THE House of Representatives ways and means committee will hold hearings on the risks of Philippine offshore gaming operators (POGOs), many of whom employ Chinese nationals, and decide whether they should stay in the country, according to Albay Rep. Joey S. Salceda.
“It has returns,” Mr. Salceda, who heads the ways and means committee, told reporters yesterday. “It has high risk — high risk-high return for the Philippines as an economy,” he added.
The congressman was asked to comment on China’s request for the Philippines to ban POGOs in the country.
He noted that POGOs are legal under the franchise of the Philippine Amusement and Gaming Corp. (Pagcor).
The Finance department has threatened to shut down POGOs found evading withholding income taxes from their workers.
The agency has issued 130 letter-notices to operators with P21.62 billion in tax liabilities, it said. — ALB
House bodies to form TWG on OFWs agency
TWO House of Representatives committees have agreed to form a technical working group that will consolidate 31 bills seeking to create a Department of Overseas Filipino Workers.
Batangas Rep. Mario A. Mariño, who heads the committee on government reorganization, said Filipino workers overseas had sought the creation of the agency.
Creating a department to address their problem is a small cost compared with $38 billion they send home, the lawmaker said
Mr. Salceda also said his committee would study the Customs Brokers Act to see if President Rodrigo R. Duterte’s wish to remove brokers from the Bureau of Customs could be accommodated. — Vince Angelo C. Ferreras
Change is inevitable, in anything. Nothing can forever remain constant. And change coming is just as sure as all living things die, eventually. But change doesn’t always mean moving forward. Sometimes, out of necessity, change means going back to the way things were. Again, not necessarily by choice, but as a matter of need.
At the supermarket checkout recently, the woman at the register looked with obvious wonder at the carton of eggs I intended to buy. She picked up the box, held it up, and looked all around it. When I asked her why she did that, she said it was her first time to see a dozen eggs sold in brown carton, and not a plastic tray.
This, of course, is an example of how we “changed” back. Imagine her surprise when I told her that eggs used to be sold in cartons, up until about maybe 25 years ago. I reckon she was born after the carton era, when tree huggers were in vogue, and when eggs were already sold in plastic trays or crates, rice in plastic sacks, juices in tetra packs, and soft drinks in plastic bottles.
The marriage of technology and necessity has brought the world to where it is now, and from where I sit, given all the things happening locally and globally, I have a strong feeling that many of the industries we see now will not survive the 21st century. They need to reinvent themselves, to adapt, to match skills with emerging needs and opportunities.
I had a chat recently with a friend with a small business. His family owns a shop that retails car accessories and provide car services. Given the declining market for his goods and services as well as skyrocketing rent, he says he can survive maybe another two to three years, at most. Sad news indeed, but more so for about a dozen people in his employ — all relying on him for their livelihood.
It was then that I mentioned to him my open invitation to a foreign company to establish a presence in the Philippines, and to bring here their technology and expertise in converting particularly old cars — 1960s to 1970s Porsches, Beetles, and Kombi Wagons, among others — into electric vehicles. The company supplies the conversion kits as well as the battery packs, and do the installation/conversion.
In my friend’s case, I believe, this can be a major breakthrough in revitalizing his business. But I told him that he should be willing to change and to learn something new. He needs to reinvent himself, to recognize emerging needs, and more important, to gain access to new products and new technologies. If opportunity is certain, the capital will come. Some investors can be like sharks when they smell blood.
The Philippines, with a population of more than 100 million people, and with per capita income growing, is ripe for new products and new technologies. Slowly but surely, our cities are becoming unrecognizable to those who have not been here in the last 30 to 40 years. Much has changed not only in infrastructure but also in terms of products and services.
When I first started covering a beat as a newspaperman, I typed out my stories on whatever typewriter I could get my hands on prior to deadline time. While personal computers were already on the market at the time, they were very expensive. And, most press offices had only typewriters. Next to the typewriter, the most used “equipment” were telephones and fax machines.
Of course, with typewriters still in fashion, we also kept “hard copies” of our stories. There was no diskette or hard drive or flash drive to store them. Our version of the hard drive was a pigeon hole on a shelf filled with type-written stories, piled up chronologically by date. So, we were literally swimming in paper in those days. One also had to be friends with the photocopier.
As I moved up from the typewriter, it came to a point that I would go to the beat lugging a pilot’s bag. In it were a big Toshiba laptop, bought second-hand; a power supply as big and as heavy as a brick; and a slim dot matrix printer. With this set-up, I could type on a computer, save my work in a disk, print out a story, and then fax it to the Editorial offices. I could work “anywhere” as long as there was a big enough desk and also access to a telephone and a fax machine.
Then came the era of pagers, then cellphones, and then smaller laptops. The fax machine was set aside in favor of modems or dial-up access, and we started using the internet and e-mail to file stories. Fewer people went back to the office to file their stories, more reporters worked remotely, and large newsrooms started to look empty. Many files also became “soft” or were kept in electronic copies.
Nowadays, I read newspapers and do my columns at home on a slim 11-inch laptop. All information — research materials, references, and written columns themselves — are stored in a hard drive and then backed up on an external drive. Columns are e-mailed to Editorial via a DSL broadband service, while within the home everything is on a wireless network. I confirm receipt of my column via mobile through Viber. On occasion, I type out parts of a column on a smartphone with a data plan, and then e-mail it to the office, even as I sit for coffee in a café.
Over the years, newsrooms and newspaper people have had to reinvent themselves, to change their processes, to learn new technology, and to adapt to market changes as they recognized emerging needs and opportunities. Yes, I truly believe that newspapers will eventually die — just like everything else. But, the need for information, and modes to deliver them, will remain. Thus, for people now creating or developing content, remaining relevant means adapting to change.
We have been lucky to experience the tail end of the 20th century. We are just as fortunate to have witnessed the dawn of this new century, as well as the significant and dynamic changes in technologies, our environment, and the way we do business. And, the hard lesson from all this change is one thing the Marines have known for a long time: “Improvise, Adapt, Overcome.”
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
We all hear about inclusive business nowadays. And rightly so because business, especially big business, is the most important force in growing the middle class in our country by spreading the fruits of our healthy economic growth.
But let’s do a reality check. According to official data, poverty among Filipino households is about 16% and about 21% among individuals. These levels are improvements from the 2015 levels of 22% for households and 27% for individuals. However, we shouldn’t rush to celebrate yet since these statistics are based on the official poverty line of P10,481 per household which most people find ridiculously low. Mahar Mangahas of Social Weather Stations puts the actual poverty rate at above 40% based on extensive data on self-rated poverty that the social indicators organization has tracked through the years.
The World Bank report “Making Growth Work for the Poor” noted that the Philippines has one of the slowest declines in poverty in the region since 2005 at only 0.9 percentage point annually compared to Vietnam and Indonesia which have reduced poverty by more than two percentage points annually. Even more troubling, the drop in our poverty rate per one percent GDP per capita increase is less than 0.4 percentage point versus Vietnam’s one percentage point!
The report observes that “despite the good economic growth, only a small share of the population has made it to the middle class, and more than 10% of Filipinos remained vulnerable to falling into poverty.” For those who claim that economic growth “trickles down” in our country — well, a very slow trickle is exactly what we have when compared to our neighbors. In short, our economic growth is more exclusive than inclusive.
A research note also by the World Bank entitled “Employment and Poverty in the Philippines” gives a major reason for this in two words: “bad jobs.” Bad jobs are low-paid and informal, and thus are not covered by labor regulations, or are involuntarily part-time, temporary or casual. While our economic growth has resulted in many more jobs being created by businesses, most of these jobs cannot sustain decent human lives. In fact, “in-work poverty” has become the norm in the country.
I’ve often been assured by business leaders that they are helping the country by creating jobs. Fair enough. But unless the jobs created are good jobs, they trap people in poverty. Paradoxically, businesses which offer bad jobs are a major reason why the Philippines has one of the most persistent poverty rates in the region and among the highest levels of inequality in the world.
PHILIPPINE STAR/KRIZJOHN ROSALES
The way forward for inclusive business requires a long view from business leaders. Firstly, businesses need to avoid keeping workers at the minimum wage. Even business leaders will grant that the minimum wage is not sufficient for a decent life. Therefore, they must be mindful that keeping people at that level is a poverty trap.
Secondly, workers need to graduate from minimum wage but this will have to be paid for by increased productivity through effective training. The key is then to share the fruits of productivity with the workers through higher pay. Unfortunately, the Employment and Poverty report cited above reports that while labor productivity grew by more than 30% since 2005 real wages dropped by 5%! Where did the productivity gains go? The top 1% owns more than half of the nation’s wealth, according to a Credit Suisse Wealth Report.
Delano Villanueva, former economist at the International Monetary Fund and author of Macroeconomic Policies for Stable Growth, calls it “social extraction” — a process where the elite get politicians on its side to increase the returns on its already substantial capital advantage while underpaying workers, most of whom are the poor.
On Aug. 19, the Business Roundtable (BRT) — the association of US CEOs which includes Amazon’s Jeffrey Bezos, Apple’s Tim Cook, General Motors’ Mary Barra and IBM’s Ginni Rometty — announced that it is moving away from prioritizing shareholders and is now committing to all stakeholders of the corporation. The BRT is now pushing for “investing in… employees by compensating them fairly and providing important benefits and supporting them through training and education that help develop new skills for a rapidly changing world.”
Similarly, the Management Association of the Philippines (MAP) held its annual International CEO Conference entitled The Future of Business: Sustainability, Development, Impact. MAP President Riza Mantaring explained that a key component of sustainability is talent management and taking care of the health and welfare of employees.
Our business leaders can transform our economy from social extraction to inclusion through good jobs.
Dr. Benito L. Teehankee is the Jose E. Cuisia Professor of Business Ethics and Head of the Business for Human Development Network at De La Salle University.
Among the ironies of government health policies regardless of administration is their cry for “cheaper medicines” — and then they impose various tariff and taxes on medicines that make these products more expensive.
I checked the tariff and duties for imported pharmaceutical products at the World Trade Organization (WTO) and I was surprised to see that zero tariff in medicines is imposed by a number of our neighbors in the region while the Philippines imposes a nearly 3% tariff, aside from 12% VAT on medicines (See Table 1).
Other countries have higher medicine tariffs: Nepal has 14%, Pakistan 11%, Laos 10%.
This coming Monday, Sept. 23, there will be a UN High-Level Meeting (UN HLM) on Universal Health Coverage (UHC). Their theme is “Universal Health Coverage: Moving Together to Build a Healthier World.”
The UN and WHO send this virtue signaling to member-country governments to further raise taxes, impose more prohibitions and restrictions on “unhealthy” products to achieve a “healthier world.” So that the Philippines’ Department of Health, Department of Finance, other agencies create new legislations and regulations to implement this signaling.
But people around the world have been living healthier and longer, even before UHC was coined and before various taxes or tax hikes on alcohol, tobacco, sugary drinks and food were imposed (See Table 2).
Related to this, a new report was released this week, “Accelerating access to medicines: Policy recommendations for achieving the health-related Sustainable Development Goals.” It was produced and co-signed by 15 independent and non-government think tanks from 14 countries including the Geneva Network (UK), Minimal Government Thinkers (Philippines), and four others from Asia.
The report has noted that government itself is among the causes of expensive medicines and thus recommended three ways to reduce medicine costs: reduce taxes, abolish tariffs, and eradicate other trade barriers. In particular, it recommended that “Non-members should join the WTO Pharmaceutical Tariff Elimination Agreement (‘Zero for Zero’ initiative). If this is not possible, countries that still levy tariffs should unilaterally abolish them.” Yes, the Philippines should reduce its double talk by cutting its pharmaceutical tariffs of 2.8% to zero (See Table 1 again).
Regarding improving access to medicines, the report also noted that government itself creates regulations that in the process delay or limit access to medicines by the people. Thus, the report made four recommendations: Speed up patent examination, simplify the drug approval process, modernize government medicine reimbursement decision-making, and promote open trade in medicines.
Open trade in medicines means allowing more market competition via: (1) a stronger role for the WTO in enforcing existing laws vs. mandatory local content requirements; (2) instead of protectionism, developing country governments should make their economies more attractive to foreign investment by among others, investing in human capital and physical infrastructure; and, (3) public procurement of medicines should be transparent, ensure best interests of the taxpayers.
As this column has repeatedly argued, cheaper products like energy, rice, transportation, healthcare and medicines is possible if government steps back via less taxes and tariff, less mandates and prohibitions, have more competition among producers and sellers of these goods and services. Government should only ensure good quality commodities from competing players by heavily penalizing producers of fake, counterfeit, substandard, and unreliable products.
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.
AT THE OUTBREAK of the English Civil War in 1642, Warwick Castle was attacked by soldiers loyal to the king who tried without success to unseat the Parliamentarian forces that held it. While a minor skirmish, the outcome would foreshadow the broader struggle for the country.
Today, the town of Warwick is under siege of another kind, one that may similarly decide where the divided nation is headed after an escalation in the political drama over Brexit.
The UK is witnessing an historic period of upheaval that has invited comparisons with events almost 400 years ago. Parliament has been suspended — illegally, a court in Scotland ruled last week. The prime minister is threatening to flout the law to get his way while lawmakers on all sides are in open revolt and Ireland’s future, north and south, is at stake.
Even the Queen has become embroiled in the standoff. And violence is brewing, with scuffles outside Parliament and a government document warning of public disorder from food and fuel shortages should the country crash out of the European Union without a deal.
Lawmakers last week channeled an event from the run-up to the civil war in the House of Commons to protest the so-called prorogation of the legislature. Brexit Party leader Nigel Farage, one of the main architects of the vote to leave the EU, has described the present constitutional crisis as the worst since that tumultuous period.
A recent tour through some English counties scarred by the conflict suggests he may be right. With positions hardening and no obvious release for rising tensions, it’s anybody’s guess where the Brexit dilemma ends.
Voters in Warwick opposed leaving the EU, seeing a departure as a threat to a key employer — the automotive industry — and to the university town’s international outlook. But as a pro-EU bastion amid a sea of Brexit territory, Warwick is at odds with neighboring districts, the UK as a whole and with Prime Minister Boris Johnson’s Conservative government. Those same divisions run through swaths of the country.
“If we get out of the current impasse without shots being fired, we will be doing better than I expected,” said Diane Purkiss, author of The English Civil War: A People’s History and a professor of English literature at Oxford University. “The question from here is whether we can at the last minute and in the eleventh hour muddle together some kind of final British compromise.”
With its timber framed houses, country parks and association with William Shakespeare, the county of Warwickshire is picture postcard England. But beneath the patina of Olde Worlde charm lie stark divisions in attitudes to Brexit.
Of course the UK has always diverged along political lines, from Thatcherism to Blairism. What attracts today’s comparisons with the 17th century is the constitutional chaos on top. Then, the country chose sides as Parliament and Oliver Cromwell’s Puritans asserted authority over King Charles I and his Catholic household in a standoff over religion and power that ultimately led to war and regicide.
In an echo of Brexit’s patchwork of “leave” and “remain” voting areas, the civil war cleaved along the lines of individual towns and cities depending on which way they declared, for Parliament or the King. Indeed, the political map of the Brexit vote resembles the distribution of support for both sides in the civil war, Stefan Collignon, a professor at the London School of Economics wrote in March last year.
In Warwickshire, Stratford-upon-Avon was sandwiched between Parliamentarian and Royalist forces, and took in casualties from the war’s first major battle at Edgehill.
Stratford, Shakespeare’s birthplace, is a 20 minute drive to the southwest of Warwick but a different world in its Brexit outlook. Whereas Warwick and its surroundings are home to workers from the nearby Jaguar Land Rover plants and left-leaning, pro-European students and academics from Warwick University, Stratford relies on tourism, the hospitality industry and foreign workers to staff it.
Warwick voted 59% to 41% in favor of remaining in the EU. Stratford voted 52% to 48% to Leave, bang in line with the country as a whole.
THE BREXIT SIEGE
Walking around Stratford, past the Tudor houses and boats on the river Avon, there is little outward evidence of tension. That’s no comfort to Sophie Clausen, an artist and author originally from Denmark who first came to Britain as an art student more than 20 years ago.
For Clausen, that sense of indifference cannot be excused by any amount of Brexit fatigue, and is the most worrying aspect of all. “People switch off, they don’t care, and that’s really dangerous,” she said.
“If we get out of the current impasse without shots being fired, we will be doing better than I expected.” — UNSPLASH — SABRINA MAZZEO
“People say they just want Brexit over with, but I don’t think it will ever end,” said Clausen. “Because if it doesn’t happen, the divisions will get even deeper and people who voted Leave will be even more angry,” she said. “No-one knows the way out any more.”
Johnson has a little over a month to try and strike a new deal with the EU that’s palatable to enough parliamentarians to enable Britain to leave the bloc in an orderly way on Oct. 31. If he fails to do so, he is now required by law to ask for an extension, something that will almost inevitably lead to the general election he wants to break the impasse.
Comparisons between Johnson and Charles I over their treatment of Parliament are unhelpful, according to Purkiss, the civil war author, since the king waited 11 years to recall the legislature rather than the present five weeks. Yet there is a common “persistent ongoing failure of compromise” that contributed to the descent into conflict, she said.
Other parallels lie in the existence of concurrent crises in “the three kingdoms” of England, Ireland, and Scotland; and in the emergent print media’s alarmist headlines that mirror today’s social media posts, “weaponizing fear mongering,” said Purkiss. “I don’t think people are taking this threat seriously enough,” she said in an interview at Keble College in Oxford, one block away from St. Giles Church, which carries a plaque describing its damage in the civil war.
At root, Brexit is the symptom of a crisis of parliamentary democracy, with both main parties pushed to extremes and the middle ground erased, eroding willingness to reach consensus. That presents a challenge for politicians like Jack Rankin, selected to contest the Warwick and Leamington constituency for the Conservatives at the next election.
The district was held by the Conservatives for much of the 20th century, falling to Labour in 1997 as the Blair government came to power, and has changed hands between the two parties since. Matt Western retook it for Labour in 2017 with a majority of just 1,200 votes.
His pro-European views were reinforced by a previous life as a marketing manager for French carmaker Peugeot in places like Vienna and Paris. Bridging the division “is very hard because both sides of the debate are becoming quite entrenched in their view,” said Western. “I’m really alarmed about what’s going on in society,” he said.
To win the seat from Labour, Rankin, who voted for Brexit, will have to appeal to a strongly anti-Brexit electorate.
He said that his experience on voter doorsteps shows “the overwhelming majority are fundamentally democrats and just want to get on with it.” The divisions are not as deep as commonly presented, he said in an e-mail response to questions, and healing the Conservative rift “won’t happen until we deliver what we said we would.” He said the future is bright regardless of how Brexit plays out.
That may be wishful thinking. Jaguar Land Rover CEO Ralf Speth warned last year that a bad Brexit could put tens of thousands of jobs at risk. Warwick University’s Vice-Chancellor Stuart Croft has called Brexit a “disaster” and said that losing access to international research networks could shut the UK out of the science vanguard and risk jobs.
The warnings were not lost on Barry Archer, a maker of clay models used in car industry design who has worked across Europe, most recently for Skoda in the Czech Republic. He was at a “Stop the Coup” demonstration week before last in Coventry, the city whose outskirts include Warwick University’s leafy campus, to protest the proroguing of Parliament. Archer was among the 200 or so who showed up.
His latest job was canceled as a result of the uncertainty over Brexit. His two adult sons feel their future is being settled without their say, with freedom of movement set to go in the name of the “will of the people.” For Archer, Brexit is personal — his wife is German — but he still doesn’t see any chance to roll it back.
“The problem is it’s divided the country so much there’s going to be no easy way around it,” he said as an autumn wind blew in the city’s Friargate. “Damage to the foundation of who we are, what we are has been done. It’s just damage control now.”
Bernard Capp, an emeritus professor of history at Warwick, has seen the university’s development from its earliest days in the 1960s and still teaches a class on radicalism and the English Civil War. He sees parallels with the sort of polarization witnessed between 1640 and 1642, when the war broke out, and says that’s a cause for concern.
During the civil war, Coventry was a Parliamentarian center, known for its extensive medieval city walls. Capp related that Charles I arrived in late summer 1642 on his way to raise an army, and demanded entrance. The mayor of Coventry refused, the first real act of defiance before the fighting started.
“We should all be very wary because nobody wanted a civil war, nobody expected a civil war and look where that happened,” he said. Even at the war’s end, “no one thought there would be a revolution and the king would get his head chopped off, and yet that’s where it ended up,” he said.
“So no one knows what the final destination will be once you get into a constitutional crisis.”
MANILA, PHILIPPINES— As creativity and comfort go hand in hand, Commune Home Philippines launches the Rover, their newest addition to their growing furniture collection. True to their brand ethos, the Singaporean furniture design and lifestyle company officially unveiled the Rover last September 12, 2019 at the EDSA Shangri-La Plaza.
Established in 2011 in Singapore, Commune’s philosophy is deeply rooted in sustainability, coming from a belief that “no person nor environment should be compromised in providing quality furniture.” In line with this is yet another milestone as they reveal the Rover: an ensemble designed to take comfort to another level. Inspired by the adventures in the outdoors and environment appreciation, the Rover seeks to spruce up your home with its bold hues and warm tones.
“More than anything else, I take pride that our pieces are meant to be lived and experienced by our customers. You can go to the store, sit on our sofas, test our tables, and feel what Commune is all about,” says Gerry Alava, COO Commune Home Philippines. To when host ShamceySupsup-Lee asked what makes Commune Home different, Alava mentioned about it being sustainable and eco-friendly. “We want to be a part of the solution as we believe our furniture is like “art for the everyday”. Quality, well designed, artisanal and sustainable woodcraft.”
Agreeing with Alava, architect and former Miss Universe 3rd runner up, Shamcey,Supsup-Lee also emphasize, “Filipinos often feel guilty about owning wood furniture at home so we settle with alternatives. But it’s nice to know that Commune Home offers style, comfort, and value. Along with their furniture coming from ethically sourced materials. ”
During the event, guests were able to experience the new collection through the various vignettes displayed onsite, together with ShamceySupsup-Lee, Commune Home Philippines’ brand manager, Audrey Ngui, also shed more light on the new collection. “When you see Rover, it immediately takes you back to those trips outdoors, adventure with friends, and well-kept stories over bonfire nights,” says Audrey. “The rustic-modern collection,with its clean and dignified lines portraying a classic and stately feel is designed to be a glamourous reminder of the leisure class. The traditional, rich, dark and warm colour palette captures the flavour of owning a heritage, laidback country home.” adds Ngui.
The 4-day display ended last September 12, but for more exciting news, follow Commune Home PH on Facebook and @communehomeph on Instagram or visit Commune Home showroom located at 6th floor, East Wing, Shangri-La Plaza.
SURGING WORLD OIL PRICES after attacks last Saturday on Saudi Aramco’s processing facilities could ignite inflation risks for the short term, even as the pace of overall price increase should stay well within the official 2-4% full-year target due to base effects, a senior official of the Bangko Sentral ng Pilipinas (BSP) and private economists said on Tuesday.
“This development represents an upside risk to the inflation outlook,” BSP Deputy Governor Francisco G. Dakila, Jr. said in an e-mail, even as he emphasized that “based on preliminary projections by BSP staff, inflation is still likely to remain within target for 2019.”
“We will continue to monitor the situation for new developments and will update our forecasts accordingly as we get more information, especially as we prepare for the meeting of the Monetary Board on the monetary policy stance on Sept. 26… As always, our decision on the monetary policy stance will depend on how these and other developments will affect our outlook for inflation.”
Bloomberg on Sept. 16 quoted BSP Governor Benjamin E. Diokno as saying that the attack on Saudi Aramco facilities and its market aftermath will form part of briefings at the Sept. 26 monetary policy review.
The attack is estimated to have halved the production of Saudi Arabia, the world’s top oil producer — or by about 5.7 million barrels a day — and cut global output by a fifth.
World oil prices spiked on Monday, with Brent crude logging its biggest intraday jump in nearly 30 years, or since the 1990-1991 Gulf crisis over Iraq’s invasion of Kuwait.
Philippine headline inflation has been easing from 2018’s multi-year highs to clock in at a three-year-low 1.7% in August, which took the year-to-date pace to three percent — the midpoint of the central bank’s 2-4% target for 2019. Inflation last year had logged successive multi-year highs to peak at 6.7% in September and October. It hovered in six-percent territory from August to November, helping to fuel 2018 inflation to a decade-high 5.2%.
For Security Bank Corp. Chief Economist Robert Dan J. Roces, “The speed by which Saudi Aramco will be able to restore supply levels will prove to be very crucial in the short to mid term as this will provide scope as to when (oil production) levels will normalize.”
At the same time, he said in an e-mail, “We still think inflation will be within BSP targets and below or at 2.0% probably until November on the back of base effects” from last year.
Saying that “[m]uch will depend on how quickly Saudi Arabia will be able to get production back on line,” Alex Holmes, Asia Economist at Singapore-based Capital Economics, said also via e-mail that “It’s likely that overall inflation in the Philippines will probably bottom out slightly higher than we had anticipated for Q4.”
“But with other factors, such as tumbling food price inflation, driving the headline rate downward, we still expect it to be below two percent for the rest of the year.”
For Jiaxin Lu, economist at Singapore-based Continuum Economics, “Whether or not plant production gets moving again, the event will still pull off some upside risk to inflation…”
“Oil prices are likely to remain elevated given geopolitical tensions and reserves use. Energy components take up roughly eight percent of the overall CPI (Philippine consumer price index) basket, which consists of fuel for motor vehicles and electricity utilities for residences,” Ms. Lu said.
“If crude oil prices stay elevated, it is likely to drive fuel prices up further in the Philippines. We expect high pass-through to inflation, with inflation likely drifting higher to the mid-point of BSP’s target range in Q3 and Q4,” she added.
“However, a beyond target inflation still seems unlikely at this stage.”
Also in an e-mailed response to queries, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that as “electricity, gas and other fuels account for about 7.4% of the inflation basket, a potentially combined 15% share for inflation items are affected by higher oil/petroleum prices…”
“Despite some increase in global oil prices after the attacks on Saudi Arabia’s major oil production/export facilities, estimated inflation rate for the third and fourth quarter would continue to average below two percent, especially if the net increase in global crude oil prices would be limited to… a little over +US$10.”
UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion pointed out that the Philippines get 12% of its petroleum supply from Saudi Arabia, sourcing bulk of requirements from the United Arab Emirates.
“If and when the disrupted oil supply from Saudi Arabia normalizes, this oil infrastructure attack is deemed a short-term disruption and has temporary impact on price levels,” he said.
“With the recent Saudi incident and its expected temporary nature, inflation is still expected, for both [third and fourth] quarters, to come in between 1.8% and 2.5%.”
THE MEASURE that will lower the corporate income tax to 20% by 2029 from 30% currently and remove redundant fiscal incentives has chances of hurdling the Senate within this first regular session, as the chamber’s Ways and Means committee began deliberations on Tuesday.
The committee is also set to finish deliberations on the proposal to increase excise tax rates on alcohol products and e-cigarettes as part of the government’s comprehensive tax reform program.
“I’m about to wrap up hearings on (package) two-plus, which is the e-cigs and alcohol, patapos na ’yun. CITIRA (Corporate Income Tax and Incentive Rationalization Act) naman ang pa-umpisa ngayon,” Senator Pilar Juliana S. Cayetano told reporters on Tuesday.
The House of Representatives approved the corporate tax reform, House Bill No. 4157, on third and final reading on Sept. 13. Albay 2nd District Rep. Jose Ma. Clemente S. Salceda, chairman of the House ways and means committee, invoked Rule 10 Section 48 of House Rules, allowing swift approval of bills that secured third-reading approval in the 17th Congress that ended in June.
Ms. Cayetano said that deliberations in the Senate will take a bit longer. “Mga ilan pang (It will take a few more) hearing[s to approve the bill]. Hindi ‘to agad-agad matatapos (We cannot immediately approve it),” she said.
Asked on chances of being approved by the Senate within the first regular session, which closes on June 5 next year, Ms. Cayetano replied: “Oo naman, may pagasa (Definitely, there’s hope of that).”
The measure will grant incentives for five to 10 years to exporters and industries listed in the Strategic Investments Priority Plan. Such incentives include a three- to six-year income tax holiday depending on location, and a two-year extension for those investing in agribusiness, less developed areas or upon relocation outside Metro Manila and adjacent urban areas.
Aside from said measures, remaining tax reform packages include proposals for a unified framework for real property valuation and assessment, as well as a simplified tax structure for financial investment instruments, which President Rodrigo R. Duterte mentioned in his fourth State of the Nation Address last July 22.
Senate Majority Leader Juan Miguel F. Zubiri had proposed to extend the transition period for incentives to five to seven years from the two to five years under the House version and increase the rate of gross income earned (GIE) tax to seven percent from five percent.
“We raised this issue that we have to really find a sweet margin, sweet area among the numbers, which is acceptable to investors and at the same time also to government,” Mr. Zubiri told the committee.
E-CIGARETTES
Also on Tuesday, the Senate committee conducted a technical working group hearing on the proposed tax increase on e-cigarettes and other vapor products, during which the Action for Economic Reforms (AER) opposed proposals to impose taxes on e-cigarettes that will be lower than those on tobacco cigarettes.
The AER said graduated rates on vapor products that begins at P10 per 10 milliliter (ml), provided under Republic Act No. 11346 are “too low.”
The said law, enacted last July, will raise excise tax on tobacco products to P60 per pack by 2023 from P35 currently, which the industry said should be implemented first before further increasing tax rates.
“The rationale behind the P10 tax is that it is less harmful; so it sends a wrong signal because if you say it’s less harmful then why are there more kids using this, proportionally, compared to traditional tobacco. So we say its too low,” AER Program Officer Arjay Mercado said on Tuesday.
The AER said that one out of five e-cigarette users are below 20 years old and that young e-cigarette smokers are about three times more than young consumers of conventional cigarettes.
The AER also opposed an industry proposal to tax e-cigarettes at a rate lower than that of tobacco products on claims that e-cigarettes and other vapor products are a “healthier” substitute to tobacco products.
“We don’t agree that it should be lower in terms of tax, we say it should be equal or higher,” Mr. Mercado said.
“We see it as a perfect substitute for children, for the youth, it’s a perfect substitute in terms of the product being a starting point for these kids to start addiction.”
The AER also proposed to impose a hybrid taxation scheme on e-cigarette devices consisting of a combination of specific tax and ad valorem tax.
Senate Bill No. 987, authored by Senator Emmanuel D. Pacquiao, proposed to increase rates to P45 per pack of heated tobacco products and per milliliter of vapor products beginning in 2020. This will increase by P5 per year until it reaches P60 in 2023 and then by five percent every year thereafter.
The proposal will also impose a 20% excise tax on e-cigarette devices based on wholesale price or value of importation.
Moreover, the AER proposed that e-cigarettes and other vapor products be available only through medical prescription.
“If the intentions are clean then we think that the industry should agree to make this a cessation tool. It must have a doctor that can prescribe them so they can be guided.”
The government has also enacted Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Law, which slashed personal income tax and increased or added levies on several goods and services; and RA 11213, the Tax Amnesty Act, which grants estate tax amnesty and amnesty on delinquent accounts left unpaid even after being given final assessment.
ASIAN DEVELOPMENT BANK President Takehiko Nakao is relinquishing his post about two years ahead of schedule to give way to a successor “with fresh ideas and strong commitment to development,” the regional lender announced on Tuesday.
“I would like to inform staff and Board members that I have decided to resign as the President of Asian Development Bank, effective January 16, 2020,” Mr. Nakao said in a statement of intent of resignation posted on ADB’s Web site.
Mr. Nakao had first assumed his post as ADB president on April 28, 2013, succeeding Haruhiko Kuroda who stepped down in March that year and now serves as Bank of Japan governor.
Mr. Nakao was reelected on Nov. 24, 2016 to serve a fresh five-year term.
While his statement did not elaborate on the reason for his decision, Mr. Nakao said: “I feel this is a good time to ask someone with fresh ideas and strong commitment to development to succeed me.”
“I announce my resignation now so that the institution can have a smooth transition of presidential administrations,” Mr. Nakao said.
Mr. Nakao outlined achievements under his term, including:
• an increase in new lending and grant commitments to $22 billion last year from $14 billion in 2013 while incorporating more advanced technologies into projects;
• out of this total, increased private sector operations (lending, equity investment and guarantee to private companies) of $3.1 billion with enhanced system of risk management from $670 million;
• merger of Ordinary Capital Resources and concessional lending operation of the Asian Development Fund (ADF) which enabled expansion of operations;
• completion of ADF 12 replenishment to continue grant operations for the poorest countries;
• strengthening operations in social sector such as health and education;
• doubling ADB’s climate mitigation and adaptation finance in five years;
• using project, result-based and policy-based loans and grant programs to respond to difficulties of countries from external volatilities, natural disasters and displaced persons;
• increasing funding through local currency bonds and issuing thematic bonds such as green, gender and water;
• and launching the lender’s Strategy 2030 last year after a review of ADB priorities, including continued efforts to reduce poverty, and with clear targets for climate change, gender, private sector operations and co-financing.
At the same time, Mr. Nakao said, the region faces growing challenges like persistent poverty and a growing income gap, the need to support small island economies and other countries in fragile situations, achieving gender equality, mitigating and adapting to climate change, protecting the environment including oceans, addressing urbanization, coping with demographic change, ensuring food security, promoting rural development, and enhancing regional cooperation.
“The region is critical in achieving global agenda such as Sustainable Development Goals and the Paris agreement for climate change because its population already accounts for more than half of the total world’s population, and is expected to keep growing together with its size in economy,” he noted.
Mr. Nakao’s term has also seen the emergence of a parallel regional lender, the China-led Asian Infrastructure Investment Bank, which began operations in January 2016 and now counts 74 economies as members, besides 26 prospective members. While analysts had regarded this development as part of China’s growing geopolitical and economic assertiveness against the West, both institutions took pains in mid-2018 to characterize their relationship as being complementary rather than one of competition, with Asia needing about $1.7 trillion in annual infrastructure investment between 2016 and 2030.
Formed in 1966 with 31 initial members, ADB’s membership has grown to encompass 68 economies, including 19 outside Asia and the Pacific.
“ADB will continue to reinvent itself for responding to changing needs of our developing member countries and pursuing its mission to achieve a prosperous, inclusive, resilient and sustainable Asia and the Pacific,” Mr. Nakao said.
STATE OFFICES have continued to catch up with their spending programs as of August to make up for lost time last semester in the wake of late national budget enactment, the Department of Budget and Management (DBM) reported on Tuesday.
The DBM said utilization rate of national government Notice of Cash Allocation (NCA) — authority given by the department to disburse funds to cover state offices’ operations, projects and programs — improved to 92% in the eight months to August, corresponding to P1.802 trillion worth of NCAs out of the P1.961 trillion in NCAs issued for that period, from 86% a year ago.
Total NCAs used, though, were down P9.51 billion in the eight months to August from the past year’s P1.811 trillion (out of the P2.116 trillion NCAs released to national government offices).
The DBM reported in the middle of last month that NCA utilization rate clocked in at 93% in the seven months of July from 78% the past year.
DBM said line departments used P1.303 trillion out of the P1.457 trillion in NCAs released to them as of August, equivalent to an 89% year-to-date NCA utilization rate
The DBM said that a higher utilization rate means line agencies were able to “disburse their allocated funds and implement their programs and projects” on time.
In a note e-mailed to journalists, Security Bank Corp. Chief Economist Robert Dan J. Roces said state spending will act as a “coping mechanism” for the country in the face of escalating global tensions. “Government spending will prove critical as a form of coping mechanism if the Philippines wants to get by in the current unpredictable trade war environment,” Mr. Roces said.
Given “still tenuous” household consumption, government spending will “carry the heavier burden” in driving overall economic growth as global trade is currently “unreliable” due to the continuing tariff row between United States and China, he said.
“For now, household consumption is still tenuous at best, with spending also being pushed by remittances from our overseas workers who are exposed to any global economic slowdown. If we take a look at levels of household spending, the level for the first half of 2019 is still slightly below the high inflationary period of 2018,” he explained.
At the same time, he said that household consumption is already at a “recovery stage” amid easing inflation.
Headline inflation clocked in at a three-year-low 1.7% in August, sending the year-to-date pace back on target at three percent, at the midpoint of the government’s 2-4% target range for 2019. It had seen successive multi-year highs last year, peaking at a nine-year-high 6.7% in September and October.
Gross domestic product grew by a disappointing 5.5% in the first half, and will have to expand by at least 6.4% in this semester to hit the lower end of the government’s 6-7% full-year goal.
For Mr. Roces, however, even six percent growth this semester would be “increasingly challenging,” though doable, depending on the speed of project deliveries.
“Another interest rate cut by the central bank may also help charge growth for the rest of the year; but given the challenges, our revised GDP estimate is now 5.7% for full year 2019,” he said
The DBM has released 91.4% or P3.354 trillion of the P3.662-trillion 2019 budget as of end-August.
The government spent P1.93 trillion in the seven months to July, still 0.11% less the year-ago P1.932 trillion, while spending on infrastructure and other capital outlays were still down 11.6% year-on-year at P386.6 billion, still far from the government’s P1 trillion full-year program. — Beatrice M. Laforga
“More than anything else, I take pride that our pieces are meant to be lived and experienced by our customers. You can go to the store, sit on our sofas, test our tables, and feel what Commune is all about,” says Gerry Alava, COO Commune Home Philippines. To when host ShamceySupsup-Lee asked what makes Commune Home different, Alava mentioned about it being sustainable and eco-friendly. “We want to be a part of the solution as we believe our furniture is like “art for the everyday”. Quality, well designed, artisanal and sustainable woodcraft.”
During the event, guests were able to experience the new collection through the various vignettes displayed onsite, together with ShamceySupsup-Lee, Commune Home Philippines’ brand manager, Audrey Ngui, also shed more light on the new collection. “When you see Rover, it immediately takes you back to those trips outdoors, adventure with friends, and well-kept stories over bonfire nights,” says Audrey. “The rustic-modern collection,with its clean and dignified lines portraying a classic and stately feel is designed to be a glamourous reminder of the leisure class. The traditional, rich, dark and warm colour palette captures the flavour of owning a heritage, laidback country home.” adds Ngui.
