Businessmirror september 21, 2017

broader look » a6-a7

InterracIal marrIage: a FIlIpIna’s onlIne journey to blIssFul tIes

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

n

Thursday, September 21, 2017 Vol. 12 No. 343

T

@lorenzmarasigan

he Department of Public Works and Highways (DPWH) vowed to prioritize the revision of the implementing rules and regulations (IRR) of the National Building Code to ensure buildings throughout the country would withstand strong earthquakes and typhoons.

business news source of the year

P25.00 nationwide | 4 sections 26 pages | 7 days a week

Govt moves to make buildings conform to needs of the times By Lorenz S. Marasigan

2016 ejap journalism awards

Uberization of work Rene E. Ofreneo

₧89.6B

laborem exercens

T

With almost half a centur y since the law was passed in the early-1970s by then-President Ferdinand E. Marcos through a presidential declaration, experts believe that the National Building Code should be amended in order to meet the needs today.

he rise of Internet-facilitated on-demand services is changing the world of work in a radical and unpredictable way. We are now in the era of the so-called gig economy or “sharing economy”. A “gig”, initially equated to a paid musical performance, is now “one ride gig” for a private car owner who has transformed his/her vehicle into an on-demand taxi. Uber and Grab are turning these car owners-taxi drivers into “freelancers” or “independent contractors”. The “uberization” of work is spreading in other industries that are using the digital platforms, such as those advertising, selling and delivering goods or services with a little help from online facilities. Many simply use the still-to-be-regulated social media.

Continued on A2

Continued on A11

The losses incurred by the province of Leyte after it was hit by Supertyphoon Yolanda

Govt to ensure adequate protection for farmers in law abolishing rice QR By Jasper Emmanuel Y. Arcalas

L

@jearcalas

awmakers and government officials are keen on retaining the National Food Authority’s (NFA) power to issue import permits (IPs) as a measure to regulate the entry of imported rice into the country. This was evident during the House Committee on Food and Agriculture Technical Working Group’s (TWG) deliberations on the initial draft of the substitute bill amending Republic Act (RA) 8178, or the Agricultural Tariffica-

ALIW MEDIA GROUP HONORS NATIONAL ARTISTS The BusinessMirror and Philippines Graphic Publisher T. Anthony C. Cabangon (left) presents the Guardians of the National Memory plaque to National Artist for Literature Bienvenido Lumbera, while National Artist for Literature F. Sionil Jose (third from left) receives his plaque from Aliw Media Group Chairman D. Edgard A. Cabangon (right) at the recent Nick Joaquin Literary Awards. NONOY LACZA

Mexicans dig through collapsed buildings

M

E X ICO CIT Y—Police, firefighters and ordinary Mexicans dug frantically through the rubble of collapsed schools, homes and apartment buildings early on Wednesday, looking for survivors of Mexico’s deadliest earthquake in decades as the number of confirmed fatalities stood at 217. Adding poignancy and a touch of the surreal, Tuesday’s 7.1-magnitude quake struck on the 32nd anniversary of the 1985 earthquake that killed thousands. Just hours earlier, people around Mexico had held earthquake drills to mark the date. One of the most desperate

rescue efforts was at a primary and secondary school in southern Mexico City, where a wing of the three-story building collapsed into a massive pancake of concrete slabs. Journalists saw rescuers pull at least two small bodies from the rubble, covered in sheets. Volunteer rescue worker Dr. Pedro Serrano managed to crawl into the crevices of the tottering pile of rubble that had been Escuela Enrique Rebsamen. He made it into a classroom, but found all of its occupants dead. “We saw some chairs and wooden tables. The next thing we saw was a leg, and then we started to

PESO exchange rates n US 51.0360

move rubble and we found a girl and two adults—a woman and a man,” he said. “We can hear small noises, but we don’t know if they’re coming from above or below, from the walls above [crumbling] or someone below calling for help.” A mix of neighborhood volunteers, police and firefighters used trained dogs and their bare hands to search through the school’s rubble. The crowd of anxious parents outside the gates shared reports that two families had received WhatsApp messages from girls trapped inside, but that could not be confirmed. See “Mexicans,” A12

SERRANO: “I think the combination of applied tariffs…and the administration of import licensing by the NFA, or whatever agency that will administer it, will provide our farmers the protection.”

tion Act, on September 19. The amendment will abolish the quantitive-restriction (QR) scheme on rice imports, as committed by the Philippines to the World Trade Organization. The chairman of the TWG,

Party-list Rep. Jose T. Panganiban Jr. of Anac-IP, said he is amenable to retaining the power of the NFA to issue IPs, but not as the sole authority to import rice. “The permit shall come from the NFA, but to give them the sole authority to import all rice requirement, in fact, that is where I disagree,” said Panganiban, who also chairs the House Committee on Food and Agriculture. During the TWG, Rep. Gloria Macapagal-Arroyo of the Second District of Pampanga proposed that the government adopt an See “Govt,” A2

DOT’s ‘Bring Home a Friend’program seeks additional 500,000 foreign visitors By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

A

T least 500,000 more foreign visitors are expected by the Depar tment of Tourism (DOT) when it launches its “Bring Home a Friend” (BHAF) program in October. Tourism Secretary Wanda Corazon T. Teo made this bold prediction as she spoke with the BusinessMirror on the aims of the program, which will be launched in several countries abroad. “I’d like to think we can reach a target of 1 million arrivals,” said Teo, but agreed that 500,000 new arrivals because of the program alone could be more achievable. I n a ne w s con fe re nce on

teo: “This shall be a thrilling experience for us Filipinos, who are known for our genuine hospitality and for celebrating a long Christmas season.”

Tuesday, the DOT said the launch of the BHAF program is timed with the onset of the Christmas season, which in the Philippines usually lasts from October until January. “ We would like to close the year strongly for the tour ism industr y in ter ms of v isitor arrivals and carr y the momentum into the coming year,” the DOT chief said. T he program takes

a f ter for mer Tou r ism Secre tar y Mina T. Gabor’s own BHAF implemented in 1994 by the DOT, and is meant to encourage Filipinos to invite their foreign fr iends to come and v isit the Philippines. Any Filipino, residing in the country or overseas, stands to win an array of prizes under the program that will run for six months from October 15, 2017 up to April 15, 2018. Among the prizes are a condominium unit from Megaworld Corp., a brandnew Toyota Vios and a P200,000 gift certificate from Duty Free Philippines Corp. Their “friends” or foreign guests can win roundtrip international flight tickets and tour packages to Palawan,

n japan 0.4574 n UK 68.9547 n HK 6.5393 n CHINA 7.7492 n singapore 37.9055 n australia 40.8747 n EU 61.2228 n SAUDI arabia 13.6096

Continued on A2

Source: BSP (20 September 2017 )

A2 Thursday, September 21, 2017

BMReports BusinessMirror

Govt moves to make buildings conform to needs of the times Continued from A1

DPWH Project Director Johnson V. Domingo said the agency is open to receiving more recommendations from technical organizations for the amendment of the said law. The agency, through the Nationa l Bui ld ing Code Rev iew Committee (NBCRC), has already received some suggestions from several groups, which voiced concerns and issues relative to the code and its implementing rules and regulations (IRR). “From the submitted proposals, NBCRC, along with the newly reconstituted Board of Consultants of the National Building Code, shall evaluate and recommend action on issues and concerns, and propose revisions or amendments to the IRR of the existing code,” he said. A mong the potentia l rev isions include streamlining the process of acquiring building p e r m it s , s t a n d a r d i z i n g t h e specifications of building mater i a l s a nd i nt roduc i ng new building categories. Architect Renato A. Labudlay said there really is a need to update the building code because it has conflicting provisions with

the National Structural Code of the Philippines. "The building code also has contradicting standards w ith Batasang Pambansa 220 on economic and socialized housing projects," Labudlay added. A lready tag ged by ex perts and lawmakers as “antiquated” and “outdated”, the legislation lists the standards for the construction of buildings all over the Philippines. Lawmakers from both Houses have already voiced concerns over the law, noting it should be amended to keep pace w ith the trends in the constr uction sector, as well as consider factor s on p o pu l at ion g ro w t h , moder n u rba n pl a nning a nd r i sk reduc t ion. For mer R e p. Ferdinand Martin Romua ldez of Ley te has said it is “ imperative” to consider risk-reduction management in the rev ision of the building code consider ing the disasters that have come to the countr y. Leyte was heavily devastated by Supertyphoon Yolanda in 2013, leaving the province with over P89.6 billion in losses due to damages on public and private infrastructure, and millions of people displaced.

Sen. Leila M. de Lima has also filed a resolution for immediate review and revision of the law, as it will help in modernising the current state of the buildings— residential or commercial—in the Philippines. And, being situated along a typhoon belt and the so-called the Ring of Fire, the Philippines should have better laws on construction for the safety of its people, she said. Domingo said once the public works department finishes its review of the submitted proposals, these will be collated and be passed to Congress in aid of legislation. The NBCRC is composed of directors of Bureau of Design, Bureau of Constr uct ion, Bureau of Maintenance, Bureau of Research and Standards, Legal Ser vice, Planning Ser vice, Unif ied Project Management Office—Buildings Management Cluster and NBCP-Board of Consultants chairman. The Board of Consultants of the National Building Code is composed of represent at ives from different government off ices a nd non- gover n ment a l organizations, such as departments of Environment and Natu-

ral Resources, Interior and Local Government, Health and Justice; Bureau of Fire Protection and the Construction Industry Authority of the Philippines. The Institute of Electronics Engineers of the Philippines, Institute of Integrated Electrical Eng ineers of the Philippines Inc., National Master Plumbers Association of the Philippines, Philippine Association of Building Officials, Philippine Society of Agricultural Engineers, Philippine Institute of Mechanical Engineers and Philippine Society of Sanitary Engineers are also part of the board. The Philippine Institute of Volcanology and Seismology (Phivolcs) had earlier urged Metro Manila residents to prepare for the “Big One”, or a 7.2-magnitude earthquake. Businesses were also told to plan “carefully” so they can cope with the impact of the earthquake. The Philippines was given a preview of what to expect when the Big One strikes after Mexico was rocked by a 7.1-magnitude earthquake, which killed more than 200 people on Wednesday. The earthquake also damaged a number of buildings, including the Philippine Embassy.

DOT’s ‘Bring Home a Friend’ program seeks additional 500,000 foreign visitors Continued from A1

Cebu and Davao. “ T his sha l l be a t hr i l l ing experience for us Filipinos, who are known for our genuine hospitality and for celebrating a long Christmas season,” Teo said. To join the program, the sponsor should register at the BHAF home page, accessible via DOT’s

web site http://tourism.gov.ph. Registration may also be accomplished at BHAF booths soon to be set up at select international airports in the Philippines. The number of eligible entries will also depend on the points they earn corresponding to the guest’s country of origin: Asia and Oceania/Australia 2; and A f-

rica, Middle East, Europe and America 3. Conversely, the more foreig n fr iends the sponsors invite, the more entries they can submit. Data from the Department of Foreign Affairs show 9.1 million overseas Filipinos, of which, more than 3 million reside in the United States, while more than 2

million are based in the Middle East. Other countries with large numbers of Filipinos are Malaysia, Hong Kong, Japan, China, Italy and Australia. Employees of the DOT and its attached agencies and their relatives to the third degree of consanguinity are prohibited from joining the BHAF program.

www.businessmirror.com.ph

Govt. . .

Continued from A1

import-licensing regime that would ensure regulation of rice imports in the country. Arroyo noted that this kind of measure would shield local farmers from adverse effects caused by sudden influx of cheaper rice from abroad. Meanwhile, Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano supported the proposal of maintaining the government’s authority to issue IPs, adding that a set of guidelines should be developed in issuing such. “There could be a multisectoral [committee] tasked by law to develop guidelines in the issuance of import licences. Whether the import licensing remains within the NFA or other agencies, we do not have any problem with that,” he said. “As for the proposal to confine the NFA’s authority to buffer stocking and emergency importation, we can conform with that as long as the import-licensing provision of the NFA is retained with adequate guidelines,” he added. The agriculture official pointed out that aside from higher tariffs, having an import-licensing regime would also serve as mechanism to protect local farmers from cheaper rice imports. Serrano pointed out that without an import license or permit, a rice trader cannot bring in any imports. “We propose in this bill that we preserved the import licensing for rice. There’s no much higher protection than import licensing…you can have a 1,000-percent tariff rate but if you do not have an import licensing then you are just as open as everybody else. I think the combination of applied tariffs that are not too high but pleasurable enough and the administration of import licensing by the NFA, or whatever agency that will administer it, will provide our farmers the protection,” he added. The TWG later on included three provisions relating to the NFA in the draft of the substitute bill after no objection was made during the deliberations. “So, we agree to confine the

power of the NFA to import only for buffer stocking and emergency. We also maintain its current importlicensing power,” Panganiban said. However, the TWG deferred other discussions relating to other powers of the NFA, such as market interventions, to a later meeting. In its position paper submitted to Panganiban, NFA Administrator Jason Aquino said the state-run food agency should maintain its import-licensing authority even after the removal of the QR on rice. “The NFA will still monitor and regulate all rice imports. During the transition period, the NFA should still retain its present regulatory powers, i.e., issuance of import permits,” Aqunio said in the position paper dated August 31, a copy of which was obtained by the BusinessMirror. “After the transition period, the NFA should still be allowed to continue to license all those engaged in the rice business, to properly monitor the volume and arrival of all rice imports, and compliance to Food Safety Act,” Aquino added. At present, the NFA regulates the country’s rice importation by dividing the current import quota to licensed and accredited traders and importers. Any interested rice trader shall comply with the requirements outlined by NFA’s minimum access volume (MAV) guidelines. For example, interested importers should file their letter of intent, after which the NFA MAV prequalification team will conduct the validation and authentication of all the requirements submitted by the applicants. The team will also verify if the applicant is a party to any case or investigation for rice smuggling, hoarding, unauthorized rebagging or resacking of government stocks to commercial sacks, diversion and cornering activities. After this, a Certificate of Eligibility shall be issued to qualified applicants. Under the guidelines, all rice importers are also required to register with the Bureau Plant IndustryNational Plant Quarantine Services Division prior to the conduct of negotiation and actual importation. Also, a private trader could only secure an IP from the NFA upon payment of a P5,000 processing fee per bill of lading, according to the agency’s MAV 2017 Guidelines. The issuance of IP shall also be on a per bill of lading basis, according to the MAV 2017 guidelines, which was approved by the NFA Council. The NFA Council is the highest policymaking body of the NFA, which is chaired by Cabinet Secretary Leoncio B. Evasco Jr.

Psalm. . .

Continued from A12

On August 28, 2007, the BIR sent the NPC. a demand letter for the payment of the VAT deficiency for the sale of the said power plants. The NPC, in turn, endorsed the said letter to PSALM, considering that the proceeds of the sale are with the latter. On August 30, 2007, PSALM, the BIR and the NPC executed a memorandum of agreement wherein they agreed that the resolution of tax issues will be submitted to appropriate courts or body. PSALM subsequently filed a petition with the DOJ for adjudication of the issue of whether the sale of the two power plants is subject to VAT. The DOJ, in its March 13, 2008, decision, affirmed the position of PSALM that the sale of the said power plants was done in accordance with its mandate under the Epira, thus, the tax assessment should be declared null and void. The justice department also directed the BIR to refund the P3.81 billion that Psalm paid under protest. Concurring with the ruling were Chief Justice Ma. Lourdes Sereno, Associate Justices Presbitero Velasco Jr., Teresita Leonardo de Castro, Diosdado Peralta, Jose Catral Mendoza, Marvic Leonen, Francis Jardeleza, Alfredo Benjamin Caguioa, Samuel Martiresm Noel Tijam and Andres Reyes Jr. Associate Justice Lucas Bersamin concurred with the dissenting opinion of Associate Justice Mariano del Castillo. Associate Justice Estela Perlas-Bernade did not take part.

Economy

A4 Thursday, September 21, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

Time to splurge: Duterte repeals Arroyo order on austere spending By Jose Cielito Reganit Philippines News Agency

P

r esident Duterte has repealed an administrative order issued by former President Gloria MacapagalArroyo, which directed the continued adoption and implementation of austerity measures in the government. Administrative Order (AO) 6, which was signed by Duterte on Tuesday, repealed AO 103, issued by Macapagal-Arroyo on August 31, 2004. Macapagal -Arroyo ordered the implementation of austerity measures in the government to meet the country’s fiscal targets, maintain its macroeconomic stability and improve investor confidence. AO 103 also directed the national government, its agencies and instrumentalities to undertake cost-cutting measures to reduce expenses and channel its scarce resources toward the implementation of the Macapagal-Arroyo administration’s 10-Point Legacy Agenda. The said AO ordered all national government agencies (NGAs), including state universities and colleges (SUCs), government-owned and-controlled corporations (GOCCs), government financial institutions (GFIs), and other government corporate entities (OGCEs) and their subsidiaries, and other instrumentalities under the Executive branch to suspend all foreign travels, except for ministerial meetings and scholarship/trainings that are grant-funded or undertaken at no cost to the government. It also ordered the suspension of the following: Local travels, unless urgently necessary and allowed by the secretary or the head of the SUC, GOCC, GFI, or OGCE; purchase of any type of motor vehicles, except ambulances and those required by the military and police; Conduct of training, seminars and workshops, except if funded by grants, or if the cost may be recovered through exaction of fees; Expansion of organizational units and/ or creation of positions, except those following “scrap and build” policy or matched by the deactivation of existing units/positions of the same cost; Conduct of celebrations and cultural or

sports activities not related to the core function of the agency, except athletic competitions conducted by public schools or SUCs; and Donations, contributions, grants and gifts, except if said activities are undertaken pursuant to the mandate of the donor agency. The order, likewise, called for the reduction of at least 10 percent in the cost of services of consultants, technical assistants, contractual and casual employees; and consumption of fuel, water, office supplies, electricity and other utilities. Likewise, a scheme that will allow employees rendering overtime to be compensated through time/days off work in lieu of overtime pay was implemented. AO 103 also adopted the provisions of the attrition law, which prohibited, with certain exceptions, the filling-up of positions that have been vacated by reason of resignation, retirement, dismissal, death or transfer to another office. In repealing Macapagal-Arroyo’s AO 103, Duterte noted that the country’s fiscal condition has significantly improved since 2004, due to public expenditure management and tax administration reforms, as well as sound and prudent debt management. “With the country’s improved fiscal situation, the government could, among other initiatives, increase infrastructure and social spending, implement public expenditure management reforms with greater intensity, streamline government operations and make public service delivery more efficient in order to give the Filipino people the best value for their taxes,” AO 6 stated. AO 6 also noted that most of the provisions of AO 103 are already covered or superseded by previous pertinent provisions of the General Appropriations Act and recent issuances of the Office of the President, the Department of Budget and Management, Civil Service Commission and other relevant agencies. “Repealing AO 103 is aligned with the strategies of the Philippine Development Plan 2017-2022, which provides for, among others, the formulation and implementation of public expenditure management reforms that will improve budget utilization and address underspending of government agencies,” AO 6 stated.

BusinessMirror

news@businessmirror.com.ph

Lawmaker says DepEd procurement process delays school-supply delivery

T

By Elijah Felice Rosales

@alyasjah

he Department of Education (DepEd) on Wednesday was told by Senate President Pro Tempore Ralph G. Recto to reform, if not revamp, its procurement process, which, the lawmaker said, delays the delivery of equipment and books badly needed by public-school teachers and students. “The present DepEd leadership assumed into office to a huge avalanche of unspent funds. Prior to her [Education Secretary Leonor M. Briones] assumption, we were regularly regaled with reports on how many classrooms were built, the millions of books bought, the tens of thousands of teachers hired, but it later turned out that there was even zero procurement in these areas,” Recto said in a news statement. Recto took a swipe at the past DepEd leadership, saying it has passed on “a culture of underspending and a broken system of procurement” to Briones. He said the failed procurement process of the DepEd has caused numerous delays in the delivery of equipment and books. For instance, Recto claimed none of the 86,641 lots of science and mathematics equipment supposed to be delivered from 2014 to 2016 were bought. He said the sets of equipment were nonexistent in any of the 75,182 public schools identified by the DepEd as recipients. On the other hand, the senator reported only 84.9 million books were bought in 2015 and 2016, well below the targeted 179.6 million books for procurement. “The same goes for the chairs: It’s a failing grade for the DepEd. The total number of funded chairs was 1.323 million in 2015, but only 364,670 chairs

w e r e b o u g h t ,” Recto said. “The said debacle was repeated in 2016. Of the programmed 45,898 furniture sets to be acquired that year, not one was bought,” Recto added. However, what briones Recto lamented most was the “pileup” in classrooms, beginning from the 84,000 backlog in 2015 and 22,000 in 2016. “Then there’s the goal of 47,000 this year. All these are already delayed in delivery,” the senator said. Recto told the DepEd leadership it will be difficult to roll out general appropriations-funded projects with all the backlog it has to address. “That’s the result of creating a list for purchase based only on mathematical formula without checking the realities on the ground. When computations by central offices are done table top and without validation, the outcome would be a hitch,” Recto said. Recto told Briones “not to be fazed by these challenges” and to focus on outlining and implementing meas-

ures that would remove procurement blockages and erase the backlog on books and equipment. “In fairness to the DepEd, there are procurement and auditing law and regulations, [including] planning protocols, that need to be changed or liberalized in order to speed up the delivery of resources,” the senator said.

The present DepEd leadership assumed into office to a huge avalanche of unspent funds. Prior to her [Education Secretary Leonor M. Briones] assumption, we were regularly regaled with reports on how many classrooms were built, the millions of books bought, the tens of thousands of teachers hired, but it later turned out that there was even zero procurement in these areas.”—Recto

Manufacturers in developing nations told to prepare for tech advancement By Cai U. Ordinario

N

@cuo_bm

ew technologies are expected to reduce the manufacturing sector’s ability to create jobs, similar to the days of the East Asian Miracle, according to the World Bank. In a report, titled Trouble in the Making? The Future of Manufacturing-led Development, the Washington-based lender advised developing countries to create new policies to cope with technological disruptions in manufacturing. For lower middle-income countries (LMICs) with a strong services sector but have a weak manufacturing backbone, like the Philippines, the World Bank urged the creation of synergies between services and manufacturing. “Technology and globalization are changing how manufacturing contributes to development. We will need to embrace this change rather than fear it,” World Bank Group’s Senior Director for Trade and Competitiveness Anabel Gonzalez said. “In the past, the manufacturing sector created jobs for unskilled workers and increased productivity. In the future, developing countries will need to update their policies along with their infrastructure, firm capabilities and job creation strategies to meet the demands of a more technologically advanced world,” she added. The report said countries like the Philippines that have “stand-alone” services, such as tourism, health care, business-process outsourcing and other professional services, as well as embedded services can, on its own, provide growth opportunities without a manufacturing base. However, jobs in the services sector cannot create employment for all kinds of workers, including unskilled labor. Subsectors, like finance, information technology, accounting and legal services, are all skill-intensive. Some of the few service sectors that can provide jobs, even to low or unskilled

workers, are construction and tourism services. But these sectors cannot absorb all unskilled workers. The World Bank said by creating synergies between sectors, such as services and manufacturing, will allow both sectors to participate in the “entire value chain of a product”. “Countries can seize promising new opportunities for productivity growth and job creation if policy-makers pursue approaches that adapt to changing technologies and changing patterns of globalization,” said Mary HallwardDriemeier, a senior economic advisor in the World Bank Group’s Trade and Competitiveness Global Practice and the report’s coauthor. “Those countries that don’t are likely to face not just economic costs, but also social costs associated with increased inequality and more limited access to opportunities.” These synergies can be created by adopting the “3Cs” that countries can use to bolster their manufacturing sectors. These are competitiveness, capabilities and connectedness. Competitiveness will increase the importance of reforms that reduce unitlabor costs. But it will also require each economy to be better able to consider new business models; to seek new contracting relationships that embrace new technologies and to devise new ways for manufactured goods to also deliver services. Capabilities, meanwhile, will involve giving workers new sets of skills, strengthening firms’ abilities to absorb new technologies, and providing new infrastructure and new rules to support the use of new technologies. The World Bank said connectedness will continue to emphasize openness to trade in goods, including raw materials and components. But it also increases the importance of grasping the synergies with services that are increasingly embodied and embedded within manufactured goods.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Thursday, September 21, 2017

A5

Rice production seen hitting 3.36 MMT in Q3 By Jasper Emmanuel Y. Arcalas

D

@jearcalas

espite the projected reduction in palay harvest area and yield, the Philippine Statistics Authority (PSA) said paddy-rice output in the July-to-September period would still reach 3.36 million metric tons (MMT).

BLOOMBERG

In its report published on September 20, titled “Updates on July-September 2017 Palay and Corn”, the PSA revised downward its forecast for unmilled rice production to 3.36 MMT, from 3.39 MMT. “The probable decrement in pa lay production may be attributed to reduction in harvest area and yield caused by flash floods in South and North Cotabato; lower y ield in Sulta n Kud a rat, L a nao Sur a nd

Maguindanao,”the report read. “[Also] late plantings due to late release of irrigation water in Bulacan, rice blast infestation in Negros Oriental, and occurrence of tungro in Aurora during vegetative stage of the crop [would cut output],”it added. The PSA also noted that harvest area may contract by 0.10 percent to 851,757 hectares, from 852,610 hectares. Yield per hectare could also fall to 3.95 MT, from 3.98 MT.

The projected harvest area in the third quarter, however, is bigger than last year’s record of 745,140 hectares. PSA data also showed that its latest palay production forecast is still higher by 13.3 percent than the 2.969 MMT produced in the same period last year. The report noted that about 123,930 hectares, or 15 percent, of the updated standing crop for the July-to-September period have been harvested. The PSA added that around 1.3 million hectares, or 70.7 percent, of the farmers’s planting intentions for the fourth quarter have materialized. “Of the [2.028 million] hectares standing palay crop, 73 percent were at vegetative stage, 18.2 percent at reproductive stage and 8.8 percent at maturing stage,” the report read. The expected increase in the cou nt r y ’s paddy- r ice out put this year prompted the United States Department of Agriculture’s Foreign Agricultural Service (FAS) to revise downward its projection for Philippine rice imports this year to 1.1 MMT, from 1.6 MMT. In its Global Agriculture Information Network report, FAS said Philippine rice harvest area in marketing year 2016 -2017 could expand to 4.705 million hectares, 2.28 percent bigger than the FAS’s previous forecast of 4.6 million hectares.

PHL, US eye joint research on marine turtles

A

host to five marine turtles, particularly green marines, the Philippines is planning to conduct a joint research with the United States on marine turtles to protect and conserve the species. The Philippines and the US share a vast range of marine turtle distribution across the Pacific. Many of the marine turtles “tagged” in the US have been found to be traveling across the Philippines to forage. On Tuesday experts from the Pacific Islands Fisheries Science Center of the National Oceanic and Atmospheric Administration (NOAA) and their counterparts from the Department of Environment and Natural Resources-Biodiversity Management Bureau (DENR-BMB), Department of Agriculture’s Bureau of Fisheries and Aquatic Resources, University of the Philippines’s Institute of Biology and other marineconservation stakeholders held a public seminar at the DENR-BMB’s Training Center in Quezon City where the experiences of both countries on marine turtle research and conservation were shared. Held at the Ninoy Aquino Park and Wildlife Rescue Center in Quezon City, the second of a series of meetings cohosted by the DENRBMB and the United States Agency for International Development was highlighted by experts sharing ini-

tial results of ongoing research and initiatives on marine turtle conservation. It aims to explore avenues for collaboration and to jump-start joint initiatives for marine turtle research, as well as possible collaboration to combat marine-turtle poaching. Both countries have extensive studies on marine turtles. Experts from NOAA—John H. Wang and Dr. Summer Martin— shared their studies on fisheries and marine turtles in the Pacific Islands. Martin said marine turtles have the tendency to stay in one place for about 20 years, which could explain the mystery surrounding a juvenile marine turtle’s behavior. Marine turtles, known to be a migratory species, leave their nest after hatching and return only when they are mature and it’s time for them to nest and lay their own eggs. The recent studies of NOAA experts cover assessment of marine turtles through genetics and satellite technology and reducing bycatch of turtles in fisheries. The Philippines has an ongoing program on marine turtle conservation called Pawikan Conservation Project, which was formally started in 1979. Through the project, the Philippines has established marine turtle sanctuaries and nurseries where eggs are secured

against illegal-wildlife traders and natural predators. Dr. Rizza Araceli Salinas and Pablo de los Reyes of the DENR-BMB shared policy initiatives and ongoing marine turtle conservation efforts, particularly in Tawi-Tawi and other areas. The most recent project involves the satellite tracking of tagged 20 marine turtles to track their migratory pathways. While the Philippines has been frequented by marine turtles because its coastal and marine ecosystems are ideal as foraging grounds, nesting grounds or migratory corridors, it is also a biodiversity hot spot because of the rapid rate of species extinction owing to habitat loss and illegal-wildlife trade. Poaching is rampant as marine turtles are hunted for their eggs, meat and shell. Other threats to the existence of marine turtles are pollution, destructive and harmful fishing practices and disease. BMB Director Theresa Mundita S. Lim said the Philippines, being a resource-poor country, needs the support of its allies in the conduct of extensive research for biodiversity conservation. “We look forward to this collaboration because, after all, with our limited resources, we cannot do it alone,” Lim said. Jonathan L. Mayuga

TheBroa

Business

A6 Thursday, September 21, 2017

Interracial A Filipina’s online jou I

By Recto Mercene

@rectomercene

NTERRACIAL marriages in the country have existed long before the advent of air travel and the Internet. It is defined as “a marriage between spouses who belong to different races”. Interracial marriage was historically a taboo in the US and outlawed in South Africa. It was formally declared legal in the former only in 1967. In the last decades, however, mail-order bribes became a “fashion”. Mail-order brides were prevalent in 19th-century America; their object being brides from welldeveloped areas on the Eastern seaboard to marry men in Western frontier lands. “In the 21st century, the trend is now based primarily on Internet-based meeting places that do not qualify per se as mail-order bride services. The majority of the women listed in the 20th century and 21st century services are from Southeast Asia, countries of the former Eastern Bloc and, to a lesser extent, from Latin America. The Philippines became famous for mail-order brides due to poverty and the lack of employment, forcing thousands of Filipinos to find work abroad and to seek marriage with foreigners. They were seeking a better life and to support their families back home. Because of the uproar that followed after many overseas Filipino workers (OFWs) were victimized by syndicates, the government eventually banned ma i l- order br ides in 1990 through the enactment of Republic Act (R A) 6955. The law was amended to exact heavy penalties for businesses peddling Filipino spouses through the mail-order system. R A 10906, or t he a nt i-ma i l order spouse l aw, ma kes it i llega l for a nyone to operate a business matc h ing a Fi l ipino to a foreig n nat iona l for ma rr i age or common-l aw pa r t nersh ip t hrough persona l int ro duc t ion , e - m a i l , sn a i l m a i l , web site or adver t isement on t rad it iona l med i a.

The law also sanctions clubs that aim to introduce Filipinos to foreigners in order to allow them to broker a marriage or common-law partnership. R A 10906 also protects “Filipino spouses” and also includes digital platforms, but not including social-media sites. W hile protecting against immed iate per manent ar range ments, the law does not cover dating web sites, or businesses that only aim to let foreigners meet Filipinos for purposes other than marriage or commonlaw partnerships.

Good match

A Filipina who got disappointed by the lean pickings from the local male population tried the online-dating web site out of cur iosit y and, eventua l ly, hit the “ jackpot”. Eight years later, their union blessed them with a son, now 7 years old. They initially lived in the United States but the husband gets assigned to work abroad and, presently, they are having a field day in Singapore. Jam Kotenko-nee Regis is adept with the written words and she practically wrote the story for this piece, following an interview and questions sent via electronic mail. She gamely relates how she met, got engaged and married her spouse. “My husband Jason and I met in a way that’s still considered by the older generation as unconventional and unique, but in 2017 is actually commonplace: by meeting online through a dating web site,” Jam said. Jam used to live in Ayala, Alabang, and one day opened a dating web site. Jam said her husband-to-be Jason “landed on my profile”. The site lets you know when someone views a page. “I viewed his, found his profile

I take pride in being a Filipino, so when someone asks me where I am from, I immediately say I was born and raised in the Philippines even before mentioning the place we used to live [San Jose, California, before moving to Pittsburgh, Pennsylvania], unlike Filipinos who grew up in the US who probably identify more as American and would instinctively say American before mentioning Filipino.” —Jam Kotenko-nee Regis

interesting and initiated a correspondence. The rest, as they say, is history.” That time, Jason was a senior director for digital solutions in Visa. She said the web site rated their pairing as a 98-percent match.

Good choice

ACCORDING to Jam, her search for Jason has always been at the back of her mind. “After having a few relationships with guys of the same heritage and experienced varying levels of heartbreak with each and every one, I made a conscious decision to try dating someone from a different country, just to see if my past breakups were personality-based and if I could get along better with somebody culturally different,” she said. “I was tired of having to defend my being nonreligious, or the fact that I took a two-year break from college and took longer to attain a degree. I needed to meet new people who were more openminded, who respected me as an equal who had valuable insights, who appreciated my type of humor and personality. I needed to date someone who ‘got’ me.” Jam said talking to people who lived abroad “had its perks”. “If they turned out to be creeps, then the distance between us would prevent me from having to interact with them in person and I can just stop writing back or answering their Skype calls,” she said. “If they were gems, they’d figure out a way to visit me in the Philippines to meet up in person—a gesture that was itself a sign that the guy is a keeper!— or would be willing to meet up if I ever went on a trip abroad.” Jam said they go on “‘ dates’ by w atc h i ng t he sa me movies and basketba l l games w ith Sk y pe on, so it feels like we’re watching together.” “He also met my entire family via webcam.”

Far concept

JAM said she wasn’t really focused on marriage per se when she started online dating, “but I had an inkling that maybe I’d have a better chance at a long-term relationship with a foreigner.” “After meeting Jason, I knew I made the right call.” Jason, on the other hand, said most of the women he was meeting in the US were not clicking with him. “So when Jam came up [on the web site], I was open to it,” he said. “I had dated people of other races and nationalities in the past, so it wasn’t a big deal overall.” Stil l, Jam said she was unprepared to be a housew ife in the United States, where they were first based as a mar r ied couple. She ex plained that in the Philippines “ it’s common to have live-in help and I grew up w ith people who helped my mom m a n age t he hou sehold w ith ever yday chores and maybe even child care.” “In the US having household help is reserved for the super-rich.” She said Jason grew up with a mom who did everything herself—cooked, cleaned the house, ran errands, attended community functions, managed a side

A Filipino woman talks to a foreign national over the video capability of the Internet. Interracial relationship sealed online has helped some couples to achieve a successful marriage.

business, and cared for him and his brother as babies.

Adjustment period

ACCORDING to Jam, she tried to adapt to Jason’s definition of a housewife. “In the six years that we’ve lived there and in the five years that we’ve been married, I tried very much to adapt to the definition of housewife Jason was familiar with, and while there were times when I thought I was doing a good job of it, the struggle that got me to that point was very real... especially once our son was born!” Relocating to Singapore also changed things. “Now that we are based in Singapore, where we have household help, I feel slightly more confident being my own brand of

housewife: a convenient mix of the typical US stay-at-home mom who is capable to do everything and more and a Filipino leader of the house who knows how to delegate and supervise,” she said. Jason said he also had to adjust. “My family is much smaller and less connected because it is spread all around the US, which is a very big country.” He added he never had the concept of a close, extended family. “Even my immediate family put more emphasis on independence and self-reliance than Jam’s,” Jason said. “That was definitely the biggest thing that I noticed.”

Managing differences

JASON said it helped that Jam was already a bit “Americanized” in attitude before they met.

“It was natural for us then to go our own way and start an independent life from her family and mine,” Jason said. “I know I could have never fully integrated into the Filipino family way of life so in that way Jam moved in my direction more than I moved in hers. Otherwise, we are so much alike that we haven’t had a ton of issues around differences in opinion on how we should lead our lives.” Still their passion for adventure and traveling helped further cement their relationship. “My favorite part about our marriage and relationship is our equal thirst for adventure. We love traveling!” Jam said. They also frequently did crosscountry road trips in the US, enjoying the local activity or delicacy.

aderLook

sMirror

www.businessmirror.com.ph | Thursday, September 21, 2017

l marriage: urney to blissful ties hand and the fork with your left hand, or having to use the spoon at all [are another].” He added there’s also the concept of noche buena and that there doesn’t seem to be any toilet paper in public restrooms. For Jam, what was surprising was American “don’t use spoons with their meals and how, apparently, there’s no such thing as ulam [viand] in the US”. She cited a day when Jason made a stew on the slow cooker and she prepared to cook rice. “When he realized what I was doing, he stopped me and told me we don’t need rice and there’s potato in the stew.” Jam also realized one cannot call the waiter’s attention to order more because it is considered rude. “You have to wait for them to come back to your table.” What Jason finds difficult to understand is the inability of Filipinos to say “No.” “If I ask for directions on the street, instead of someone telling me that they don’t know, they will simply point me in any random direction to be helpful.”

No interference

ACCORDING to Jam, her being a Filipino doesn’t interfere with their relationship. “I think it makes it more interesting. After seven years of being together, five of them as a married couple, he still cannot speak Tagalog,” she said. “But he at least knows enough to know if he is being talked about by my friends and relatives.” Jam said her being Filipino and his being A mer ican also improves their relationship in terms of upbringing “ because we are able to get the best of both our worlds and instill it in our family life, as well as each other”. She cited the tight-knit relationship of her family as example. Despite the difference in racial traits, however, Jam finds similarities. “We both value honesty, we’re passionate, and generous. We’re both nonreligious and have an outlook that is rooted in science. We both like preparing for the future. I like making lists and he likes making excel sheets of all our plans.”

Management tips Pretty lucky

JAM said she considers herself “pretty lucky to have not been exposed to a high level of racism that a lot of people of color are experiencing in the US these days”. “ The most [treatment] that I have gotten is the insistence that my English was exceptional and how they couldn’t believe I didn’t have a thick accent like other Filipinos they know,” Jam said. “I also take pride in being a Filipino, so when someone asks me where I am from, I immediately say I was born and raised in the Philippines even before mentioning the place we used to live [San Jose, California, before mov ing to Pittsburgh, Pennsylvania], unlike Filipinos who grew up in the US who probably

identify more as American and would instinctively say American before mentioning Filipino.” She sa id she a l so con sid ered herself “very lucky to have American family members who received my different heritage with open arms”. “I was happily encased in a racist-free bubble and was incredibly grateful for it.”

Blissful feeling

HOWEVER, this feeling of bliss was temporary and things started to change following the election of Donald J. Trump. “ I b e c a me hy p e r - aw a re. I became war y of the place we lived in and became cr itica l of its reception of A sians [and] Fi l ipi nos a nd k id s of m i xed descent,” Jam said.

She added they used t o l i v e i n a p r e d o m i n a nt ly white neighborhood. “And there was a very high probability that if my son were to go to school there, he’d be the only Asian in his class, a thought that made me cringe—still does to this day,” Jam said. “I didn’t want to expose [my son] to that and have it tarnish his childhood. I didn’t want him to grow up completely alone and without compatriots who could relate to him better.” That concern “ definitely affected ” their decision to move away from the US. “I have no regrets,” Jam said. On the other hand, Jason said they “probably had a rosy point of view when we moved to Pittsburgh and into the suburbs that everyone would be accepting and

nice and we would become part of a community”. “ That never happened, and part of me thinks it was partially related to all the Trump sig ns that popped up in the election all around us,” he said. “Did those people see my wife as a foreigner who shouldn’t be there? W hat did they think of my son, and of me? “

Culture quirks

THERE are Filipino practices that Jason found sometimes funny. “The concept of needing to take a shower if you get ambon [drizzle] to avoid getting sick is one,” he said. “The need to get pasalubong [gift] for everyone in the family every time you go to a different country and having to use the spoon with your right

Jam said they were able to manage to reconcile cultural, racial, political and other differences because they were aware of these in the first place. “Coming into the relationship the way we did, we already knew what we were getting into before h a nd ,” she s a id . “ T he beauty of having a digital romance and long-distance relationship to start with is you’re encouraged to be as descriptive about your life stor y as possible with the person you are getting to know.” Jam said they talked about absolutely everything and left nothing out through thousandword e-mails exchanged each and every day of their courtship. “On top of that, we also chatted through text and v ideo,” she added. “In a matter of a few months,

A7

we found out that we had the same political beliefs [liberal], the same level of regard for racial equalit y and the same excitement over learning new cultures,” Jam said. “It honestly wasn’t so hard to navigate our differences because our channels of communications were very, very wide to begin with. That is something we try to keep intact in our marriage.”

Odd foods

ACCORDING to Jam, when they were first getting to know each other, “Jason told me he was the t y pe of g uy who is w il ling to tr y new things and tr y new foods at least once, which is what impressed me about him.” “Balut, surprisingly, did not gross him out,” she said. Jam added the first time Jason tried balut (boiled duck fetus), “it was the sizzling variety and he sat the duck on his spoon, making it ‘talk ’ before eating it whole”. “He’s super proud about that story.” Howe ver, Ja m s a id Ja son “hates bagoong (fish paste) with a passion”. “He refuses to eat anything that requires it [bagoong] as an ingredient or sauce, like green mango or [in] kare-kare.” One day, Jam said her brother-in-law ser ved binagoongang baboy (pork in bagoong ) a nd didn’t tell Jason what it was. Jason said the viand was delicious and when he finally found out, he laughed hard. “He then agreed that he would eat food with bagoong in it as long as it’s mild and the fishy taste is disguised,” Jam said. She added he’s not a fan of dried fish “and refuses to let me cook it inside the house”. Jason was put to the test, however, when Jam, while pregnant, had a craving for danggit (dried fish) but she was too nauseous to cook it. “He braved the smell of it and cooked it for me using the barbecue grill in our back porch.” According to Jam, her husband has also eaten camaro (fried crickets), which he found tasty. He does not like sinigang or any sour soup. For Jam, American food is acceptable to her. However, she was shocked by the large or super-sized helpings.

Digital settlement

FOR Jam, electronic mail is still the best way to settle differences. “O u r ne ver -fa i l tec h n ique for set t l i ng a rg u ments, d is putes, misunderstandings and prickly issues? Believe it or not, e-mail!” she exclaimed. “ T he beauty of the written word is that you are able to compose your thoughts and you have time to deliberate, let your intense feelings simmer and dissipate, and gives you the opportunity to remove or rephrase statements you might say out of hurt or anger and focus on the root cause of the problem.” She said they’ve settled major fights by writing letters back and forth. “And we always come out of it with a better grasp of the other person’s feelings and point of view,” she said.

A8

Banking&Finance

Thursday, September 21, 2017 • Editor: Jun B. Vallecera

BusinessMirror

news@businessmirror.com.ph

Solon eyes quick recovery of stolen Bangladeshi funds to help Dhaka deal with Rohingya crisis

S

By Elijah Felice E. Rosales @alyasjah

enate President Aquilino L. Pimentel III on Wednesday urged the government to intensify the hunt for the money launderers involved in the Bangladesh Bank heist so as to assist Dhaka in the refugee crisis it faces.

In a statement, Pimentel cited the influx of some 380,000 Rohingya refugees fleeing Bangladesh to escape alleged attacks by Myanmar government troops. He said Manila should “do everything in its power” to help Dhaka manage the

wave of refugees. “Thousands of Rohingya have already fled to Bangladesh for safety, and the country’s resources will understandably be stretched as it helps deal with this humanitarian crisis. We must do any-

Associations in Malaysia

U

pon invitation by the Malaysia Convention and Exhibition Bureau (MyCEB), I spoke about association transformation and leadership at the Third Malaysian Association Next (MyNext) conference on September 14, in Petaling Jaya, Kuala Lumpur. MyNext is an annual gathering of Malaysian association leaders and professionals to access and exchange cutting-edge insights and ideas, as well as network with each other on issues that impact the future growth and sustainability of associations in the country. The event was also an occasion to officially launch the Malaysian Society of Association Executives (MSAE), which is of the same mold, so to speak, of our own Philippine Council of Associations and Association Executives. MyNext is part of MyCEB’s “Association Development Programme”, a range of training initiatives to promote professional development of associations in Malaysia. The program aims to build capacities and confidence of associations in attracting international conventions to Malaysia. Benefits from this initiative includes showcasing local innovation and expertise to the world, knowledge sharing, building international networks and business prospects. The MyNext association conference was held on the heels of the three-day “Malaysia Business Events Week” that ran from September 11 to 13 on the same venue. Themed “Our Future by Design: Accelerating Transformation”, the event was a platform for all stakeholders of the business events industry in Malaysia to converge, communicate and deliberate on issues that have relevance to their industry. All these programs and initiatives are under the framework of MyCEB’s “Malaysia’s Business Events Roadmap: Charting Malaysia’s Journey to 2020 and Beyond” that aims to power the country’s knowledge and creative economy and lay the groundwork, setting up and management of all the platforms for co laboration. It was also meant to support the development of strong local business events hosts, such as associations,

Association World Octavio Peralta convention and exhibition organizers and suppliers and other stakeholders in the business-event industry to become strong advocates of the needs of the business events sector. Through these collaboration efforts between the government and the business-event industry, MyCEB hopes to be in a better position to contribute to the achievement of the nation’s 2020 goals under its “Economic Transformation Programme”: to be among the top 5 destinations for international conventions in the Asia-Pacific region and to attract 2.9 million business events visitors which make up about 8 percent of total international visitors to Malaysia. In my January 4 column entitled “Associations and Tourism”, I mentioned that the role of associations in tourism cannot be discounted and, in fact, should be strengthened. I also added that the growth potential of businessevent tourism in the Philippines is enormous. What is needed now is for all tourism stakeholders (the government, the business sector and associations) to join hands to pursue this opportunity as what the Malaysian case study above has presented. The column contributor, Octavio “Bobby” Peralta, is concurrently the secretarygeneral of the Association of Development Financing Institutions in Asia and the Pacific (Adfiap) and the CEO and founder of the Philippine Council of Associations and Association Executives (PCAAE). PCAAE is holding the Associations Summit 5 (AS5) on November 22 and 23, at the Philippine International Convention Center (PICC) which is expected to draw over 200 association professionals here and abroad. The two-day event is supported by Adfiap, the Tourism Promotions Board and the PICC. E-mail inquiries@adfiap.org for more details on AS5.

Case clippings

By Justice S J Ranada Jr.

RETIREMENT LAWS–liberal construction Social legislation must be liberally construed in favor of the beneficiaries. Retirement laws, in particular, are liberally construed in favor of the retiree because their objective is to provide for the retiree’s sustenance and, hopefully, even comfort, when he no longer has the capability to earn a livelihood. Indeed, retirement laws are liberally construed, and all doubts are resolved in favor of the retiree to achieve their humanitarian purpose. PNB v. Dalmacio 05 Jul 2017

GR 202308 Tijam, J

Pimentel thing and everything we can to help,” Pimentel said. Pimentel urged the Department of Jus-

tice, the Anti-Money Laundering Council and the Bangko Sentral ng Pilipinas (BSP) to fast-track the pursuit against Philippine-based money launderers who had a hand in the heist. He said the money to be recovered from the crime would help the Bangladeshi government address the ongoing crisis. “While $15 million out of the $81 million have been recovered and returned to the Bangladeshi government, we must not stop there and must continue to assist Bangladeshi authorities until the full amount is recovered because they need ever y cent,” the Senate chief added. In 2016 hackers attempted to breach the Bangladesh Bank account with the Federal Reserve Bank of New York and stole close to $1 billion. Five of the 35 transactions were wired to Rizal Commercial Banking Corp. (RCBC) through a number of bogus accounts.

The funds were laundered through the casinos which, at the time, were beyond Republic Act (RA) 10927, or the antimoney laundering law. In July President Duterte signed into law amendments to RA 10927, to include casinos, as well as Internet- and ship-based gaming sites as covered institutions. The heist prompted the BSP to impose a record-setting fine of P1 billion on RCBC. Pimentel said the recovery of the stolen Bangladesh Bank funds is, more than ever, urgent with the refugee crisis Bangladesh is facing. Estimates by the United Nations cited more than 380,000 Rohingya refugees have crossed into Bangladesh to escape violent treatment by the military in Myanmar. The UN added the Bangladeshi government sorely needs funds to underwrite security and humanitarian aid to the refugees.

Banks virtually ignore TDF windows

T

he various banks hesitated to part with much of their money on Wednesday and brought far less of the resources to the term deposit windows of the Bangko Sentral ng Pilipinas (BSP) that on auction day usually reports buoyant subscriptions. The results of Wednesday’s auction showed the twin term deposit facilities (TDFs) attracting fewer than usual subscription as bids proved lower than that offered by the BSP. “[The] suspension of work appears to be the reason for the banks to keep funds with them. Of course, they continue to lend out, invest, etc.,” BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said of the Malacanang announcement declaring today, Thursday, as a day of protest and the impact this had on the banking system.

At the auction, both the seven- and 28 -day TDFs were undersubscribed, with the short tenor bids attracting only P36.89 billion, covering 92.23 percent of the total amount offered for the week of P40 billion. As for the 28-day TDF, this attracted only P67.155 billion, covering 61.05 percent of the P110 billion offered for the week. The twin facilities attracted fewer bids compared to last week’s sale exercise. Both also attracted higher rates, with the seven-day TDF hitting 3.3765 percent from only 3.3484 percent, last week, and the 28-day TDF rate reaching 3.496 percent from 3.495 percent. P r e s i d e nt D ut e r t e e a r l i e r d e clared T hursday as a “nationa l day of protest”, suspending work at select gover nment of f ices, as wel l as

classes in some schools. The BSP, however, did not declare a suspension, its officers and staff still conducting regular operations. The policy-making Monetary Board will convene on Thursday as scheduled no matter the Malacañang declaration. The Bankers Association of the Philippines (BAP) also said member-banks will continue to observe regular work hours today, Thursday. “The Bankers Association of the Philippines would like to inform the public that all member-banks will remain fully operational despite the suspension of work in government offices on September 21, 2017,” the BAP said in a statement. “Normal check-clearing operations, trading and other financial transactions will be observed to fully serve the banking public,” it added. Bianca Cuaresma

Asean primed for a digital future

H

alf a century into the Asean story, the growing importance of digital innovation will shape the next wave of economic development. As the Asean turns 50 this year, the economic strides that have made the regional bloc the world’s seventh-largest economy will set it up for sustained growth, increased prosperity and exciting prospects for the next half century. Technology, and how it will continue to change the way people live, work, shop, dine, travel and save, is perhaps one of the most fascinating advances in recent times, and one that presents vast opportunities ahead. China gives us a glimpse of the transformative power of online and mobile innovation in a young, increasingly affluent and tech-savvy population. From a standing start in 2003, the country has become the largest e-commerce market in the world. Likewise, Tencent’s Wechat app, which launched as recently as 2011 and can now do everything from messaging to payments, now has 963 million regular users. True, neighboring Asean, with its 10 member-countries, is not China. The region spans a huge array of cultures, languages and political systems. Levels of affluence, economic and infrastructure development, and Internet and mobile penetration vary widely. Still, the region holds some of the same potential that can already be witnessed in China. Take a look at the sheer numbers. At 630 million or so, Asean’s population numbers less than Wechat’s user base. But 15 years from now, the region will have added another 120 million inhabitants—the equivalent of one-and-a-half Germanys. Asean’s population is also one of the world’s youngest. For example, half of the population of the Philippines, and over 40 percent of Indonesians are under 25 years old. Meanwhile, disposable incomes are

gradually rising in much of the region. Asean as a whole will have some 125 million middle-class households by 2025— roughly double the number in 2010. All this means is that for businesses, bankers and investors, Asean offers a large, dynamic and eager consumer base—and one they can tap and service increasingly easily via digital tools and mobile handsets. Take Internet penetration. Last year only about 260 million Asean inhabitants were Internet users,—but that number is expected to soar to 480 million by 2020. Similarly, in much of the region, cashon-delivery, rather than digital payments, still dominates when it comes to paying for online purchases: an estimated threequarters of transactions are still paid by cash. And while Asia Pacific, as a whole, accounted for 40 percent of global e-commerce sales in the first quarter of 2017, the vast majority of those sales went to China, Japan, South Korea, Australia and India rather than Southeast Asia. But that leaves plenty of room for growth, and positions the region as the next frontier for e-commerce and digital payments. In the Philippines, as more Filipinos are going online, multimedia services and digital content are becoming more widely available. More than just the exciting technologies, these digital innovations are transforming the people’s way of life. Many industries and arenas are converging through digital. Meanwhile, it is easy to see that Asean’s young consumers, just like their millennial counterparts in China, the US or Europe, are highly likely to want to incorporate online and mobile innovation into multiple aspects of their lives. As Internet and mobile penetration pick up, they, too, will come to take for granted a world in which they can chat with friends online 24/7, and shop and access banking services (from remittances and payments, to foreign exchange and stocks, credit cards and personal loans) via their phones easily and securely around the clock.

It’s already clear that people in the region are receptive to digital tools. A recent HSBC survey found that four in five home buyers in Malaysia, for example, used online channels to research their recent property purchase, and over three-quarters went online for financing options. Amid all this change and potential, it is no wonder that Asean has begun to spawn a number of fintech companies. In Indonesia, for example, the highly popular Go-Jek platform has started to add digital payment functionality to its core transportation services. In Thailand there is Omise; a payments platform that has already raised $50 million in funding. Traditional banks are starting to invest significantly in their digital capabilities to offer a simpler, better, faster and more secure banking and payments experience. This includes working more and more with nimble fintech start-ups to ensure that their services meet the demands of a young, tech-savvy consumer base. Meanwhile, some Asean governments are working to enable innovation. Singapore, for example, is leveraging its status as an established financial center to take a leading role in fintech development, with support from the Monetary Authority of Singapore. In the Philippines the Bangko Sentral ng Pilipinas (BSP) has put in place both its e-money and IT Risk framework to enable an environment of fintech innovation and support. The BSP issued its Consumer Protection Framework that focuses on proactive interventions, such as financial-literacy initiatives and the necessity of having remedial recourse by way of redress. Asean is on the cusp of an all-encompassing digital transformation, with technology promising to offer a new way of life and better experiences for consumers in this dynamic region. The opportunities are numerous and ripe for the taking; the challenge is to be quick, bold and flexible to change.

www.businessmirror.com.ph

briefs Maria aims at Puerto Rico after slamming Dominica SAN JUAN, Puerto Rico—Hurricane Maria barreled toward Puerto Rico on Tuesday night after wreaking widespread devastation on Dominica and leaving the small Caribbean island virtually incommunicado. As rains began to lash Puerto Rico, Gov. Ricardo Rossello warned that Maria could hit “with a force and violence that we haven’t seen for several generations.” “We’re going to lose a lot of infrastructure in Puerto Rico,” Rossello said, adding that a likely island wide power outage and communication blackout could last for days. Authorities warned that people in wooden or flimsy homes should find safe shelter before the storm’s expected arrival on Wednesday. By Tuesday night, the US National Hurricane Center in Miami said Maria’s winds had intensified to 175 miles per hour (280 kilometers per hour) and additional strengthening was possible. At 11 p.m. EST, Maria was centered about 30 miles (45 kilometers) south-southeast of Saint Croix, or 120 miles (190 km) southeast of San Juan, Puerto Rico, and was moving west-northwest at 10 mph (17 kph). AP

Lavrov hints U.S.-Russia ‘tit-for-tat’ could end NEW YORK—Russian Foreign Minister Sergey Lavrov told The Associated Press (AP) in an interview on Tuesday that he heard positive news in President Donald J. Trump’s United Nations address: “that the US would not impose its way of life on others.” “I think it’s a very welcome statement, which we haven’t heard from an American leader for a very long time,” said Lavrov, who sat down with the AP and Russia’s Tass news agency directly after meeting with US Secretary of State Rex Tillerson. Lavrov blamed the Obama administration for the collapse in relations between Moscow and Washington. The US enacted a series of steps against the Russian and Russian diplomats last December, including new sanctions and expelling 35 Russian diplomats, to punish Russia for meddling in the US elections, a charge Russia has denied. Moscow responded by limiting the size of the US diplomatic staff in Russia. AP

U.N. chief to open signing for 1st nuclear-ban treaty UNITED NATIONS—UN SecretaryGeneral António Guterres will open the signing ceremony for the first treaty to ban nuclear weapons and the Security Council hold a highlevel meeting on its far-f lung peacekeeping operations as world leaders tackle a wide range of crises and challenges on the second day of their annual gathering. More than 120 countries approved the treaty in early July over strong opposition from nuclear-armed countries and their allies, who boycotted negotiations. The UN treaty office said 51 countries are expected to sign during Wednesday’s opening day. Guterres is also expected to brief the Security Council meeting on reforming UN peacekeeping—a key item on the Trump administration’s agenda, which will be represented by Vice President Mike Pence. AP

Nato chief welcomes Trump’s new approach UNITED NATIONS—North Atlantic Treaty Organization’s (Nato) secretary-general welcomed President Donald J. Trump’s new strategy for the 16-year Afghan war and said the US leader’s insistence that Nato members increase their defense spending is achieving positive results. Jens Stoltenberg said in a wideranging interview with The Associated Press on the sidelines of the UN General Assembly’s annual meeting of world leaders that Trump has been very clear “that the United States remains committed to Nato, but not only in words but also in deeds.” He strongly welcomed the US decision to increase its military presence in Europe for the first time since the end of the Cold War—along with its European allies. AP

The World

Thursday, September 21, 2017 A9 BusinessMirror Heralding ‘America First’ in combative U.N. speech, Trump airs list of threats

N. Korea will be ‘totally destroyed’ if it threatens US U NITED NATIONS—President Donald J. Trump brought the same confrontational style of leadership he has used at home to the world’s most prominent stage on Tuesday, as he vowed to “totally destroy North Korea” if it threatened the United States and denounced the nuclear agreement with Iran as “an embarrassment” that he may abandon.

In his first address to the United Nations General Assembly, Trump framed the conflicts as a test of the international system. The bombastic flourishes that generate approving roars at political events were met by stony silence, interrupted a few times by a smattering of applause, as Trump promised to “crush loser terrorists,” mocked North Korea’s leader as “Rocket Man” and declared that parts of the world “are going to hell.” The president’s tone carried real-world implications for the future of the UN and the escalating confrontations with international outliers. In the space of 42 minutes, he upended decades of rhetorical support by the US for the collective philosophy of the United Nations as he defended his “America First” policy. He repeatedly extolled “sovereignty” in a setting where the term traditionally has been brandished by nations like Russia, China, Iran and North Korea to deflect criticism. “As president of the United States, I will always put America first, just like you, as the leaders of your countries, will always and should always put your countries first,” he said, generating light applause in parts of the chamber. But he argued that nationalism can be the foundation for strong

nations to join common causes. “If the r ighteous many do not confront the wicked few, then evil will triumph,” he said. “W hen decent people and nations become bystanders to history, the forces of destruction only gather power and strength.” Trump singled out North Korea, broadening his indictment of the Pyongyang government beyond its pursuit of nuclear weapons to its treatment of its own people and captured foreigners like the American college student who died shortly after being sent back to the US. “No nation on Earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missi les,” Trump said. “ The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket Man is on a suicide mission for himself and for his regime.” Wit hout ment ion i ng it by na me, Tr u mp a lso c h a st ised China for continuing to deal with its rogue neighbor, calling it “an outrage that some nations” would trade, arm and support North Korea. He assailed the Iran agreement, which was negotiated by President Barack Obama and

President Donald J. Trump greets British Secretary of Foreign Affairs Boris Johnson (left) as United Nations Secretary-General António Guterres (second from right) looks on during a meeting on UN reform at the UN headquarters in New York on September 18. Doug Mills/The New York Times

leaders of f ive ot her powers and ratified by the UN Secur it y Council to curb Tehran’s nuclear program for a decade in exchange for lifting internationa l sanctions. Under US law, Trump has until October 15 to certify whether Iran is complying with the agreement, which he has done twice so far since taking office. But he has made clear that he would prefer not to do so again, which could unravel the accord. “The Iran deal was one of the worst and most one-sided transactions the United States has ever entered into,” Trump said. “Frankly, that deal is an embarrassment to the United States, and I don’t think you’ve heard the last of it, believe me.” The tough words cheered the delegation from Israel, whose prime minister, Benjamin Netanyahu, applauded from the gallery and called it the boldest speech he had heard at the UN in 30 years. In his own address later, he said Trump had “rightly

Rain, relocation add to woes in Rohingya Muslim camp C

OX’S BAZAR, Bangladesh—Monsoon rains, relocations and extortion attempts are worsening the living situation in the Bangladeshi camps for Rohingya Muslims who fled Myanmar. Several Rohingya camps in this coastal city are flooded from three days of unrelenting rains. People in the camps were being pelted with heavy rain on Wednesday while desperately packing their meagre belongings into plastic sacks and bits of clothes and trying to find new shelter The initial arrivals in the most recent exodus simply settled on whatever patch of land they could find, building shelters of bamboo sticks and plastic sheets. But as their numbers soared to more than 420,000 in a matter of weeks, the local government has started moving them to newly allocated refugee

camp areas. Many refused to move, terrified of being without shelter at all. But the rains washed away many shanties or made them uninhabitable. So they’re moving again. Most of them are being sent to the new settlement of Balukhali in Cox’s Bazar. On Tuesday and Wednesday, groups of weary Rohingya were carrying whatever they could salvage from their submerged shelters and walking toward the new camps to build shelters all over again. If the rain doesn’t ease soon, the flimsy homes may become useless at best and dangerous at worst. The area is prone to mudslides during the seasonal monsoon that have already proven deadly this year. For Abul Bashar, that concern will come later, if at all. For now, he needs to shelter his family of 12 from the rain.

They were made to pull up the shelters they had first built on an open field. Now they’ve moved to Balukhali. But like all crises, the Rohingya exodus is an opportunity for exploitation and a camp mafia is taking advantage. Bashar doesn’t have the 2,000 taka ($24) to pay them to set up a shelter in this camp. The family slept in the tent of an acquaintance, but things are tight for everyone, and Bashar says he must find a shelter of his own soon. He has plastic sheets and bamboo sticks. Just no money to buy a spot. AP

called the nuclear deal with Iran an embarrassment” and pointed to North Korea as an example. “In the last few months, we’ve all seen how dangerous even a few nuclear weapons can be in the hands of a small rogue regime,” Netanyahu said. “Now imagine the danger of hundreds of nuclear weapons in the reins of a vast Iranian empire, with the missi les to deliver them anywhere on Earth.” In an editorial on Wednesday, the state-run China Daily gave no special emphasis to Trump’s tough passage on North Korea, but it scolded the US for not doing more to start talks. Trump had called President Xi Jinping of China the night before and previewed what he planned to say, a person briefed on the call said. Others called Trump’s speech excessively belligerent. “If Trump was determined to demonstrate to the world that he is unhinged and an imminent danger to world peace, he has succeeded with this speech, and will only make

it harder for him to win over the world to his self-destructive goals,” said Trita Parsi, president of the National Iranian American Council, a Washington-based group that criticizes the Tehran government but advocates more engagement. Ne it he r H a s s a n R ou h a n i , Iran’s president, nor Mohammad Javad Zar if, its foreig n minister, was in the hall for Trump’s speech. North Korea’s ambassador left his seat before the president started speaking. In an interview taped before the speech, Rouhani castigated Trump for considering a withdrawal from the nuclear accord. “The exiting of the United States from such an agreement would carry a high cost, meaning that subsequent to such an action by the United States of America, no one will trust America again,” he told NBC News. Zar if said on Tw itter that “Trump’s ignorant hate speech belongs in medieval times—not the 21st Century UN.” New York Times News Service

A10 Thursday, September 21, 2017 • Editor: Angel R. Calso

Opinion

BusinessMirror

editorial

When the Christmas countdown begins

W

hen radio and TV programs start telling us every day how many sleeps to go before the Nativity, millions of Metro Manila residents also start expecting traffic to grow heavier as Christmas day draws nearer. For many, Christmas is the most wonderful time of the year. For others living in the metropolis, however, the yuletide season can also be the most stressful. That’s because traffic volume on major roads swells to the limit during the holidays. In December we expect an influx of people and cars from nearby provinces going to Metro Manila to shop, or to attend gatherings, parties and reunions.

Metropolitan Manila Development Authority (MMDA) Chairman Danilo D. Lim said the big malls and other commercial establishments in the metropolis are traffic generators during the holidays, so there is a need to come up with effective and sustainable measures to provide convenience to the public. Citing the case of Edsa, the most congested highway in Metro Manila, Lim said the monstrous traffic along this road gets worse during the holidays because there are 36 malls and other big commercial establishments attracting huge numbers of shoppers. For the coming Christmas holidays, Lim told a recent BusinessMirror Coffee Club Forum he will ask the help of mall owners and operators to help in the implementation of traffic-mitigation measures throughout the holiday season. For example, mall owners can lessen the queuing of vehicles of customers by assigning more people to manage the flow of traffic. In addition, mall owners can help reduce traffic by conducting sales during weekends only, starting, say, at 12:01 a.m. As part of a long-term solution to solve the heavy traffic situation in the metropolis, Lim intends to propose to Metro Manila mayors the adoption of the expanded number-coding scheme, a plan he earlier abandoned after receiving numerous adverse reactions. The proposal entails a two-day number-coding scheme, instead of the existing one-day coding system. It can be recalled that Lim floated the idea of an expanded numbercoding scheme way back in June, but public-transport groups and motorists rejected the proposal. The MMDA chief said he floated the idea to get the reaction and sentiments of motorists. “Since then, we have not talked about this in the Metro Mayors Council meeting.” However, he decided to revive the proposal because “Rep. Danilo E. Suarez [of the Third District of Quezon] brought that up during our budget hearing, and I committed to him that I will bring it up to the council meeting.” Recalling how the expanded number-coding scheme was publicly rejected, Lim appealed to motorists in Metro Manila to make a little sacrifice: “We complain [about the traffic], but when we make a move to reduce the number of vehicles to ease up traffic, we don’t want to make that sacrifice.” For the MMDA chief, part of the solution in solving Metro Manila’s traffic gridlock involves going back to basics. Lim said: “When I said basic, it means basic implementation of traffic rules and regulations.” That goes for both pedestrian and vehicular traffic. In other words, motorists must follow traffic rules and pedestrians should not cross the road where it’s not safe. As the Christmas countdown continues, let’s remind ourselves that we can help ease up Metro Manila’s holiday traffic just by realizing and accepting the necessity of discipline. Of course, we’re all in a hurry. But that’s not a good excuse to violate traffic rules. We must obey traffic rules and regulations.

Since 2005

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

Stocks: Expensive or costly? John Mangun

OUTSIDE THE BOX

T

his coming Saturday at the Financial Advisors Congress, I will be speaking on “How to Spot the Next Stock Market Crash”. That is a relatively easy thing to do if you know what to look for and how to see it. There are clear signs and factors that set up for the market making a substantial move lower both abruptly and over time. One problem is that investors and many experts compare stock-market crashes with asset-price “bubbles” bursting and that is not the case. Further, they also do not understand the difference between an asset price being “costly”—something with a high price tag—and being “expensive”. Let me share a silly story. I use a widely available toothpaste that sells at a price of P380 and it is not expensive, merely costly. “Colgate” or other brands sell for about P100 for the same amount. People who know me—and my wife—would tell

you that we are extremely tightfisted when it comes to spending. But we buy what might be considered to be the highest-priced ordinary toothpaste available because it is not expensive. Expensive means that the cost of the product or service is greater than the value. Costly only means that it carries a high price. In terms of value—performance, quality and results—my toothpaste is actually “cheaper” than any other brand because the value is very high in relation to the price. People concerned about asset-

Essential elements

Founder Publisher

T. Anthony C. Cabangon

Editor in Chief

Jun B. Vallecera

Managing Editor Associate Editor City & Assignments Editor

Max V. de Leon Jennifer A. Ng Vittorio V. Vitug

Senior Editors

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

Online Editor Social Media Editor

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes

Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan

BusinessMirror is published daily by the Philippine Business Daily Mirror Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines. Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025. (Advertising Sales) 893-2019; 817-1351, 817-2807. (Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila MEMBER OF

Cecilio T. Arillo

database Customs enforcement

N

ATIONAL security and public order are essential elements in building the foundation for “inclusive growth, a high-trust society and a globally competitive knowledge economy”, the 2017-2022 Philippine Development Plan states.

“That is why the government must upgrade the capability of law enforcers to drastically reduce criminality, terrorism and ensure the safety and security of all people in the country,” said lawyer Ramon Cuyco, a trade security expert and retired Bureau of Customs official. Cuyco said President Duterte, in his second State of the Nation Address, emphasized that the war on drugs shall be unrelenting. He said, “The problem on illegal drugs needs a holistic approach because illegal drugs is prevalent in the country with around 4 million drug users and 47 percent of barangays throughout the country being drug affected [PDEA, 2016]. Three illegal transnational drug groups of African, Chinese and Mexican Sinaloa

origin are operating in the country and have greatly aggravated the drug problem.” According to him, the country’s growing illegal-drugs problem, in particular, needs a determined and proactive solution. “Successive researches and pertinent crime statistics in the Philippines show a strong and direct correlation between crimes, especially serious or violent ones, and drug abuse. Any serious campaign to fight crime should, therefore, also involve a resolute crusade to stamp out drug abuse. This is a tough challenge.” As it is, the Philippines may either be an origin, a transit point, a destination or a combination thereof. Her intelligence community states that the country is all of the

price bubbles will tell you with complete expert confidence that the bubble will burst when the price is too high. They will give you an expert reason or formula why they know that the asset price is expensive. And when the price continues to go higher, they say the bubble is getting larger and closer to bursting. They are wrong. Asset price bubbles have nothing to do with the price, and everything to do with understanding the concept of expensive. At the beginning of the Tulip Mania in the Netherlands in December 1631, the same amount of money that you could pay for a new house would buy you 6,000 tulip bulbs. At the price peak in February 1637, one house would buy you one tulip bulb. When the price doubled to one house equaling 3,000 bulbs, the experts were probably warning how there was a price bubble ready to explode. The warnings grew louder at 1 to a 1,000 and louder at 1 to 500 and so on. “Prices are too high!” the experts screamed. But the person who sold his house, bought 10 tulip bulbs and held on to the top, made a 1,000-percent profit. Even the guy

that bought two tulip bulbs after selling his house for cash doubled his money selling at the price peak. But what the modern-day “bubble experts” forget to mention is that even after the so-called bubble broke, the price of one of the rarest tulips— the Viceroy—continued to appreciate to a price of one to five houses. The actual price has almost nothing to do with stock-market crashes and has everything to do with another factor, which I will explain and show on Saturday. In 2014 for the same amount of money you could buy one share of Ayala Corp. at P708, or 3.73 kilos of pork at P190 per kilo. Today you can buy one share of Ayala Corp. at about P940, or about 5 kilos of pork. The price of a share of Ayala has appreciated to about 35 percent higher than the price of pork three years ago. Are Ayala shares expensive in relation to the price of pork or are they only more costly than before?

above—origin-transit-destination. And because we are archipelagic, ingress and egress of illicit drugs are coursed through her ports and airports. This is where her vulnerabilities are most felt.

As if to stress the helplessness of the country’s border controls, Faeldon “warned senators that another 500 kilos of shabu are expected to be unloaded in the Philippines that we cannot detect.” If manifestly antisocial goods could be entered into the Customs territory undetected, or even if detected, they are unmolested, how convenient would it be for shipments that would not incite suspicions due to their regular appearance or packaging, say, boxes of illegal drugs packaged as fake grapes mixed with boxes of real grapes stuffed into a container of imported fruits? Or, antisocial goods coursed through “green lane” of the Customs risk-management system? Or, even through the “super green lane”, or what is now known as the “blue lane” of its selectivity screens? That the latter is accessible and available only to some 200 preregistered top corporations is no guarantee that antisocial goods—drugs, firearms or other weapons of mass destruction—may pass through this “free way” of sort. As has already happened, or is still happening, the country is a sitting duck.

Customs enforcement

Who is going to watch aircraft and seacraft is a task reposed on the Customs-Immigration-Quarantine security agencies and, together, they constitute what is called “the boarding party”. Unfortunately, the unmolested entry of the P6.4 billion worth of illegal drugs on May 26, among the many that were allegedly undetected, puts serious doubt on the capability of the country’s border control management. Quizzed by the Senate on July 31, former Customs Chief Nicanor E. Faeldon admitted, “[T]he flow of illegal drugs through the country’s seaports could not be contained as the current x-ray system of the Bureau of Customs is capable of handling only 16 percent of all imports arriving in the country through the Manila International Container Port.” Faeldon told the Senate Blue Ribbon Committee probers “the chance of shabu being smuggled into the country is 84 percent with the limitation of the x-ray system.”

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

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

Opinion

BusinessMirror

opinion@businessmirror.com.ph

EJKs cut into PHL economic pie Val A. Villanueva

Businesswise

T

here is this perception that the stock market is the barometer of economic health. If the market is the “bull” position, the economy must also be doing well and vice versa. But this is not always the case. I’m not saying the Philippine Stock Exchange’s (PSE) price index rally in the last few years has not been buoyed at all by the growth of the country’s GDP. I believe, however, that the connection of stock prices with economic health or its future forecast is at best fragile in the short to medium term. Why stock prices are high could be because these earnings reflect the faintness of the economy rather than its assets. I don’t buy that PSE index is the barometer of the economy as a whole, despite the popular view. That there is a strong association between prices of shares and real investment that augments the productive size of the economy is doubtful. Share prices mirror profits and not incomes in its entirety. They only echo a slice of general income that is reflected as profit. Had the profits’ share in incomes been stable then it would not have been a problem. But that is not what happens. The gains made by some listed companies in the past have risen even without corresponding growth in GDP and a wider base of better incomes, giving doubts to the connections between profits and economic health. When you buy a share in a publicly listed firm, you’re effectively buying a portion of its future profits. The investment value to an investor depends on its returns on other funds in terms of money parked today for revenue that you will get tomorrow. If you buy a share at a premium, it means that you are prepared to pay higher, hoping to earn more than what you invested, either in the form of dividends or capital gains. Finance Secretary Carlos G. Dominguez III points to the country’s booming equities market as a proof that investors are unfazed by the political noise brought about by the perception of human rights and due process being trampled upon by the administration of President Duterte. On Tuesday the local barometer hovered at the 8,300 level, up 113.29 points, or 1.39 percent, to close at a new high of 8,291.14. But this is in stark contrast to what is actually happening to our investment climate. According to the Philippine Statistics Authority (PSA), foreign investments approved by seven investment promotion agencies (IPAs) from April to June this year slumped by 55 percent to P18.2 billion, from P40.4 billion in the same three-month period last year. The PSA data comprised of approvals made by the Authority of the Freeport Area of Bataan, Board of Investments (BOI), BOI-Autonomous Region in Muslim Mindanao, Cagayan Economic Zone Authority, Clark Development Corp.,

Philippine Economic Zone Authority and Subic Bay Metropolitan Authority. These IPAs give away fiscal and nonfiscal incentives to investors. As of the end of the first six months, IPA-approved foreign investments totalled P41 billion, down 38.4 percent from P66.6 billion a year ago. To recall, foreign investment pledges fell 12.8 percent year-on-year to P22.9 billion in the first quarter. Also, approved foreign investments declined 9.3 percent year-on-year to P125.7 billion in the fourth quarter of last year after commitments dropped by a faster 45 percent to P26.7 billion in the third quarter of 2016. What this means is that investors’ pledges decreased in the first four quarters of the Duterte administration. I have no doubt about the abilities of some in Duterte’s economic team, particularly Domiguez and Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. But their effectiveness is virtually drowned out by the abrasive action of Duterte himself, the rogue police and insensitive legislature. The almost daily killings brought about by the President’s war on drugs and the seeming bias of the majority coalition in Congress against the Commission on Human Rights (CHR) are cited by analysts as factors shaking investors’ confidence in the country. They certainly are sending the wrong signal to foreign investors, which reinforces fears of political uncertainty. The situation has already caused the Philippines to lose thousands of local jobs to Vietnam since late last year. Hundreds more are set to follow in the coming months as the number of Korean manufacturing companies leaving the Philippines for Vietnam continues to rise. In an interview with the Philippine Daily Star, Korean Chamber of Commerce of the Philippines President Ho Ik Lee said three big garments firms have already shut down operations in the country from late last year to early this year with each company employing at least a thousand workers. The departure of Korean manufacturing firms is expected to continue. Another electronic firm is shutting down its operations this year, adding 250 more employees to the unemployment rate. “Some of them are already planning and some have already closed down,” Lee said in the same interview. Duterte’s war on drugs, according to Amnesty International, has created incentives to kill and “an economy of murder”. There is no reprieve in sight.

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

The first and the last Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

L

ife in our communities of faith eventually reveals the big difference between what we think is proper and what God may be doing. The gospel parable of the workers in the vineyard (Matthew 20:1-16) shows that our way of thinking is not God’s way, which we should appreciate and imitate.

Zealous disciples The context of the parable of the workers was Peter’s question to Jesus: “What will there be for us?” who have given up everything and followed Him (19:27). The answer of Jesus, that those who have followed Him “will sit on 12 thrones judging the 12 tribes of Israel” in the new age and “will receive a hundred times more” than what they have given up, ended with the perplexing conclusion: “But many who are first will be last, and the last will be first.” Like a bracket, this paradox also concludes the parable of the workers. Interestingly, the parable is followed by the story of the mother of James and John trying to secure for her sons special seats of honor in the

company of Jesus (20:20-23). Jesus clarified that being closely associated with him entails indeed drinking the cup he drinks, but this means joining him in his passion as he had just then once more predicted (20:17-19). Their communion together is not about worldly power, but service to others. His mission and theirs is not how to be served, but to serve. Otherwise, zealous disciples can easily become jealous individuals in worldly rivalry.

Good master

After the usual hiring of laborers for the vineyard at dawn, the unusual continuous hiring around 9 in the morning, noon and 5 in the afternoon sets the scene for the payment of all hired hands at 6. The focus is

Uberization of work Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1

T

he gig economy benefits those with talents and business ideas that can be marketed via the Internet. For example, those who transform their homes into bed-and-breakfast mini hotels are giving big hotels stiff competition in attracting dollar-wary tourists through savvy and attractive online marketing. People can become self-employed or small businessmen/businesswomen at the click of the mouse and transact business anywhere in the world at the time most convenient to them. Starting a business under the digital revolution seems easy. This is why the gig economy is expanding exponentially. Work also looks easy for those who deliver service based purely on information communication technology (ICT) tools. For example, there are hundreds of Filipino English tutors teaching Japanese students (sometimes whole Japanese families) English via Skype. The Filipino English tutors usually do such tutoring from home, in their pajamas or casual clothes. Some of the tutors do tutoring on a part-time basis, meaning as a supplementary job to their regular job. Overall, services delivered online have been multiplying. If there is Skype English, there is also Skype Mandarin being provided by freelance tutors from Singapore and Malaysia. In the United States it is reported that a growing

number of the self-employed are online freelancers doing editing, translation, indexing, Web development, specialized consultations and so on. The gig economy is a big problem for the tax people. Monitoring new businesses and various transactions done online requires an army of cyber spies. It is also problematic for labor regulators. Are Uber/Grab drivers employees? Are they covered by the Labor Code? Is there an employer-employee relation when the service terms of reference refers to the individual service provider as a contractor, not as an employee? How about the self-employed techno-entrepreneurs? Of course, in real life, freelancing is not necessarily a bed of roses. It involves a series of hits and misses in job contracts concluded or business deals consummated. Sometimes, there are problems in payment for services, delivered or undelivered. It is great for those with outstanding talents and have an established reputation or brand, which needs limited marketing. But for the average freelancers dependent on online

VAT zero rating of sale of services under the Peza law Atty. Rodel C. Unciano

Tax Law for Business

S

ection 108(B)3 of the 1997 Tax Code, as amended, provides for the value-added tax (VAT) zero rating on supply of services performed in the Philippines by VAT-registered persons to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory. Following this provision, the supply of services to entities registered under the Philippine Economic Zone Authority (Peza) law, or Republic Act (RA) 7916, shall be subject to VAT zerorating. However, in a number of rulings, the Bureau of Internal Revenue (BIR)

has laid down qualifications in order that VAT zero rating on sale of services

should apply. The BIR has ruled that sale of services to a Peza-registered enterprises shall be subject to VAT at zero percent, provided that the services are rendered within the ecozone and provided further that the services are rendered in connection with the registered activities of the Peza-registered buyers. Following this view, if the services are rendered within the Customs territory, such sale of services by the VAT-registered person shall be subject to the 12-percent VAT, irrespective of the status of the buyer as ecozone registered enterprise. Recently, though, the Court of Tax Appeals (CTA) in CTA Case 9004 promulgated a decision, ruling that under Section 108(B)3 of the Tax Code, as amended, the only requisites for the application of VAT zero rating are as

follows: 1) Sale of service is performed in the Philippines; 2) Service is performed by a VAT-registered person; and 3) Service is rendered to persons or entities exempted under special laws or international agreement to which the Philippines is a signatory. Based on the foregoing requisites, the CTA held that sale of services by VAT-registered person performed within the Philippines to the Peza-registered entities operating within an ecozone shall be subject to zero-percent VAT. To qualify for VAT zero rating, a sale of service by VAT-registered persons need not be rendered within the ecozone and need not be connected to the activities of the Peza-registered entity. A contrary view is not in accordance with the plain wording of the law. In rationalizing its ruling, the

Thursday, September 21, 2017 A11

on the master; his peculiar behavior contains the intended teaching. The work in the vineyard is the traditional picture for the task God gives His people; on the other hand, God is the shepherd who seeks the lost sheep (18:12-14) and does not want that any of the little ones be disregarded and lost or be without part in the kingdom. The way the master ordered the payment of all the laborers is stunning and challenging. By beginning with the last hired and finishing with the first, the usual recognition of those who have labored earliest and longest is bypassed. And the generous payment of a day’s earning to those who came in last and worked shortest at the head of the line underscored the natural expectation of those hired first that they would get much more. Nothing of the sort happened. They, too, received one silver coin, the sum agreed upon for a day’s work. Shocked, these workers thought they were wronged. But the master pointed out that they have received what they have agreed on. The issue really is the master’s goodness to those who were hired last and thought to be getting less.

in last received as much as they did. Their standard is to each his due. They did not appreciate the goodness of the master who offered them work at dawn and who hired others, as well at the last hour, and who in his kindness gave everyone their “daily bread”. This undeserved goodness is emphasized as those hired last were first paid full, not as a slight to those who have labored much more, whose grumbling must have contrasted visibly with the rejoicing and wonderment of those who received so generously from the master of the vineyard. Divine goodness is not a discussion about salary; it is about everyone being invited to the vineyard and given work, relying on the master’s judgment and goodness. There are those servants who may have come late and boast of nothing and just do their duty (Luke 17:10). These turn out to be the first. Those jealous of their fellow workers and know better than the master make themselves last by their own estimation, like the older son who was unhappy with the goodness of his father toward his prodigal brother (Luke 15:11ff). God is just and good to all.

Alálaong bagá, the first hired were envious that those who came

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.

signals, sustainability can be a problem. A good transaction can be followed by long periods of inactivity. On the other hand, an online assignment can be exhausting and bad to the health. This is why some European and North American labor activist-researchers are insisting that freelancers also belong to the precariat because they lack social and economic protection. Very few buy social insurance. And since they are not considered regular employees, they do not enjoy paid holidays, leave benefits and other privileges accorded to the regulars. This brings us back to the issue of employer-employee relations. Can the so-called independent contractors be considered employees, too? In the Philippines, there is a long-running and unresolved debate on “independent job contracting” and “prohibited labor-only contracting” involving “manpower agencies” hiring and deploying workers to do certain work or services for a principal. The big difference in the case of the Uber and Grab business setup is that the contractors are the drivers themselves. There is no intervening third-party manpower agency, whose recruitment and deployment services are being covered by the regulations outlined in the Department of Labor and Employment’s Department Order 174. In the gig economy, the employeremployee relation issue arises when the participating freelancers or independent contractors have become dependent on the central coordination provided by the big platform providers through the magic of the ICT tools. The platform managers give directions on what to do for each job or gig and at what price to collect for such undertaking. This is clearly what is happening

in the case of Uber and Grab, which have become global on-demand taxi business operations. Not surprisingly, it did not take long before one driver filed a case against Uber, in 2015. The lady driver, Barbara Ann Berwick, claimed that she was an Uber employee, not an independent contractor, and as such, should be reimbursed for the various expenses she incurred as a driver of Uber for eight weeks. Uber argued that it is merely an “app” that connects drivers and passengers and has no control over the hours logged in by driver-contractors. The California Labor Commission sided with Berwick and asked Uber to reimburse her. Uber appealed the case to a higher court. And in a class-action suit that followed and involved almost 400,000 drivers in California and Massachusetts, Uber entered into a compromise agreement. Uber would pay the drivers in the two states over $100 million in compensation; however, the position of Uber that the drivers shall be considered and treated as “independent contractors” was upheld. To Uber, maintaining the independent-contractor status of the drivers is victory enough. However, there are complaints being filed in other countries where Uber operates. In October 2016 Uber drivers in the United Kingdom won a “monumental victory” (words of the British union) when a London employment tribunal ruled that the drivers are employees entitled to holiday pay, paid rest breaks and national minimum wage. From the foregoing, it is abundantly clear that the battle for decent work conditions and appropriate labor rules in a cyber environment has just begun.

CTA said the VAT exemption of Pezaregistered enterprises flows from the legal fiction establishing ecozone as foreign territories under Section 8 of the Peza law, and not by virtue of the special tax incentives granted to them under Section 24 of the same law. As such, there is no need to prove that the sale of services to Peza-registered enterprises are directly connected to their registered activities. What is important is that the Peza-registered enterprise availing itself of the services is located and operating within the ecozone. Accordingly, for as long as the Pezaregistered purchaser is located and operating within the ecozone, sellers from the Customs territory cannot pass on any output VAT to it for any sale of goods or services destined for

consumption within the ecozone. Indeed, Section 108(B)3 of the 1997 Tax Code is clear. A sale of service by a VAT-registered person to a VAT-exempt person or entity performed in the Philippines is subject to VAT zero rating. Under the law, no other conditions are required.

The author is a senior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at rodel.unciano@ bdblaw.com.ph or call 403-2001 local 140.

2nd Front Page BusinessMirror

A12 Thursday, September 21, 2017

www.businessmirror.com.ph

Political dynasties seen escalating violence in proposed federal states T By Cai U. Ordinario

@cuo_bm

he population of the states, presence of political dynasties and dissolution of urban centers are among the critical factors that need to be carefully considered in the planned shift to a federal form of government, according to local experts. In a recent Philippine Institute for Development Studies (PIDS) forum on federalism, experts debated on the possible impact that the Duterte administrationespoused federal government will have on the economic and political landscape in the country.

PIDS Trustee Alfredo Pascual said the country must first define what federalism is and consider what it entails, particularly its impact on sectors such as education, agriculture, health and others that have suffered under the devolution espoused by the

MENDOZA: ”This fight for leadership is not negative per se, but may not be ideal, especially for states with provinces where political dynasties and armed conflicts are prevalent.”

Local Government Code (LGC). “The move now is toward consolidation, amalgamation, not breaking up anything, be it on geography; we’ve seen a lot of accommodation for political elites by way of cutting up congressional districts, creating more provinces. Now if federalism will be able to reconcile, consolidate the so many political units in the country, then it’s something worth looking into seriously,” Pascual said. Experts, such as urban-regional planner Arturo Corpuz and

Ateneo School of Government Dean Ronald Mendoza said failing to study the impact of federalism could lead to greater income inequality and poverty. Corpuz said, based on his studies, dividing the country into two to three states will help boost economic growth and not worsen the widening income gap. He said the widest gap under a two-state Philippines, or a Luzon and Visayas-Mindanao scenario, is 50 percent, while the widest gap under a three-state country divided into Luzon, the Visayas and Mindanao is 51 percent. Breaking up the country into four, five and seven states could increase income inequality to 61 percent, 79 percent and 93 percent, respectively. The main reason for this is that federalism could divide urban centers, which include central business districts (CBDs), reducing the

CPP ready to resume peace talks with govt

Batanes, La Union, Isabela, Abra and others, for example, could result in violence to escalate because of “highly dynastic provinces”. “This fight for leadership is not negative per se, but may not be ideal, especially for states with provinces where political dynasties and armed conflicts are prevalent,” Mendoza said. “There exist asymmetries within and among provinces [dynastic, nondynastic, low/high development] which pose a challenge in the integration,” he added. Shifting to a federal form of government was one of the President’s campaign promises. It is viewed by the administration as an efficient means to address underdevelopment in the countryside. This aim has been supported by Duterte’s zero to 10-point agenda, which aims to rebalance the economy by having a bias for regional and rural development.

SUPREME COURT: PSALM SALE OF POWER PLANTS NOT SUBJECT TO VAT By Joel R. San Juan

By Elijah Felice E. Rosales

T

@alyasjah

T

he Communist Party of the Philippines (CPP) has expressed readiness to return to the negotiating table, following President Duterte’s remark he is “not averse” to the idea of resuming the stalled peace talks with the communists. In a statement, the CPP said it is not closing its doors to the Duterte administration in spite of its withdrawal from the peace talks in May. “As the party and the NDF [National Democratic Front] have often stated, it is the policy of the revolutionary forces to remain open to peace negotiations with any ruling regime that expresses willingness to seriously discuss the roots of the armed conflict, in accordance with previously agreed principles and procedures as stipulated in The Hague Declaration,” the statement read. “Thus, the peace negotiations can resume if [President] Duterte will drop his earlier precondition of a bilateral cease-fire, which became the single biggest factor which terminated the talks. The ball is still in Duterte’s hands,” the statement added. The statement came in light of the President’s remark last Saturday that he is not averse to the idea of talking again with the communists. He said he just has to consult with his Legislative and Judicial counterparts before sending the government panel back to the negotiating table. “Now, if you want to resume the talks, I am not averse to the idea, but let me sort out first the other branches of the government,” Duterte said. In spite of the renewed optimism on the prospect of peace, the CPP branded the President’s statement to resume the peace talks as “part of his damagecontrol measures” while the administration sails in arguably the toughest period of its regime. “Duterte is widely blamed for terminating the NDFP-GRP negotiations because of his stubborn insistence to toe the United States’s line of using peace talks as an instrument for the pacification and capitulation of the revolutionary forces.” However, the CPP made clear it is “no longer hopeful” the peace talks will achieve any substantive reform. “While open to resuming peace talks with the Duterte regime, revolutionary forces are no longer hopeful that anything substantive will come out of it in the face of Duterte’s subservience to the interests of US imperialism and other big foreign capitalist countries.”

ability of these areas to generate growth and productivity to sustain the economy. “The more you break the Philippines into states, the more the [income] gap widens,” Corpuz said. “[Considering] market size, efficiency, clustering, and linkages, [this shows us] lesser [number of states is ideal].” Meanwhile, Mendoza said his study showed that creating states through the merger of certain provinces could not be ideal, especially if the provinces have political dynasties. Mendoza said the merging of these provinces could create a “power vacuum” that will push leaders to vie for leadership in a state. While this is healthy, the country’s electoral history has shown this could turn violent. He said proposals to create the state of Northern Luzon consisting of Pangasinan, Ilocos Norte,

Rescue workers search for children trapped inside the collapsed Enrique Rebsamen school in Mexico City on September 19. The earthquake stunned central Mexico, killing more than 200 people as buildings collapsed in plumes of dust. AP/Carlos Cisneros

Mexicans. . . Continued from A1

Rescuers brought in wooden beams to shore up the fallen concrete slabs so they wouldn’t collapse further and crush whatever airspaces remained. The federal Education Department reported late on Tuesday that 25 bodies had been recovered from the school’s wreckage, all, but four of them, children. It was not clear whether those deaths were included in the overall death toll of 217 reported by the federal civil defense agency. President Enrique Peña Nieto had earlier reported 22 bodies found and said 30 children and eight adults were reported missing. In a video message released late on Tuesday, Peña Nieto urged people to be calm and said authorities were moving to provide help as 40 percent of Mexico City and 60 percent of nearby Morelos state were without power. But, he said, “The priority at this moment is to keep rescuing people who are still trapped and to give medical attention to the injured people.” People across central Mexico already had rallied to help their neighbors as dozens of buildings tumbled into mounds of broken concrete. Mexico City Mayor Miguel Angel Mancera said buildings fell at 44 sites in the capital alone as high-rises across the city swayed and twisted, and hundreds of thousands of panicked people ran into the streets. Long lines of volunteers passed chunks of debris from hand to hand at a collapsed clothing factory where several people died. When a person was hauled out alive, they broke into shouts of “Yes, we can!” Dust-covered and exhausted from digging, 30-year-old Carlos Mendoza said

two people were pulled alive from the ruins of a collapsed apartment building in the Roma Sur neighborhood during a three-hour period. “When we saw this, we came to help,” he said, gesturing at the destruction. “This is ugly, very ugly.” Blocks away, Alma Gonzalez was in her fourth-floor apartment when the quake collapsed the ground floor of her building, leaving her no way out. She was terrified until her neighbors mounted a ladder on their roof and helped her slide out a side window. The official Twitter feed of Civil Defense Agency Head Luis Felipe Puente said 86 dead had been counted in Mexico City and 71 in Morelos state, which is just south of the capital. It said 43 were known dead in Puebla state, where the quake was centered. Twelve deaths were listed in the State of Mexico, which surrounds Mexico City on three sides, four in Guerrero state and one in Oaxaca. At the site of a collapsed apartment building in Mexico City, rescuers worked atop a three-story pile of rubble, forming a human chain that passed pieces of rubble across four city blocks to a site where they were dumped. Throughout the day, rescuers pulled dustcovered people, some barely conscious, some seriously injured, from about three dozen collapsed buildings. At one site, shopping carts commandeered from a nearby supermarket were used to carry water to the rescue site and take rubble away. As night fell, huge flood lights lit up the recovery sites, but workers and volunteers begged for headlamps. Where a six-story office building collapsed in Mexico City, sisters Cristina and Victoria Lopez Torres formed part of a human chain passing bottled water. “I think it’s human nature that

drives everyone to come and help others,” Cristina Lopez said. “We are young. We didn’t live through 19 85. But we know that it’s important to come out into the streets to help,” her sister Victoria said. Ricardo Ibarra, 48, did live through the 1985 quake and said there hadn’t been anything like it since. Wearing a bright orange vest and carrying a backpack with a sleeping bag strapped to it, he said he and his friends just wanted to help. “People are very sensitive because today was the 32nd anniversary of a tragedy,”he said. Buildings also collapsed in Morelos state, including the town hall and local church in Jojutla near the quake’s epicenter. A dozen people died in Jojutla. The town’s Instituto Morelos secondary school partly collapsed, but school director Adelina Anzures said the earthquake drill held in the morning came in handy. “I told them that it was not a game, that we should be prepared,” Anzures said of the drill. When the quake came, she said, children and teachers rapidly filed out and nobody was hurt. The US Geological Survey (USGS) said the 7.1-magnitude quake hit at 1:14 p.m. (2:14 p.m. EDT) and was centered near the Puebla state town of Raboso, 76 miles (123 kilometers) southeast of Mexico City. Much of Mexico City is built on former lakebed, and the soil can amplify the effects of earthquakes centered hundreds of miles away. The quake appeared to be unrelated to the 8.1-magnitude temblor that hit on September 7 off Mexico’s southern coast and also was felt strongly in the capital. USGS seismologist Paul Earle noted the epicenters of the two quakes were 400 miles (650 kilometers) apart and said most aftershocks are within (60 miles) 100 kilometers. AP

@jrsanjuan1573

HE Bureau of Internal Revenue (BIR) has lost a P3.81billion tax case against the Power Sector Assets and Liabilities Management Corp. (PSALM) involving the sale of PantabanganMasiway Plant and Magat Hydroelectric Power Plant in 2006. This was after the Supreme Court (SC), voting 12-2, granted PSALM’s petition seeking the reversal of the Court of Appeals’s (CA) decision issued on September 27, 2010, that declared null and void a resolution issued by the Department of Justice (DOJ) directing the BIR to refund PSALM the amount of P3.81 billion representing the valued-added tax (VAT) deficiency that it paid to the tax agency under protest for the sale of the said power plants. Instead, the Court en banc reinstated the decision of the DOJ issued in 2008. In a 29-page decision penned by Associate Justice Antonio Carpio, the SC held that the CA erred when it ruled that the secretary of the DOJ has no jurisdiction on the issue and can’t rule on whether the sale of the power plants is subject to VAT. It noted that under Presidential Decree (PD) 242, “All disputes and claim between government agencies and offices, including government-owned or -controlled corporations, shall be administratively settled or adjudicated by the secretary of justice, solicitor general or the Government Corporate Counsel, depending on the issues and government agencies involved.” Furthermore, the SC ruled that the sale of the power plants by PSALM to private entities is not subject to VAT, since it was made pursuant to its mandate under the Electric Power Industry Reform Act of 2001 (Epira). The SC explained that under Section 50 of the Epira, PSALM’s principal purpose is to manage the orderly sale, disposition and privatization of the generations

₧3.81B The amount that the BIR needs to return to PSALM representing the VAT remitted for the privatization of two power plants

assets, real estate and other disposable assets, and contracts of the National Power Corp. (NPC), with the objective of liquidating all its financial obligations and stranded contract costs. It also agreed with PSALM that the sale of the power plants was not done in pursuit of any commercial or profitable activity, where VAT is imposable. The SC noted that under Section 105 of the Tax Code, VAT may be imposed on any person “who, in the court of trade or business, sells, barters, exchanges, leases goods or properties, renders services and imports goods.” “The sale of the power plants is not in pursuit of a commercial or economic activity, but a governmental function mandated by law to privatize NPC generation assets,” the Court said. PSALM, according to the SC, is limited to selling only assets and independent power-producer contracts of the NPC. “Similarly, the sale of the power plants, in this case, is not subject to VAT since the sale was made pursuant to PSALM’s mandate to privatize NPC assets, and was not undertaken in the course of trade of business,” the SC said. “In selling the power plants, PSALM was merely exercising a governmental function for which it was created under the Epira.” Records showed that Psalm conducted public biddings for the privatization of the PantabanganMasiway Hydroelectric Power Plant and Magat Hydroelectric Power Plant. See “Psalm,” A2