

Cimatu has deferred action on the issue of open-pit mining ban and the mine closure and suspension orders affecting more than two dozen large-scale operating mines to the MICC. He vowed to bring up the MICC recommendation during a meeting in Malaca-

ñang early this week.

The open-pit mining ban would have effectively stopped several multibilliondollar mining projects currently in the pipeline, including the Tampakan Copper-Gold Project, King-king Copper-Gold Project and the Silangan Gold Project, all in Mindanao.

President Duterte had earlier vowed to prohibit the open-pit mining method in the future, but also said he is willing to give mining companies some elbow room to continue operations because of the existing mining law.

“We see the MICC recommendation as a positive development for the mining industry. Open-pit mining is an accepted mining method that is practiced worldwide. It is proven to be safe, efficient and can be fully rehabilitated post-mining,” Recidoro said.

He also expressed hope that the MICC recommendation will send positive signals to investors, but was quick to add that another major hurdle that prevents mining investment to flow into the country is the ban on new mining projects.

“However, the other issue that must still be resolved is the moratorium on new mining projects,” he added.

According to Recidoro, after the issue of the open-pit mining is resolved, COMP hopes to bring the matter of the moratorium on new mining projects up with Cimatu.

Cimatu said he is in favor of increasing the government’s share in mining revenues, and is eyeing an increase from the current

We see the MICC recommendation as a positive development for the mining industry.

Open-pit mining is an accepted mining method that is practiced worldwide. It is proven to be safe, efficient and can be fully rehabilitated post-mining.”

—Recidoro

2-percent to 5-percent excise tax charged against mining companies.

“But we understand also that the moratorium is conditioned on the passage of a new fiscal regime. That’s what we need to resolve,” he added.

The MICC is scheduled to release its resolutions on the issue of the mine closure and suspension orders in January 2018.

Shift to ‘innovative’ financing to achieve 2030 SDGs pushed

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F countries in the Asia and the Pacific, like the Philippines, will achieve the Sustainable Development Goals (SDGs) by 2030, their government must turn to innovative financing models.

In a report, the United Nations Economic and Social Commission for Asia and the Pacific (Unescap) Korea’s Science and Technology Policy Institute (Stepi) said meeting the SDGs worldwide could amount to $2.5 trillion.

The Unescap and Stepi said the amount cannot be financed by donors and governments alone, thereby requiring the use of innovative financing models.

“It is imperative to implement innovations that can divert private capital toward development objectives to help bridge the SDG financing gap,” UN UndersecretaryGeneral and Executive Secretary of Escap Shamshad Akhtar said.

“The Innovative Financing for Development in Asia and the Pacific report aims to spark ideas and knowledge sharing to help stimulate further action to develop the innovative financing solutions urgently required for the advancement of the 2030 agenda,” she added.

These innovative financing models include the Women’s Livelihood Bond (WLB), which provided $8 million for microfinance institutions in Cambodia, the Philippines and Vietnam.

The bond specifications included a 5.65-percent coupon and a four-year tenor. The social return on investment of the WLB was estimated at $2.5 of social value for every dollar invested.

The report stated that WLB was effective in meeting the targets under SDG 5 “Gender Equality and Women’s Empowerment,” SDG 8 “Decent Work and Economic Growth” and SDG 17 “Partnerships for the Goals.”

“The initiative was designed to be replicable in a variety of countries and contexts and to offer attractive rates of risk-adjusted returns to investors who are interested in a double bottom line— economic and social returns,” the report stated.

The WLB was able to provide some 385,000 women with access to credit, essential goods and services that enhance their well-being, and technology, as well as market linkages.

The bonds also generated over $13 million in improved financial resilience by empowering women to increase income and savings, thereby promoting economies’ demographic dividend.

The report added the WLB mobilized $20 of private-sector investment capital for every $1 of grant funding provided to structure the instrument.

The WLB also brought together two banks, five law firms and two donor agencies to come together for a common goal.

This bond was just one of several case studies presented in the report. The case studies focused on various financing model innovations, such as the India Impact Investers Council, the Thai social investment taskforce, India’s corporate social responsibility law, the problem-solving R and D program of the Republic of Korea, and the Social Outcomes Fund in Malaysia.

“Public policy plays a key role in enabling innovative financing for development by creating a favorable ecosystem where private capital pays more attention on SDGs,” according to Dr. Song Jong-guk, president of Stepi, a leading Korean policy think tank in the field of science, technology and innovation.

The report analyzes this and other innovative financing mechanisms in five core areas, namely: strategic leadership models that promote impact investing; policies that unlock corporate investment for development; private-sector financing products for development; innovative public financing models for science, technology and innovation; and systemic approaches to finance and innovation as means for development.

K e y recom mend at ion s for governments include developing an impact investing strategic road map to guide the development of an innovative financing movement. Cai U. Ordinario

Christmas balls

Workers put finishing touches to a set of Christmas balls at the Art In Island in Cubao, Quezon City, ahead of the anticipated spike in the demand for Christmas decorations for the forthcoming holiday season. Nonoy Lacza

Conference highlights results of 3-year OWWA and AIM study on OFWs

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rom 2014 to 2017 a research team from the Overseas Workers Welfare Administration (OWWA) and Asian Institute of Management (AIM) followed 2,000 first-time Filipino domestic workers (DWs) who went to work in Hong Kong and Saudi Arabia, and the families they left behind.

All the overseas Filipino workers (OFW) have to take the Pre-Departure Orientation Seminar (PDOs). The objective of the study was to test the impact of new modules for the PDOS, as well as to gain insights on how domestic workers and their families adjust to having a family member become an OFW. The PDOS program has been running since 1983 by OWWA and the Philippine Overseas Employment Administration, and this marks the first time that OWWA partnered with an academic institution to do a long-term evidence-based impact evaluation of the program.

For AIM, on the other hand, the research is in line with its focus on business and society, and the study was an opportunity to bring theories and rigorous statistical techniques to a sector that is very important for the country, namely the OFWs. Together, an OWWA-AIM research team experimented with four new twists on the basic PDOS modules. The first was a new financial literacy module using a comic-book format to teach four basic simple messages that are critical to savings.

The second experiment was to send savings reminders every 15 days to the OFWs, and the

third was using the experience directly from “ex-abroads” in setting expectations of firsttime DWs. The fourth experiment was a gift of dried mangoes that the workers or DW were instructed to give to their employer to make a good first impression upon arrival in Hong Kong or Kingdom of Saudi Arabia. The latter draws on the theories of behavioral economics that are increasingly being used to elicit desired behavior without heavy direction.

Some 2,000 domestic workers were randomly assigned to a comparison group and a project group.

The DWs and their families were interviewed just prior to their departure, and again after eight months on the job and finally at the end of the work contract.

The project has gathered a large amount of data on domestic workers, including communications, remittances, savings and expenditure decisions, and attitudes. The findings and their implications for policy were presented at a conference in AIM on October 24, which was attended by government representatives, migrant groups, non-governmental organizations (NGO) and academe.

The study was financed by a grant to AIM from 3ie, an international grant-making NGO promoting evidence-based development policies and program and the International Initiative for Impact Evaluation.

The main funders of 3ie are the Bill & Melinda Gates Foundation, UKaid and the William and Flora Hewlett Foundation.

www.businessmirror.com.ph

RCEP ‘mega trade deal’, FTAs to boost trade, investments in Asia, Pacific­­–ADB

By Cai U. Ordinario

T

@cuo_bm

he Asian Development Bank (ADB) said trade agreements in Asia and the Pacific, including the “mega trade deal” Regional Comprehensive Economic Partnership (RCEP), are breathing new life into global value chains.

In a study titled, “Asian Economic Integration Report 2017” released on Wednesday, the Manilabased multilateral development bank said robust intraregional trade and investment have become a buffer against uncertainties in global trade and economic growth.

Among these trade pacts is the RCEP which is nearing completion. ADB Economic Research and Regional Cooperation Department Director Cyn-young Park told the BusinessMirror that concluding the RCEP would further boost trade and investment in the Asean and six other states covered by the proposed agreement.

“Once concluded, it is expected to help boost trade and spur economic growth of the region by lowering tariff and nontariff barriers in goods and services, as well as impediments to investments, among others,” Park said in an e-mail.

Park described the RCEP as a proposed free-trade agreement (FDA) between the 10 Asean countries and Australia, the People’s Republic of China, India, Japan, the Republic of Korea and New Zealand.

The RCEP is termed in the ADB report as a mega trade deal given that it represents a population of 3.4 billion people and accounts for around 39 percent of the world’s GDP in purchasing power parity terms.

Asean countries, including the Philippines, and multilaterals like ADB are hopeful that the agreement is concluded, because apart from boosting trade and investment and further grow economies in the region, the RCEP can also address problems created by the “noodle bowl” effect.

The noodle-bowl effect stems from the intertwining of FTAs in Asia and how these have wrecked havoc on rules of origin and standards.

As such, having the RCEP, which Park said goes beyond bilateral trade agreements, is a “unified FTA and a mega regional trade deal” rolled into one.

“With a group of multiple members, it can help address the noodle-bowl problem to a certain extent by introducing harmonized rules of origin requirements at the regional level. It can also contribute to strengthening regional value chains through expansion of trade networks in intermediate goods,” Park said.

The report said the conclusion of the RCEP has been deemed a key output to mark the Asean’s 50th year anniversary this year. This was contained in the Joint Media Statement released after the fifth RCEP Ministerial Meeting in the Philippines in September 2017.

ADB said in 2016, Asia’s intraregional trade share, measured by value, rose to 57.3 percent in 2016, a record high, up from an average of 55.9 percent from 2010 to 2015.

Foreign direct investment (FDI) within Asia rose in absolute value to reach $272 billion in 2016, despite a 6-percent decline in global FDI flows into the region. This intraregional FDI increased as a share of total FDI to the region from 48 percent in 2015 to 55 percent in 2016.

“Asia and the Pacific is leading a recovery in world trade that is helping the region to maintain strong growth momentum amid global economic and trade policy uncertainty,” said Yasuyuki Sawada, ADB chief economist. “Asia’s continued integration and cooperation will underpin regional economic growth and financial resilience.”

ADB said given the role intra-Asian FDI plays in enhancing global and regional value-chain development, this is expected to help strengthen the region’s trade growth globally.

Asian economies have continued expanding their global presence, with FDI originating from Asia rising 11 percent in 2016 to $482 billion, primarily through investment in renewable energy, natural resources, semiconductors and information technology.

“Beginning March 2016 growth returned and has been rising steadily. The ongoing global economic recovery lifted demand for the region’s exports, particularly in Hong Kong, China; Japan; Taipei,China; and Vietnam,” the report stated.

The report also features a special chapter on how Asia can strengthen financial resilience in an era of financial interconnectedness.

It highlights that 20 years after the Asian financial crisis, Asia stands strong, with healthier financial systems, stronger regulations and better regional financial cooperation mechanisms.

Significant challenges remain, however, with unresolved financial market and system weaknesses. Remaining regulatory policy gaps could also increase the region’s risk exposure and financial vulnerability through excessive leverage and risk-taking.

Agriculture/Commodities BusinessMirror

www.businessmirror.com.ph

Editor: Jennifer A. Ng • Thursday, October 26, 2017

A5

Creation of rainfed agri agency pushed

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By Jovee Marie N. dela Cruz @joveemarie

deputy speaker of the House of Representatives is pushing for the passage of a measure mandating the set up of an agency that would help farmers in rainfed areas cope with climate change.

In House Bill (HB) 6330, Deputy Speaker Party-list Rep. Sharon S. Garin of Aambis-OWA said the creation of the Philippine Rainfed Agriculture Institute (Philrai) is needed to improve the livelihood of resource-poor rainfed communities and empower them to cope

with drought, global warming and rising food prices brought about by climate and environmental changes. Garin filed HB 6330 last month.

According to the lawmaker, rainfed areas are mostly in Northern Luzon, Central Visayas and

Southern Mindanao.

“The Philippines has more than 7.5 million hectares of dryland, or rainfed areas, which accounts for three-fourth of the 10 million hectares of total cultivated areas.

Over 5 million poor households are dependent on dryland farming and it contributes about 40 percent of total domestic food production,” she said.

“Important as it is, rainfed agriculture is a neglected sector, receiving little investment and policy support, despite contributing about 40 percent of total food production supply in the country,” Garin added.

T he law ma ker sa id ad apting the rainfed system merits greater attention and investment in research and development because the area of arable irrigated land has reached a plateau globally and is shrinking in many countries.

“It is high time for us to build

a climate-resilient agriculture,” she said.

Under HB 6330, the Philrai will be attached to the Department of Agriculture (DA). It will be tasked to preserving natural resources, ensuring food security and providing socioeconomic assistance to resource-poor rainfed agriculture farmers through its different programs.

The measure also aims to create an “integrated approach by enhancing the impact of natural resources and adapting various coping strategies on climate change.”

Rainfed agriculture or dryland farming refers to the cultivation of crops without irrigation, utilizing mainly water that comes from the precipitation stored in the unsaturated soil.

The bill also authorized the secretaries of agriculture, budget a nd m a n a gement to set aside, out of the Agricultural

Competitiveness Enhancement Fund and other fund sources of the DA, the amount of P500 million as the initia l budget of the institute for its start up and operating expenses. Therea f ter, t he a n nu a l bud get of the institute’s operation would come from the annual General Appropriations Act. Once the measure is passed, the Philrai would formulate a Strategic Framework on Philippine Rainfed Agriculture.

The framework shall serve as the basis for developing programs on rainfed agriculture, and action plan for research, development, extension and monitoring activities. It shall be reviewed every three years, or as may be deemed necessary.

The Philrai would also formulate a program and action plan in accordance with the framework within one year after its formulation.

Farm-gate price of palay falls below ₧19/kg–PSA

October rose by 3.17 percent to P11.44 per kg, from P11.09 per kg a year ago. It was lower than the P11.52 per kg recorded in the previous week.

“The average farmgate price of white corn grain at P14.93/kg was higher than its previous week’s level by 1.8 percent. Similarly, it posted a double-digit annual up-

tick of 29.97 percent from a year ago quotation of P11.49 per kg,” the PSA said.

The country’s rice supply is expected to get a boost, as harvest has started, and imports have started arriving. As of October 4 the National Food Authority (NFA) said a total of 178,392 metric tons (MT), or 82.16 percent, of the 250,000 MT contracted by the food agency, were already delivered to various ports in the country.

T he rem a i n i ng volu me of about 65,600 MT, or 15.44 percent, were either in transit or at laycan, while 6,000 MT have yet to be shipped from Vietnam, according to the NFA. “While there is a slight delay in the arrival of part of the rice imports, the NFA has enough stocks to supply the needs of relief-giving agencies and local government units should such need arise,” NFA Administrator Jason Laureano Y. Aquino said.

As of September 28 the NFA said it has procured a total of 299,506 bags of palay under its regular procurement program and Farmers Option to Buy Back.

The NFA buys clean and dry palay at P17 per kg, with additional incentives totaling to P0.70 to P1 per kg for delivery (P0.20 to P0.50 per kg), drying (P0.20 per kg) and cooperative incentive fee (P0.30 per kg).

California is expected to be “very limited,” with most of the grape harvest already in the cellars, Aurand added.

Volu mes in Aust ra l i a, t he

world’s fifth-biggest wine producer, are seen 6 percent higher, while Argentina’s production may rebound 25 percent, based on the OIV’s estimates. Bloomberg News

By Jasper Emmanuel Y. Arcalas @jearcalas

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he average farm-gate price of unmilled rice continued to slide for the fourth consecutive week, dropping below P19 per kilogram at the start of the harvest season.

The latest report of the Philippine Statistics Authority (PSA) showed that as of the first week of October, the farm-gate price of palay declined by 1.63 percent to P18.91 per kg from the previous week’s P19.23 per kg.

However, on a yearly basis, the farm-gate price was 6.34 percent higher than the P17.79 per kg recorded in the first week of October 2016, according to the PSA’s report, titled “Updates on Palay Price and Corn Prices.”

Data from the PSA showed that the average retail price of regular milled rice during the period inched up by 1.78 percent to P38.01 per kg, from P37.34 per kg a year ago.

“The average wholesale price of regular milled rice retained its week-ago level of P35.58 per kg.

Compared to the previous year’s quotation of P34.37 per kg, it was however, higher by 2.43 percent,” the report read.

The PSA report noted that on a weekly basis, both the wholesale

bloomberg

and retail prices of well-milled rice dropped to a three-week low. “ R e l at ive to t he pre v iou s week’s level of P39.27 per kg, the average wholesale price of wellmilled rice settled at P39.25 per kg,” the report read.

“Similarly, the average retail price of well-milled rice during the week at P42.24 per kg dropped

by 0.13 percent, from P42.30 per kg in the previous week,” it added.

However, on a yearly basis, both the wholesale and retail prices of well-milled rice during the period grew by 2.19 percent and 1.4 percent, respectively.

Data from the PSA also showed that the average farm-gate price of yellow corn in the first week of

World’s smallest wine vintage since 1961 may lift booze prices

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he world may produce the least wine this year in half a century, after small grape harvests in Italy, France and Spain, a global wine organization said.

That could mean higher prices for bulk and entry-level wines.

The global 2017 vintage is estimated to slump 8.2 percent— equivalent to about 3 billion fewer bottles—to 246.7 million hectoliters, the Paris-based International Organisation of Vine and Wine said. That would be the lowest since 1961, according to Jean-Marie Aurand, the intergovernmental group’s director general.

“Logic dictates that for entrylevel wine, there will be a bit more tension on prices,” Aurand told reporters in Paris. “We’re past the time where we had structural overproduction of wine; the market is more balanced.”

The group, known by its French acronym OIV, puts the value of the global wine industry at about €75 billion ($88 billion). Countries with large grape harvests, such as

Australia and South Africa, will probably be more active in the wine trade this season, Aurand said.

World wine consumption in 2017 is expected to be around 243.2 million hectoliters, according to the OIV. The forecast excludes wine used annually for distilling into spirits, making vinegar and industrial purposes. Production in recent yea rs mea ns t here are sufficient stocks to avert shortages of wine and alcohol, Aurand added.

Italy alone accounts for half of the drop in global wine volume, with the country’s 2017 vintage predicted to slump 23 percent, according to the OIV. French output may fall 19 percent, and Spanish production is expected to drop 15 percent.

“The main reason is the freeze that affected the vineyards of western Europe,” Aurand said.

“Add to that the rather dry summer, and you have the two main reasons for the decline.”

Bloomberg

United State wine production may slip 1 percent, according to an OIV estimate based on US Department of Agriculture data.

The effect of the wildfires in

Duck output dropped to 15,490 MT in Jan-June

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he country’s duck production in the first half declined by 3.54 percent to 15,490 metric tons (MT), from 16,060 MT recorded in the same period last year, according to the latest report of the Philippine Statistics Authority (PSA).

Data from the PSA showed that this is country’s lowest duck output in the January-to-June period since 1989, when the first-half production reached 16,060 MT. “During the period, most of the regions posted decrease in production. Caraga, ARMM [Autonomous Region in Muslim Mindanao] and Soccsksargen recorded significant decreases by 31.17 percent, 23.08 percent and 15.45 percent, respectively,” the PSA said in its report, titled “Duck Situation Report January-June 2017,” which was published recently.

“However, increases in production were observed in Central Visayas by 16.13 percent; and Bicol region by 11.54 percent,” the PSA added.

Central Luzon was the top duckproducing region in the first half, accounting for 36.91 percent of the total output during the period. However, output in the region slightly declined to 5,717 MT, from 5,749 MT recorded same time period last year.

The PSA said the country’s duck production in the first half was valued at P1.379 million, at current prices, nearly 3 percent higher than the P1.339 million recorded value a year ago.

“At constant price, duck production grossed P841.21 million in January to June. It contracted by 3.54 percent from the previous year’s value of production,” it added.

The PSA said that the monthly average farm-gate price of duck in the first half was pegged at P79.39 per kilogram, nearly 5 percent higher than the previous year’s price of P75.62 per kg.

“The highest price was posted in January at P82.59 per kg, liveweight, while the lowest price was registered in April at P76.19 per kg, liveweight,” the report read.

However, duck-egg production during the same period grew 6.84 percent to 23,230 MT, from 21,740 MT recorded in the first half of 2016.

“About 41 percent of the total duck-egg production came from Central Luzon. This region, being the top producer, produced about 9.50 thousand metric tons,” the PSA said.

“This was followed by Northern Mindanao contributing about 2,300 MT and Cagayan Valley with 1,680 MT. These three regions shared about 58 percent of the total duck-egg production,” it added.

The PSA said the gross value of duck-egg output at current price went up by 11.51 percent to P2.243 million, from P2.012 million a year ago.

“For duck egg, the monthly average farm-gate price in January to June was recorded at P6.84 per piece, an increment of 5.75 percent, from the previous year’s average farmgate price of P6.47 per piece,” the PSA said.

“The lowest price was observed in April at P6.76 per piece. Highest price at P6.98 per piece was noted in January,” it added.

In the same report, the PSA said the volume and value of duck imports during the sixmonth period declined by 27.39 p e rce nt a nd 29. 9 6 p e rce nt , respectively. Jasper Emmanuel Y. Arcalas

A8

Banking&Finance

Thursday, October 26, 2017 • Editor: Jun B. Vallecera

BusinessMirror

www.businessmirror.com.ph

ADB selling 10-year bonds to raise $1.5B

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By Cai U. Ordinario

@cuo_bm

he Manila-based multilateral development bank, Asian Development Bank (ADB), has returned to the US dollar bond market with a $1.5 billion worth bond offering.

In a statement, ADB said the proceeds of the bond issuance were to boost its ordinary capital resources (OCR). The last time the bank issued bonds to boost its OCR was in September, with a $4 billion worth offering.

The bank said it has so far raised $27 billion from the capital markets this year, which is at the low-end of its $27-billion to $30-billion target this year. “ T his strong out ing w it h broad

sponsorship from investors globally, which allowed us to simultaneously tighten the pricing of the transaction relative to the initial guidance and upsize to $1.5 billion, highlights the esteem for ADB’s credit and mission,” ADB Treasurer Pierre van Peteghem said.

The ADB’s $1.5-billion 10-year global benchmark bond issue has a coupon rate of 2.5 percent per annum payable semiannually and a maturity date of

Multi-industry smuggling costing government some ₧900B–study

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n just five years, the Philippines lost billions of pesos attributed to the smuggling of products from just eight industries.

A recent study by the University of Asia and the Pacific-Center for Research and Communication Foundation Inc. and the Federation of Philippine Industries reveals that, from 2011 to 2015, the government missed generating revenues from the smuggling of petroleum, steel, resins, wood, cigarettes, sugar, palm oil and automotive batteries worth more than P904 billion.

Citing a United Nation Trademap, the study identified China, the United States, Japan, Taiwan and Singapore as among the top 5 partner-countries that the Philippines engages for imports.

Aside from the revenue loss, smuggling has also lowered local output measured as the GDP by P495.5 billion, household income by P77.2 billion, and displaced 291,070 workers in the above-mentioned industries within the five-year period.

Smuggling also affects the delivery of basic services, as the government relies on tax collection to finance its various infrastructure and social-development programs nationwide.

This year President Duterte certified House Bill 5636, or the Tax Reform for Acceleration and Inclusion (TRAIN) act as urgent.

The proposed legislation aims to lower the personal income-tax rate and expands the value added tax base by imposing excise tax on commodities, such as sugar-sweetened beverages and petroleum products.

A number of business sectors, including sari-sari store owners, have opposed the TR AIN bill for being “antipoor,” as it is expected to increase prices of beverage products commonly sold in community stores.

November 2, 2027.

The bond was priced at 2.595 percent to yield 19.55 basis points over the 2.25-percent US Treasury notes due August 2027.

The transaction was lead-managed by Citi, Daiwa Securities, HSBC and J.P. Morgan. A syndicate group was also formed consisting of DBS, Deutsche Bank, ING, Morgan Stanley, Nomura and RBC. The issue achieved wide primary market distribution with 56 percent of the bonds placed in Asia, 33 percent in the Americas and 11 percent in Europe, Middle East and Africa.

By investor type, 56 percent of the bonds went to central banks and official institutions, 31 percent to fund managers, 11 percent to banks and 2 percent to other types of investors.

ADB said its OCR operations cover agriculture and natural resources, education, energy, finance, health and social protection, industry and trade and public-sector management, among others.

Regular market-based OCR loans are generally made to developing member-countries (DMCs) that have attained a higher level of economic development, while concessional OCR loans are made to lower-income DMCs. DMCs that have regular access to the OCR include the Philippines, Armenia, Azerbaijan, Bangladesh, People’s Republic of China, Cook Islands, Fiji, Georgia, India, Indonesia, Kazakhstan, Malaysia, Mongolia and Pakistan, among others.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration.

Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 countries—48 from the region. In 2016 ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.

KPMG R.G. Manabat & Co. welcomes new partners

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op local auditing firm KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member-firm of KPMG International, recently welcomed three new partners to further strengthen its capabilities.

New audit partner Maria Arleene C. Yu brings with her 14 years of audit experience and has worked on various assignments carrying out the audits of KPMG RGM&Co.’s biggest clients.

She has significant experience in the financial audit of various sectors, which include food and beverages, power utilities, pharmaceutical and health care, business-process outsourcing, real estate and manufacturing.

I

Association World Octavio Peralta or level of commitment. Surveyed members cite e-mail content as the easiest to consume, most likely to keep them engaged, and most powerful for telling the organization’s story.

There is no consistency in collecting and using information for personalization. Of the respondents, 74 percent recall being asked for at least some type of personal information or preferences.

Nearly half of members feel their content is not personalized. Of the surveyed members, 47 percent say the typical content they receive is not personalized. Common content offensives include sending content that is irrelevant, boring or in an inconvenient format.

The study lists where to go from here: n Identify and understand your organization’s loyalty segments. Educate your executive team and board of directors on the importance of these loyalty metrics, and start including them in your monthly or quarterly reports. n Reevaluate your value propositions. Conduct member surveys and focus groups to identify the challenges

D

espite high mobile penetration, Filipinos continue to rely on cash transactions rather than digital money, according to a specialist from the Asian Development Bank (ADB).

In an Asian Development Blog, ADB Sustainable Development and Climate Change Department Financial Sector Specialist (SME Finance) Shigehiro Shinozaki said the lack of trust on digital finance prevent millions of poor Filipinos from using digital money to get out of poverty.

Shinozaki said that in visiting the Phillippines, poor households have poor digital connectivity that prevent them from using technology to improve their lives.

“I’m wondering if digital finance is a pipe dream for the extremely poor, since their primary concern is daily survival.

Maybe it isn’t. Given the high mobile penetration rate in some developing Asian countries, data connectivity can unlock digital financial services for those who have almost nothing,” Shinozaki said.

Shinozaki said the Philippines is not alone when it comes to its aversion to digital money. He said among people with access to finance, only one percent have a mobile money account and another one percent have both bank and mobile accounts.

He added that half of the digital accounts of the banked are inactive while the other half of the active accounts are empty.

This is lamentable, Shinozaki said, since mobile money can improve the daily lives of the poor. This was observed in Kenya through M-Pesa that allows the poor to make low-cost, fast, safe, and easy transactions online.

“Why is this happening? Digital accounts are often not used as a store of value for future payments of school fees, weddings, or funeral expenses, but rather as

a pass-through for immediate payments,” Shinozaki said.

“Many people don’t understand the concept of stored value, and tend to regard savings as simply unspent money. Moreover, cash is accepted and trusted while digital money is not. This is much evident in poor households in developing Asia,” he added.

In the Philippines, Shinozaki said ADB staff members visited poor communities living in Kasiglahan, on the outskirts of Metro Manila.

They spoke to a family who earned about P500-P600 or around $10-$12 per day. They worked 10 to 15 days per month and supported three children.

The parents were unbanked, preferring to keep their savings in a box at home.

Shinozaki said they also do not borrow formally or through banks.

Despite their living conditions, the family has a smartphone and a tablet that children can use to do their homework.

The children also study online because they cannot afford to buy books. The children pay P7 a week to a neighbor to use the Internet.

“This suggests the huge potential of delivering digital financial services to the poor,” Shinozaki said.

Citing data from international sources, Shinozaki said mobile adoption has been rising in Asia-Pacific. There were 2.7 billion mobile subscribers in the region in 2016.

This, he said, is estimated to increase to 3.1 billion by 2020. This number of mobile subscribers is already three quarters of the population of the region.

The trend is led by the People’s Republic of China and India although Southeast Asian countries, such as Indonesia, Malaysia, Myanmar and the Philippines have also shown high smartphone adoption ratio of over 50 percent. Cai U. Ordinario

PHL tops the EITI Standard in nine areas

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KPMG RGM&Co. tax partner Ryan E. Cabello (from left), audit partner Maria Arleene C. Yu and advisory partner Jallain Marcel S. Manrique

Why association members stay or leave

’d like to share with you the results of a recent study on why members stay or leave their associations, commissioned by Community Brands and its family of companies (Abila, Aptify, NimbleUser and YourMembership), and undertaken by Edge Research: Members feel a lack of connection.

While the majority of members (84 percent) feel satisfied with their membership, a far fewer (55 percent) feel a connection to their membership organization.

Code of Ethics and consistent updates on industry information are must-haves to retaining members. Other top benefits are focused on intangibles, such as representing members’ interest, fuelling growth and innovation, and raising awareness. Job, continuing education, and training opportunities are most important to millennial and Gen X members.

Membership organizations struggle to communicate value. The top reasons members decide not to renew are centered on dues becoming too costly and the organization providing little value.

The amount of information members want varies by loyalty level. Loyal members prefer detailed updates more than twice a month, while members less loyal to an organization prefer to just receive the big news monthly or even less frequently. Millennial and Gen X members are more likely to want more frequent communication.

E-mail is the top-performing channel, regardless of a member’s generation

Cash still king

your members face each day, how might the organization help and what tools are needed to be successful. n Put your loyalty segments to work.

Once you are aware of which members fall within each segment, partner with other stakeholders in your organization, including your marketing team, to build dynamic lists to successfully segment your various loyalty groups. n Collect data and content preferences and use them. Members now expect organizations to collect information to personalize their experience. n Keep your code of ethics updated and relevant. Members are proud to belong to an association that provides a framework and standard for their industry. n Empower your “super members.”

Help your membership heroes use their power for good, and enlist them in helping move their peers up the loyalty spectrum.

Committees, ambassador programs and advisory boards are great examples of bringing your super members together.

The column contributor, Octavio Peralta, is concurrently the secretary-general of the Association of Development Financing Institutions in Asia and the Pacific and the CEO and founder of the PCAAE. The PCAAE is holding the Associations Summit 5 and the “Ang Susi” Awards 2017 on November 22 and 23 at the Philippine International Convention Center.

E-mail inquiries@adfiap.org for more details.

he Philippines has exceeded the requirements in nine areas set by the Extractive Industries Transparency Initiative (EITI) on global benchmarks for good governance in the oil, gas and mineral sectors, according to the Department of Finance.

This allowed Manila to become the first country to have successfully obtained a “satisfactory progress” assessment under the 2016 EITI Standard.

Besides going beyond the minimum required by the EITI in the nine areas, the Philippines also achieved “satisfactory” progress in 18 of the 33 requirements set by the EITI in evaluating countries under the 2016 EITI Standard.

“In taking this decision, the board recognized the Philippines’s pioneering efforts in using EITI data to drive government reforms and generate a vibrant public debate around issues on natural-resource governance,” said Fredrik Reinfeldt, the chairman of the EITI International Board, in his letter to Finance Secretary Carlos G. Dominguez III congratulating the Philippines on its landmark achievement.

On October 5 the EITI International Board declared the Philippines as the first country to meet all the requirements of the EITI Standard, which requires countries to publish timely and accurate information on key aspects of their natural-resource management, including how licenses are allocated, how much tax and social contributions companies are paying and where this money ends up in the government at the national and regional level.

The Philippines, beginning in January this year, underwent the validation process of the EITI, a Norway-based international initiative that promotes open and accountable management of extractive industries, including the mining and oil and gas sectors.

In his letter, Reinfeldt also said he was looking forward to meeting Dominguez when the EITI holds it 38th board meeting in Manila on October 25 and 26 and “hear about how the EITI in the Philippines will continue to create impact and drive reforms in your extractive sector.”

Reinfeldt commended the Philippines for going beyond the requirements of the EITI Standard in nine areas in its Assessment Scorecard. These are: 1) the multistakeholder group’s oversight of the EITI process; 2) work

plan; 3) the legal framework; 4) policy on contract disclosure; 5) revenue management and expenditures; 6) social expenditures; 7) public debate; 8) follow-up on recommendations; and 9) outcomes and impact of implementation.

The EITI board will revalidate the Philippines’s status in three years, or in October 2020.

Dominguez earlier welcomed the EITI board’s decision and pointed out that “the forum that EITI provides has been indispensable to achieving mutually beneficial collaboration between all stakeholders in the country.”

“With the proper governance framework in place, the extractive industries may do what they do without causing harm,” said Dominguez, who is at the helm of Philippine EITI. “To achieve that, they must be transparent and the communities ever watchful. I trust that the international recognition we have received will further spur our nation to build institutions of accountability and enterprises that are better able to serve the common good,” he added.

In a statement released by the EITI board on October 5, it said “the Philippines presents a dynamic case of EITI implementation, with its fast-paced and innovative multistakeholder group engaging in strategic discussions linking the EITI to national priorities for the extractive sector”. It also said “EITI has also built trust in a country where the mining sector has often been contentious”.

Referring to the Philippines’s validation, Reinfeldt said: “I congratulate the Philippines on its use of the EITI Standard to build trust, generate public debate and inform policy, which serves as an example to other countries. Meeting all the EITI requirements is a milestone for the EITI and, more important, a significant achievement for all the stakeholders in the Philippines that have supported EITI implementation. I urge them to continue to ensure progress, particularly in the coal sector where further work is needed to ensure full transparency.”

Earlier, the Philippines earned several citations for best practices in the implementation of global standards on the management of mining resources during the 37th EITI board meeting held in Oslo, Norway, in May. With Rea Cu

The Regions BusinessMirror

www.businessmirror.com.ph

Editor: Efleda P. Campos • Thursday, October 26, 2017

A9

Issuance of ₧50-B Marawi bond proposed

By Jovee Marie N. dela Cruz

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@joveemarie

he chairman of the House of Representatives’s Committee on Banks and Financial Intermediaries on Wednesday backed the government’s plan of tapping the bond market to finance the reconstruction of Marawi City.

Rep. Ben P. Evardone of the Lone District Eastern Samar, the panel chairman, said the national government should pursue the issuance of bonds to generate funds for the rehabilitation of Marawi City.

“Economic managers should tap the bond market to finance the reconstruction of Marawi,” Evardone told reporters.

“The Bureau of Treasury should pursue the issuance of a P50-billion ‘Marawi Bond’ considering the low interest rates prevailing in the market. It should also capitalize on the outpouring sympathy of investors to the victims of the Marawi siege,” he added.

By tapping the bond market to finance Marawi’s reconstruction, the lawmaker said this will free up a huge part of the regular budget for government’s other social and

infrastructure programs.

Earlier, Budget Secretary Benjamin E. Diokno said the national government is eyeing to issue P30 billion in bonds to help Marawi City.

“As far as Marawi bonds are concerned, it is a go already. The plan is to start next year or in January,” Diokno said.

According to Diokno, the rehabilitation of the city would be prioritized, saying the government would allocate P15 billion to Marawi City in the next two years.

He also added the tax settlement paid by Mighty Corp. and Philippine Airlines would be used to finance the rehabilitation of the war-torn city.

Last week President Duterte declared Marawi’s liberation from Maute terrorists, who occupied the Islamic city on May 23. The

A mosque with its dome blasted out with holes is seen at the battle-scarred Marawi City in southern Philippines on Thursday, October 19. Two days after President Duterte declared the liberation of Marawi City, the military announced the killing of more suspected militants in the continuing military offensive. AP Photo/Bullit Marquez

Islamic State of Iraq and the Levant-inspired fighters reportedly numbered about 1,000.

Islamic bond

Meanwhile, Rep. Frederick W. Siao of the Lone District of Iligan City said the rehabilitation of Marawi can also be funded through issuance of “Islamic bonds” through the lone Islamic

bank, the Al Amanah Islamic Investment Bank of the Philippines (Al Amanah).

“As an investor myself and member of the House Committee on Mindanao Affairs, I recommend for the government to work together with Al Amanah in developing a so-called sukuk or Islamic financial certificate that complies with sharia laws. The Department of Fi-

nance [DOF] through the Bureau of Treasury, shall be the issuer, and Al Amanah shall be the marketer,” he said in a statement.

“Issuance of sukuk will enable us to tap funds from the 57 membercountries of the Organization of Islamic Cooperation,” he added.

Recently, the lawmaker said Qatar Investment Authority announced that it has at least $320

billion worth of excess funds, which may be used for energy projects in the Philippines and Southeast Asia.

“Chairman and CEO of Al Amanah Alex Bangola said the Philippines can access those billions of dollars of funds from Qatar through the issuance of sukuk,” he added.

The lawmaker, quoting Bangola, said: “Sukuk can be compared with government bonds, only that these financial papers do not follow the Western banking concept of riba, or interest. Under Islamic banking, a holder of a sukuk means he or she holds ownership in the investment, and the bank becomes a business partner.”

While supporting the government’s plan to issue “Marawi bonds,” Siao said the move can be complemented by the issuance of sukuk in order to give “our Muslim allies throughout the world an opportunity to help rebuild the Islamic trading city of Marawi.”

“The P30-billion worth of debt securities that DOF proposed might just be not enough compared with the magnitude of work that has to be done,” he added.

“The P30 billion is enough only for some key structures, but insufficient to implement a master plan, not just for Marawi but also the surrounding towns, the Lake Lanao area, and to integrate them with Mindanao and the Visayas,” Siao added.

Provincial chief executive doubts PDEA’s capacity to fight illegal drugs in Quezon

By John Bello Correspondent

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ISLAND-HOPPING ESSENTIALS

Photo taken at the isle of D’Talipapa in Boracay, Aklan. This is where tourists buy all the essential things they need to fully enjoy their island-hopping experience in Boracay. FAYE PABLO

DICT assures faster Internet speed by 2018

By Jun N. Aguirre Correspondent

K

ALIBO, Aklan—Filipinos will start enjoying faster Internet connection all over the country by next year, according to the Department of Information Communications Technology (DICT).

In his speech here on Monday, DICT acting secretary Eliseo Rio said the Philippines couldn’t afford to be continually lagging behind in the region with poor Internet connection.

Rio was here for the launching of the province’s Aklan Technology Business Incubation Center/Rural Impact Sourcing Hub and Tech4Ed

Center. The center is located at the compound of the Dr. Rafael S. Tumbukon Memorial Hospital.

“Currently, the Philippines is ranked no. 1 as the business-process outsourcing [BPO] capital in the world. Because of this, we should endeavor to attain standard Internet speed,” he said.

He added that, although the Philippines is the capital of the BPO industry, the country is among those with the slowest Internet speed in the world, slightly better than Afghanistan, which has the world’s slowest Internet connection.

“Looking back, the country was then known as the SMS capital in the whole world. Telecommunication companies, despite earning

billions of pesos, only invested in a few towers. With the seed of modern development, these towers have now been fully loaded by data connections. To remedy this, the DICT will be launching thousands of free Wi-fi areas to unclog the capacity of the telecom towers,” he said.

For her part, former Vice Gov. Gabrielle Calizo-Quimpo said the launching of the tech4ed centers in the province puts Aklan in the map of next wave cities.

“The Aklan provincial government is currently looking for BPO companies to invest in the province,” said Quimpo, who is currently serving as the executive director of the Aklan ICT Council.

UCENA City— Quezon Gov. David Suarez has expressed reservations about President Duterte’s decision to remove the campaign against illegal drugs from the Philippine National Police (PNP) and its transfer to the Philippine Drug Enforcement Agency (PDEA).

“We are talking of a billion-peso illegal-drugs industry that has long plagued the entire country, and now we are placing it in the hands of the severely undermanned PDEA. This will derail our progress in our war on drugs, especially in Quezon,” said Suarez after the joint meeting of the Provincial Anti-Drug Abuse Council, Peace and Order Council and Provincial Development Council at the Kalilayan Hall here.

Suarez issued a statement to the local media in an ambush interview after the five-hour meeting attended by several municipal mayors, provincial government officials and representatives of various non-governmental groups, saying he fully supports Duterte’s war on drugs.

“We have an aggressive campaign against illegal drugs and then, in the midst of our campaign at the local level, all of a sudden, here comes the decision of the President stopping the PNP operations and handing it to the PDEA. But I fully support the President’s war on drugs,” the governor said, after asking Quezon provincial police head Senior Supt.

Roderick Armamento to talk with the new PDEA head in Quezon for a new stance against illegal drugs.

Suarez, seated beside provincial administrator Rommel Edano, his

provincial chief of staff Webster Letargo, executive assistant Juanito Diaz provincial board members Ferdinand Talabong and Vincent Dominic Reyes, was dismayed upon learning that the PDEA in Quezon has only four personnel to undertake the campaign against illegal drugs in the whole province.

“How can we sustain our momentum in our war against illegal drugs if the PDEA in the province of Quezon is staffed only with four committed manpower?” Suarez asked, and immediately ordered Armamento to talk with the PDEA to come up with a plan before the end of the month on how to sustain the anti-illegal campaign and operations so that all the 39 municipal mayors and two city mayors in Quezon will be guided accordingly.

Suarez said he is worried the illegal-drug situation will worsen in the province with the campaign against drugs now in the hands of the PDEA with only four personnel to undertake antidrug operations.

“We don’t want to give the impression that we, as public officials, are getting lax against illegal drugs in this new setup, or worse, drug coddlers or drug protectors in Quezon if illegal drugs start to proliferate anew in our province, so we want to be clarified. What’s the role of the local chief executives?” the governor told the participants.

San Antonio Mayor Eric Wagan said the new directive of the President on drugs is a big challenge to local authorities.

For his part, Armamento said that with Duterte’s new directive on October 12, the PNP can still provide back-up support to PDEA in its antidrug operations. The PNP can assist

with intelligence information against drug suspects and can still arrest drug users and pushers who are seen doing illegal drug activities.

He proposed to strengthen the Barangay Against Drug Abuse Councils in the whole province, stressing that these councils would know the real drug situation in the barangay, even as he urged everyone to be proactive in the fight against illegal drugs at the barangay level.

Armamento earlier made a slide presentation showing the “drug situation” in the province, from July 2016 to September.

According to the Quezon Police Provincial Office (QPPO) a total of 25,097 drug users and pushers have surrendered to the police who have neutralized 28 suspects during their operations, arrested 2,543 drug suspects and confiscated 5.67 kilos of shabu with an estimated value of P7,875,591.50, from July 2016 to September The PNP conducted 1,841 police operations, visited 14,748 homes under project “Tokhang” and cleared 477 barangays of the 627 drug-affected out of a total 1,242 barangay in the whole province.

The QPPO has set up the parameters in declaring a barangay drugfree: nonavailabilityof drug supply, absence of drug transit or transhipment activity, absence of drug laboratory, drug warehouse, marijuana cultivation site, drug den, drug pusher, drug user, active involvement of local officials in antidrug activities, existence of preventive education and information program and existence of a barangay-based non-governmental organization to help monitor the drug-liberated status of the barangay.

Ilocos Norte projects 20-percent increase in garlic production

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AOAG CITY—In time for the October planting season, garlic farmers here are being encouraged to expand their production area as the province aims to deliver at least 20 percent or 26,000 metric tons (MT) of the national market demand.

Garlic demand in the Philippines, based on national statistics

report, is approximately 128,000 MT per year.

As one of the country’s major garlic producers, Ilocos Norte’s garlic industry remains threatened by cartel, which government authorities here are trying to suppress.

“Garlic is a potential product we should look into. Our produc-

tion target is doable,” provincial board member Vicentito Lazo said, as he urged farmers to help fight the cartel, a longtime problem in the agriculture industry which, he said, needs to be taken seriously.

T h is pl a nt i ng sea son, t he state-run Mariano Marcos State University (MMSU), Ilocos Norte

government, Department of Agriculture and a Japanese firm that specializes in garlic products, started an experimental to produce bigger and more resilient garlic bulbs.

Dr. Shirley Agrupis, MMSU president, said on Wednesday the new garlic-seed materials from Japan would be pilot tested at

the MMSU and in Burgos town using Ilocos Norte and Japan technology.

Prior to the arrival of the garlic-seed materials from Japan, a soil analysis was conducted to determine the appropriate technology.

Agrupis hopes the experimental farm will yield positive result to help

garlic farmers produce more.

In support to the garlic industry, Sen. Cynthia A. Villar has also pledged to allocate some P57 million to improve the quality of production.

During the last planting season, about 1,876 hectares were planted with garlic with an average yield of 6,000 MT. PNA

A10 Thursday, October 26, 2017 • Editor: Angel R. Calso

Opinion

BusinessMirror

www.businessmirror.com.ph

editorial

When Duterte meets Trump

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he 10 members of Asean—Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Singapore, Thailand, Vietnam and the Philippines—are celebrating this year their 50th anniversary. From November 10 to 14, the Duterte administration will host the 31st Asean Summit and Related Summits, an international conference of heads of governments that will simultaneously take place alongside related meetings and a special celebration of “Asean@50” at Clark Air Base in Pampanga and in Manila.

Asean’s dialogue partners, including the United States, Australia, Canada, China, the European Union (EU), India, Japan, Republic of Korea, New Zealand and Russia, are expected to participate in the 31st Association of Southeast Asian Nations Summit and Related Meetings.

As host of this year’s summit and special celebration of “Asean@50,” the government wants to ensure smooth and productive bilateral meetings between and among the various different leaders, particularly the meetings among Asean leaders and their dialogue partners that will be held at the Philippine International Convention Center and Sofitel and Solaire hotels in Manila.

What will complicate things, however, is the Duterte administration’s recent decision to stop receiving development assistance from the European Union as a display of the country’s independent foreign policy. President Duterte has become distant from the EU among our dialogue partners because of the European Union’s supposed intervention in the country’s internal issues, specifically the government’s war on drugs. In his speeches, the President has repeatedly thrown expletives at the EU and even declined future grants from the bloc to avoid interference.

Duterte’s remarks will surely have an adverse effect on the relationship between the Philippines and the European Union. However, the Chief Executive’s rhetoric notwithstanding, the EU’s ties with Asean member-states still remains robust. As an unimpeachable source said, the issue between the European Union and the Philippines is different from Asean and EU. Our source added: the issue between the Philippines and the European Union on a bilateral basis will be relegated to the back burner.

Malacañang earlier released Proclamation 332, decl aring November 13 to 15 as special nonworking days in Manila, Bulacan and Pampanga to pave way for the Asean conference. This came following Duterte’s announcement that the Marawi seige was over. Still, security forces would be on full alert all throughout the country, especially in the areas where the world leaders will gather. Putting the whole country on alert is expected, because we do not want anything to happen anywhere in the Philippines during the 31st Asean Summit and Related Meetings.

Among the world leaders expected to grace the event, US President Donald J. Trump’s arrival is highly anticipated, since this is his first trip to the region as president. Particularly interesting is his announced meeting with Duterte, who has come under international criticism for his administration’s alleged “brutal crackdown on drug trafficking, which has resulted in thousands of extrajudicial killings.”

Trump has spoken with the President by telephone before, and has not directly denounced Duterte’s actions. In May Trump and Duterte had a friendly discussion that included an invitation from the US President for Duterte to visit the White House. Duterte has been enthusiastic about meeting Trump in Manila, and the American President appears to feel the same. The world can’t wait to find out what the two leaders will see in each other the moment they are put in a room together.

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BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua

Bow to your alien overloads!

John Mangun

OUTSIDE THE BOX

H

ad certain Filipinos in 2017 been around 500 years ago, they might have killed Lapu-Lapu and proclaimed Magellan as Datu of Mactan and savior of the archipelago.

That some of the other Datus tried to use the foreigner Magellan for their own political interests maybe shows that not much has changed in five centuries.

But you would think that, after all this time, after all the blood and death, and after all the betrayals, pervasive colonial mentality would be mostly gone. Think again. The fact that Filipinos so long accepted the symbolism of Philippine independence being recognized on July 4 is bizarre enough.

Over time though, if the profits and job-creating opportunities are good enough, you learn to do business even with the “white devils” and the Asian variety that perpetrated the Bataan Death March.

Actually, that is a sign of greater

self-confidence and self-esteem.

But look no further than the Philippine stock market for Philippine colonial mentality among those that are supposedly more highly educated, sophisticated and smarter.

Reported price movements on the Philippine Stock Exchange (PSE) are usually accompanied with the amount of foreigner buying and selling as if the first was dependant on the second. It is a story told as if the PSE was on a leash held by foreign hands.

Fact: of the 773,187 stock accounts on the PSE, 1.8 percent is

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Emperador Inc. has 2 percent more foreign ownership; the price is unchanged at P7.

Foreign holdings usually are actually more stable and less volatile than local because the large foreign holdings cannot find liquidity as quickly. If you look at actual foreign transactions, you see foreign brokers selling and buying from other foreign brokers for that liquidity reason.

The myth that foreigners move the market is like the magician that wants you to look at his assistant wearing the plunging neckline swimsuit instead of what his hands are doing. Prices move when money—all money regardless of nationality—goes in or out of the market.

Massive amounts in the middle of September from all sources of new money have flowed into the PSE. Now we are experiencing the consequences of “too far, too fast.” The longer term upside trend has not changed for either foreigners or locals. That is what is important to investors.

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

Reforming seven uniformed-services retirement benefits

Founder Publisher

foreign owned. It is also a fact that foreign trading accounts for about 40 percent of the total trading volume.

But does the amount of net foreign buying or selling move stock prices?

Assume the PSE trades P8 billion today. That means P8 billion of cash was traded for P8 billion of shares.

Assume also that foreigners are not allowed to participate. Therefore, in this case, the “net buying/selling” by locals would be zero. Locals sold P8 billion, and locals bought P8 billion.

When you then read that “foreigners were net sellers of P1 billion today,” that must mean locals were “net” buyers of that P1 billion because all selling is offset by equal buying.

Likewise, if “foreigners were net buyers of P1 billion today”, then locals were net sellers of P1 billion. It must be zero-sum, just like SM trades P1 billion of shoes for P1 billion of cash.

If foreign ownership changes do move prices, then there should be data to that effect. There is none.

Foreign holding of Ayala Corp. is up by one percent in 2017 even as the price has moved from P730 to P1,000. Foreign ownership of GT Capital Holdings is up 2 percent; the price moved down from P1,270 to P1,000 since end of 2016.

Cecilio T. Arillo

database

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House technical working group (TWG) of the Committees on Government Enterprises and Privatization and National Defense and Security has started consolidating two bills meant to reform the confusing retirement-benefit and pension system of the country’s seven major uniformed services.

Rep. Mark O. Go of the Lone District of Baguio City, TWG head, said: “President Rodrigo Duterte himself emphasized the need to reform the benefits and pension system of the uniformed services in his budget message to Congress for fiscal year 2017.”

The seven major uniformed services are the Armed Forces of the Philippines, Philippine National Police, Philippine Coast Guard, Bureau of Fire Protection, Bureau of Jail Management and Penology, Bureau of Corrections, and National Mapping and Resource Information Authority.

The TWG will harmonize House Bills 1137 and 5673 filed respectively by Reps. Gary Alejano of Magdalo and Francisco Jose

Matugas of the First District of Surigao del Norte. The measures are both titled “Unified Uniformed Personnel Retirement Benefits and Pension Reform Act.” The bills were supposed to address the many concerns of the major uniformed services of the government, as the State duly recognizes the vital role of the uniformed services in providing internal and external security, promoting peace and order, ensuring public safety and further strengthening local government capability aimed toward the effective delivery of basic services to the citizenry.

The State also acknowledges the extraordinary hazards, risks, perils and dangers the uniformed personnel encounter in the

performance of their duties. It shall, therefore, be its prime concern to provide all uniformed personnel with adequate remuneration and benefits, including retirement benefits and pension.

Once consolidated into a new law, the existing retirees and future retirees of the uniformed services will be entitled to receive a monthly retirement pay equivalent to 2.5 percent for each year of active service rendered, but not exceeding 90 percent of the monthly base and longevity pay of the grade next higher than the permanent grade last held, amending Section 17 of Presidential Decree 1638, also known as “Establishing A New System Of Retirement And Separation For Military Personnel of The Armed Forces of The Philippines” issued in 1979 by former President Ferdinand E. Marcos.

The TWG will consider that new entrants who, at the time of their actual retirement, are eligible to receive retirement benefits and pension under existing laws applicable to the uniformed services, will be entitled to receive their lumpsum benefit equivalent to three years within one month of their effective date of retirement.

It will also see to it that all uniformed personnel who are disabled in the line of duty shall be eligible to

receive a monthly pension, the rates of which shall be determined by the respective department concerned.

The two bills sought to provide a new fund-sourcing scheme for the unified retirees’ pension and benefits that is sustainable in the long term with the creation of a Uniformed Personnel Retirement Fund (UPRF) to be managed by the Government Service Insurance System for the sustainability of the retirement benefits and pension of uniformed personnel.

Once the new law is approved, it will be mandatory for new entrants to contribute a percentage of their monthly compensation as personal share and for the national government to contribute a corresponding share sourced from the general appropriations for the maintenance of the UPRF. If authorized by the President, additional funds for the maintenance of the UPRF will be sourced from the sale or disposition of public lands.

Representatives of the seven major uniformed services presented their respective retirement and pension system during the hearing with a common aim that their retirement benefits and pension are secured and sustainable.

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

Opinion

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BusinessMirror

Inclusive capitalism

So familiar yet ever so challenging

nomic progress, to steal or murder or lie in violation of God’s law and in exchange for God’s love.

Dr. Rene E. Ofreneo

Msgr. Sabino A. Vengco Jr.

LABOREM EXERCENS

Alálaong Bagá

Continued from A1

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here are, however, also those who think strategically, meaning those who think capitalism cannot survive if nothing is done to help the excluded majority composed of the unemployed, underemployed, underprotected and those on the margins of life.

T

he basic principle Jesus stood for in confrontation with his critics is the ground rule of Judaism and Christianity: the love of God and the love of neighbor (Matthew 22:34-40), an episode retold seven times in our Lectionary. This greatest and most familiar commandment in the law needs to be recalled into actual practice if our religion is not to be a caricature.

With all one’s heart History tells us that the social and labor rights of the people under capitalist development have been established not only due to the protest movement of the poor, but also due to the proactive policy posture taken by business leaders and government officials in dealing with labor and social issues. Example: the formation of the International Labour Organization in 1919 was partly a response of the tripartite representatives of the allied countries, which emerged victorious in World War I, to the rise of a workerled Bolshevik government in Russia in 1917.

Some business people have even become radical visionaries. The most famous among them was Robert Owen, who managed a textile mill in Scotland and England at a time (circa 1800s) when Europe still had not recognized any protective labor laws and child labor, beginning at age 5, was fairly common. As an industrialist, he built schools for children, raised wages, improved working conditions and preached community living. He even helped organize unions, which were banned under then prevailing English law, and promoted consumer cooperativism, which is the reason Owen is venerated today as the father of the international cooperative movement. Owen was one of the original articulators of the importance of the eight-hour labor regulation because workers need eight hours of sleep and eight hours of social and family life. The eight-hour law became a law in many countries a century later.

Are there modern-day Owenites today in the ranks of the business community? The world is not lacking in such people in different countries across the globe. Just Google the business people committed to sustainable business by safeguarding the environment, such as those engaged in keeping the Amazon forest in Brazil pristine or those promoting access of rural women in Asia to clean and affordable water through microfinance.

Here in the Philippines, the Go Negosyo program of Joey Concepcion has also documented 80 cases of “inclusive business models” in Angat Lahat Stories (2017). These are businesses that help solve poverty using business solutions.

One of the stirring stories in the book is that of Victoria Sandidge, a Filipina who worked as a nurse in America and who returned to the Philippines to build a “honey-bee farm” in 2002 out of a small farm in the hilly side of Panglao, Bohol. The farm started with only four workers.

Today, the farm employs over 300 workers. Sandidge was able to transform a 6-hectare farm into a popular ecotourist destination by showcasing organic products, producing ice cream based on local fruits, processing vegetables into bread and other products, retailing community-made bracelets and other artisanal items and, yes, transforming the once barren and hilly side of Panglao into a 40-room resort-cum-spa with a view of the sea. Everything in the resort is sourced locally and the employed are mostly women. This author had visited the farm several times, from its inception to the present. Each time, he was amazed at how a visionary overseas Filipino worker could galvanize what was once a depressed rural community (not adjoining the famous Panglao beach) by thinking organic and transforming locally

sourced materials into marketable tourist products.

There can be many more Sandidge. This is the vision adopted by Dr. Niceto S. Poblador, professor emeritus of the University of the Philippines (UP) College of Business Administration. In a paper he submitted to the Centre International de Formation des Autorites et Leaders Philippines, a program under the UPs’ Center for Integrative Development Studies, Poblador explains that the main reason for the deepening inequality amid surging growth everywhere in the capitalist world is “the single-minded pursuit of profit” of those engaged in business. He further explains that the “obsessive and near-fanatical quest for shareholder wealth invariably leads to the following undesirable trade-offs: n Economic value accruing to the owners of capital is realized at the expense of the economic interest of all other groups that have a stake in the firm; n Immediate financial gains are realized at the price of the long-term viability of the enterprise; and n Enhanced shareholder wealth is achieved at the cost to society in terms of the harmful outcomes of the choices made by businesses.

Hence, Poblador came up with a proposal that runs directly opposite to what he used to teach in the business school: a rethinking of the role of the profit motive, the core concept underpinning capitalism as an economic system. No, he does not advocate a renunciation of the profit motive. Rather, he argues for the need to broaden a business profit maximization behavior in support of all stakeholders, not just shareholders. This means the function of the firm expands into “one of creating economic value for society” and aligning the financial interest of the owners with other groups that have a stake in the business, such as the workers and the host community. Accordingly, by getting all stakeholders on board, the business enterprise is able to maximize profit while being able to produce and share more wealth for all stakeholders.

Poblador calls his framework inclusive business model or IBM, the same term used by the Go Negosyo group. This IBM model is not unique. It has been articulated in the past by other groups in different ways. For example, the Fair Trade Alliance of former Sen. Wigberto E. Tañada Sr. launched in the mid-2000s a Social Accord involving the business group of Meneleo Carlos and select trade unions, civil-society organizations and local government units.

The content of the accord states that competitiveness requires higher and higher productivity, which is not possible without management and labor joining hands; however, to have productive and sustained cooperation, both parties must not only learn to respect each other’s rights but must also commit to work for their mutual welfare and benefits.

Now the big question: Are the top 40 families that dominate the business landscape of the Philippines prepared to adopt the inclusive business model that Poblador, Go Negosyo and Fair Trade Alliance have been advocating? Can they be convinced to focus more on creating value for all stakeholders, not just their shareholders?

Thursday, October 26, 2017 A11

To love God with all one’s heart and soul and mind (Deuteronomy 6:5) means a constant and complete attention to the beloved. It is a love that is inventive and generous and developmental, not limited to a set of predetermined duties or particular applications. It does not aspire to be eventually free of the beloved nor consider it acceptable to be no longer somehow obligated to the demands of the beloved. Hence, specific items entered on a calendar like celebrations and anniversaries are only reminders and longed for opportunities, not debts or bills that must be paid.

As we saw last week, “giving to God what is God’s” means God alone can demand from us and is worthy of our total and absolute surrender, so that even our rendering to Caesar what is Caesar’s falls under the supreme law of God. Since God alone is God, we must love Him with our whole and undivided heart, excluding nothing of oneself from Him and reserving nothing of oneself for somebody or something else. In effect, we shall worship no other, rejecting any idolatry of money or fame or power. We allow no pretentious Caesar to manipulate us for the sake of national security or eco-

Food for thought Val A. Villanueva

Businesswise

I

would like to believe that my wife and I were typical children of the 1980s, having been engulfed by the taste, scents, colors, music, food and fashion of that era. Today, we live and talk about that decade as if it were the recent past. It was a time of “silent” turmoil, and chilling out was our only escape.

Back then, the political climate was stifling. Martial law had been lifted, but the poster boy of evil—Ferdinand E. Marcos—was still very much around.

He was, however, rumored to be suffering from an incurable disease. Everyone was on edge, and had to adapt to the anxiety prevailing in those dangerous times.

We were just starting to climb up the corporate ladder, but the economic climate was not desirable. In the aftermath of the assassination of Sen. Benigno Aquino Jr., capital flight had ensued. The value of the peso against the dollar plummeted, and business had to endure the difficulties in opening letters of credit and had to make do with soaring oil prices.

Nonetheless, we Filipinos proved simply unsinkable. In those dark hours, we still managed to have some fun. There were Papillion Jazz Bar at Bricktown, Ayala Center, where my then-girlfriend (now my wife) had Friday trysts, and Birds of the Same Feather in Morato,

Quezon City—which later became the infamous Ozone Disco where 162 people were killed in a fire—where she first had her taste of Sweet Vermouth.

Of course, there was Tito Rey’s where eating with one’s hands was the rule of thumb. Owner Rey Bautista is considered the father of kamayan (or the Filipino custom of eating with our hands), which name (Kamayan) was adopted by his partners who left him and set up their own.

Why is it that I am experiencing an uneasy 1980s déjà vu? The extrajudicial killings (EJKs) happening around us, and the recent setting up of the so-called Tapang at Malasakit Alliance led by the triad of Imee R. Marcos, Sara DuterteCarpio and former President Joseph E. Estrada have all the ingredients of a Marcosian ambiance.

The Duterte era has brought back the Marcos specter, and our family is once again coping with stress comparable to what we felt in the 1980s. Aside from watching movies, dining out is now our

As oneself

Created especially in God’s own image, humankind images and represents God in the world. So, the greatest commandment for humankind is love whereby our love of God is authenticated by our love for one another. We are entrusted to each other, so that we can love God in each other. The love we say we bear God whom we do not see is judged by the manner we act toward others whom we see. Indeed, the love of God remains in us and is brought to perfection in us by the love we have for one another (1 John 4:12). Nothing is better than love to testify to the nature of God and to His presence in our lives.

Doing anything contrary to our neighbor’s good can never correspond to God’s will and to the love we owe God. It is the imperative of love to determine what must concretely be done at any given time. A rule of thumb is to ask oneself what would one do or wish to be done for oneself under similar situation, or simply be guided by the golden rule that I should never do to anyone

main source of comfort. We have done our stress-induced eating of ramen in the ramen restaurants that abound, but our favorite is Santouka. Mama Lou’s (BF Homes and Nuvali) fills up the loss of Intermezzo (in Greenbelt), and is on top of our list of restos offering Italian delights, but the best Caesar Salad could be had at Bistro Ravioli (Mall of Asia, Robinson’s Malate, Greenbelt and Glorietta). Izakaya Kikufuji (Pasong Tamo) is one of the best Japanese restaurants in the Metro and gives a lot of bang for the buck. Kuya J Restaurant’s menu items are a bit bland for our taste, and not up on a par with other restaurants offering Filipino dishes, such as Mesa Filipino Moderne. Kuya J’s halo halo is an epic fail compared with Razon’s.

In our constant search for great Filipino fare, we chanced upon Kuya’s at QC on Mother Ignacia Avenue. Located snug in the midst of a growing business district, Kuya’s at QC is the hobbyhorse of Arthur “Chito” Bautista, with whom we had a chance to chat with. A retired banker, he pursued his other interests in food, travel and music. He now runs his trading company and two restaurants, Kuya’s at the Fort for those who live in the south and Kuya’s at QC for those who live in the north.

“The Filipino home is a hodgepodge of people, visitors and family members, sharing stories and passing down recipes,” Chito explains. Aligned with this “open Filipino home” concept, the customers hold a more privileged status at Kuya’s compared to other restaurants.

Chito enthuses, “We meet every month and ask ‘Ano’ng hinahanap ng customer?’

Nilalagay namin…. Our menu is the wildest in town; chefs disagree with us. We’re mavericks.”

what I would not want anyone to do to me. There is still some risk that we may be mistaken, for we are not always sure what may really be good for us here and now. That is why it is prudent to seek the advice of others more experienced, or to have recourse to such necessary experience as contained in our traditional values and guidelines.

Alálaong bagá, it is senseless to separate the first commandment from the second, or vice versa. For our love of God is first in the order of precept, while the love of neighbor is first in the order of practice, inasmuch as we do not see God but our neighbor we see immediately. As God’s love for us became incarnate in His Son Jesus Christ who became our Brother remaining in our midst, we must continue to find that love in the flesh, in our brothers and sisters with whom Jesus has identified Himself. Our attitude toward others verifies our belonging to Him and opens our access into God’s eternal reign. We shall merit to see God later by loving our neighbor now.

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.

Even as the restaurant prides itself in the traditional approach to food, Chito and his team have integrated suggestions by customers, like switching the typical puto-dinuguan combination with the more playful and tasteful dinuguanbibingka combo (the bibingka being Chito’s own personal recipe).

In Kuya’s at QC, you actually get three establishments under one roof because you can also dine at Jed & Julian’s and Bote’s Bar. Diners can choose from Filipino, Italian, Spanish, American and Mediterranean offerings, from lunch at 11:00 a.m. through afternoon snacks, dinner, until after-dinner drinks and pulutan at past midnight, without having to leave the premises, brave the city traffic and find safe parking again.

Bote’s Bar serves their own radical, signature drinks, such as Margarita TKO, which (you guessed it) is not your typical margarita with its mix of chili and basil for that much needed extra kick after a long work week. Jed & Julian’s is not a new name in the food industry, and offers western cuisine, including the best burgers and pizzas to satisfy every Filipino’s craving.

Chito believes and is convinced that our country’s iconic dishes—crispy pata, kare-kare, caldereta, sinigang, mechado, adobo, fresh lumpia and garlic rice—will be the ones to put the Philippines on the global food map.

The past year’s EJKs and our leaders’ foul-mouthed rants and irresponsible behavior have put our country in bad light with other democratic nations.

Finding favor in the eyes of the rest of the world for our gastronomic flair and flavors would indeed be most welcome.

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

Opportunity amid adversity: Claiming disallowed input VAT as deductions from taxable income Atty. Jared C. Vicencio

Tax Law for Business

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axes are the lifeblood of the government. This well-used legal maxim is mainly the reason that makes claiming tax refunds tedious. This means that Courts should be wary in granting entitlement to tax refunds, and that applications for such should be placed under the most extensive of scrutinies.

This also means that the burden of

proving entitlement to tax refunds fall on the shoulders of the taxpayer. The same applies in cases of refunding input value-added tax (VAT) incurred in relation to zero-rated sales. There are several tedious requirements that need to be met before such an entitlement is established.

However, given recent developments in the Court of Tax Appeals (CTA) cases, all

is not lost in case a taxpayer should find itself unable to prove its entitlement to input VAT refund.

Of particular interest is the CTA decision in CTA Case 8934, dated October 11. In the said case, the taxpayer involved was being assessed by the Bureau of Internal Revenue (BIR) for deficiency income tax. The BIR maintains that the taxpayer cannot validly

deduct its input VAT refund claim that was denied by the Office of the Secretary of Finance. However, the CTA ruled that the denied VAT refund qualifies as a deductible loss. The court reasoned that the taxpayer, prior to the denial of the claim, had reasonable expectation of receiving the refund. Further, upon receiving the denial, it has no other means of compensating the said loss.

And looking at the circumstances, the denial of the input VAT refund falls under the definition of deductible loss under the National Internal Revenue Code of 1997, as amended, and current BIR rules.

Thus, the CTA sustained the deduction made by the taxpayer, and nullified the BIR’s assessment on the said item. Note that this is contracting to issuances of the BIR, which do not allow input taxes as deductions for income tax purposes.

A word of caution, though, for those considering such a move. The facts of the case involve an input VAT refund that was denied in the administrative level. Thus, whether the input VAT refund denied by the courts can be valid deductions

from taxable income is still unsettled.

Further, CTA decisions, as the CTA itself will admit, do not create binding legal precedent upon itself. Only decisions of the Supreme Court (SC) create binding legal precedent that obliges other courts to follow. As such, until the SC affirms the said decision, it has yet to attain the status of legal precedent. Furthermore, there are currently no indications that the case has already attained finality, and is thus open to further scrutiny through several reliefs provided under the rules of the CTA.

The author is a junior associate of Du-Baladad and Associates Law Offices, a member-firm of WTS Global.

The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at jared.vicencio@ bdblaw.com.ph or call 403-2001 local 370.

2nd Front Page BusinessMirror

A12 Thursday, October 26, 2017

Lapeña moves to stop flow of ‘grease money’ at Bureau of Customs C ustoms Commissioner Isidro S. Lapeña has signed on Wednesday a memorandum that seeks to fast-track document processing in the Bureau of Customs (BOC), in line with President Duterte’s marching order to shorten processing procedures among government agencies.

Lapeña issued Customs Memorandum Order (CMO) 24-2017 setting a five-day mandator y time frame for all BOC personnel to respond to all clients.

This is pursuant to Republic Act (RA) 6713, or the Code of Conduct and Ethical Standards for

Public Officials and Employees; RA 9845, or the Anti-Red Tape Act of 2007; and Duterte’s policy pronouncement in his latest State of the Nation Address.

Communication letters, requests and other permits shall be acted upon by the concerned

CMO 24-2017 The Customs memorandum order that mandates all BOC units to act on all requests and permits within five days

BOC office within five days upon receipt of documents, according to the CMO. “When there’s delay, there is grease money,” Lapeña said.

According to Lapeña, the delays have caused the importers to resort to bribery. “They are looking for people who can facilitate their shipments and documents.”

He added that once shipments are “facilitated,” most of the time importers resort to benchmarking, one of the reasons the bureau has failed to hit the target revenue set by the Department of Finance.

The customs chief has also given orders to the Account Management Office (AMO) of the bureau to streamline the procedures in the accreditation of importers and brokers. Lapeña particularly criticized the AMO, as being the first show window of the bureau, that it should not be encountering delays in its services.

He stressed that it takes a month or two before the documents are released by the office. “Once documents are complete, the processing time shall start and it should not exceed five days,” he added.

Applicants can proceed to the Office of the Commissioner if their respective permits were not yet released by AMO within the fiveday time frame.

“The BOC is now two steps into eradicating the century-old practice of graft and corruption in the agency,” he said. Rea Cu

www.businessmirror.com.ph

DUTERTE’S SECURITY ADVISER WANTS MARTIAL LAW TO STAY IN PLACE DESPITE MARAWI WIN

By Elijah Felice E. Rosales @alyasjah

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ational Security Adviser Hermogenes C. Esperon Jr. urged President Duterte not to lift martial law in Mindanao, despite the liberation of Marawi City from the clutches of the Daesh-inspired Maute Group.

“Personally, I would like it to stay in place because, while the combat operations are over, let us remember that there are probable and possible elements that would still carry on the affiliation to [the Islamic State],” Esperon said.

Esperon added that members of the Abu Sayyaf Group, Bangsamoro Islamic Freedom Fighters and other radicalized groups that pledged allegiance to the Daesh continue to pose a security threat in Mindanao. He also said the government will benefit from martial law, since it will be able to roll out its rehabilitation program for Marawi City with ease.

However, Esperon did not give a clear answer if he will recommend the possible extension of martial law in Mindanao past its expiration on December 31.

The security adviser explained that it is “quite a dream” to say that all threats and problems on the island will be resolved within the time frame of the existing martial law.

“That’s why in Mindanao…but this has also national application, we must be able to shepherd the peace process with the MI [Moro Islamic Liberation

ESPERON: “All the terrorists that have come from Raqqa [in Syria], Mosul [in Iraq] and Aleppo [in Syria] could come here, or to Malaysia, or Indonesia, or even Singapore.”

Front], with the MN [Moro National Liberation Front], with the CPP-NPA-NDF [Communist Party of the PhilippinesNew People’s Army-National Democratic Front], if they are still willing to go by the terms of respectable peace process. We must shepherd all peace process,” Esperon said.

Esperon added that Southeast Asian countries should keep its guard up in spite of the death of Isnilon Hapilon, the selfstyled emir of the Daesh in the region.

“We must defeat terrorism, especially so that terrorism is borderless,”Esperon said.

“All the terrorists that have come from Raqqa [in Syria], Mosul [in Iraq] and Aleppo [in Syria] could come here, or to Malaysia, or Indonesia or even Singapore,” the security adviser added.

In a speech on Tuesday the President told the Philippine Air Force to stay on guard, as threats of terrorism and insurgency continue to haunt Mindanao.

“I enjoin our troops to continue performing their duties well, especially as martial law remains in effect in Mindanao, and there are persisting threats of terrorism and [insurgency],” Duterte said.