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Public Interest First in 3rd Telco

After a year in the works, the country’s third major telecommunications player has been named,…but not without controversy.
Last Nov. 7, the National Telecommunications Commission (NTC) named the Mindanao Islamic Telephone Company, Inc (Mislatel) as the country’s third major telco player, albeit provisionally. Mislatel is the consortium that includes the Udenna Group, belonging to Davaoeño businessman Dennis Uy, along with technical partner, China Telecom.
The two other bidders were the PT&T Group and the Sear Consortium. The former is backed by Salvador Zamora II of Nickel Asia fame and the latter is owned by Luis “Chavit” Singson. Both were disqualified.
The P&T Group was deemed ineligible due to its inability to secure a certification from NTC for the technical requirement. See, the NTC requires that the bidder must have experience delivering telecommunications services on a national scale for more than 10 years. While PT&T has been in the telco scene for much longer than that, it has not operated in the scale and scope that satisfies the NTC. PT&T does not have a foreign partner and this has proved to be its Achilles’ heel. A foreign technical partner like Vodafone, Moviestar or Orange could have satisfied this requirement.
The Sear Consortium was disqualified for not presenting a letter of credit in the amount of P700 million. This was required by the NTC as proof of capacity to participate in the telco industry.
The disqualification of the two paved the way for the Mislatel Consortium’s victory. But the story is far from over. Remember, Mislatel’s victory is only provisional. NTC’s selection committee must still submit its recommendation to the NTC En Banc, which will review the same. If it finds everything in order, then a Confirmation Order will be issued to Mislatel. If not, then it will be a failure of bid and a second round of bidding will likely ensue.
The NTC En Banc may also choose to withhold the issuance of the Confirmation Order until all appeals and petitions are resolved.
LEGAL COMPLICATIONS
On Nov. 9, two days after the opening of bids, PT&T and the Sear Consortium filed their respective Motions for Reconsiderations before the NTC’s selection committee.
For PT&T part, it sought to overturn its disqualification claiming that the NTC’s bid bulletins effectively changed the requirements for technical capabilities, midstream. It further asserted that the terms of references discriminated Filipino telco companies.
The motion for reconsideration of the Sear Consortium has two components. On the first count, Sear questioned the conferment of the provisional award to Mislatel, citing Mislatel’s legal incapacity to enter into partnership with the Udenna Group. On the second count, it questioned the reason for which Sear was disqualified. Let me explain further.
Sear claims that Mislatel was in breach of contract by joining the Udenna Consortium in the first place. Sear, through a consortium member, Digiphil Technologies, Inc., has an active agreement with Mislatel that stipulates that the latter cannot enter into partnerships with other companies unless upon mutual consent. Digiphil also enjoys the right of first refusal in that should Mislatel intend to partner with another company, it should secure Digitel’s permission first.
This agreement was finalized in May, 2018, when Digiphil paid P5 million for a seat in Mislatel’s board and P5 million for the right of first refusal.
On the part of Mislatel, it claims that the exclusive rights and right of first refusal of Digiphil only applied to “small projects” and not all-encompassing endeavors such as being a national telco player.
Mislatel further asserts that it effectively terminated its agreement with Digiphil through a written notice last Oct. 5. It even offered to refund the P10 million paid by Digiphil.
On Digiphil’s side, it maintains that Mislatel cannot unilaterally terminate a binding agreement. It further insists that its exclusive rights to partnership covers being a national telco deal.
As to who is wrong or right in this legal juggernaut depends on legal interpretation. Suffice it to say that should the NTC favor the side of Sear, the Mislatel Consortium could be considered an illegal entity and therefore disqualified from bidding.
On the second count of Sear’s motion for reconsideration, it says that while it failed to present a Letter of Credit in the amount of P700 million, it still presented sufficient proof of having P700 million through a mix of letters of credit from the Industrial Bank of Korea and managers checks from BDO and Metrobank later on. Besides, it says that when it asked the NTC for guidance on the “proper language” to use for the letter of credit, the NTC did not respond. How, then, can it be faulted for not presenting an LC?
On Nov. 12, the NTC denied the Motions for Reconsideration by both parties. This opened the way for the Selection Committee to recommend Mislatel as the victor.
PUBLIC INTEREST FIRST
Legal complications aside, let us go back to why this government saw the need for a third telco player in the first place. The main intent is to break the cushy duopoly of PLDT and Globe by providing healthy competition. Competition between the three is meant to make all players more efficient. In the end, it should redound to faster internet speed, better cellular service, wider coverage and cheaper toll fees for all. All these are vital to make the economy more competitive, not to mention fulfill President Duterte’s campaign promise.
Respecting legal processes are important as it gives integrity to our institutions and assures us of fair play. But this is not the end-all, be-all of a public bidding. In the end, what matters is who can fulfill the third telco’s intended purpose in a manner most beneficial to the Filipino.
The PT&T Group signified its intent to have its bidding documents opened. This suggests confidence that its rollout plans are superior to that of Mislatel.
The Sear Consortium went on record to say that they are willing to spend P540 billion at the get-go to bring national internet speed to 55 Mbps and provide service to 100% of the archipelago. They even boasted of having a stake in a state-of-the-art US satellite built by Boeing due to be launched into orbit next year. This should give them unprecedented advantage in as far as quality of signal is concerned.
The ball is now in the hands of the NTC En Banc. It has the power to overturn the recommendation of the selection committee and take other matters into consideration.
Since the main intent is to provide the public with the best possible service at the most reasonable costs, I say the rollout plans of all three bidders should be taken into consideration. Beyond all the legal gray areas, the bidder with the superior technical plan and highest investment should be declared the winner. This way, the main intent of the 3rd Telco will be fulfilled and the Filipino wins.
 
Andrew J. Masigan is an economist.

Doi Mòi in Viet Nam

A larger-than-life concrete statue of the Blessed Virgin Mary stands on the rotunda just beyond the Thành pho? Ho Chí Minh, the City Hall, more formally called the People’s Committee Building. It is as if the Holy Mother had stepped out of the Basilique-Cathédrale Notre-Dame de Saigon behind her, the twin-belfry cathedral built by the French colonizers between 1863 and 1880. Noisy vehicles and pedestrians swirled around her to the main artery road Nguyen Thi Minh Kai and its tree-lined tributary roads. But there are only about six million Catholics in communist Vietnam, representing just 7% of the total population.
Is there even a statue of the Blessed Virgin Mary standing practically on ground level, anywhere on a busy intersection in Metro Manila — where 84 million Filipinos, or roughly 82.9% of the population profess the Catholic faith? Perhaps more than the comparative statistics, the durable presence of the centuries-old Catholic symbols in Ho Chí Minh City alongside the less-conspicuously displayed but more prevalent Buddhist (10 million followers), Hindu and other affirmations only showcase the deep religiosity of the Vietnamese as they survived wars and occupations by foreigners. And the communist government knows this basic emotional and spiritual need of its people. Today the Nortre Dame cathedral is being restored to its awesome glory in the more than 400 years of French influence and rule. Restoration is a key word even in the economic dreams of Viet Nam.
At the International Association of Financial Executives Institutes (IAFEI) 2018 World CFO Congress held in Ho Chí Minh City last week, Prof. Dr. Nguyen Thien Nan, member of the Politburo of the Communist Party of Viet Nam (CPV), Secretary of the Ho Chí Minh City Party Committee and keynote speaker, talked about the restoration of the Vietnamese socialist-oriented market economy via its Doi Mòi strategic plan.
Doi Mòi literally means “renovation” in common-usage English, or in economics, an “open door” policy as that purposely adopted by communist Viet Nam in 1986, when the command-economy stance since its 1975 victory over the US in the Viet Nam War faltered and failed amidst world economic crises of that critical first decade of independence. True to socialist ideals, central planners of the CPV focused on people as the primary concern of the state — for individual welfare as well as for the common good of society.
Dr. Nguyen cited the continuous addition of the labor force by around one million a year as one of the seven driving forces identified to be behind Viet Nam’s remarkable economic achievements since 1986. For the 18 years from 1999 to 2016 (to now), the fertility rate has been maintained at 2.1 (two babies, to replace husband and wife, plus at least one more), much like the goal set by sister-state in ideology and trade, China. Dr. Nguyen publicly chided and warned Japan about its long-lasting low fertility rate (average about 1.44 for the most recent 14 years), way below the replacement fertility rate of 2.1. A steady replacement of the labor force sets absolute labor cost with relative world average cost.
Consistency and reliability of delivery in trade and commerce is the key principle of doing business in Viet Nam. And tandem to the innovative economic reforms under Doi Mòi is the political and social stability as driving forces behind Viet Nam’s rising global economic and political position, Dr. Nguyen points out. Proudly, he declares that this particular ingredient of stability (one-party political system, with no political noise to alarm local enterprises and foreign investments), much like China, has powered the growth of Viet Nam. He calls it a unique “democratization” that although all decisions and policies are decided at the highest levels of the Politburo, all these are with the oversight powers of the people in actual practice and sustainability versus world standards.
In an on-the-side interview at the IAFEI conference with a business development officer of one of the largest local commercial banks (listed with Ho Chí Minh Stock Exchange [HOSE]), she said that the State Bank of Viet Nam (its Central Bank) has efficiently and precisely implemented the Banking Law. It is the clearing house for money activities — a powerful regulatory body co-equal to and separate from the Ministry of Finance which handles tax, fiscal policy and administration. She pointed out that 50% of the population of more than 96 million have bank deposits and access to credit. Banking laws are strict and unbending with bank secrecy (depositor rights) and anti-money laundering.
A speaker at the IAFEI conference, Dr. Ian Alexander Eddie, professor of Private Equity at the Australian research university, the Royal Melbourne Institute of Technology (RMIT), in Ho Chi Minh City and Hanoi (the first completely foreign-owned university granted permission to operate in Vietnam since 2000), cited the relatively stable currency vs. the US $ at -3% YTD Viet Nam Dong (VND) depreciation, and stable inflation at 4% in 2018 giving Cash Flow (FDI + Current Account) of 13% of GDP, the strongest in a group of eight developing economies monitored for comparison. The Philippines, fourth after Vietnam, Thailand and Malaysia experienced -9% (depreciation) in 2018, and critical cash flow of only 1.5% of GDP.
Again, Dr. Eddie, as with the banking practitioner earlier interviewed, corroborated CPV Politburo member and Doi Mòi implementer Dr. Nguyen’s basic premise that the consistency, the predictability of government thinking and action on economic and fiscal policies has contributed much to the economic boom in Viet Nam. Yet Dr. Eddie stressed that the national priority is for economic stability over higher growth. Remember that current policy settings were shaped in response to the global financial crises when the stock market in Viet Nam fell 80% (2008-2009), the VND fell 25% and inflation hit 23%, he said. GDP growth rose from 3% at that time, to close to 7% in 2010, maintained with small ups and downs to catch almost 7% today (2018).
Dr. Eddie agreed that social development has nurtured economic development in Viet Nam. With the reorientation of some of the agriculture and commodity exports (100% of GDP previously) to manufacturing, which now targets 30% of GDP (currently 16% of value, growth of 12%), the quality of life has improved by leaps and bounds for the new, broader middle class moving towards the urban centers where 33 % of citizens flock to — offering 40% more incomes than the rural areas. Upgraded incomes have raised consumption, growing 8.8% and contributing 65% of GDP as a sure boost to the economy.
The Vietnamese people seem happy with their present state. On the way back to the hotel after a gluttonous dinner hosted by a kababayan Hanoi-based Filipino company CFO, the Financial Executives of the Philippines (FINEX) delegates to the IAFEI CFO conference marveled at the extreme jubilation on Nguyen Hue Boulevard. With City Hall majestically glowing and beaming down the kilometer-long walking plaza strip that ends at the edge of the Saigon River, thousands of people roaring their pipes on motorcycles and cars were tooting their horns and flashing their lights. It was some two hours of delirious, noisy happiness.
From six giant video screens set up in the plaza, it was just known that Viet Nam beat Malaysia 2-0 in the 2018 ASEAN Football Federation Championship, following a comfortable opening-round win over Laos last week.
Faith in themselves, and the indefatigable effort to achieve — that is the secret of the Vietnamese.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

Watching out for UHC

The Universal Health Care (UHC) bill is at its final stages. After a couple of preparatory meetings during the Congress break last October, the Bicameral Conference Committee is officially meeting tomorrow to reconcile the differences of the Senate and the House versions. At this rate, we can expect that the UHC bill will be signed into law before the year ends.
While we’re almost there, a few remaining challenges cannot be overlooked as these could either make or break the entire health care reform. The main obstacle is none other than Senator Ralph Recto who is at it again, six years after his infamous Recto-Morris act. (In 2012, health advocates slammed Senator Recto for adopting the tobacco tax proposal of Philip Morris-Fortune Tobacco; hence, the label Recto-Morris.)
EMERGING CHALLENGES ON THE UHC BILL
In Senate Bill 1896 (SB 1896), the Senate-approved UHC bill, Senator Recto negotiated to take away one key word in the definition of terms — “gatekeeper.” Prior to Senator Recto’s intervention, the term service delivery network “refers to a group of primary to tertiary care providers, [whether public or private,] with the primary care provider acting as the gatekeeper and coordinator of care within the network.” The final SB 1896 renamed service delivery network to “health care provider network” and defined it as “a group of primary to tertiary care providers, whether public or private, offering people-centered and comprehensive care in an integrated and coordinated manner with the primary care provider acting as the coordinator of health care within the network.”
The gatekeeping function of the primary care provider is one of the important things that is missing in our current health care system. The lack of a gatekeeper in a complex system of health providers has led to many Filipinos getting lost in the health care system, patients being overtreated and burdened by high out-of-pocket expense, overcrowded hospitals, and overworked specialists.
Thus, gatekeeping of the primary care provider is crucial in ensuring that patients see specialists only for conditions that could not be managed at the primary care level and are referred to an appropriate specialist, when necessary. Without gatekeeping, the primary care provider will not also be an effective coordinator of care and navigator in the health care system.
Contrary to the principles of a social health insurance wherein the well-off subsidizes the poor, Senator Recto also intends to give more PhilHealth benefits to those who can pay more. Under the section “Entitlement to Benefits” of the approved SB 1896, he inserted this provision: “PhilHealth shall provide additional NHIP [National Health Insurance Program] benefits for direct contributors, where applicable.” Direct contributors “refer to those who have the capacity to pay premiums, who may be gainfully employed with an employer-employee relationship, self-earning, professional practitioners, or migrant workers.”
While Senator Recto’s main motivation is to encourage businessmen, doctors, lawyers, and other professionals, who are part of the informal sector, to voluntarily pay for their PhilHealth premiums by giving them additional benefits, the two-tiered benefit scheme will also exacerbate health inequity in the country. The poor and vulnerable indirect contributors will continue to be treated as “charity patients.” In other words, Senator Recto’s provision goes against the very essence of Universal Health Care and creates more problems than solutions.
Also, if the real intention is to encourage members of the informal sector to pay, administrative reforms in PhilHealth, such as strengthening its coordination with other agencies like the Social Security System, Home Development Mutual Fund, Bureau of Internal Revenue, and Professional Regulation Commission, etc., can be undertaken without jeopardizing the objectives of our social health insurance.
To add insult to injury, Senator Recto also introduced a section legislating the currently regressive PhilHealth premium schedule, which caps the premium contribution of those earning above P40,000 a month at an amount equal to the contribution of those earning exactly P40,000. On the other hand, those who are earning below P40,000 pay a PhilHealth premium that is proportional to their income. His reason — so that richer Filipinos will have freed up resources to pay for private health maintenance organizations (HMOs).
This is obviously contrary to the long-standing proposal of removing the ceiling so that those who have more can contribute more to the social health insurance. Worse, the Senator wants this regressive premium schedule legislated so that PhilHealth will no longer have the mandate to adjust the premium ceiling as provided for in the current National Health Insurance Act.
IS THERE ENOUGH MONEY FOR UHC?
Once these emerging issues on the UHC bill are already settled and assuming our legislators will be able to fight for the best provisions that will secure the objectives of UHC, the next major hurdle will be on funding. The Department of Health (DoH) estimates that, in the first year alone, an additional P164 billion will be needed to fully implement UHC. So far, only P17 billion can be pooled from PAGCOR and PCSO, which leaves us with a deficit of P147 billion — an amount almost equal to the current budget of the DoH.
Recently, Senate President Sotto was quoted as saying that the UHC bill can be implemented even if the 17th Congress will not be able to pass the pending bills on increasing the excise taxes on tobacco and alcohol.
Meanwhile, the scheduled fuel excise tax increase in 2019 under the TRAIN law has already been suspended. If implemented for a whole year, this will result in a net loss of P26 billion. The approval of the pending general tax amnesty proposal is estimated to just offset the loss due to the suspension of the fuel excise. Aside from the general tax amnesty, only the tobacco and alcohol excise tax bills, and package 2 of TRAIN are pending in Congress — the latter is estimated to be revenue-neutral.
Now where will we get funding for UHC?
 
Jo-Ann Latuja-Diosana is a trustee of Action for Economic Reforms.

Philippines convenes joint trade panel with Papua New Guinea

THE Philippines and Papua New Guinea (PNG) agreed to create a Joint Economic and Trade Committee (JETC) on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit in Port Moresby Saturday, Trade Secretary Ramon M. Lopez said.
In a televised briefing in Papua New Guinea on Sunday morning, Mr. Lopez said both countries have “signed a memorandum of understanding (MoU) to promote joint economic trade cooperation,” referring to the JETC which his department and the PNG Ministry of Foreign Affairs signed last Saturday.
In a statement, the Department of Trade and Industry (DTI) said the JETC “sets up the mechanism that will enhance trade and economic relations with the PNG.”
Under this committee, which will be co-chaired by representatives from the DTI and the PNG National Trade Office, both parties will “exchange information on trade, investment, economic issues or concerns, relevant laws, regulations and policies.”
Both countries will also “explore and identify sectors where cooperation may be expanded and intensified and accordingly propose measures and recommendations thereof, [and] recommend to their respective governments measures aimed at the expansion and diversification of trade, investment and other related matters.”
The committee will also “identify possible cooperative projects and draft proposals for implementation, organize consultations and official visits through delegation(s) or missions to deal with specific economic and trade issues of interest to both participants, ensure proper coordination and expeditious implementation of arrangements concluded under this MoU, and enhance cooperation with relevant business associations.”
At the APEC Summit, Mr. Lopez said the main discussion focused on the digitalization of micro, small and medium enterprises (MSMEs).
President Rodrigo R. Duterte, according to Mr. Lopez, stressed in his remarks during the APEC leaders’ meeting that the Philippines is “a friend to all and enemy to no one.”
He also said that the President pointed to the need to provide proper training for MSMEs and develop the human resource to prepare them for the digitalization of the business sector.
On the United States-China trade war, Mr. Lopez said: “We are a small economy. We’re still enjoying better market access to both countries. We are not affected.”
But he added that “nobody wins in a trade war,” so both parties “will have to go back to the negotiating table and settle differences and agree on new trade terms that are mutually beneficial.”
“Nobody will be in favor of protectionism… [Leaders] are all wishing it would not be the trend moving forward,” he added.
He also noted that there is no need for the Philippines to take sides on US-China trade war. “Those are two big economies. We are a friend to both. We are enhancing our trade relations with China. They have been opening up their market to us. Even the US is opening its market to the GSP (Generalized System of Preferences),” he said. — Arjay L. Balinbin

Poverty database bill passes House on 3rd reading

THE House of Representatives, voting 157-0, approved on third and final reading a bill establishing a poverty database in aid of the government’s social protection programs.
House Bill 8217, “Establishing A Consolidated Poverty Data Collection (CPDC) System Act,” seeks to provide local government units with a tool to improve targeting of poor households entitled to benefits from government programs.
The proposed measure will allow government to generate “updated and disaggregated data necessary in targeting beneficiaries, conducting more comprehensive poverty analysis and needs prioritization, designing appropriate policies and interventions, and monitoring impact over time.”
The bill authorizes the Philippine Statistics Authority (PSA) to lead implementation of the CPDC System; while the local government units will serve as the primary data collecting authority.
The PSA will also ensure that LGUs have the capacity to perform data collection through the Philippine Statistical Research and Training Institute, with help from state universities and colleges.
The data collected by the LGUs will be submitted to the PSA, which will be collated and included in a national CPDC System databank.
Under the law, the Department of Information and Communications Technology will develop an institutional data-sharing arrangement, while the Department of Interior and Local Government will be in charge of regular dissemination of information regarding the CPDC System.
The bill provides for data collection to be conducted every three years for the first six years after enactment; from then on, synchronized data collection will be conducted annually.
The law requires participation in data collection to be voluntary, with respondents also retaining the option to sign a waiver allowing the LGU to disclose their identity and other information to other government agencies. — Charmaine A. Tadalan

ERC, NEA to expedite approval of co-ops’ capex applications

THE Energy Regulatory Commission (ERC) and the National Electrification Administration (NEA) will team up to expedite the approval of the capital expenditure (capex) projects of the country’s electric cooperatives.
“This has been perfected through the years,” said NEA Administrator Edgardo R. Masongsong in a statement after the holding of a meeting among officials of the two government agencies, referring to the process of preparing and evaluating the capex proposals.
The meeting, which was led by him and ERC Chairperson Agnes T. Devanadera, discussed the adoption of a planning tool called enhanced integrated computerized planning model, or e-ICPM, according to Mr. Masongsong, the administrator of the country’s 121 electric cooperatives (ECs).
Mr. Masongsong said the program, originally called ICPM, had been started by NEA in early 2000s and had undergone several improvements through the years.
Luisa Hernandez, manager of NEA’s rural electrification project planning and development division, said e-ICPM is a homegrown software that helps ECs in drafting their two-year work plan, which includes their capital expenditure projects.
“The e-ICPM is a computer software designed to integrate and harmonize most of the data required from the ECs using MS Office Platform and Visual Basic,” she said.
The program is made up of four components: load forecast, technical, financial, and institutional factors.
ERC Commissioner Josefina Patricia M. Asirit described e-ICPM as a “good tool,” noting that the commission was part of the original group to “ensure regulatory requirements were considered.”
Before the meeting, NEA officials had a meeting with ERC commissioners in March 2017 to discuss the possible partnership to adopt e-ICPM as a tool for evaluating the ECs’ capital expenditure application.
The latest meeting also discussed other concerns, including the harmonization of NEA-ERC definitions and formulas, and the NEA business intelligence Technology system. The meeting was held earlier this month at the NEA office in Diliman, Quezon City. — Victor V. Saulon

Foreign share of government borrowing up sharply in Sept.

GOVERNMENT BORROWING rose in September due to an increase in foreign loans, the Bureau of the Treasury (BTr) said.
The government borrowed P43.98 billion in September, up 3.48% from a year earlier.
Funds borrowed from foreign sources accounted for two thirds of the total, or P29.53 billion, up sharply from P5.50 billion a year earlier.
Foreign project loans doubled to P2.61 billion while program loans grew six times to P26.92 billion.
Domestic borrowing meanwhile fell sharply to P14.48 billion from P37 billion a year earlier.
Treasury bill issues rose to P8.72 billion while Treasury bond floats fell 81% to P5.73 billion.
The government borrows funds to pay for public projects and programs beyond its ability to finance from the budget, amid an aggressive spending program largely focused on infrastructure.
The government hopes to maintain a budget deficit of 3% of gross domestic product, a rule of thumb widely deemed to represent prudent deficit-spending levels.
Total borrowing in the nine months to September stood at P683.28 billion, up 9.54% from a year earlier.
This is equivalent to 76.93% of the P888.23 billion programmed for borrowing this year.
Of the total, P284.28 billion, or 41.6% was sourced from foreign lenders in the nine months to September.
The government borrowed P399 billion, or 58.3% of the total, from domestic creditors. — Elijah Joseph C. Tubayan

DoE to launch new energy contracting round this week

THE Department of Energy (DoE) is hoping that a new round of contracting will spur more petroleum exploration ventures and close the resource development gap with regional neighbors.
The DoE will launch the Philippine Conventional Energy Contracting Program (PCECP) on Thursday.
DoE Secretary Alfonso G. Cusi said his office was “aggressively pursuing” the implementation of the contracting program to set a strong “Explore, Explore, Explore” program.
“We have been grossly trailing behind our neighbors in terms of petroleum exploration and development activities. It is high time that we step up. We need to attain energy security and sustainability to minimize our vulnerability to global oil price shocks,” he said in a statement during the weekend.
“Harnessing our indigenous energy resources would also go far in helping us meet the country’s increasing energy demand as we continue to usher in economic progress,” he added.
The program offers two modes of application that potential investors may pursue.
First, interested parties may wish to bid on the 14 pre-determined areas identified by the DoE all over the country — one in Cagayan, three in east Palawan, three in Sulu Sea, two in Agusan-Davao, one in Cotabato, and four in west Luzon.
Thursday’s launch will officially open the application period, which will be for 180 days.
The DoE said applicants may opt to nominate and publish other areas of interest to them. Through this mode, applications could be submitted at any time of the year, and subject to a “challenge” period of 60 days.
Accepted applications will be evaluated by the DoE’s centralized review and evaluation committee based on the criteria under Department Circular No. DC2017-12-0017, which adopts the PCECP mode of awarding petroleum service contracts and creating the panel.
Before the launch, the DoE conducted road shows to boost awareness of the program, including one in Singapore in August.
In October, President Rodrigo R. Duterte signed Service Contract No. 76, the first service contract under his term. The contract covers area 4 of eastern Palawan and was awarded to Israeli firm, Ratio Petroleum Ltd. The DoE said the deal signalled the administration’s push to revive the country’s upstream petroleum industry.
At present, 23 petroleum service contracts are active in the Philippines with the following developers: Shell Philippines Exploration B.V.; Total E&P Asia Pacific Pte. Ltd.; Philippine National Oil Co.-Exploration Corp.; Nido Petroleum Pty. Ltd.; Philodrill Corp.; PXP Energy Corp.; and Galoc Production Co.
The Malampaya deepwater gas-to-power project off the Palawan coast is so far the largest and most successful natural gas industrial project in the Philippines. — Victor V. Saulon

CTA cancels P1.15-B tax assessment vs drug firm

THE Court of Tax Appeals (CTA) has ruled against the Bureau of Internal Revenue in a P1.15 billion tax deficiency case from 2009, saying that the assessment against a drug company was made by an unauthorized official.
The CTA Special Third Division, in a Nov. 14 decision, declared null and void the alleged tax deficiency of Central Luzon Drug Corp. after finding that the revenue officer involved “acted without authority.”
According to Section 16 of the Tax Code, a revenue officer (RO) may only perform assessment duties and examine taxpayers pursuant to a Letter of Authority (LOA).
Revenue Memorandum Order (RMO) No. 38-88 also states that an LOA is valid for 120 days and can be revalidated after submission of a Progress Report. A revalidation of a LOA shall be covered by an issuance of a new LOA. RMO No. 43-90, meanwhile, states that the reassignment of case to another RO and revalidation of an expired LOA requires the issuance of a new LOA.
In the case of Central Luzon Drug Corp., the BIR issued an LOA on May 14, 2010 authorizing revenue officers (RO) to assess its taxes for 2009.
However, a Memorandum of Assignment (MOA) pursuant to the previous LOA was issued, authorizing RO III Josa C. Gomez to continue the assessment for tax deficiencies of the corporation for 2009 following the transfer of the previous ROs to another district office.
“Clearly, the requirement of the law was not complied with. The MOA for the continuance of audit signed by the Chief of LT (Large Taxpayers) Regular Audit Division I is certainly not sufficient basis for RO Gomez’s authority to examine petitioner for it cannot in any way be deemed equivalent to a LOA,” the decision read.
“In other words, RO Gomez acted without authority when she conducted the audit of petitioner, hence, the assessment subsequently issued by respondent is null and void,” the decision read.
The CTA also cited previous Supreme Court rulings that highlight the importance of an LOA and the lack of it is tantamount to violation of a taxpayer’s right to due process.
“Let it be stressed that a LOA is the proof that the person/s named therein is/are authorized to conduct the necessary investigation/audit, it is an express grant of authority. Thus, absent the necessary issuance of a new LOA specifically naming the person to whom the case will be reassigned with the corresponding annotation per RMO No. 43-90, there is no authority to conduct the investigation/audit,” the CTA ruled.
The decision was written by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Associate Justice Ma. Belen M. Ringpis-Liban. — Vann Marlo M. Villegas

PHL, Armenia initiate talks for labor deal

THE Philippines and Armenia are discussing the possibility of a bilateral labor agreement, Moscow-based Philippine diplomats said.
In a statement last week by the Philippine Embassy in Moscow, the Embassy’s Second Secretary and Vice Consul Jeffrey A. Valdez met with officials of the Armenian Ministry of Foreign Affairs to discuss the labor deal on Oct. 30 in the Armenian capital Yerevan.
“The Embassy wants to be proactive in extending assistance to Filipinos under its jurisdiction,” said Ambassador to Russia Carlos D. Sorreta, noting that “a bilateral labor agreement is an important step in that direction.”
Mr. Valdez was accompanied by Third Secretary and Vice Consul Catherine F. Alpay and Attaché Vida Cara.
The initiative was proposed by the Philippine side in the hopes of increasing the number of Filipinos living and working in Armenia.
The Embassy noted that the increasing popularity of Armenia as a tourist destination, especially among Filipinos based in the Middle East, contributed to the growing number of Filipinos settling in Armenia.
Armenia’s Ministry of Foreign Affairs East Asia and Pacific Division head Mnatsakan Safaryan committed to cooperate on the possible agreement. He said Filipinos were viewed as law-abiding and productive contributors to Armenian society.
He added that the Armenian government is also exploring best practices in protecting its nationals abroad, given the “significant diaspora” of ethnic Armenians. Armenia has a population of about three million, but as many as seven million live overseas.
According to the Philippine Embassy, an estimated 300 Filipinos currently reside in Armenia. — Camille A. Aguinaldo

Israeli firms invited to invest in PHL

PHILIPPINE Ambassador to Israel Nathaniel G. Imperial said Israeli firms have been invited to invest in the Philippines following a presentation on opportunities in the infrastructure sector.
In a statement issued last week by the Philippine Embassy, Mr. Imperial said he presented an overview of the Philippine business climate during the 1st Southeast Asia Forum organized by the Society for International Development (SID) — Israel on Oct. 31 in Tel Aviv.
Around 50 Israeli executives attended the forum, according to the Philippine Embassy.
“The Philippine economy has remained strong and stable in the last eight years, maintaining an average growth rate of more than 6%,” Mr. Imperial was quoted as saying.
“The current administration’s initiatives to improve the country’s infrastructure through the ‘Build, Build, Build’ Program are expected to improve mobility, connectivity and accessibility of Philippine products and services,” he added.
In a separate statement by the Philippine Embassy, former Israeli Deputy Prime Minister Silvan Shalom paid a courtesy call to Mr. Imperial and discussed possible Israeli investment to the Philippines, particularly in the energy sector.
“During the call, Mr. Shalom expressed that Israelis should now look at the investment opportunities offered by Philippines in sunshine industries such as the renewable energy sector,” the Embassy said.
Mr. Shalom was joined by SOL Global Solutions founding partners Alon Naor and Dor Sultan. The company is engaged in renewable and sustainable projects.
In September, President Rodrigo R. Duterte visited Israel upon the invitation of Prime Minster Benjamin Netanyahu. — Camille A. Aguinaldo

When equal access brings economic success

SGV & Co. is the first professional services firm in the Philippines and in the region to receive the Economic Dividends for Gender Equality (EDGE) Assess Certification. The EDGE certification was granted early this month.
EDGE is the leading global assessment methodology and business certification standard for gender equality. The EDGE Assess Certification is the first level of that metric, awarded to companies that make a public commitment to monitoring, benchmarking, and achieving workplace gender equality.
SGV has been a staunch supporter of empowering working women, a claim just validated by the EDGE program. With EDGE, we now have the proper data-driven methods to create stronger, more practical solutions that can help bridge any perceived prevailing gender gap in our company and industry.
This certainly isn’t the first time that SGV has committed itself to promoting a culture of fairness. In fact, SGV has long promoted a culture of merit-based progression, which has allowed the people of SGV to become more receptive to policies that support diversity and inclusivity in the workplace.
As early as 57 years ago, SGV was one of the first audit firms to admit a woman into the partnership. Then in 1992, we saw the firm appoint its very first female Chair and Managing Partner. While that time characterized the rise of numerous innovations for the practice, there is definitely something revolutionary in seeing the rise of a woman into a leadership position, during a time when it was highly uncommon. Even today, SGV takes into account proper gender equity when hiring, promoting, and training employees who are ready to take on larger roles in the company. This is evident in our talent pool, where women comprise 49% of the partnership.
These are some of the moments which have truly left an indelible mark on the annals of SGV’s narrative. When we talk of success, we think of men and women who see an opportunity to lead, and work hard to achieve it. Longevity in our profession must be earned through ability, talent, and hard work — traits that do not, and should not, discriminate between genders. SGV stands unwavering amid the challenges of a changing world because we hold an inherent belief that the best talents, regardless of gender, must be recognized, trained, and given equal opportunities to step up into bigger responsibilities.
But let us look beyond the accolades and ask ourselves why it’s important to prioritize workplace gender equality. According to research conducted by the IW for Smart Economics, business organizations must see gender inequality not only as a social issue, but as an economic issue as well.
The statistics sound off loud and clear: there is more to gain for a company when women are given a chance to shine. IW’s Smart Economics also reported that companies with equal representation between male and female board members outperform those with fewer women board members, as seen in their return on invested capital, by 26%.
Despite these statistics, only 9% of directors on global corporate boards are women, and only 4% of Fortune 500 companies are led by a female CEO. Additional information by EY’s Winning Women program state that, although women entrepreneurs play major economic forces around the globe, and start businesses at nearly twice the rate of men, they still face a number of limiting factors that prevent their businesses from moving up.
But if financial institutions and large-scale, well-established companies begin prioritizing the equal upliftment of women at every corporate level, it can bring about a chain reaction of productivity and economic collaboration that will inevitably result in excellence. And the more top-down the approach to gender equality in the workplace, the more institutionalized it can be. Imagine if there were more female CEOs; imagine if more female entrepreneurs are given the same access to financial assets and funding; imagine if that other half of the population became empowered to blaze a trail in their chosen fields. Will this not invariably effect positive changes for the nation, and even the world, in the long run?
It is by this very spirit of inclusivity that we continue to find ways to institutionalize gender equality, wherever possible.
Even before the EDGE Certification, SGV became one of seven founding members of the Philippine Business Coalition for Women Empowerment (PBCWE). This coalition was launched through the Australian Department of Foreign Affairs and Trade (DFAT) and funded by the Investing in Women (IW) program.
Particularly in the Philippines, IW has partnered with the Philippine Women’s Economic Network (PhilWEN) to create a business coalition in pursuit of Gender Equality (GE) in the workplace, and Women’s Economic Empowerment (WEE) nationwide.
We were invited to become a founding member in 2017 together with Accenture, Ayala Land, Convergys, the Magsaysay Group of Companies, Natasha, and Store Specialists, Inc. Less than two years later, all seven founding members of the PBCWE are now EDGE Certified organizations, and are currently the only ones in the Philippines. While these founding members should be credited for their significant achievement, the road to progress certainly does not stop here. The conversation on gender equality must keep going until the time comes when both male and female employees are no longer standing on different ground.
The trajectory towards success should remain unbiased across all service lines and leadership roles. Gender parity should become a business imperative, and women need to have the same access to working capital as everyone else. At the same time, companies are expected to provide measurable support for professional women who are also mothers and homemakers.
We all need to consciously work to create an even playing field for both men and women in all industries, eliminating common biases and role definitions. We should constantly challenge our perspectives on gender parity and workplace equality, and realize the economic, cultural and social benefits of such an attitude. Now that SGV has been “EDGEd,” we will strive to closely guard and continue improving our adherence to inclusivity in the workplace.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
 
J. Carlitos G. Cruz is the Chairman and Managing Partner of SGV & Co.

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