Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 10090

Maynilad may forego arbitration for clarity on tariffs

MAYNILAD Water Services, Inc. said it is willing to drop its arbitration proceedings against the Philippine government in exchange for a tariff settlement that compensates it for lost revenue.

“I think we’re trying to settle that (because we also) don’t want to be in that situation with the government so I think that is being discussed with the MWSS (Metropolitan Waterworks and Sewerage System)… Assuming we come to terms on the tariff issue, then we’re more than willing to drop the arbitration case,” Manuel V. Pangilinan, Maynilad Chairman, told reporters in Muntinlupa on Monday.

The Singapore High Court ruled on Sept. 4, 2018, which was confirmed on Oct. 4, 2018, that the Philippine government should pay Maynilad P3.4 billion as an arbitral award, for the company’s foregone revenue due to the refusal of the MWSS to implement Maynilad’s tariff adjustment from 2013 to 2017, which includes the recovery of corporate income tax payments.

The Singapore High Court dismissed the Philippine government’s application to set aside the first partial award dated July 24, 2017 issued by a unanimous three-man arbitral tribunal in the arbitration between Maynilad and the Philippines. The Philippines filed an application to set aside the arbitral award on Feb. 13, 2018.

Aside from the dismissal of the application, the Singapore court ordered the Philippine government to pay Maynilad $40,000.

Under Maynilad’s concession agreement with the government, it may request tariff adjustments based on movements in the inflation rate, foreign exchange currency differentials, a rate rebasing process scheduled every five years and certain extraordinary events.

“Subject to agreement with the government on how we move forward on the tariff issue,” Mr. Pangilinan said, noting that the issue has been there for years, and that the company wants to settle on an agreed tariff structure.

“I think there’s been some arrangements with the government on that,” Mr. Pangilinan added.

Metro Pacific Investments Corp. (MPIC) owns 52.8% of Maynilad, while DMCI has a 25% indirect economic interest in the utility.

Meanwhile, Mr. Pangilinan said that his company is willing to comply with President Rodrigo R. Duterte’s call to the Office of the Solicitor General (OSG) and the Department of Justice (DoJ) for a review of government contracts with private firms.

“We welcome that review… we’ve indicated that to the President and we will cooperate in the review process,” Mr. Pangilinan said.

Justice Secretary Menardo I. Guevarra said in a text message that the department started reviewing Maynilad’s concession agreement, along with other priority government contracts such as the Chico River and Kaliwa Dam loan contracts, but “it may take time… We’ll make our recommendations upon completion of our study.”

“We have organized our teams in the DoJ to review certain priority government contracts. On top of the list is the Maynilad concession agreement, together with the Chico River and Kaliwa Dam loan contracts. We have started the review but this may take a little time. We’ll make our recommendations upon completion of our study.

MPIC, which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Reicelene Joy N. Ignacio, Vann Marlo M. Villegas

Globe in talks to share towers with ‘third player’ Mislatel

GLOBE Telecom, Inc. and the Mislatel consortium, the group selected to step in as the telecommunications industry’s “third player,” said they are now in discussions to share tower assets to reduce the cost and duration of the infrastructure buildout.

In a hearing on common tower policy by the House of Representatives Committee on Information and Communication Technology, representatives from the two telcos confirmed they are looking at possible ways to use Globe’s passive assets.

“For Globe, we have signified our intention that we are open to sharing our current network infrastructure. In fact, Mislatel was also informed of this,” Globe General Counsel Vicente Froilan M. Castelo said.

Mislatel Spokesperson Adel A. Tamano confirmed that talks are under way, and that the third player has always wanted a shared tower setup with incumbents Globe and Smart Communications, Inc.

“Even before, that has been our position. We want to enter into commercial agreements with the existing (telcos)… We are already in talks. It’s true, I’d like to confirm Atty. Castelo’s statements. We are in talks with them,” he said.

“It will really speed up roll out. The main issue for us is really the site acquisition. With existing towers, that problem is addressed,” he added.

The planned tie-up points of the complexity and expense of rolling out a new telecophone service provider and also the pressure on incumbents to increase coverage in the face of more intense competition, and as all telcos face mounting bills for upgrading technology as fith-generation mobile (5G) starts rolling out in other markets,

Mr. Tamano noted that Mislatel would like “all of (Globe’s) existing infrastructure” to be part of the shared pool of assets. “Because I think, the contemplation currently is only certain areas will be shared. But I think if we have access to more towers, that would help our rollout,” he said.

Globe has long expressed its intent to lease its tower assets and even obtained approval from the Securities and Exchange Commission last year to form its own tower company, GTowers, Inc.

When it announced the incorporation of GTowers, Globe said putting up its own tower company would “help speed up the building and deployment of cellular towers in the country.”

Mislatel, whose members are China Telecommunications Corp., Udenna Corp., Chelsea Logistics Holdings Corp. and Mindanao Islamic Telephone Company, Inc. (Mislatel), also called for Globe and Smart early on to play a role in the third-player rollout.

When the group was selected as third player in November, Mr. Tamano said then: “We’d like to invite all the stakeholders, everyone who wants to have better telecommunications in the Philippines, to work with us… In fact even our competitors, Globe and Smart, we are ready to partner with you for the use of your tower facilities.”

Smart Vice-President for Legal and Regulatory Affairs Roy Cecil D. Ibay said sharing tower assets would be more difficult for the group as it does not own the land on which its towers are located.

“Unlike Globe (which owns the land on) at least 70% of their towers, our towers are 100% on leased land,” he said.

Smart is the wireless unit of PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

Ground broken on Vigan Airport runway extension

THE government broke ground Monday on the runway extension project at the Vigan Airport in Ilocos Sur, which is aimed at increasing the types of aircraft that can use it beyond its current general-aviation market.

In a joint statement on Monday, the Department of Transportation (DoTr) and the Civil Aviation Authority of the Philippines (CAAP) said the P69-million project will allow bigger aircraft to use the facility.

“When we build and improve our nation’s airports, we are also building platforms for mobility and connectivity that usher in economic and social development. Through this project, Vigan will be more accessible to Filipinos… And we know that with more people coming in to Vigan, more jobs come to life for our kababayans,” Transportation Secretary Arthur P. Tugade was quoted as saying.

Vigan Airport handled 47,856 passengers in 2018, up from 14,645 two years prior.

“The infrastructure development project of Vigan Airport was launched to address the growing demand for improvement in the airports serving the Ilocos Region. Aside from the runway extension, projects such as the runway site acquisition, expansion of the passenger terminal building, construction of an administration building, and improvement of the vehicle parking area are also in the works,” it said.

The development of Vigan Airport is part of the total P688 million the DoTr allocated from the general appropriations act (GAA) 2018 to improve four airports, the others being Laoag International Airport, Cotabato Airport and Sanga-Sanga (Tawi-Tawi) Airport.

The DoTr signed an agreement with the Department of National Defense in November to have the Armed Forces of the Philippines Task Force for Infrastructure Development undertake the airport development works. — Denise A. Valdez

Filipino nurses find English tests for UK too hard

BRACING for life after Brexit, British hospitals badly need more nurses like Filipino Jobie Escalona, but she twice flunked a mandatory English language test that asked her to write up the merits of immigration and computer education in school.

The 23-year-old Ms. Escalona, with three years experience in a private hospital in Manila, lost almost 3 months salary paying nearly $600 to sit the tests.

Fed up, she was ready to give up on Britain and try Canada, one of several other countries short of nurses, until her father persuaded her to take the test a third time.

“I was already losing hope,” she told Reuters. Finally, in January last year, she passed, having at last got a subject she felt comfortable writing about in the tough written section of the test.

Asked to compare team and individual sports, Ms. Escalona had little trouble: “I was able to relate to it because I am a swimmer.”

But, her tortuous experience doesn’t bode well for Britain’s chances of adequately filling alarming staffing gaps in its health care services.

With Brexit looming, the supply of nurses from European Union countries has almost dried up, with lots going home. And of the many foreign nationalities employed in Britain, Filipinos made up the largest number, with 10,719, according to a parliamentary paper.

As of June last year, 16% of nursing jobs in hospitals and community health services were held by foreigners — nearly a quarter of whom were Filipinos.

Britain is already facing a shortage of 40,000 nurses, and once it leaves the EU, if it ever happens, the gap could widen to 50,000, enough to staff more than 40 small to medium-sized hospitals, according to a report commissioned by the Cavendish Coalition, a group of health and social care organizations.

OUT OF THEIR COMFORT ZONE
The staffing crisis is increasing Britain’s dependency on hiring from low-cost countries like India and the Philippines, where English is widely spoken, yet the language test has proved to be a major obstacle.

Philippine recruitment firm Louis International Manpower Services has received 1,000 job orders for nurses since 2015.

It has only filled a quarter of them.

“It is not because of the lack of applications, but the English test,” said Lilibeth Villas, documentation officer at the firm. “We have applicants who were interviewed in 2015, but they have not passed the test yet.”

Run by the British Council, IDP Education and Cambridge Assessment, the International English Language Test System (IELTS) gauges applicants’ ability to speak, listen, read and write, and is used by employers around the world.

Questions in the academic written section asks candidates to write short essays on diverse subjects. Examples given on the IELTS website included interpreting graphs on changes in radio and television audiences, and gender variations between full and part-time students, and discussing the pros and cons of nuclear technology and of regulating car ownership.

Many candidates clearly find the weighty topics too daunting.

Febin Cyriac, a business development manager at Envertiz Consultancy, a British health care recruitment firm that specializes in bringing in nurses from overseas, started a petition in change.org in 2014 that asked UK regulators to relax their IELTS scores.

Working as a nurse himself, Mr. Cyriac said there are a good number of Indian or Filipino nurses with many years of experience working in Britain, but who are only working as assistant nurses in the National Health Service (NHS) and nursing homes.

“IELTS is the only barrier for them to practice as a nurse in the UK,” said Mr. Cyriac, himself a nurse working in Britain.

Still, the number of Filipinos in the NHS has risen by almost a third in the last two years, according to British government figures.

Late last year, the pass mark for the writing section was lowered, but there are no immediate plans to make further changes to the test standards, said Andrea Sutcliffe, Nursing and Midwifery Council (NMC) Chief Executive and Registrar.

“We will continue to carefully monitor the impact of the recent changes. This change is part of a wider review of our overseas registration processes aimed at making it more straightforward and user-friendly for people with the right skills and knowledge to join our register in a timely way,” Ms. Sutcliffe said.

There is an Occupational English Test (OET), more suited to medical professionals, that foreign nurses can take. If they pass that test they would still have to sit the IELTS, but they would be eligible for a lower pass mark. The OET is more expensive, however, making it unattractive for low paid nurses.

A London-based recruitment agency visited Manila recently to find nurses for Cambridge University, East Surrey and Royal Cornwall Hospitals, while there have also been recent hiring drives for hospital trusts in Oxford, Hull and Dudley.

Germany, Japan, the United Arab Emirates and Saudi Arabia are the other countries hiring Filipino nurses, said Bernard Olalia, head of the government’s Philippine Overseas Employment Administration.

In January alone, Mr. Olalia’s office received 1,000 job orders for nurses from Saudi Arabia.

“There are a lot of markets for our Filipino nurses,” Mr. Olalia said, adding that it was understandable if they took jobs in places where the requirements were easier to fulfill.

Filipino nurses who were recruited in the 1990s did not have to take the language tests, yet they are still in the NHS and providing good service, said Reydeluz Conferido, who was until recently the labor attache to the Philippine embassy in London.

While there, Mr. Conferido called on British officials to review the requirements placed on overseas nurses to see whether they were serving the correct purpose or creating an artificial barrier.

“If you really want these nurses, you would do something about your standards,” he said. — Reuters

CEZA to start building corporate center, upgrading Port Irene

Cagayan Economic Zone Authority (CEZA) logo

THE Cagayan Economic Zone Authority (CEZA) will start building this month a corporate and commercial center as a well as launch rehabilitation works in Port Irene.

In a statement on Monday, the investment promotion agency said the P426-million corporate and commercial center will rise on up to 40 hectares in Sitio Punti, Barangay Rapuli.

The so-called CEZA Global City will have institutional and retail areas, a conference hall, a dining area, offices, and a CEZA corporate center, among others.

CEZA Chief Raul L. Lambino said two buildings will be ready for occupancy by early next year, filling the demand for offices of the Cagayan Special Economic Zone and Freeport’s first 26 Financial Technology principal licensees.

Commercial banks and a fresh batch of business locators in the tourism and manufacturing sectors are also setting up offices in the corporate and commercial centers.

For the planned rehabilitation of Port Irene, six new warehouses are slated for construction amid rising demand for space by port users importing construction materials and supplies and a variety of loose cargoes, according to CEZA.

Port Irene is being positioned as the leading international port in the Northern Philippines, capable of accommodating panamax and cape-sized vessels.

To further improve the Freeport, CEZA recently commissioned a master development plan for the entire 54,000-hectare special economic zone and Freeport as well as feasibility studies, including financial viability, for the various projects approved by the CEZA board.

These include the construction of a proposed convention center and sports complex, coastal boulevard, fintech hub and duty-free mall, power and water plants, and a cyberpark. — Janina C. Lim

Copper producers gather in Chile as electric cars expected to drive demand growth

SANTIAGO — Global copper producers are converging in Chile this week as tightening supply buoys prices, even as the industry grapples with declining ore quality, project delays and worries the US-China trade war may hit long-term demand.

Despite these challenges, the industry is planning for substantial growth in the next decade thanks to an expected boom in production of electric vehicles, which use twice as much copper as internal combustion engines. Automakers are vowing to produce all-electric fleets.

With all that in mind, hundreds of investors, executives, analysts and regulators are gathering in Santiago, the Chilean capital, for the annual World Copper Conference.

“From a numbers perspective we have a deficit in copper, and it’s expected to be a tighter market in 2019 relative to last year,” said Eleni Joannides, a copper market analyst at consultancy Wood Mackenzie.

Relatively upbeat commodity prices since January have lifted producers such as Freeport-McMoRan Inc, Antofagasta Plc, BHP and Anglo American Plc out of the doldrums and presented them with a new problem: the hunt for high-quality assets at a time of geo-political uncertainty.

LME cash copper is expected to average $6,397 a tonne this year, a Reuters poll of 30 analysts shows, slightly lower than $6,437 on Friday.

“I think we’re heading into a bull market for copper,” said Jefferies mining analyst Christopher LaFemina.

A lack of new supply and steady demand this year for the metal, widely used in power and construction, should keep the 25-million-tonne market in a slight deficit and support prices, analysts said.

The industry is moving to bring new supply online, but it will take time. Freeport, the world’s largest publicly traded copper producer, cut its 2019 output forecast at Indonesia’s Grasberg mines by more than half as it transitions to underground operations, a costly process that will take years.

But Freeport, BHP, Nevada Copper Corp and other miners are spending more than $1.1 billion to develop fresh copper projects in the United States, a country once seen as a laggard in the global mining industry.

Panama, not historically associated with a large mining industry, is also seeing investment dollars. First Quantum Minerals Ltd plans to spend $327 million to expand a copper mine, with the goal of increasing production by 375,000 tonnes annually within five years.

Tightening supply this year was Freeport, due in part to the Grasberg mine plan, while miner Glencore halved its 2019 output from its Mutanda copper and cobalt mine in Democratic Republic of Congo to 100,000 tonnes.

Meanwhile, global visible inventory in the form of combined stocks held by the London Metal Exchange, Comex and the Shanghai Futures Exchange have nearly halved from a year ago to around 500,000 tonnes, data from the exchanges show.

Analysts said this has helped boost sentiment in copper and some other metals, which had been held down by the US-China trade dispute and hiccups in economic growth of top consumer China where stimulus has been promised.

Copper is one of the metals that will benefit the most from an expected boom in the use of electrical vehicles, but significant demand for the low-emission automobiles is expected to only ramp up in the middle of 2020’s.

Roskill expects sales of electric vehicles powered by rechargeable lithium-ion batteries to rise to 17 million units, or 20 percent of the total, in 2025, and 32 million, or 37 percent, by 2030 compared with 3 percent, or 2.1 million, last year.

Still, some copper executives are concerned that aluminum may try to supplant copper’s role in electronic equipment in the near future. Aluminum is a cheaper alternative to conduct electricity, although less efficient.

A large portion of the weeklong conference is devoted to research presentations from industry scientists studying new applications for the red metal, part of a plan to go on the offense against aluminum. — Reuters

Most Swedish firms in PHL planning for long-term expansion

A SURVEY of Swedish businesses in the Philippines has revealed that most of them are here for the long term and plan to expand accordingly, the Swedish government said.

The “Philippines — Open for Business” report published April 3 by Business Sweden, the trade and investment council of the Swedish Government, said it surveyed 13 firms present in the Philippines and 92% said they are planning for “long-term business expansion.”

“Results show that overall, businesses remain positive about their prospects in the Philippines. A majority of the respondents are opting to stay invested, and even plan to expand operations in the country in the long term,” according to the report.

Near term, 70% of respondents also forecast solid growth, with expectations of 10% growth in sales annually over the next three years.

However, the report noted “cautious optimism” among Swedish businesses in the Philippines.

“For one, respondents cited bureaucracy and regulatory changes as a potential source of risks,” the report read.

Also, four out of 13 said they expect economic conditions in the Philippines “to either stay the same or even decline.”

For day-to-day operations, dealing with government permits (69%) was identified as the biggest hurdle, followed by infrastructure constraints (54%) and sector-specific policies (34%).

Nevertheless, a majority still expect economic improvements, citing an ”average” level of confidence in the government’s infrastructure program.

“From the survey, what we see driving Swedish business in the Philippines is that most firms are able to support their clients by providing innovative solutions needed for the present and the future,” it said.

“Consequently, Swedish companies feel that they take a more active role in shaping industry trends. Having a shaping role in the sectors that they operate in supports the view that Swedish companies have a long-term positive outlook for the Philippine market,” it added.

Besides the opportunities for Swedish suppliers that can offer equipment, solutions and services for critical applications in infrastructure push, it also identified sectors where Swedish firms are a potential fit: manufacturing; information technology and business process management; as well as retail and e-commerce.

Currently, there are around 30 Swedish firms operating in the Philippines. Of these, 20 are considered large, with combined Philippine revenue of 5 billion krona or P28.06 billion.

Swedish exports to the Philippines in 2018 also grew 30% year-on-year to 2 billion krona or P11.23 billion. — Janina C. Lim

2019 ITR filing reminders

Summer is here! As the school break starts, everyone is excited to plan where to spend their holidays. But before gearing up for the vacation, corporate taxpayers adopting calendar taxable year and individual taxpayers can’t think of enjoying summer yet until the April 15 annual income tax return (ITR) deadline passes.

As the deadline draws closer, here are some reminders for the ITR filing:

1. BE MINDFUL OF THE APRIL 15 DEADLINE
As expected, there have already been news reports saying that the Bureau of Internal Revenue (BIR) will not extend the upcoming April 15 income tax deadline. The BIR has been warning taxpayers to file their income tax returns earlier to avoid penalties for late filing. The penalties for late filing include a 25% surcharge of the tax due plus 12% interest per annum (from the payment deadline until the amount is fully paid), and a corresponding compromise penalty, on top of the income tax due.

So, for the taxpayers, April 15 this year is a crucial day that should not be missed.

2. USE THE CORRECT VERSION OF ITR
As of writing, all new/revised versions of annual ITRs (BIR Form No. 1700 for individuals earning purely compensation income, BIR Form No. 1701 for individuals under graduated income tax rates availing of itemized deductions including mixed income earners, BIR Form No. 1701A for individuals earning income purely from business/profession under graduated income tax rates availing of Optional Standard Deduction or those who opted to avail of the 8% flat income tax rate, and BIR Forms No. 1702-RT/EX/MX for corporations, partnerships and non-individuals exempt from tax and subject to regular tax rate, respectively) have been released by the BIR.

For the individual ITRs, the revised version of BIR Form No. 1701 and the new BIR Form No. 1701A are already available in eBIR Forms package v7.4.1, but are not yet available in the electronic Filing and Payment System (eFPS). Thus, the BIR advised eFPS filers to file using the eBIRForm facility and pay manually through AABs. BIR form No. 1700, on the other hand, is not yet available in the eBIRForms facility. Hence, this shall be filed and paid manually.

For corporate ITRs, all new versions of the ITRs are not yet available in the eFPS and eBIRForms facility. Thus, the BIR advised the eFPS and eBIRForm filers to use the existing/old version available in the eFPS and eBIRForms package. However, taxpayers filing 1702-MX who opted for optional standard deduction as their method of deduction shall use the manual return and pay manually.

For the detailed guidelines on the filing and payment of annual ITRs, taxpayers may refer to Revenue Memorandum Circulars No. 41-2019, 37-2019, 19-2019, and 17-2019.

3. FILE AT THE PROPER VENUE
Under the rules, wrong venue filing or filing of tax returns at a different Revenue District Office (RDO) than where they are registered, is subject to a penalty of P1,000 per return and a 25% surcharge of the tax due to be paid. The P1,000 penalty may be nominal, but the 25% surcharge could mean millions to some taxpayers depending on the amount of tax due.

Hence, taxpayers, especially individuals, are recommended to verify first with the BIR and check which RDO they are registered at before proceeding to the nearest Authorized Agent Bank (AAB) or RDO to file their annual ITR.

Wrong venue filing also includes a situation wherein taxpayers, who are mandatorily required to file their returns through eFPS or eBIRForms, erroneously file their tax returns manually.

4. KEEP ABREAST OF BIR ADVISORIES
At this time of the ITR filing season, it is not uncommon for taxpayers to encounter downtime or traffic in the eFPS facility due to network congestion.

There have been certain instances in the past wherein a taxpayer tried to file an ITR on the morning of April 15 only to find himself in front of the computer the whole day and until midnight without successfully filing the ITR. This is why taxpayers are advised to file their tax returns early to avoid this kind of inconvenience.

Nonetheless, taxpayers should be alert about BIR advisories, wherein the BIR makes announcements about work-around procedures in case of problems in the eFPS facility.

5. COMPUTE YOUR INCOME TAX DUE CAREFULLY
When computing for the income tax due, taxpayers should always practice due diligence. Even though a taxpayer can amend an ITR to correct a mistake, that mistake may incur large cost depending on its significance. This is because in the event that the tax payable per amended ITR is higher than what is remitted in the filed original ITR, a 25% surcharge, 12% interest per annum, and compromise penalty shall be imposed based on the additional tax to be paid per amended return. Better be safe than sorry.

With just a few days left before the deadline, I hope everyone can successfully file their ITRs on time and have a meaningful Holy Week with no worries. Fingers-crossed!

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Juvy de Jesus is a manager from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd. For comments and inquiries, please email

pagrantthornton@ph.gt.com.

Responsible Mining: Planet, People, Profit, Policy

Mining is highly extractive. From the vantage point of environmental protection, “responsible mining” may seem like an oxymoron given the obvious toll of mining on natural resources, especially arable land, water and forests. The nature of this industry thus goes against the principle of preserving and cultivating land and nature for present and future generations.

There are those who argue, however, that the environment can still be protected despite the extractive nature of mining. There are also those who claim that the environment is not the only thing that needs protecting. One also has to protect the ancestral domain of the indigenous peoples where mining sites are often located, jobs of mine workers, and profit for mining companies. One also has to consider the overall potential of mining as a driver of economic development.

Above-mentioned values and interests, however, often run in opposition to one another and the debates around mining center on the idea of trade-offs: protection of ancestral domains or economic development? environmental protection or job creation? profit or environmental protection? jobs in mining or no jobs at all?

In this piece, I present recent efforts to bring to the table concerns and interests that are mining-related. I argue that these efforts are necessary and must be sustained. For development to be genuinely “inclusive,” development strategies and policies must be contested and negotiated by all stakeholders. Everyone affected must have a seat at the negotiating table.

MULTI-STAKEHOLDER DIALOGUE
While there are no easy answers to the question of trade-offs, processes for consensus-building have recently been undertaken by several stakeholders, under the platform of “responsible mining.” Two dialogues were held in the latter part of 2018 while a third dialogue was held in March 2019.

The document “Discussion Paper on Mining: Consolidated Notes from the 1st and 2nd Roundtable Discussions on Responsible Mining held in Astoria Plaza Hotel on November 27, 2018 and December 11, 2018” reveals that the RTDs were precipitated by at least two developments: the signing of the Chamber of Mines of the Philippines (COMP) of “a declaration to pursue responsible practices in November 2017,” in response to “President Duterte’s challenge to promote responsible mining,” and the invitation of Bantay Kita to the Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources (DENR), the CoMP and the Philippine Extractive Industry Transparency Initiative (PH-EITI) “to undertake a series of consultations, in a safe space and respectful atmosphere, through a round table discussion (RTD) with key stakeholders in the hope of finding a common understanding and mutually acceptable articulation of what ‘responsible mining’ is.” Bantay Kita is “a coalition of civil society organizations advocating for transparency and accountability in the extractive industry.”

The first RTD focused on large-scale mining operations while the second one discussed small-scale mining. The results of these two dialogues were then presented during a third RTD held at the Ateneo de Manila University on March 17, 2019. I had the privilege to help organize and participate in that third dialogue.

mining

DETERMINING SOCIAL LIMITS TO DEVELOPMENT
The first two dialogues resulted in an initial definition of responsible mining as “one which contributes significantly to economic growth while at the same time ensuring that the impacts to the environment are remediated toward sustained productivity of the land after mining and the host and neighboring communities are developed into self-reliant communities beyond the life of the mine.” This definition was said to be “founded on the threefold elements of economic viability, technical feasibility and social acceptability.”

Moreover, the first two dialogues resulted in a claim that “for mining to be responsible, it has to meet the fundamental tenets of economic growth, environmental protection and social development or loosely translated as ‘profit, planet and people,’ all with the end goal of sustainable development. The three ‘Ps’ are to be treated as equals, but with ‘planet’ as the primus inter pares (first among equals), signifying that primordial consideration is to be given to mining’s responsibility to protect the environment.” A fourth “P” — policy — has also been deemed necessary because mining “should be legally compliant.”

In the third RTD, a representative of civil society, lawyer Gerthie Mayo-Anda of the Environmental Legal Assistance Center, emphasized the need “not just for a law but a robust policy framework that integrates rights and privileges, taxes, penalties, tree-cutting permits, resilience cost and benefit, wealth accounting and valuation, island ecosystem and biodiversity.” Attorney Mayo-Anda’s intervention was followed by a discussion on the need for a new law since the existing law RA 7942 or the Mining Act of 1995 is seemingly silent on many important issues.

Representatives of the mining industry, meanwhile, emphasized the need for “certainty” when it comes to mining policy. According to one representative, mining is a business enterprise and therefore predictability of operations is crucial. When policies change too often or are not implemented evenly, operations of mining companies suffer.

For my part, I argued that social limits must be taken into consideration and not just market limits. I also claimed that “planet” and “people” were, in fact, social limits and that it was commendable that the first two dialogues had raised these limits. I observed a glaring omission though: labor. The impact of mining on indigenous peoples and affected communities had been raised, and rightfully so, but mining workers were not considered. I also reminded the group that DOLE’s list of the top 20 violators of the contractualization law included two mining companies and that this should be a cause for concern for all stakeholders.

GOVERNMENT AS MAIN DUTY-BEARER
The third roundtable discussion also resulted in several discussions about the important role that government plays in mediating the various interests in the mining industry, and, ultimately, in locating the mining industry in a larger development strategy. Industry and civil society were agreed that government is the main duty-bearer especially when it comes to ensuring that policies are agreed upon democratically and implemented effectively.

Hopefully, the DENR, particularly the MGB, will step up to the task. It would also help if the PH-EITI were strengthened as a multi-stakeholder mechanism. The EITI is the “global standard to promote the open and accountable management of oil, gas and mineral resources.” The Philippines joined EITI in 2013, with the Department of Finance (DoF) as the lead institution and MGB, COMP and Bantay Kita as members. Since its establishment, Philippine EITI has produced five reports disclosing payments of and receipts from mining companies. Apart from these disclosures, PH-EITI has been important as a vehicle by which the various stakeholders — government, industry, civil society — are able to know and respect each other by working together in a sustained manner. I don’t think the recent dialogues on “responsible mining” would have been possible without the PH-EITI.

It is thus very important that in the coming elections, voters choose candidates who agree that policy should always be negotiated and are willing to support genuine multi-stakeholder dialogue on mining policy. For consensus-building to be sustained, there must be “responsible-mining champions” in government, in the executive and legislative branches, and at the national and local levels.

Let us vote for candidates who believe that planet, people, and profit must be protected — in that order.

 

Carmel V. Abao is a faculty member of the Political Science Department of the Ateneo de Manila University. She teaches political theory and international political economy.

CG Code for PLCs: Principles-based and market-disciplining in character

The CG Code for Publicly Listed Companies (PLCs) formally adopts the “comply or explain approach,” which combines voluntary compliance with mandatory disclosure, and which it defines as “Companies do not have to comply with the Code, but they must state in their annual corporate governance (CG) reports whether they comply with the Code provisions, identify any areas of non-compliance, and explain the reasons for non-compliance.” The Code therefore does not contain any penalty clause at all, and through its “comply or explain approach” relies upon the “pressure of the market” to goad PLCs to adopt its governance principles and recommended best practices. One of the outstanding features therefore of the CG Code for PLCs is its underlying belief that in the “disciplining power of the market,” thus:

• The Boards of Directors and the Management of PLCs, not the SEC, are in a better position to evolve, develop and implement within their particular industry and company culture and structures the CG principles embodied in the Code;

• That “market forces,” i.e., the negative reaction of the public investors who may dump the company’s shares when they see a grievous violation of CG principles and recommendations under the Code, have a more coercive effect on the Boards and Management of PLCs on the manner of implementation of the CG principles embodied in the Code.

The principles-based and market-disciplining features of the CG Code for PLCs provide for the following advantageous features:

(a) Principles-based governance reforms, as contrasted from “rules-based” reforms, are able to capture within its coverage all possible scenarios or situations that would confront the Boards of Directors and Management of PLCs with very little danger of loopholes that can be exploited.

(b) A principles-based system of CG has a greater tendency to change the hearts and minds of Boards and Management since in determining whether to act one way or the other in a corporate transaction, they really need to understand the meaning and coverage of the principle to determine whether the corporate act would be consistent with or contravene the covering principle.

(c) Market-disciplining feature of the CG reform would likely have a more personal effect on the exercise of business judgment of directors and senior officers since they may in fact lose their jobs against an investing public that does not approve of their non-compliance of what are recommended to be CG best-practices.

On the other hand, the principles-based and market-disciplining features of the CG Code for PLCs have a few, yet important, downsides.

Firstly, such features operate effectively only in a securities market where the ownership of PLCs are widely dispersed, and there is not a group of stockholders who control the equity and thereby be able to control the majority of the Board of Directors. In widely held public companies, the members of the Board are elected basically on the merits of their agenda presented to the voting investors at large; and are able to retain their positions in the Board over the years by being responsive to the best interests of the investing public.

This is not the case in the Philippine publicly held companies sector, where most of the listed companies are really family-owned and controlled companies, and where the public float is rather minimal. In effect, the market-disciplining force of the investing public would not be as effective a disciplining force versus the majority and controlling stockholders, who as the biggest block of equity holders are expected to run the company to maximize their returns, through the majority members of the Boards whom they are able to elect into office.

Secondly, the market-disciplining feature would be more effective where the Boards and Management of most of the PLCs are professional managers and accountable to a large investing public. The Board composition in our PLC sector, even with the system of independent directors introduced by the Securities Regulation Code, is still majority-constituted, with directors elected by the controlling family or group, and often the Chairman as head of the Board and/or CEO, as the head of Management, comes from the family or group that holds the controlling equity in the company. In effect, the market-disciplining force of the investing public (who constitute the minority stockholders) would not have a robust “coercive influence” against the Board, the majority of whom effectively represents the interest of the controlling family or group.

Thirdly, even in situations where the market-disciplining features have a strong coercive effect on the Board and Management, the legal effect is that only the stockholders of a PLC would have a real voice in goading their Boards and Management to listen to them, and thereby effectively place all other stakeholders in a nominal position to influence actions and actuations of the Boards and Management.

These varying enforcement rules between the Original and Revised CG Codes, on the one hand, and those of the CG Code for PLCs, on the other hand, are what we shall discuss vis-à-vis the mandatory governance principles provided under the Corporation Code and the Securities Regulations Code.

3. Composition of the Board of Directors of Publicly-Held Companies (PHC)

a. Size of the Board

Both the original CG Code and the Revised CG Code repeat the requirement of the Corporation Code that the Board of Directors of every PHC shall be composed of at least five (5) but not more than fifteen (15) members elected by the shareholders from among themselves, and shall have a term of one (1) year until their successors are elected and qualified.

On the other hand, the CG Code for PLCs very sensibly does not even attempt to repeat what are obviously mandatory provisions of the Corporation Code.

In this sense, the SEC CG Codes adhere to the “CG” principle under the Corporation Code that the “optimum size” of the Board of Directors for stock and for-profit corporations should not be less than five (5), but not more than fifteen (15), members.

b. Independent Directors (IDs) in PHC Boards

While both the original and Revised CG Codes adhere to the requirement under the Securities Regulation Code (SRC) that at least two (2) of the members of the Board of Directors should be IDs or such IDs shall constitute at least 20% of the Board membership, whichever is lesser; the CG Code for PLC recommends that “the Board should have at least three [3] independent directors, or such number as to constitute at least one-third of the members of the Board, whichever is higher.”

The CG Code for PLCs explains its recommendation for a higher number of IDs than that required under the SRC, in the following manner:

Explanation
The presence of IDs in the Board is to ensure the exercise of independent judgment on corporate affairs and proper oversight of managerial performance, including prevention of conflict of interests and balancing of competing demands of the corporation. There is increasing global recognition that more IDs in the Board lead to more objective decision-making, particularly in conflict of interest situations. In addition, experts have recognized that there are varying opinions on the optimal number of IDs in the board. However, the ideal number ranges from one-third to a substantial majority.

The merits of the rationale offered under the CG Code for PLCs for the recommended higher number of IDs, “to ensure the exercise of independent judgment on corporate affairs and proper oversight of managerial performance,” can better be appreciated from the discussions in an earlier submitted paper entitled “Revisiting the Efficacy of the Oversight Functions of Independent Directors for PLCs.”

Obviously, the “comply or explain approach” of the CG Code for PLC does not make the recommendation for a higher number of IDs contravene the mandatory provisions of the Securities Regulation Code. In fact, it makes it rather easy for the PLC Boards to explain why they cannot comply with the particular recommendation for a higher number of IDs in that it is higher than the statutorily required number of IDs, and that the only way the Board can implement the same is to amend the articles of incorporation to increase the official number of IDs. As discussed previously, in our PLC sector which is dominated by family controlled companies, the “market backlash” that may come from the minority investing public who react adversely to the refusal of the Board to adopt a higher number of IDs, cannot usually be expected to counter the primary investing interest of the majority or controlling family group who find it more important to have the Board within the majority control of their representatives.

The more important question that should be addressed is “Whether the SEC could, through the exercise of its quasi-legislative powers, make it mandatory for publicly-held companies to adopt a higher number of IDs than the number provided for under the Securities Regulation Code?” The answer would be in the negative, for the current provisions of the Securities Regulation Code on the minimum number of IDs in PHC Boards represents the current Legislative policy on the matter, and that SEC’s attempt to impose a higher minimum number of IDs would extend that policy beyond what the Legislature has set out in the SRC. Otherwise, SEC would by quasi-legislation be extending the State’s exercise of coercive police power over the proprietary rights of the majority or controlling stockholders to vote their own nominees to the Board of Directors.

On the other hand, when publicly listed companies on their own follow the recommendation under the CG Code for PLCs to increase the number of IDs above that provided for in the SRC, that would not constitute a breach of the State policy on IDs as found in the SRC, but rather a voluntary move on the part of the majority or controlling stockholders of the PLC to further erode their proprietary rights to vote for their own nominees who do not otherwise fall within the definition and qualification of IDs. In other words, the more dispersed the ownership of our PLCs become, the more effective would be the “comply or explain approach” of the CG Code for PLCs when it comes to IDs.

The intention of the CG Code for PLCs is to goad the Boards of PLCs, in the face of what may be perceived as a “market approbation,” to undertake the necessary legal process to introduce a higher number of IDs into their Board. In this sense, the recommendatory step taken by the CG Code for PLCs under its “comply or explain approach” is much better than the lame copying by the original and Revised CG Codes of just mimicking the provisions of the SRC.

The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

 

Cesar L. Villanueva is Chair of the MAP Corporate Governance Committee, the Founding Partner of the Villanueva Gabionza & Dy Law Offices, and the former Chair of the Governance Commission for GOCCs (GCG).

cvillanueva@vgslaw.com

map@map.org.ph

http://map.org.ph

The benefits of anonymity

By Tony Samson

PR PRACTITIONERS traditionally hired to raise the profile of clients to move them from zero to hero (especially in an election year) may also be employed to do the opposite. They work to cast a high-profile individual who is extremely wealthy or politically powerful, or both, into relative obscurity. The effort to keep somebody out of the news cycle (no news is good news) can entail “spiking” or killing negative stories before they’re posted.

Still, high-profile incidents are sometimes witnessed by too many people to escape comment and trolling in social media. Celebrities are in the unfortunate position of being in the spotlight even when just being noisy in a bar or not picking up their dogs’ poo in a mall. Can a photo and an upload in social media be far behind?

Even pedestrian events like arriving at a party with a different partner are given undue attention. Such mundane activities, or even less quotidian ones, when involving anonymous people do not rate even a dinner conversation. Anonymity has its benefits, mainly being ignored and left alone. “Anonymous,” after all, derives from the Greek word, meaning “no name.”

Scandals are associated almost exclusively with celebrities. Would a list of drug users be of interest to the public if the names are unrecognizable? Is the sex video of a barber taking liberties with a masseuse going to go viral? (It depends on his haircut.)

What advice can one give a celebrity in a messy separation involving time inside a cupboard and occasional violence (taking back gift of dangling earrings while still worn)? Video recordings of embarrassing moments make the flight to anonymity challenging, especially when the snippet has already gone viral. Denials just make things worse.

The best practice on anonymity belong to witness protection programs for whistle blowers who expose powerful criminals. Here are agents who can hide witnesses behind new identities and even some plastic surgery, after they testify against the mafia, bent on giving them cement boots for underwater attire.

Short of a WPP, here are some steps to get out of the news cycle and get back to being ignored.

Stop giving media interviews. Having a party and discussing with reporters the alleged warm words from an absent and erstwhile partner/torturer does not douse media frenzy. Refusing to go to talk shows or give any comments for attribution and refraining from sending text messages to media help a scandal lose steam.

Travel abroad and be away for two years. This disappearing act (where did he go?) is an extreme form of media unavailability. The shelf life of a story is getting shorter anyway if not given more details. The media pack moves on to the next scandal to leave the previous one in peace.

Prohibit friends from defending you in public. (I haven’t really seen her lately. But knowing her, she may just have been playing some harmless parlor game like tongue hockey. Maybe she just had marbles in her mouth.) These friends tend to love the spotlight — I feel her pain.

It’s not that difficult to move from fame to no-name, from mags to ditches, from spotlight to no light. Even without any conscious effort, a fall from grace into obscurity happens in the natural course of events. The land of former celebrities or those with “ex” problems is full of vaguely recognizable individuals. (Isn’t that what’s-her-name?)

Celebrities at the height of their popularity often lament their state — I hope one day I can just go to the beach like everybody else and walk around without being mobbed by fans for selfies. Such a wish is sure to be granted in time, as new celebrities crowd out the old.

Still, even anonymous characters can hit the headlines with a big enough scandal. In 1995, a rogue trader, only 28 years old bet on futures of the Nikkei index and lost big time to bankrupt his employer, Barings bank. He spent six and a half years in a Singapore jail, and wrote a book on how the illegal trades were pulled off. After the brief stint as a celebrity, he is back to being anonymous.

In the new world of digital sharing, the effort to be anonymous takes some doing. Thankfully, the attention span of netizens is shrinking, making celebrity status, and the scandals that go with it, fleeting and temporary. In time, everybody becomes anonymous.

 

Tony Samson is Chairman and CEO, TOUCH xda

ar.samson@yahoo.com

Hotshots extend ‘Clasico’ quarters to rubber match

By Michael Angelo S. Murillo
Senior Reporter

THE “Manila Clasico” quarterfinal series between the Magnolia Hotshots Pambansang Manok and Barangay Ginebra San Miguel Kings is set for a one-game decider after the former took Game Two of the best-of-three affair, 106-77, on Monday at the Smart Araneta Coliseum.

Fended off in the opener last Saturday, the Hotshots returned the favor with a dominant performance in the second game to force a rubber match on Wednesday.

Ian Sangalang and Jio Jalalon jolted the Magnolia attack with 21 and 17 points, respectively, to help their team get the win that got them back in the series.

Magnolia started the game on fire, building an 11-0 lead in the first four minutes, which it would use to eventually hold a 25-18 advantage after the opening canto.

In the second quarter, the Kings tried to make up some ground but the Hotshots were staunch in their stand not to allow their opponents to gain much headway.

The count was at 39-34, and Magnolia on top, with five minutes to go before Messrs. Jalalon and Sangalang and the Hotshots moved to create further separation at the half, 51-38.

The third quarter saw the Hotshots blowing open the game.

With contributions coming from different directions, Magnolia outscored Barangay Ginebra, 15-6, in the first six minutes, to stretch its lead to 24 points, 68-44.

Scottie Thompson and Kevin Ferrer tried to provide some answers for the Kings but the Hotshots kept them at a bare minimum.

The Magnolia lead hit the 30-point plateau, 78-48, at the 2:57 mark.

When the quarter smoke cleared, it was an 81-54 separation for Magnolia.

With control of the match on their side, the Hotshots went for the early closeout.

The score was at 87-56 with still 8:18 to go and from there Magnolia cruised to the series-tying win.

“We just made an effort to play defense and we executed well,” said Mr. Jalalon on what did for them in Game Two.

“Everybody contributed to this win, not only the players but also the coaches and the people on the bench,” he added.

Mr. Jalalon also had six assists and five steals to merit player of the game honors.

Game Three of the Manila Clasico is set for Wednesday at 7 p.m. also at the Big Dome.

1...10,08910,09010,091...13,193Page 10,090 of 13,193
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube