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CTA upholds P26.07-M VAT refund for P&G

Procter and Gamble (P&G) logo
THE Court of Tax Appeals (CTA) affirmed a P26.07-million partial tax refund it awarded to Procter and Gamble Asia, Pte. Ltd. (P&G) for its unutilized excess input value-added tax (VAT) attributable to zero-rated sales for the second half of 2005.
In a Jan. 3 resolution, the CTA special second division denied the motion for partial reconsideration of the Bureau of Internal Revenue (BIR) for lack of merit.
In its motion, BIR claimed that the documentary exhibits, invoices official receipts, credit notes, certifications of inward remittances, Business Service Agreements and other documents it presented for a tax refund are “hearsay evidence,” claiming the witnesses who identified the documentary evidence “allegedly had no personal knowledge and participation in the participation and execution of the same.”
However, the court said the BIR only raised the argument in its supplemental memorandum whereas it should have objected to the documentary evidence of P&G within 15 days upon receipt of formal evidence as stated in the Rules of Court. “However, despite notice, respondent filed no comment or opposition to petitioner’s formal offer of evidence.”
Assuming that the BIR registered its opposition in a timely manner, the CTA noted that the witnesses of the petitioners “were able to sufficiently identify the documents alleged by respondent to be hearsay evidence.”
“Hence, the Court finds no cogent reason to modify or reverse the assailed Amended Decision,” the court said.
The BIR also claimed P&G’s invoices and official receipts failed to comply with the mandatory invoicing requirements under the Tax Code as they did not indicate in full the required information and therefore lacked “probative value and must be treated as immaterial and irrelevant.”
“At the outset, the Court notes that respondent’s motion shows that it merely repeats the arguments found in his supplemental memorandum. Moreover, he did not specifically indicate the invoices and official receipts which allegedly failed to comply with the mandatory invoicing requirements,” the court said.
P&G initially claimed unutilized input VAT due to zero-rated sales amounting to P53.62-million for the periods July to October 2005 and October to December 2005.
However, the CTA special second division in an amended decision on Sept. 6 partially granted the refund claim as P&G only substantiated its entitlement of refund claim in the amount of P26.07-million.
According to the Tax Code, claimants for zero-rated sales must be VAT-registered, the input taxes were not applied to any output VAT liability, and the claims were filed within the prescribed period of two years after the close of the quarter.
Sales of services that are zero-rated according to the Tax Code should be other than processing, manufacturing or repackaging of goods, must be paid for in an acceptable foreign currency and delivered to businesses outside the Philippines. — Vann Marlo M. Villegas

Rice tariffication improving PHL’s WTO standing

THE Philippines’ decision not to extend quantitative restrictions on rice has improved its position with potential trading partners, its World Trade Organization (WTO) representative said.
“Our view is that the perception of the Philippines as a trading partner has improved after the current administration’s declared policy of ending its quantitative restriction on the importation of rice and our making progress towards tariffication,” Representative to the Philippine Mission to the WTO Ambassador Manuel A. J. Teehankee said in an e-mail interview.
The Philippines has been receiving queries from WTO-members about its obligation to move away from a QR regime, which were brought up frequently during the country’s trade policy review last year.
The QR is a non-tariff measure imposed by a member of the WTO to limit the volume of a particular commodity entering its borders.
Annex 5 of the Agreement on Agriculture which was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade allowed members to apply for special treatment in certain products by complying with certain provisions under the deal.
Rice is the only commodity in the Philippines that enjoys special treatment, granted to the country upon acceding to the WTO in 1995.
With the QR, the Philippines sought more time to achieve self-sufficiency in the staple grain, to counter the impact of the expected influx of cheap rice imports.
The waiver’s validity ended a decade later but was further extend by seven years after the Philippines lobbied for an extension which was granted in 2007.
This continued until its 2012 expiry after which the country negotiated for another extension, again to buy more time to prepare farmers for liberalized trade. The second request for an extension was granted in 2014 and ended June 30, 2017.
However, the country failed to amend the Agricultural Tariffication Act of 1996, and replace the quantitative restriction on rice imports, in time for the waiver’s expiry.
The waiver was nevertheless extended up until the country passed the law.
In November, Senate Bill No. 1998, Act Replacing the Quantitative Import Restrictions on Rice with Tariffs, Lifting the Quantitative Export Restrictions, made it past the chamber’s plenary.
Under the measure, the country will apply a 35% tariff for rice shipments from ASEAN member states, in recognition of the ASEAN Trade in Goods Agreement. For non-ASEAN member states, a 50% tariff equivalent will be applied.
Rice tariffication has raised concerns that rice farmers may lose their livelihoods because of their inability to compete with cheaper imported rice.
Mr. Teehankee said that “the interests of our rice producing farmers and sectors are safeguarded while assisting them in becoming competitive and also be able to avail of the benefits of higher value-added rice production that can be exported.”
The Senate bill as approved proposes the creation of a Rice Competitiveness Enhancement Fund which will be funded from tariffs.
It will receive a minimum P10 billion every year for six years, after which period all duties collected from the importation of rice are expected to have replaced the allocated funds.
The fund will provide assistance to rice farmers, helping them develop inbred rice seeds, farming equipment and upgrade their rice-growing skills. — Janina C. Lim

Government studying 2020-2022 salary hikes for civil servants

THE GOVERNMENT has formed a task force to study the extent of future salary adjustments for civil servants, calling the pay hikes certain though the degree of the adjustment is yet to be determined.
In a briefing on Wednesday, Budget Secretary Benjamin E. Diokno said the government’s civilian workers will receive salary increases from 2020 to 2022, continuing annual increases that began in 2016.
“I have already organized a task force to study. We hired a third party to study the wage structure right now at this time for the 2020 to 2022 salary adjustment,” Mr. Diokno said.
“There will be, it’s not just a possibility. But by how much is not yet certain,” he added.
“2019 is already covered so what we’re doing right now is to determine the salary structure of the private sector, and we will compare our salary structure. And that study is ongoing right now,” he added.
The fourth tranche of the salary standardization law is programmed for this year, pending the passage of the 2019 General Appropriations Act. — Elijah Joseph C. Tubayan

DTI hoping to ramp up halal certifications for SEA Games

PH halal logo
THE Department of Trade and Industry (DTI) is pushing to boost halal certification in the restaurant industry ahead of the 30th Southeast Asian Games late this year.
“We are expecting more than 48,000 athlete-visitors. Some 50% will be from our Muslim neighbors in Southeast Asia… We need to be proactive in serving their dining needs,” DTI Undersecretary for Special Concerns Abdulgani M. Macatoman told reporters on the sidelines of the Muslims Entrepreneurs Forum held in San Juan City on Wednesday.
Mr. Macatoman said the lack of halal-certified restaurants is a common complaint from Muslim tourists.
He said the Philippines lags Asian neighbors like Thailand, Singapore and South Korea in positioning itself as a Muslim-friendly country.
Mr. Macatoman said the lack of expertise in Halal-approved butchering and food preparation is the central problem that keeps Muslim Filipinos from expanding the industry.
“The Philippines has a Muslim population of about 10 million.
The government is also hoping to capture a piece of the $3.2 trillion global halal market.
The government has also been launching a series of workshops to help educate and promote opportunities in the halal industry across the globe while clinching deals with Muslim states that will help local businesses penetrate foreign markets.
Republic Act 10817 or the Philippine Halal Export Development and Promotion Act of 2016 tasks the DTI with strengthening the country’s ability to service global demand for quality halal products and services. — Janina C. Lim

Crop insurance payments worth P160M due next week for victims of Usman

A TOTAL of P160 million worth of insurance payments will be released next week by the Philippine Crop Insurance Corp. (PCIC) to farmers affected by tropical depression Usman, Agriculture Secretary Emmanuel F. Piñol said on Wednesday.
“PCIC President Jovy C. Bernabe reported that checks covering insurance payments worth P160-M are now being prepared for release next week,” Mr. Piñol said in a Facebook post.
“Bernabe said around 14,200 farmers in Bicol region would get a total of P116 million while 4,300 farmers in the provinces of Northern and Eastern Samar would be paid P32.5 million. Farmers numbering around 1,503 in Quezon and Oriental Mindoro will receive P11.9 million,” Mr. Piñol added.
The Agricultural Credit Policy Council (ACPC) is now also preparing the listing and validation of farmers and fishermen who will be lent up to P25,000 for no collateral at zero interest on a per-family basis, under the Survival and Recovery (SURE) Loaning Program of DA, according to Mr. Piñol.
The DA’s Production Loan Easy Access (PLEA) program meanwhile is also available at no collateral, and 6% annual interest, for farmers and fishermen.
“Last week, I promised President Duterte that the release of the support and interventions will be done quickly so farmers can still catch up with the planting season in the first quarter of 2019,” Mr. Piñol said.
The DA earlier reported that agricultural damage caused by Usman amounted to P1.18 billion with an estimated volume loss of 25,240 metric tons (MT). The affected area was 62,231 hectares and involved 56,108 farmers and fisherfolk. — Reicelene Joy N. Ignacio

CTA denies BIR petition vs cancellation of P46.2-million tax deficiency

THE Court of Tax Appeals (CTA) denied for lack of merit a motion for reconsideration filed by the Bureau of Internal Revenue (BIR) seeking to reverse the cancellation of a P46.2-million tax deficiency finding against a merchandising company.
In a Nov. 22 resolution, the CTA special second division affirmed the cancellation of tax assessment against Megabucks Merchandising Corp., after confirming that the BIR’s period for assessing Megabucks had prescribed.
The BIR argued that the Third Waiver supposedly extending the assessment period of Megabucks is valid as it was duly notarized and that it was also able to execute two more waivers to extend the assessment period of Megabucks, citing a previous case in the Supreme Court which declared a waiver valid despite not complying with the requisites for the waiver.
However, the CTA rules that the precedent cited by the BIR was exceptional.
The Court also ruled that the argument of the BIR that the Formal Letter of Demand (FLD) fixed and set the deficiency tax liability is bereft of merit, citing a Supreme Court decision which states that date of the accrual of penalties and charges is not the due date for payment.
The CTA also said the argument of BIR that the assessments for deficiency in expanded withholding tax (EWT) and withholding tax on compensation (WTC) are imprescriptible “deserve scant consideration” as these cannot be excluded in the prescribed period for assessment.
The BIR argued that the EWT and WTC are not internal revenue taxes but taxes imposed for failure to withhold taxes that it should collect, making the assessment for these as imprescriptible.
According to Section 203 of National Internal Revenue Code, internal revenue taxes must be assessed within the period of three years from filing of tax returns.
In its Aug. 21 decision, the court cancelled the FAN (Final Assessment Notice) for Megabucks for lack of definite due date and as the right of the BIR to assess Megabucks had prescribed.
The CTA ruled that the assessments against the company are void as they came beyond the three-year prescriptive period and the waivers meant to extend the assessment period were defective as the third waiver did not indicate that Megabucks was notified that the BIR accepted it. Following this finding, the fourth and fifth waivers were also deemed cancelled.
The CTA also ruled that the FANs and the FLD are also invalid due to lack of indicated due date for payment “which negates respondent’s demand for payment.” — Vann Marlo M. Villegas

Just one card

How many identification cards do you have? Which of those are accepted as proof of your identity by the government or private entities?
With the advent of the Philippine Identification System (PhilSys), soon you will only need to present one identification card. But what is PhilSys?
Under Republic Act No. 11055, or the Philippine Identification System Act, PhilSys is the government’s central identification platform for all Filipino citizens and resident aliens in the Philippines. It aims to provide a single document as valid proof of identity, thus simplifying public and private transactions by eliminating the need to present other forms of identification.
The Philippine Statistics Authority (PSA) is the primary implementing agency of PhilSys, responsible for the overall planning, management and administration of the PhilSys. As such, it is required to ensure the security and integrity of the PhilSys with the assistance of the Department of Information and Communications Technology.
Every citizen or resident alien shall personally register under the PhilSys one year after the effectivity of the Act (i.e., on Aug. 25, 2019).
Registered persons will be given a randomly generated, unique, and permanent identification number called PhilSys Number (PSN). The PSN will be assigned upon birth or upon registration.
To secure an identification card, demographic and biometric information is to be collected from every citizen and resident alien during registration. Demographic data to be collected include the individual’s full name, gender, date of birth, place of birth, blood type, and place of residence.
On the other hand, biometric information to be collected are a front-facing photograph, a full set of fingerprints, and an iris scan.
In case of minors below five years of age, only the demographic and front-facing photograph shall be collected. For those aged five to fourteen years, biometric information shall be initially captured and recaptured at age fifteen. In both cases, their PSN shall be linked to that of their parents or guardian.
Thereafter, a nontransferable PhilID shall be issued to the registrant. On its face, the relevant information pertaining to the registrant’s identity shall be reflected on the PhilID, as follows: PSN, full name, gender, date of brith, place of birth, blood type, resident address, marital status (optional), and a front-facing photograph of the registered person. It shall also contain a QR code which contains any two fingerprints.
The PhilID shall serve as the official government-issued identification document of cardholders in dealing with all national government agencies, local government units, government-owned and controlled corporations, government financial institutions, and all private sector entities.
While presentation of the PhilID or PSN shall be sufficient to establish identity in transacting business with the government and private entities, the information is still subject to authentication. Under the system, there are two modes of authentication: online and offline.
For online authentication, the PSN and the biometric information will be used to validate the identity of the registered person. For offline authentication, validation of identity shall be thru presentation of the PhilID, matching of fingerprints as stored in the QR code, and encoding of a one-time password.
In compliance with the data privacy law, any requesting entity needs to secure the consent of the registered person before collecting identity information. The registered person should be advised of the nature of the information that will be shared upon authentication and the purpose for which the information received during authentication will be used by the requesting entity. Moreover, a data sharing agreement is required between the requesting entity and the PSA as a prerequisite to the release of data. Only upon compliance with the foregoing conditions can the registered person’s personal data be provided for the purposes for which it has been requested and will be used.
All information collected shall be stored in a repository called PhilSys registry. It shall store the PSN, the registered records, and information of all registered persons in the PhilSys. The registered records shall pertain to electronic copies of completed application forms and supporting documents submitted during registration.
A registered person’s record in the PhilSys shall be considered official and sufficient proof of identity. It shall not, however, be understood as proof of eligibility to avail of certain benefits and services, nor shall it be an incontrovertible proof of citizenship.
While the implementation of a unified identification system hopes to simplify public and private transactions, there are apprehensions on the capability of the public system to secure the privacy of personal data against cyber-attacks, in the wake of the COMELEC fiasco of 2004. To counter the threat, PSA will need to tighten its PhilSys security measures against unauthorized leakage of personal data. On the part of the cardholder, it is prudent to safeguard personal information reflected on the face of the PhilID and to use the ID only in official or secured transactions. More importantly, the public will need to be educated on data privacy and the safety measures against data compromise. Otherwise, having just one card may mean swift misfortune rather than an efficient transaction.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
 
Rachael U. Yap is a senior consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
(02) 845-27 28
rachael.u.yap@ph.pwc.com

Telecommuting

You go to a search engine and type the word telecommuting and you will find various sources with definition of the term. One source offers a straightforward description of “work from home, making use of the Internet, e-mail and the telephone.” Another source describes it as a work arrangement in which employees do not commute or travel to a central place of work, such as an office building, warehouse, or store.
Majority of us at work have to leave home five times a week and spend at least eight hours a day in a workplace, whether it is a business office, commercial store, government agency, school, and other physical setup. It is just how work is as we know it — people who belong to a company or organization who share physical office to get the job done spend their day traveling to and from work.
This concept of telecommuting is a young one that traces its beginnings in the 1970s in the US. A source cited that in the US alone, there are more than “3.9 million employees who make up 2.9% of the total workforce work from home at least half of the time. There has been a 115% increase in telecommuting between 2005 to 2015 (up from 1.8 million in 2005).”
What makes telecommuting attractive? This particular practice affords workers flexible work option that contributes to the worker’s morale and productivity. Studies have shown that “people are happier and healthier when they have some control over their work lives.” Work flexibility also reduces burnout and stress among workers.
Needless to say, telecommuting is eco-friendly since workers do not need to burn fuel to go to work either as car drivers or vehicle passengers. It is also said to be more cost-effective in terms of time, money spent on transport and food and other travel-related expenses on the part of the workers. On the part of the office, they can save from office rental and all the attendant expenses in providing workspace to employees. It also allows employers to work with talent regardless of location.
telecommuting
But then, not all kinds of work are suitable to telecommuting. “Many client-facing jobs, for example, require employees to be in the office for meetings; some sales jobs require a more personal level of communication and some more manual jobs require equipment that employees just don’t have at home.”
Since you do not have a physical workplace, you have to motivate yourself to work and not slacken with your output. You may also be facing the prospect of working round the clock since you can be accessed on demand by the office.
Regardless, telecommuting has found champions and adherents since the advent of technology and the realization of providing work-life harmony and creative opportunities for workers to be given flexibility in how they do work, are important things to be managed and addressed in the workplace.
Here in our country, there is already a House Bill 7402 (the Telecommuting Act) and Senate Bill 1363 (the Telecommuting Act of 2017) which both aim to “enhance the protection and promotion of (the rights and welfare of) workers engaged in telecommuting and other flexible work arrangements.” The DoLE is tasked to come up with a pilot program to test its implementation before full adoption in the country.
Aside from the benefits cited, for many in the metropolis besieged by traffic commuting daily to and from work, this development is like a whiff of fresh opportunity to continue to engage in productive work without being hampered by the stress and aggravation that commuting entails.
 
Dennis L. Berino is an associate professorial lecturer of the Decision Sciences and Innovation Department of the Ramon V. Del Rosario College of Business of De La Salle University.
dennis.berino@dlsuedu.ph

Corporation 101 and amending the Corporation Code

Corporations have a crucial role in the overall economic well-being of the country. Most businesses prefer the corporation as an efficient and rational legal structure in order to conduct their commercial pursuits.
Essentially, a corporation has a personality separate and distinct from its board of directors, officers and stockholders. The liabilities of the stockholders are limited to their shares, thereby encouraging more investors’ participation in the growth plans of the company. It has the power of succession, ensuring continuity of its existence, managed centrally by a board and corporate officers.
Except as otherwise provided by law, a corporation can deal with property, shorten its term, freely transact with respect to its corporate assets, transfer its shares, invest in another corporation, declare dividends and can enter into contracts to further its interests. Supporting corporations as fundamental business organizations makes good business sense.
With the organizational advantages of a corporation, the avenues for expansion are close to boundless. As the company grows, their operational capabilities increase, enabling it to widen the scope of its delivery of goods and services and maximizing satisfaction in the market. Profits are huge and steady thereby justifying the sale of more quality products at lower prices. With more financial resources, they could hire the best and brightest talents to do more research, development and innovation, produce new goods and technology.
All of these activities stimulate competition among market players, thereby fueling economic growth. Studies have shown that there is a very strong linkage between positive national economic performance and the growth of corporations.
IMPROVING THE CORPORATE LEGAL BASIS
Given this context, Senate Bill 1280 which introduces amendments to the Corporation Code of the Philippines (“Code”) can indeed be considered as a milestone piece of legislation. The bill, approved in August 2018, is one that the investment community is looking forward to because of its attempt to make “doing business” via the corporate vehicle a more simple and rational process.
Most of the changes to the Code cover some of the key issues that confront corporations such as corporate continuity and stability, ease in doing business, directors and officers’ accountability, and process improvements in corporate activities, public interest and corporate governance.
BUSINESS CONTINUITY
Perpetual existence for corporations — Unless otherwise provided in the corporation code, a corporation shall have perpetual existence. The original term of 50 years is too short a period for corporations to achieve its purposes and these organizations should be able to exist even if its incorporators are no longer living.
Revival of existence — Companies whose life has expired can apply for a revival of its existence. Upon revival, its rights under its certificate of registration are also reinstated.
EASE OF DOING BUSINESS AND STIMULATING INVESTMENTS
One-Man Corporation — The new Code allows a single shareholder to form a one-person corporation. The requirement for at least five (5) incorporators was removed. There is also no minimum authorized capital stock but 25% must be subscribed. This feature will allow entry of small investors and will pose a better alternative to sole proprietorships which are exposed to personal liabilities. No meeting is needed and one person can just sign a resolution for a particular corporate action.
SEC to call and hold elections — Upon petition by any member or stockholder, the SEC can summarily hold elections. The purpose is to prevent excesses brought about by holdover boards due to failure to conduct elections.
Emergency boards — If no quorum results from a vacancy in the Board of Directors and there is a need for immediate action to prevent damage to the corporation, the remaining directors may fill up the vacancy from its remaining officers
Use of technology for board meetings — Video or teleconferencing and any other form of remote attendance are now allowed for board meetings. Stockholders can also vote in absentia or thru electronic means.
CORPORATE GOVERNANCE AND PROTECTION OF PUBLIC INTEREST
Independent Directors’ role — At least 20% of the entire board should be independent directors particularly in companies vested with public interest. Included in this enumeration are educational institutions, public utilities, banks and other similarly situated companies whose securities are registered under the Securities Regulations Code, including publicly listed or public corporations.
Material Contracts — Corporations vested with public interest should acquire the approval of at least 2/3 of the entire membership of the board for material contracts.
Stopping Anti-Competition — Voting trust agreements that have been executed to violate anti-trust laws and whose purpose is to stifle competition are prohibited.
Removal of Directors – A disqualified director can be removed by the SEC on its own initiative or upon a verified complaint especially in relation to those convicted of violations of the Securities Regulation Code, offenses such as fraud, deceit and crimes like graft and corruption.
Stockholders’ right to disclosures — Formerly considered as sensitive and confidential, stockholders are entitled to have information about compensation and other remuneration of its directors, business strategies, risk management and other related matters. Transparency is the objective here.
WAY FORWARD
On paper, the changes seem encouraging.
Hopefully, when carried out, the aforementioned amendments do not add to the complicated processes, requirements and bureaucratic red tape that hound individuals or groups locally or abroad who intend to start a business enterprise by using the corporation as its organizational form.
The different agencies of government — from the SEC, to the law-enforcement agencies, the departments belonging to the Executive branch and the judiciary — should make this law work. Unless the corporation is used to violate the law, trample on the rights of the populace or perpetuate crime or wrongdoing, no niching, compartmentalization or misplaced independence should stop our economy from being given a positive boost by the passage of the new Corporation Code.
As earlier raised, not only international players but small to medium-size investors and capitalists should be freed from excessive regulatory and legal burdens. More doors should be made open to them so they can innovate and grow. Participation in wealth creation can be facilitated by allowing them to build their own corporations, grow their businesses, pump up the economy and in the future, significantly contribute to nation-building.
 
Ariel F. Nepomuceno is a management consultant on strategy and investment.

Iron farming

This piece has little to do with mining or “farming” for iron. Although, mining becomes crucial in the way that it significantly contributes to technological advances, which, in turn, help boost agricultural productivity. Metallic soil is not conducive for food farming, anyway. So, farm or mine the iron and other elements, then use these elements to improve farming for food.
Why this proposition? Well, it seems we are in the era of high-technology farming, where robots — naturally made of iron and other metallic elements — are beginning to play a bigger part in the food production process. Perhaps not in a big way, just yet, but I suspect this is the trend for the coming years. Robots will eventually replace farmers, who are already diminishing in numbers.
A report in this paper a couple of days ago noted that agricultural employment continued to contract or fall in 2018, based on statistics from the Bureau of Local Employment (BLE). Natural calamities, which negatively impact on farming and harvest, are among the culprits, BLE Director Dominique R. Tutay was quoted as telling BusinessWorld.
The employment in the Agriculture sector — which includes Agriculture, Hunting, and Forestry; and Fishing and Aquaculture — was down to about 10 million workers in 2018 from about 11.3 million workers in 2015. A big drop was seen in Fishing and Aquaculture, about 14.7%, compared to 11% in Agriculture, Hunting, and Forestry.
This contraction may be seasonal in nature, or more related to weather, but I still believe that in general, the numbers will continue to drop as farmers and fisherfolk tend to favor white-collar or highly skilled work for their children. Thus, there is little incentive for continuity, where children continue on to become farmers or fishers themselves, after receiving an education.
And this is where technology can help. In a separate report in another newspaper, a farming expert was quoted as saying that digital agriculture and disruptive breeding technologies were crucial to addressing food scarcity and in raising agriculture’s contribution to creating jobs and promoting economic and national development.
Dr. Paul S. Teng was quoted as saying that in a consultation organized by the Southeast Asian Regional Center for Graduate Study & Research in Agriculture (SEARCA), it was noted that the use of technology was now a factor in determining agriculture growth. And such “technology” can be as simple as the use of the Internet to boost knowledge among farmers and fishers.
An example is the use of the Internet for more accurate weather forecasting. This ties in with the BLE finding that natural calamities, such as typhoons and earthquakes or landslides, significantly impact on agricultural employment. Of course, it is one thing for ordinary farmers and fisherfolk to know how to use the Internet, but it is another that they actually have access to it. They can be taught to use it only after they are provided access to it.
Obviously, farmers’ access to computers and smart mobile phones and connectivity are seen as crucial to adopting and promoting use of technology. Cooperatives may be encouraged to pool resources and invest in technology that can be made available to members, like Internet access to information on weather and farm management, and to establish an electronic library or a database as a resource on new farming technologies.
The report also quoted Teng as saying that other technologies like “gene-Editing biotechnologies (CRISPR, TALENs, Zinc Finger Nucleases) provide capability — the ability to edit native crop genes coding for important traits and generating non-transgenic plants. Genome-edited (important) crops include, soybean, maize, wheat, rice, potato, tomato, and peanuts.”
Over in San Carlos in California, technology is already playing a big role in determining the future of agriculture. I note with interest the piece by Erin Winick in the MIT Technology Review, of which he is Associate Editor, that was published recently. Winick’s background is in mechanical engineering. He had been a freelance science writer and was previously into 3-D printing.
In an article titled “New autonomous farm wants to produce food without human workers,” he wrote about Iron Ox, a robotics company with a facility near San Francisco, California, that “produces and sells food.” He quoted the firm’s cofounder, Brandon Alexander, as saying that despite the robots, the company is “a farm and will always be a farm.”
Alexander was also quoted as saying that automation solved two problems: the shortage of agricultural workers and the distances that fresh produce currently has to be shipped. But rather than eliminate human jobs, robots are seen as filling gaps in the farming workforce. In short, technology augments and complements, rather than take over.
Winick wrote: “The company’s 15 human employees share their work space with robots who quietly go about the business of tending rows and rows of leafy greens.” Iron Ox’s first production facility — an 8,000-square-foot (about 800 square meters) indoor hydroponic farm attached to its offices — is estimated to produce roughly 26,000 heads of leafy greens annually.
“That’s the production level of a typical outdoor farm that might be five times bigger,” Winick wrote. “The opening [of the facility] is the next big step toward fulfilling the company’s grand vision: a fully autonomous farm where software and robotics fill the place of human agricultural workers, which are currently in short supply.”
The way the farm is put together, Winick noted, robotic arms “individually pluck the plants from their hydroponic trays and transfer them to new trays as they increase in size, maximizing their health and output — a luxury most outdoor farms don’t have. Big white mechanical movers carry the 800-pound water-filled trays around the facility.”
And to make the farm work properly as an automated facility, Iron Ox has developed a software — nicknamed “The Brain” — to operate and keep watch over the farm, monitoring nitrogen levels, temperature, and robot location, among others. Winick noted that the software “orchestrates both robot and human attention wherever it is needed.”
And while workers still help with seeding and processing of crops, Iron Ox plans to automate these steps as well in the future. Also, Iron Ox is not selling any food yet, but it is in talks to supply restaurants and grocers, Winick noted. Meantime, whatever is produced goes to a food bank and the company cafeteria.
Winick added that it was Iron Ox’s belief that if technology could allow people to grow crops in indoor facilities that were closer to urban areas, using up smaller lots and minimizing labor costs, then these automated farms could provide cheaper and fresher produce, and deliver them quicker, than big farms outside cities.
There is logic to this, without doubt. But, “the problem with the indoor [farm] is the initial investment in the system,” Winick quoted Yiannis Ampatzidis, an assistant professor of agricultural engineering at the University of Florida. “You have to invest a lot up front. A lot of small growers can’t do that.”
Ampatzidis added that the rise of technology could actually widen the gap between big farming corporations and small family-owned farms, which lack the capital to invest heavily in automation. However, the academic also acknowledged the role of technology is addressing the shortage in agricultural labor.
And this, to me, is the crux of the matter. The Philippines is obviously losing farmers and farmlands to urbanization and development. However, food remains the most important input to sustaining the population, followed by clean potable water, then healthcare and education. We cannot produce farmers or farms overnight, and without heavily investing in people and land and infrastructure.
Technology can help bridge that gap. Robotics can address the issue of labor supply, and automation can help improve productivity and efficiency, even with limited land and infrastructure. Technology for indoor farming also mitigates the impact of adverse weather conditions.
I believe in the value of technology, and I realize the importance of its role particularly in food production. The use of high technology in agriculture is not only inevitable, it has in fact become necessary. As Assistant Professor Ampatzidis noted, “If we don’t find another way to bring [in] people for labor, automation is the only way to survive”.
 
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
matort@yahoo.com

The business of corruption

By Geronimo L. Sy
PERHAPS there is no field of economics as overstudied or understudied as the causes, effect, and impact of corruption as a good and a service, as an industry and a business.
There are millions of reports on graft since the beginning of man, his family and his organizations. Corruption is classified scientifically. There are institutes dedicated to the discipline and think tanks whose sole purpose is its control. Yet the phenomenon, though widely experienced and personally distasteful to most while delicious for others, is taken like breathing dark air or drinking brown water.
Coffee money may grease a transaction to make it faster or smoother, or taxes can be collected on bribes, but there is no serious argument that corruption is good for anyone, giver, intermediary or taker, whether in the short, medium or long term. It is after all biblical in the form of a sin. Is it then like the poor who will always be with us?
At its essence, corruption is an abuse of power, authority, or any type of privilege. When it is done with regularity, with a range of fees, dedicated personnel and set processes, it is a business. It is a going concern that is systemic. It is also opportunistic as an enterprise.
For jurisdictions where economic liberty is severely restricted or non-existent, where the honest and hardworking little guy ends up exactly where he started, corruption becomes the mode of making a living. It is a way of life like any other business person running a sari-sari store, a franchise or a monopoly.
There being no sufficient creative outlets or other rewarding channels, he enters some position or takes on a role that is lucrative for him. When the scales of life are skewed, man does what he needs to do to survive and then to thrive.
The default approach to interdicting corruption is via the criminal justice system with specialized laws and agencies. This includes the setting up of an anonymous complaints mechanism, the provision for investigation and prosecution, the judgment of courts and the rehabilitation of offenders. Evolved strategies span increased penalties, simpler evidentiary proofs, anti-money laundering schemes and lifestyle checks.
Other approaches call for increase of salaries of civil servants and focus on prevention and audit. More innovative programs involve use of technology, designing transparency into rules and surfacing information flows.
All these are well and may work here and there, sometimes or often. What is absent is the clear insight that the only way to make corruption go away is to put it out of business, not literally to bankrupt it but to employ a coherent plan of action to compete and beat it. It is not the case of feeding a bigger shark to rid of smaller predators. It is to think of why people go into a business, any business including corruption as an industry. If corruption is not a ‘good’ product or a ‘reliable’ service’ for purveyors and users, it will naturally go away.
In any sector, anyone who provides a better alternative will win market and replace the others. This analogy and analysis to business is valid when there is no underlying offense except for the crime of graft and corruption itself punished by law.
But what about those cases when parties bribe their way out of a crime of murder or of plunder? Not only is bribery a crime but the offense of killing and stealing in large scale are abhorrent to society. In this case, no amount of economic reform or financial engineering can affect the problem of evil. It is through the criminal justice system that the balancing of the scales of divine and human justice takes place.
How do we deal with corruption in the criminal justice system? Is it to add another layer to supervise it — to police the policeman, prosecute the prosecutors, and judge the judges? It is a vexing metaphor of turtles all the way up and all the way down.
The research on the economics of corruption requires the dimensions of rational psychology, behavioral science, motivational theory on the complex issue of why people go wrong. When people fight over a bowl of rice, a property, or an electoral challenge, they are similar only in the way the actors calculate or not. When people extort and bribe, their reasoning is the same justification.
The responses, however, cannot be the same. It is the fallacy of employing the same treatment for similar symptoms but differing causes. The economics of corruption, the crime of corruption and the business of corruption are dimensions for understanding its occurrence. They also serve as platforms of action.

PSEi surges past 7,900 as US, China wrap up talks

THE MAIN INDEX soared past the 7,900 level on Wednesday, following optimistic views on trade relations between the United States and China alongside the continued flow of foreign funds into the local bourse.
The bellwether Philippine Stock Exchange index (PSEi) surged 2.82% or 217.55 points to 7,919.67 yesterday, recovering from its decline in the previous session.
The all-shares index likewise jumped 2.02% or 93.80 points to 4,727.97.
“The market’s surge reflects rising optimism on US-China trade relations, as well as subsiding local inflation. So far, foreign funds have been net buyers since the start of the year. We are hoping that this will continue,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said via text.
China’s foreign ministry announced yesterday that it has concluded trade talks with the US, which had extended into a third day versus the scheduled two. Officials said this indicates the serious nature of the discussions.
With this, Wall Street registered strong gains overnight. The Dow Jones Industrial Average jumped 1.09% or 256.10 points to 23,787.45; the S&P 500 index edged higher by 0.97% or 24.72 points to 2,574.41; while the Nasdaq Composite index also advanced 1.08% or 73.53 points to 6,897.
Aside from warming trade relations, Diversified Securities, Inc. trader Aniceto K. Pangan also attributed the uptrend to the market’s net foreign buying position of P1.37 billion. This is about nine times the P152.33-million net inflow on Tuesday, and is the fifth straight session of net purchases.
“Market manifested an uptrend today on the continued investment inflows from overseas fund with a net foreign buying of more than P1.37 billion after inflation simmered down substantially for two consecutive months and dovish remarks from US Fed favoring emerging markets particularly Philippines on attractive valuation,” Mr. Pangan said in a separate message on Wednesday.
December inflation slowed to 5.1% from six percent in November, the second time that prices of goods eased since September and October’s peak of 6.7%.
Sectoral indices were gainers across-the-board, led by holding firms which climbed 4.47% or 339.43 points to 7,918.66.
Services firmed up 2.52% or 37.45 points to 1,519.47; property rose 2.2% or 85.24 points to 3,955.85; financials gained 1.37% or 24.45 points to 1,797.86; industrials added 0.48% or 54.78 points to 11,362.95; while mining and oil also closed 0.4% higher or 35.14 points to 8,814.39.
Some 3.37 billion issues worth P10.17 billion switched hands, much higher than Tuesday’s P6.03 billion.
Advancers were double the decliners, 140 to 72, while 30 names were unchanged.
“The market is now within striking distance of the psychological resistance level of 8,000. If the market will move and close decisively above 8,000, we could see it test 8,250…otherwise it’s back to support at 7,580,” PNB Securities’ Mr. Lisbona said. — Arra B. Francia

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