THE Philippines regressed in three of six categories in the World Governance Indicators, with “Government Effectiveness” the standout area of improvement, a performance which Socioeconomic Planning Secretary Ernesto M. Pernia attributed to the streamlining of government services. Read the full story.
Here’s a quick glance at how PSEi stocks fared on Wednesday, October 9, 2019.
THE lifting of bank secrecy is expected to generate additional government revenue of P76.6 billion, directly or indirectly, over the next five years, as economic managers promised to lobby Congress to make a weakening of account protections a feature of tax amnesty legislation.
Finance Secretary Carlos G. Dominguez III said the removal of bank secrecy in tax amnesty cases is “crucial and indispensable” for upcoming legislation, after President Rodrigo R. Duterte vetoed provisions of the Tax Amnesty Act, or Republic Act 11213, in February.
Mr. Dominguez said Bangko Sentral Governor Benjamin E. Diokno will join him in convincing the 18th Congress to allow the removal of bank secrecy in tax amnesty cases.
Mr. Dominguez said he directed Undersecretary Gil S. Beltran to inform Congress that the Department of Finance (DoF) and Bangko Sentral ng Pilipinas (BSP) have a joint position on the matter.
He warned that the government could lose around P53 billion in indirect revenue if tax amnesties are granted without giving the government the power to inspect bank accounts.
In his veto message in February, Mr. Duterte said he did not want to grant tax amnesties without safeguards against untruthful declarations of assets or net worth, and called for the “breaking down (of the) walls of bank secrecy” to prevent any abuse of the amnesty program.
The unvetoed provisions cover amnesty for estate taxes and tax delinquencies, which are expected generate P6.28 billion and P21.26 billion in additional revenue, respectively.
“Make sure that the general amnesty and the lifting of the bank secrecy (has to go) together,” Mr. Dominguez told Mr. Beltran during a recent DoF Executive Committee (Execom) meeting. — Beatrice M. Laforga
THE Philippines regressed in three of six categories in the World Governance Indicators, with “Government Effectiveness” the standout area of improvement, a performance which Socioeconomic Planning Secretary Ernesto M. Pernia attributed to the streamlining of government services.
The Government Effectiveness score jumped to the 55th percentile (55.29) from 51.92 two years earlier. However, the performance failed to meet the target of 59 set out in the Philippine Development Plan 2017-2022.
Mr. Pernia also highlighted the Philippines’ performance in the WGI’s “Regulatory Quality” category to the 56th percentile (56.73) in 2018 from 55.77 in 2017, which he said beat the target of 54 set in the PDP.
In a statement released by the National Economic Development Authority (NEDA), he said the improved standing reflects upgrades to the government’s internal efficiency in the government.
The NEDA statement made no mention of the Philippines’ worst category, “Political Stability and Absence of Violence,” where the country’s percentile standing actually improved to 12.86 in 2018, from 11.43 two years earlier.
WGI defines the category as measuring “perceptions of the likelihood of political instability and/or politically-motivated violence, including terrorism.”
“The government will address shortcomings in other governance indicators by expanding inter-agency initiatives and engaging citizens to reduce corruption. Also, strengthening local development councils to ensure participation of civil society organizations, and addressing fragmentation in the justice system to ensure swift and fair administration of justice,” Mr. Pernia was quoted as saying.
The categories where the Philippines posted declines were: “Voice and Accountability, 47.78 from 48.77 in 2017, “Control of Corruption,” 34.13 from 39.42, and “Rule of Law,” 34.13 from 37.02.
Voice and Accountability refers to perceptions that citizens can participate in selecting the government and enjoy freedom of expression and association, as well as a free media.
The WGI considers more than 200 countries in its study and draws from about 30 datasets.
“More than the passage of the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, it has been government agencies themselves that made the difference in complying with these measures to make their services efficient,” Mr. Pernia added.
He cited a NEDA study where individuals and businesses expressed greater satisfaction with government frontline services since the implementation of Republic Act (RA) No. 9485 or the Anti-Red Tape Act (ARTA) of 2007.
He also cited the impact of reforms like the Citizen’s Charter, the no-noon-break policy in government offices, and department-level innovations in service delivery, including the use of automated queuing systems.
RA 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 also requires agencies to speed up processing time and simplify procedures in government transactions.
The regional WGI leader was Singapore, with performances in the high-90s percentile in five of the six categories, including a 100 score in Government Effectiveness. Its weakest performance was in Voice and Accountability at 41.87.
The ASEAN Averages were 27.93 in Voice and Accountability, 48.05 in Political Stability and Absence of Violence, 57.21 in Government Effectiveness, 45.62 in Control of Corruption, and 52.79 in Regulatory Quality. The Philippines beat the ASEAN average in two categories, Voice and Accountability and Regulatory Quality. — Beatrice M. Laforga
ILOILO CITY — Local government units (LGUs) in Guimaras have been advised to develop agriculture for the time being pending the resolution of disrupted boat service to the island province which caused tourist arrivals to drop 74% in August.
Department of Tourism (DoT)-Western Visayas Regional Director Helen J. Catalbas offered the department’s help in marketing Guimaras produce in Iloilo.
On Aug. 3, three boats sank in bad weather in the Iloilo Strait, leading to the imposition of restrictions on the ferry services that the island depends on. The restrictions include limited hours of operation, which has made day trips less manageable and put visitors at risk of missing their return trips to the Panay mainland.
“This is a challenge. LGUs, municipalities, province, please look at your (farming) potential. If you need training, we will help you. You need to partner with huge establishments, with which we can help you,” she said during an inter-agency dialogue of public and private tourism stakeholders on Oct. 3.
Ms. Catalbas cited the example of 40 farmers in Jordan, Guimaras who were trained to supply produce to SM City Iloilo.
She said one of the DoT’s plans is to offer market-day trips to Jordan, which faces Iloilo city along the strait.
“With more farmers being trained, Jordan will be the bagsakan (wholesale supply hub) in Guimaras. We have identified 20 potential markets in the region, but we will start with Jordan,” she added.
During the dialogue, Guimaras Governor Samuel T. Gumarin reported that visitor arrivals from Aug. 4-31 fell 74% year-on-year.
“We only recorded 11,432 arrivals compared to the 43,709 in the same period in 2018,” he said, adding that tourism receipts also dropped to P9.8 million from P42.9 million.
Meanwhile, stakeholders are still pushing for the resumption of 24-hour boat service between Guimaras and Iloilo with safety provisions in place.
The Integrated of the Bar Philippines (IBP)-Guimaras Chapter has filed a civil action before an Iloilo Regional Trial Court to lift the restrictions imposed by the Maritime Industry Authority (MARINA).
“The 24/7 navigation is possible because it only takes 15 minutes from Iloilo to Guimaras, we don’t really need the (restrictions),” IBP-Guimaras Vice-President Tomas E. Jungco, Jr. said.
Marjorie T. Mella, owner of Jem Home Farm in Guimaras, expressed support for the IBP’s action, although she said even opening up boat service until 10 p.m. would address the situation.
“If they can’t give us 24/7, maybe extend our travel at night time because it’s very difficult for us. It hasn’t been an easy ride for us,” she said.
MARINA-Region 6 Director Jose Venancio A. Vero, Jr. said the protocols were approved at the national level and are intended to protect the public.
“As regards (the) 24/7, we have an existing policy… we cannot do anything because that is a policy set by the national (government),” Mr. Vero said.
He also noted that prevailing weather conditions sometimes make the Iloilo Strait and the channel from Iloilo to Guimaras “treacherous.”
He said wooden-hulled motorboats are suitable only for daytime navigation. — Emme Rose S. Santiagudo
THE Bangko Sentral ng Pilipinas (BSP) reiterated its position that the exit of Philippine Offshore Gaming Operators (POGOs) will have no significant effect on the economy.
BSP Governor Benjamin E. Diokno said: “Di naman talaga kailangan ng POGO. Yun pa rin ang assessment namin. (POGOs are not really needed. That remains our assessment.) It will not be a financial risk to the economy (if POGOs exit), kasi hindi naman ganon kalaki ang exposure nila sa real estate (the real estate sector’s exposure to POGOs is not that great).
Mr. Diokno was speaking to reporters on the sidelines of The Asset’s 14th Philippine Forum.
He added that said that Malacañang has yet to respond to his recommendation.
POGOs have become an irritant in the relationship with development donor China, which fears that its foreign exchange controls could be undermined. In August, the Chinese embassy in Manila announced a crackdown on online gambling, to bring the industry in line with its general ban on gambling in all forms.
POGOs have also generated discontent because of perceptions that the largely Chinese work force is taking away jobs and could be running rings around the alien work permit system and withholding tax rules.
At the same event, Finance Secretary Carlos G. Dominguez III said that the government is not against POGOs in principle but added that they should follow the tax rules.
“We are only implementing the law. But they have to follow and pay taxes as required by law,” he said in response to a question at a forum.
The exit of POGOs will leave a “glut” in office space which can be absorbed by traditional demand, UnionBank of the Philippines, Inc. chief economist Carlo O. Asuncion told BusinessWorld.
“There will be a glut in office space that, I think, will readily be taken up by traditional demand like that coming from conglomerates, construction, finance, professional services, technology, etc… The non-POGO office demand is still robust and stable,” Mr. Asuncion said in a text message.
He said POGOs take up between 1 million and 1.3 million square meters of office space in Metro Manila, with a high concentration in the so-called “Bay Area” reclamation zone.
However, Mr. Asuncion said in the real estate sector, “growth has softened from 10.9% in the first half of 2018 to 7.2% the same period this year. So, one can say that the impact of POGOs has not largely been felt.”
In a September report, Fitch Ratings said a crackdown on POGOs will have no significant effect on the banking sector.
“We understand that most major property developers have placed internal limits on their direct exposure to such operators in light of the potential policy risk,” Fitch said, noting that the vigilance over the sector could affect the domestic property demand more, as POGOs have absorbed about a third of Metro Manila’s office space from 2017-2018.
The government stopped accepting applications for new POGOs at least until the end of 2019 pending a policy review on the sector.
“POGO demand for space is expected to decelerate by the end of this year because of the temporary ban by the government,” Mr. Asuncion said. — Luz Wendy T. Noble
BLOOD SAMPLE testing for African Swine Fever (ASF) is encountering bottlenecks at the Bureau of Animal Industry (BAI) national office because of limited capacity or supply at regional laboratories, the bureau’s director said.
BAI Director Ronnie D. Domingo told reporters Wednesday that the referrals from the regions often overwhelm the national laboratory’s processing capacity of about 600 samples a day.
“Ang sabi sa akin ng laboratory ang (that their) capacity nila mga 600 samples every day (The laboratory told me that it can process about 600 samples a day)… Kung biglang dumating yung isang tambak mula sa probinsya (If a large volume of samples suddenly arrives),” the national laboratory has to adjust, he said.
Confirming the presence of ASF usually takes 10 hours, but due to the volume of samples, some results may take two to three days before release, he said.
The ability to test blood samples efficiently is becoming more critical with the spread of ASF, which could soon include another town in Plaridel, Bulacan.
The Department of Agriculture (DA) has conducted tests in Barangay Sipat, Plaridel, after a pig farmer reported unusual hog deaths in the area on Oct. 2. Mr. Domingo has yet to confirm the results of testing on Plaridel blood samples.
The DA has confirmed ASF in 20 locations. The first cases surfaced in Rodriguez and Antipolo Rizal, Guiguinto, Bulacan, and various locations in Quezon City, Pangasinan and Pampanga.
The number of hogs culled has surpassed 20,000 head as of Oct. 1, which is 0.15% of the total population.
The Crisis Management Task Force on Swine said in a bulletin on Wednesday that about 12,000 head of swine have tested positive for ASF.
The suspicion of ASF triggers the so-called 1-7-10 protocol, which calls for the cull of all hogs within a one-kilometer radius as well as the disinfection of all farms. The seven-kilometer radius is declared a surveillance area, subject to testing and sampling, while movement of hogs is restricted in the 10-kilometer ring. — Vincent Mariel P. Galang
DAVAO CITY — Aboitiz-controlled Apo Agua Infrastructura, Inc. (AAII) is seeking the support of government agencies in obtaining right-of-way and in managing road traffic associated with the construction of its P12.6-billion bulk water supply project, which is due for completion in 2021.
“Apo Agua deserves to be assisted and helped in terms of moral support, understanding, especially on some challenges on the road right-of way and traffic,” Councilor Danilo C. Dayanghirang said in an interview during a site visit at the Tamugan River Monday.
AAII General Manager Cirilo C. Almario III said the contractor needs multi-agency assistance particularly for the pipe-laying work to enable raw water transmission, which has started.
The installation of a 60-kilometer treated water pipeline is scheduled to start Oct. 21.
“We have 13 teams, generally 13 sites sabay sabay na mahuhukay (that will be dug simultaneously) for us to meet the 2021 target completion of the project,” Mr. Almario said.
Among the agencies that AAII has been coordinating with are the Department of Public Works and Highways, City Engineers Office, Public Safety Command Center, and the City Transport and Traffic Management Office.
“Other than the security also (on) traffic management,” Mr. Almario said, the contractor is also working with barangay officials to ensure minimal inconvenience to commuters.
AAII is a joint venture between Aboitiz Equity Ventures (AEV) and J. V. Angeles Construction Corporation (JVACC).
Mr. Dayanghirang said the city government would like to see construction work hastened to immediately address demand in areas currently with inadequate water supply.
“If they can shorten (construction), the better… because people cannot afford to be kept waiting,” the councilor said.
Mr. Almario said while the contractor has the capacity to undertake construction work 24/7, there are other considerations such as obstructing main roads in the daytime and generating noise in the evening in residential areas.
Once operational, Apo Agua will deliver 300 million liters per day to the Davao City Water District as provided under its bulk water supply agreement. — Maya M. Padillo
THE Department of Transportation (DoTr) said Wednesday that it is open to proposals to privatize the Light Rail Transit Line 2 (LRT-2) which had to be partially shut down after a fire damaged the rail line’s power system last week.
“Those options are open. Whether it will materialize, only the future can tell,” Secretary Arthur P. Tugade told reporters on the sidelines of the launch of the new Philippines AirAsia headquarters at the Ninoy Aquino International Airport (NAIA) Terminal 3 in Pasay City, when asked for comment on Senator Sherwin T. Gatchalian’s proposal.
The Light Rail Transit Authority (LRTA) has suspended operations in two stations of LRT-2 until mid-2020 due to fire damage sustained Thursday. It said it will take nine months to repair the damage that forced the closure of the last two stops heading into the Marikina Valley — Katipunan and Santolan stations.
In a statement Tuesday, Mr. Gatchalian said: “The LRT Line 2 is the only remaining segment among the three existing LRT and MRT lines that has yet to be privatized. The LRTA needs to seriously look into the privatization of the operation and maintenance of the LRT-2 in order to avoid disruptions in operations.”
The Senator added: “Bukod sa paglalaan ng ng libreng sakay para sa mga apektadong pasahero ay kailangang paghandaan din ng LRTA ang long-term viability ng linya. Sa ngayon ay pagsasapribado sa operasyon ng LRT-2 ang pinakamainam na solusyon (Beyond offering free rides to those affected by the shutdown, the LRTA has prepare for the line’s long-term viability. Privatization is the most appropriate solution).”
The LRTA has estimated that at least P430 million is needed to fix the damaged system, which will cover hiring a contractor and acquiring replacement parts.
The President’s Spokesman, Salvador S. Panelo, said at a Palace briefing Tuesday that “there should be improvement” in the LRTA’s management of the LRT2.
“You’re not maintaining it properly,” he said in the course of denying a state of crisis in Metro Manila’s transportation system.
According to the latest Number Quality-of-life-index, published in Deutsche Bank’s annual “Mapping the world’s prices” report, Manila ranked 54th out of 56 major cities in quality of life. The ranking is based on traffic congestion and commute times, purchasing power, regional crime and safety, overall quality of health care, general cost of consumer goods, and housing affordability, among others. — Arjay L. Balinbin
AGRICULTURE Secretary William D. Dar is expected to announce a decision on the possible imposition of safeguard duties on imported rice by tomorrow, Friday.
“We are discussing it,” he told reporters on the sidelines of the Senate hearing for the Department of Agriculture’s (DA) 2020 budget on Wednesday.
Under Section 7 of Republic Act No. 8800 or the Safeguard Measures Act, government agencies are authorized to make a preliminary determination that imports are harming domestic industry within 30 days from receipt of a petition or a motu proprio initiation of the preliminary safeguard investigation.
The Philippines informed the World Trade Organization (WTO) for such investigation on Sept. 12, with a surge in rice imports blamed for a plunge in the farmgate price for domestic palay, or unmilled rice, following the implementation of the Rice Tariffication Law.
The law liberalized rice imports in exchange for a tariff of 35% on Southeast Asian grain.
According to the WTO, a safeguard investigation will take in evidence from importers, exporters, and other parties.
A WTO member can only impose a safeguard action, like restricting imports temporarily, only if imports are proved to be the cause of the injury.
In September, Mr. Dar noted that rice imports from March to August hit 2.4 million metric tons (MMT), well above the estimated 1.5-MMT to 2-MMT import requirement to meet domestic demand. The country is 93% self-sufficient in rice, which means only 7% is needed to be filled in by imports.
According to DA’s price monitoring for Oct. 9, imported commercial rice is retailing for P34 to P55 per kilo. Domestically-sourced commercial rice sells for P35.26-P52.74. — Vincent Mariel P. Galang
The Department of Tourism (DoT) reported a 7.59% increase in tourist arrivals to the Philippines in the first quarter. This increase translates to around 2,204,564 foreign visitors from January to March 2019.
However, not all foreign visitors travel around the country strictly for leisure. A segment of the tourist market also visits the country for business or employment.
For instance, non-visa required nationals (such as Americans, Australians, Japanese, etc.) enjoy a 30-day visa waiver. Apart from tourism, they are allowed entry into the country for business-related activity or for the eventual assumption of duties related to work activities.
With the influx of foreign workers, the government is seeking to tighten its rules on issuance of work permits. Setting stringent regulations in place, the Department of Labor and Employment (DoLE), the Bureau of Internal Revenue (BIR), the Department of Justice (DoJ), and the Bureau of Immigration (BI) circularized the Joint Guidelines on the issuance of employment permits to foreign nationals on May 1.
TIN REQUIREMENT FOR WORK PERMIT AND WORKING VISA
Previously, only those applying with the BI for a visa to work for over six months, or those applying for an Alien Employment Permit (AEP) with DoLE were obliged to secure a Taxpayer Identification Number (TIN). Subsequently, the TIN requirement for AEP was removed when Provisional Work Permit (PWP) applications, processed while the work visas are still pending, were likewise required to be supported with a TIN. A PWP allows foreign nationals to commence working in local establishments, usually within the validity period of three months or until the work visa has been approved.
These days, with the issuance of the Joint Guidelines, all applications for work permits and working visas must be supported by a TIN. Regardless of the duration of the assignment, foreign workers are required to apply for a TIN.
Thus for the guidance of applicants, the BIR issued Memorandum Order No. 28-2019 that outlined the procedures and registration requirements to secure a TIN for foreign workers. It provides clarity on what, how, and where applications for issuance of a TIN may be filed.
Issuance of a TIN is without prejudice to the option of availing applicable tax treaty benefits based on existing treaties.
IMPLEMENTING RULES ON SWP AND PWP APPLICATIONS
Under BI Operations Order No. JHM-2019-008, foreign nationals, who will be working in the Philippines for six months or less, must apply for a Special Work Permit (SWP) with the BI. An SWP is issued only to those who intend to work, engage in specific activities, or render services outside of an employment arrangement, such as: 1. Professional athletes, coaches, trainers, and assistants; 2. International performers with exceptional abilities; 3. Artists, performers, and their staff, who perform before an audience for a fee, subject to compliance with the requirements of the concerned agency, office or body; 4. Service suppliers coming primarily to perform temporary services and who do not receive a salary or other remuneration from a Philippine source other than expenses incidental to their temporary stay; 5. Treasure hunters authorized to search for hidden treasure with a permit from the concerned government agencies and instrumentalities; 6. Movie and television crews authorized to film in the country by the relevant regulatory office, body or agency; 7. Foreign journalists practicing their profession or covering a specific event in the country; 8. Trainee/s assignees assigned in government instrumentalities, government-owned and controlled corporations (GOCC), and private entities; 9. Lecturers, researchers, trainers, and others pursuing academic work, assigned in schools, universities, educational and research institutions, government agencies, and other entities (with or without compensation); 10. Religious missionaries and preachers; 11. Commercial models and talents; 12. Culinary specialists/Chefs; 13. Professionals; and 14. Consultants or specialists.
While the current list appears comprehensive and inclusive of all work activities that may qualify for an SWP, it must be read as merely suggestive in nature. As long as the application can show that the intended pursuit is within the ambit of qualified activities and merits the approval of the Bureau, an SWP can be granted to foreign nationals.
The new Operations Order also raised the need for a PWP issued by the DoLE for foreign workers who have pending applications for a working visa with the BI. The PWP serves as an authorization for the foreign national to work pending the approval of the working visa.
Although to some extent, the guidelines merely reiterate previous policies, the harmonizing of inter-agency regulations, hopefully, addresses the overlap of responsibilities, ensures efficient processing of applications, and reinforces compliance with work permits and visas. More significantly, a clear policy direction should allay the growing apprehension among Filipinos of losing employment opportunities to their foreign counterparts, weed out illegal foreign workers, and regulate tax evasion among undocumented workers.
With the increase in visitor receipts due to growth in tourist arrivals and the boom enjoyed by the real estate industry thanks to demand for leased spaces, the current influx of foreign workers should be seen as a welcome development, rather than a threat, to our economy.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only and should not be used as a substitute for specific advice.
Larissa C. Dalistan-Levosada is a Senior Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of PwC global network.
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