PhilHealth hopes to enroll remaining 2% of population without coverage by 2020

September 2, 2019 | 10:53 pm

THE Philippine Health Insurance Corp. (PhilHealth) hopes to enroll the remaining 2% of the population in its insurance scheme by the close of the first year of the Universal Health Care (UHC) Law in 2020, Health Secretary Francisco T. Duque III said.

In a statement, Mr. Duque said 100% coverage is expected to be achieved for state-owned PhilHealth’s National Health Insurance Program (NHIP).

“Right now, we are at 98% enrollment. We expect to achieve 100% enrolment by the end of the first year of UHC implementation,” he said.

The UHC Law requires all Filipinos to be members of PhilHealth.

Mr. Duque said he expects no delays in the rollout of the UHC Law, for which only 33 locations have been identified as initial operating areas of the UHC Integration Sites (UIS) Program.

“The UIS Program is not the be-all and end-all of the UHC Program. Though it is a critical step to address fragmentation in the health system, the UIS Program is only one of the many reforms. Let us not confuse or equate UIS with UHC. Non-selection of an area in the UIS for 2020 does not mean that UHC will not be implemented at all in a certain area next year,” he said.

The 33 areas initially identified for UIS are: Valenzuela, Parañaque, Dagupan City, Baguio, Benguet, Isabela, Nueva Vizcaya, Quirino, Bataan, Tarlac, Batangas, Quezon, Oriental Mindoro, Masbate, Sorsogon, Aklan, Antique, Guimaras, Iloilo, Cebu province, Biliran, Leyte, Samar, Zamboanga del Norte, Cagayan de Oro, Misamis Oriental, Compostela Valley, Davao del Norte, Sarangani, South Cotobato, Agusan del Sur, Agusan del Norte, and Maguindanao.

Last week, PhilHealth CEO Ricardo Morales estimated that it could take three to six years to fully implement the UHC Law, citing funding and manpower issues. Mr. Duque affirmed this and added that a gradual implementation will be more cost-effective and realistic as opposed to forcing the launch without being fully ready.

“We Have to remember that the transitory provisions of the UHC Act are clear when they provide for a six-year transition period for the integration of local provider networks into provincial and city health systems. We cannot demand the complete integration of over 100 provincial and city health systems overnight when the law clearly provides for a realistic six-year period to accomplish this,” Mr. Duque said. — Gillian M. Cortez

DoE backs FiT rate extension for small river hydro projects

September 2, 2019 | 10:53 pm

THE Energy department is supporting the extension of the feed-in tariff (FiT) rate for small hydroelectric power projects until developers have fully taken up all the capacity that the agency has offered for the renewable resource, an official handling the matter said.

“[For] run-of-river [hydro projects, it’s] until full subscription. So it will continue until ma-fully subscribe ’yung 250 [megawatts, MW] (until the 250-MW quota is fully subscribed),” said Mylene C. Capongcol, director of the Department of Energy’s (DoE) Renewable Energy Management Bureau (REMB), in an interview on Monday.

She said at least 100 MW had been taken up by developers who build small hydro projects, which usually have long gestation periods, or time used from project construction, commissioning and commercial operation.

Of the subscribed capacity, not all have secured approval from the Energy Regulatory Commission (ERC), Ms. Capongcol said.

“So we’re looking at an additional 100 MW,” she said.

Asked about whether the full subscription could extend beyond this year or stretch until next year, she said: “The mechanism is until it is fully subscribed.”

“Our bureau is preparing a communication with the [ERC] for the run-of-river [feed-in tariff],” she said.

Monalisa C. Dimalanta, chairman of the National Renewable Energy Board (NREB), earlier said that her office will seek the extension in a meeting with the DoE secretary.

“[For run-of-river, the] request will be to allow testing/commissioning and eligibility even after December 2019 as long as installation capacity is not yet fully subscribed,” she said in a text message.

She said the full subscription is expected in the second quarter of 2020. She said the request of NREB, a panel composed of members from the public and private sector, would cover a “degressed” rate for the renewable energy, which is currently being evaluated by the ERC.

Ms. Capongcol said the FiT rate to be given to the new small hydro projects would depend on the ERC. “It’s ERC’s option,” she said.

Aside from the small hydro FiT extension, NREB is also looking at requesting the DoE’s approval to accommodate the capacity that exceeded the 250-MW installation target for the resource.

“For biomass, request will be to allow capacity even beyond the installation target to be certified as long as commissioned by end-December 2019,” Mr. Dimalanta said.

However, Ms. Capongcol said the DoE has yet to decide on the biomass excess capacity.

“As of now, based on the guidance of the [DoE] Secretary [Alfonso G. Cusi], until 2019 na lang (only) because (the two-year extension) will be finished by 2019,” she said.

“Inaaral pa namin pero (We’re still studying the matter but) we’re not extending as of now the biomass [feed-in tariff]. But we may devise a mechanism on how we will be able to accommodate ’yung lumagpas (the projects that exceed the quota),” she added.

The FiT scheme was meant to encourage investment in renewable energy by granting the preferential rates until the capacity installation target of 250 MW each for small hydro and biomass is fully subscribed.

Under the previous extension, the board sought a rate of P5.8705 per kilowatt-hour (kWh) for small hydro projects and P6.5969 per kWh for biomass projects.

The requested rates were the degressed values from the July 27, 2012 feed-in tariff rates issued by the ERC, which set run-of-river hydropower at P5.90 per kWh and biomass at P6.63 per kWh. The implementation of the FiT system started on Jan. 1, 2015 and was supposed to remain in effect for two years, or until December 2017.

On Feb. 23, 2018, the DoE informed the ERC of its resolution extending the FiT for biomass and small hydro for another two years until Dec. 31, 2019, or upon successful commissioning of projects covering the remaining balance of their respective installation targets, whichever comes first.

The DoE recommended that the FiT to be granted should be the rate at the time of the successful commissioning of the projects. The ERC initiated its own review and re-adjustment of the FiT rules as prompted by the missed installation targets. — Victor V. Saulon

Gov’t debt rises 10.8% at end-July

September 2, 2019 | 10:52 pm

THE national government’s outstanding debt was P7.804 trillion at the end of July, up 10.8% year on year, according to the Bureau of the Treasury (BTr).

BTr said Monday that debt in the seven months to July fell 0.8% against the P7.869 trillion posted in the first half due to the appreciation of the peso and payments made on domestic debt.

“The National Government’s (NG) outstanding debt was recorded at P7,804.05 billion for end-July 2019, P64.58 billion or 0.8% lower than the previous month,” it said in a statement.

BTr said 67.3% or P5.251 trillion was owed to domestic creditors while 32.7% was provided by foreign creditors.

Domestic borrowing rose 14.1% year on year at the end of July, but fell 0.8% from a month earlier.

Government securities accounted for the majority of domestic debt at P5.25 trillion while the remainder consisted of loans entered into by various agencies as well as assumed loans.

External borrowing increased 4.5% year on year at the end of July but fell 0.8% from a month earlier.

As of July, the bulk of offshore borrowing consisted of dollar bonds worth the equivalent of P1.263 trillion, followed by peso global bonds totaling P129.679 billion and yen bonds worth the equivalent of P118.903 billion.

“For July, the lower external debt was due to the combined effect of local and third-currency fluctuations which reduced the value of foreign debt by P18.49 billion and P3.34 billion, respectively,” it said.

Meanwhile, total guaranteed obligations stood at P483.813 billion, 0.02% lower year on year.

Valenzuela City offers relief for unpaid property tax

September 2, 2019 | 10:51 pm

THE Valenzuela City government issued an ordinance offering relief for delinquent taxpayers, allowing them to settle property tax owed, including interest, from 2014 to the date of application.

According to Ordinance No. 586 issued by the city and published in a national newspaper, the city will also condone tax owed by property owners who avail of the relief for periods starting 2013 and earlier.

Excluded from the amnesty are “delinquent real properties which have been sold at public auction to satisfy the real property delinquencies, b) Real properties (that are the) subject of pending cases, c) real properties subject to expropriation by the City Government, and d) real property under compromise agreement pursuant to existing ordinances.”

It said taxpayers who avail of relief on or before Dec. 31 will be exempt from administrative or judicial action.

During the amnesty period, the city will not auction any property seized due to nonpayment of tax. — Marc Wyxzel C. dela Paz

House panel chair opposes 10-year ‘sunset period’ for incentives

September 2, 2019 | 10:51 pm

REP. JOSE MA. S. SALCEDA, the ways and means committee chair from Albay’s 2^nd district, said the Corporate Income Tax and Incentives Reform Act (CITIRA) will be rendered ineffective by the Department of Trade and Industry’s (DTI) proposal to implement a longer transition period for current fiscal incentives.

The DTI has said that it will push for a longer transition period, of up to 10 years for firms already availing of the incentives.

“The DTI position stands in the way of achieving (CITIRA’s goals). That is the ultimate priority of the House Committee on Ways and Means. If we extend the transition period for the 3,150 firms receiving incentives, we will have to delay the reduction in corporate income tax (CIT) for 1 million (small firms) for fiscal prudence,” Mr. Salceda said in a statement Monday.

The bill seeks to cut the current 30% corporate income tax rate — described as the highest in the region — by one percentage point every other year to 20% in 2029.

He said around 50% of the tax savings under CITIRA are expected to be reinvested in domestic trade, boosting economic growth in 2022-2029, generating as many as 1.56 million additional jobs.

The measure also aims to attract more foreign direct investment by bringing down the corporate income tax rate to parity or even lower than the prevailing rates in Southeast Asia.

“Reducing the corporate income tax rate is a national imperative. So is attaining A-minus credit rating by 2022. Hindi po puwedeng (We cannot) extend the sunset period and also lower the CIT at the same time. Luging-lugi po ang gobyerno at ang taumbayan. (The government and the people stand to lose a lot),” Mr. Salceda said.

The CITIRA bill is an offshoot of the bill formerly known as the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO). It was fast-tracked in the House under House Rule 10, Section 48, which allows expedited deliberations on legislation that reached third reading in the previous sitting of Congress.

CITIRA is now awaiting second reading.

Mr. Salceda said that he is pushing for the rationalization of incentives “to correct the current unfair system in which just over 3,000 companies registered with investment promotion agencies (IPAs) — a number of them on the elite list of Top 1,000 corporations — get to enjoy discounted income tax rates of 6 to 13% while many of the country’s micro, small and medium enterprises (MSMEs) that actually employ most of Filipino workers have to pay the standard CIT rate of 30%, which is the highest in the region.”

Perks now offered to economic zone locators consist of a four- to eight-year income tax holiday; a special tax rate of 5% on gross income after the tax holiday expires; tax- and duty-free importation of capital equipment, spare parts and supplies; exemption from wharfage dues as well as export tax, duty, impost and fees; and eased restrictions on employing foreign nationals.

The Finance department estimates that such incentives cost the government about P1.2 trillion between 2015 and 2017, P301.2 billion in 2015, P380.7 billion in 2016, and P441.1 billion in 2017.

The Philippine Economic Zone Authority (PEZA) — which last year had the second-biggest value of committed projects after the Board of Investments — accounted for P879.1 billion, or 78%, of the P1.2-trillion total. — Vince Angelo C. Ferreras

Here comes PIFITA

September 2, 2019 | 10:50 pm

The Passive Income and Financial Intermediary Taxation Act (PIFITA) or House Bill No. 304 hurdled the scrutiny of the House Ways and Means Committee a few days ago. If passed into law, PIFITA will amend certain provisions of the National Internal Revenue Code of 1997 (Tax Code) on the taxation of passive income and income of financial intermediaries. PIFITA will be the fourth package of the government’s comprehensive tax reform program.

According to the explanatory note of Representative Joey Salceda, the aim of the PIFITA is to make capital income taxes and financial intermediary taxes simpler, fairer, and more efficient. Representative Salceda added that the financial sector has a sizable contribution to the economy and it plays a crucial role in financing large-scale investment, including the Build, Build, Build (BBB) programs. The reforms proposed by House Bill No. 304 seek to address several deficiencies in the taxation of these financial sectors. These deficiencies include complicated tax structure, susceptibility to arbitrage, uneven playing field, inequitable distribution of tax burden, an uncompetitive tax system, and high administrative and compliance costs.

Let us take a look at certain reforms of the proposed PIFITA and evaluate if these changes will actually benefit target taxpayers.

* In the proposed bill, interest income shall be subject to a final tax rate of 15% from 20%. On the other hand, exemption from income tax of income derived by offshore banking units and income derived by a depositary bank under the expanded foreign currency deposit system were removed.

Royalties, prizes, and other winnings remain at 20%.

* Cash and/or property dividends received by an individual and nonresident foreign corporations are subject to a final tax of 15%. Tax treaty provisions will apply in appropriate cases. Intercorporate dividends between domestic corporations remain to be exempted.

An addition to those subject to dividend tax are the distribution of profits from collective investment schemes (CISs). Under House Bill No. 304, a CIS shall mean any arrangement whereby funds are solicited from the investing public and pooled together for the purpose of investing, reinvesting, and/or trading in securities or other assets or different classes as allowed under the law, which may either have a corporate (investment company) or contractual structure (unit investment trust fund or similar structures).

Branch profit remittance tax remains at 15 percent. However, exemption from branch profit remittance tax of Philippine Export Zone Authority (PEZA)-registered entities was removed.

* The tax rate of capital gains derived by nonresident corporations from sale, exchange, transfer, barter, and disposition of non-listed of shares of stock not traded in the stock exchange or organized marketplace is aligned to the capital gains derived by individuals and domestic corporations (included amendment from Package 1 or the Tax Reform for Acceleration and Inclusion Law) at 15%. A similar tax rate is imposed on gains derived from debt instruments and other securities not traded in the stock exchange or organized marketplace.

* Previously, the sale, exchange, barter, and disposition of shares of stock traded in the stock exchange or organized marketplace is subject to a stock transfer tax (STT) of 6/10 of 1% of the gross selling price or gross value in money. In recent rulings by the Bureau of Internal Revenue, STT is a transfer tax.

In the proposed bill, however, gain from the sale, exchange, barter and disposition will be is now treated as an income tax. The tax shall be based on the presumptive gain of such sale, exchange, barter, and disposition of the shares of stock. Moreover, PIFITA proposes a scheduled reduction of rate until 2024, diminishing 1/10 year-on-year. As proposed under House Bill No. 304, the tax rate shall be 1/10 of 1% of the gross selling price or gross value in money by 2024.

* A single rate of 5% gross receipts tax (GRT) shall be imposed for all financial intermediaries for income from interest, commissions, and discounts from lending activities, as well as income from financial leasing, royalties, rentals of property whether real or personal, profits from sale or exchange including gains derived from sale or transfer of real properties, net trading gains within the taxable year of foreign currency, debt instruments, and all other items treated as gross income under Section 32 of the Tax Code.

* House Bill No. 304 also removed the distinction on tax rate based on the length of maturity period of the instrument. Dividends and equity shares and net income of subsidiaries of such financial intermediaries remains at 0%.

Financial intermediaries include banks, non-banks performing quasi-banking functions, and other non-bank financial intermediaries.

* The bill proposes to reduce the premium tax rate of pre-need, life, and HMO insurance from 5% to 2%.

Nonlife insurance transactions are currently subject to value-added tax (VAT). Under PIFITA, a 5% premium tax rate shall be imposed on nonlife insurance transactions. Nonlife reinsurance companies, however, are still subject to VAT, except for the direct premium, which was already subjected to premium tax by the direct insurer.

PIFITA also provides that, in variable insurance contracts, the amount in excess of the insurance costs is not subject to premium tax, gross receipts tax, or VAT.

* Under PIFITA, the percentage tax imposed on shares of stock sold or exchanged through initial public offering was removed.

* There is also the rationalization of documentary stamp taxes. In Package 1 of the tax reform (TRAIN Law), the stamp tax on the original issuance of shares of stocks was increased. In PIFITA, it was proposed to be pegged at 0.75% of the par value, a slight decrease from the current rate of P2.00 per P200.00 of the par value. Surprisingly, the stamp tax on sales, agreements to sell, memoranda of sales, deliveries, or transfer of shares or certificates of stock was removed.

* The stamp tax on life and health insurance is still subject to a graduated rate; while the stamp tax on property insurance and fidelity bonds and other similar insurance policies will be reduced gradually until 2024 to 7.5% from 12.5%.

Are the above reforms good enough? The advantages of PIFITA outweigh probable disadvantages. Uniformity reduces the misapplication of tax rates. Simplification makes tax compliance easier. Finally, who would not want lower tax rates?

Changes in the PIFITA are expected, as it will still be reviewed and passed by both houses of Congress and the President. Our hopes are high that the final version of PIFITA brings us closer to a simpler, fairer, and more efficient tax system.

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

Eliezer P. Ambatali is a tax manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Shares drop as investors pocket gains from rally

September 2, 2019 | 9:00 pm

By Arra B. Francia, Senior Reporter

LOCAL EQUITIES dropped on the first trading day of September as investors went profit taking amid a lack of catalysts.

The 30-member Philippine Stock Exchange index (PSEi) retreated 0.76% or 61.13 points to close at 7,918.53 on Monday, while the broader all-shares index also fell 0.24% or 11.89 points to 4,797.59.

“The start of September ended lower than its end of August closing. Actually, this is expected since month-end window dressing and the rally for the past three days signalled investors to take profit,” Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan said in a text message.

“This shows that investors are still on risk-off sentiment, as evidenced also by lower than average value turnover of only P5 billion compared to P7-8-billion average turnover.”

Mr. Tan added that there was a lack of catalysts given uncertainties from the US-China trade war. The US imposed 15% additional tariffs on $300 billion worth of Chinese goods on Sunday, Sept. 1, in response to China’s move to impose more duties on $75 billion worth of American imports.

“Yesterday was the first day of September, meaning the 15% tariff on the Chinese goods kicked in. This is something consumers can expect to feel when buying everything from milk to diapers to some China-manufactured tech products like the Apple Watch,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile phone message on Monday.

Mining companies rallied, with the mining and oil counter soaring 11.51% or 949.95 points to 9,200.47. Nickel Asia Corp. was the most actively traded stock on Monday, jumping 50% to P4.11 each, while Global Ferronickel Holdings, Inc. also firmed up 14.29% to P1.68 each.

This came after Indonesia said it will start banning nickel ore exports, in an effort to produce its own resources at home. Nickel Asia said it may book windfall gains from the supply disruption that will keep nickel prices high.

Meanwhile, the five other sectoral indices moved to negative territory, led by financials which lost 1.61% or 29.66 points to 1,803.62. Industrials shed 0.84% or 93.92 points to 11,032.38; services slumped 0.61% or 9.93 points to 1,613.82; holding firms slipped 0.52% or 41.70 points to 7,881.16, while property was down 0.16% or 6.72 points to 3,991.28.

Foreign investors turned net sellers at P665.19 million, compared to Friday’s net buying figure of P409.13 million.

Turnover stood at P5.27 billion after some 1.95 billion issues switched hands, lower than the previous session’s P9.74 billion.

Advancers outpaced decliners, 110 to 94, while 43 names were unchanged.

US stock markets are closed on Monday for Labor Day.

Peso weakens as fresh round of US-China tariffs take effect

September 2, 2019 | 9:00 pm

THE PESO weakened on Monday as the United States and China kicked off a fresh round of tariffs and with the market expecting slower Philippine inflation in August.

The local unit closed at P52.105 against the greenback on Monday, down 5.5 centavos from its P52.05-to-a-dollar close on Friday.

The peso opened sharply weaker at P52.17 versus the dollar. It traded in a tight range, with its weakest point recorded at P52.19, while its intraday best was at P52.08 against the greenback.

Dollars traded on Monday climbed $1.24 billion from the $989.53 million recorded last Friday.

“The peso weakened as the imposition of new US tariffs on Chinese goods took effect yesterday despite the ongoing talks between the US and China, dimming near-term expectations of a bilateral trade agreement,” a trader said via email.

Meanwhile, another trader said the market could be monitoring demand for more dollars by the end of the month.

“If that’s the case, the dollar-peso [exchange] will move once again. We’re looking for fresh leads as to where dollar-peso will go. P52.10 is still a good support for now.”

The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday — including footwear, smart watches and flat-panel televisions — as China began imposing new duties on US crude, the latest escalation in a bruising trade war.

US President Donald Trump said the sides would still meet for talks later this month.

Mr. Trump, writing on Twitter, said his goal was to reduce US reliance on China and he again urged American companies to find alternate suppliers outside China.

A new round of tariffs took effect from 0401 GMT (12:01 a.m. EDT), with Beijing’s levy of 5% on US crude marking the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.

The Trump administration on Sunday began collecting 15% tariffs on more than $125 billion in Chinese imports, including smart speakers, Bluetooth headphones and clothing.

A variety of studies suggest the tariffs will cost US households up to $1,000 a year and the latest round will hit a significant number of US consumer goods.

In retaliation, China started to impose additional tariffs on some of the US goods on a $75 billion target list. Beijing did not specify the value of the goods that face higher tariffs from Sunday.

The extra tariffs of 5% and 10% were levied on 1,717 items of a total of 5,078 products originating from the United States. Beijing will start collecting additional tariffs on the rest from Dec. 15.

Meanwhile, in an e-mail to reporters last Friday, the Bangko Sentral ng Pilipinas’ Department of Economic Research said it expects inflation in August to settle within the 1.3-2.1% range due to lower fuel, rice, and power prices. This compares to the 2.4% inflation rate logged in July and 6.4% in August last year.

A BusinessWorld poll of 12 economists late last week yielded a median inflation estimate of 1.8% for August.

The Philippine Statistics Authority will release official inflation data on Thursday.

For today, traders said the peso may continue to slip ahead of the release on US manufacturing purchasing managers’ index (PMI) data.

“The local currency might weaken further from safe-haven demand ahead of the US manufacturing PMIs tomorrow following the release of weak Chinese manufacturing reports,” the first trader said on Monday.

The first trader expects the peso to play at around P52.00 to P52.20 against the dollar today, while the second trader sees it moving within the P52.00-P52.30 band. — Luz Wendy T. Noble with Reuters

The politics of ‘no-war’ options vis-a-vis China

September 2, 2019 | 8:59 pm

In view of the Chinese maritime militia’s ramming of a Filipino vessel in Recto Bank on June 9, Supreme Court Senior Associate Justice Antonio Carpio proposed a number of “no war” techniques for pursuing the Philippines’ arbitral victory against China. One of the strategies would enjoin us together with Vietnam, Malaysia, Indonesia, and Brunei, to enter into a convention that would collectively voice support for the ruling against China’s dashed lines. Accordingly, this convention will “leave China isolated as the only disputant state claiming EEZs from the Spratly islands.” All but Indonesia have laid a claim in the South China Sea.

The timeliness of this proposal today cannot be over-emphasized given the most recent ASEAN talks on the Code of Conduct (CoC) that ASEAN members states want in place in order to govern the use of and manage the disputes in the South China Sea. The CoC has yet to materialize since a framework was adopted in 2017 and a Single Draft was forged in 2018. Asymmetry in the preferences of ASEAN actors and China’s inherent leverage in the talks contribute to the continuing presence of blind spots to date: the lack of a well-defined geographical scope of the South China Sea, which should be central in the negotiations and which, when addressed, should include the disputed islands; the lack of agreement on the nature of the dispute settlement mechanism (i.e. to adopt either multilateral or bilateral means of settling disputes); and, a lack of conclusiveness as to the binding nature of the future code.

Are these developments a foreshadowing of the inherent weakness of the proposed no war strategy?

Among the ASEAN member states, the sub-regional or mini lateral approach is a pragmatic route for like-minded states to build a consensus over issues that directly affect them. In the maritime domain, the Trilateral Cooperative Agreement, signed and entered into by the Philippines, Indonesia, and Malaysia in June 2016, formalizes the coordinated maritime patrols among these states that share common maritime borders in the Sulu-Sulawesi waters. In 2017, the terror attack in Marawi City in Mindanao also served as the major driver for the “triborder” states to join efforts to coordinate their aerial and naval patrols and the monitoring of their border-crossing stations.

Certain ingredients of that trilateral arrangement do not coincide with the elements of the proposed sub-regional convention: the existence of a common threat perception among actors, the non-traditional and non-controversial security-framing of threat, and the functionality of the solution being proposed.

To elaborate on the how these do not apply to the actors of the proposed convention, one must examine actors’ domestic preferences in dealing with China in the new cold war context of the South China Sea.

With the exception of Vietnam, which is vocal against China,and the Philippines, which under President Rodrigo Duterte, has adopted a policy of China’s appeasement, the rest of the above mentioned ASEAN member states — Malaysia, Indonesia and Brunei — have implemented varying strategies to balance off China’s power in the region.

While recognizing the threat of China, domestic economic considerations have driven Indonesian President Joko “Jokowi” Widodo and Malaysian Prime Minister Mahathir Mohamad to recalibrate their response to China’s aggression by recasting the threat it poses. Jokowi, for one, has extended his war against illegal, unreported, and unregulated fishing (IUU) to include Chinese fishing vessels as one of the targets. Sinking fishing boats engaged in IUU, according to reports, is presented as a civilian policy of “deterrence” against IUU and not as a politico-security policy of “retaliation” against China’s encroachment in Indonesian waters. On the other hand, Mahathir’s “no gunboats policy” in the South China Sea, which seeks to focus on piracy as the region’s foremost security threat, is a de-securitizing act to manage China’s increasing intrusions. Jokowi’s “go it alone” policy in the South China Sea and Mahathir’s policy of recalibrated distance from the great powers set the trend against an exclusive/sub-regional action against China. Brunei is no exception to these trends.

These are the reasons why the proposed no war sub-regional strategy to directly pressure China to enforce the arbitral ruling is lacking real political feasibility.

Alma Maria O. Salvador, PhD is an Assistant Professor of Political Science of Ateneo de Manila University.

The making of a Politician

September 2, 2019 | 8:59 pm

On the night of July 13, 1966 a jobless merchant seaman, after having consumed several drinks, entered a student nurses’ home in the southeast side of Chicago. Armed with a revolver and a switchblade, he demanded money from the residents. Terrified, the nurses obliged. Drunk, he lingered in the house for an hour. Then he decided to kill the nurses. He led the women in singles or pairs to other rooms where he stabbed or strangled them.

During the times he was out of the room, one nurse slithered under a bunkbed. After brutally killing eight women, including two Filipinas, the intruder walked out of the house, forgetting that he had come upon nine residents that night.

After a massive manhunt, Richard Speck was captured. At the trial in April of 1967, the lone survivor, Filipina nurse Corazon Amurao, gave 133 pages of testimony, leading to the conviction of Speck.

Corazon eventually returned to the Philippines as the celebrity who survived the Crime of the Century. (That is the title of the book about the macabre massacre.) Corazon felt that having lived to tell the story qualified her for public office. The people of Bataan thought so, too. They elected her member of the board of the province.

That has been the story of the electoral process in the Philippines. Fame, whether gained as a movie star, basketball player, prizefighter, failed coup plotter, TV news reader, teller of toilet jokes, next of kin of a national figure, or as a mere witness or survivor of a horrible event, has been the main qualification for election to the provincial board, city council, and Congress. “Da King of Movies,” who did not have the academic grounding nor the least bit of experience in governance, almost made it to the presidency.

In the early afternoon of Aug. 13, a 28-year-old mall goer was about to enter the women’s restroom in the Farmer’s Market mall in Cubao, Quezon City when the janitress blocked the woman from entering the toilet. The woman initially walked away but went back to the janitress and asked her to repeat what she had said earlier, taking a video of the encounter with her phone’s camera.

That the woman was recording the confrontation angered the janitress, who dragged her across the mall to a dilapidated office where she was detained, cuffed, and shamed by the mall staff. Not getting any explanation from any of them for her detention, she told them she wanted to talk to the police.

The woman was brought from the mall to the Cubao police station. Police officers then brought her to the Quirino Memorial Medical Center for medical test. From there she was transferred to the Quezon City Police District’s Anti-Cybercrime Division in Camp Karingal. She was eventually brought back to the Cubao station. The officers could not decide what charges to file against her.

The woman walked free hours after her arrest, at around 11:30 p.m., after the janitress decided to drop her complaint. The janitress, in a written letter to Gretchen Diez, apologized and said she was “willing to learn LGBT rights.”

Her arrest drew immediate mass media attention and became the topic of many social media conversations. Her recent schedule was filled with a series of appearances on TV talk shows.

Politicians and entertainment celebrities were quick to rally behind her. Officials of Quezon City, where there is an anti-discrimination ordinance, asked why the untoward incident happened at all. The Senate conducted an investigation in aid of legislation — the passage of the SOGIE (sexual orientation and gender identity and expression) Equality Bill. Bataan 1^st District Rep. Geraldine Roman, the first transgender member of the House of Representatives, brought her to Malacañang for an audience with President Rodrigo Duterte. Senator Bong Go said that the government is planning to organize a national LGBTQ+ convention for its members to raise their concerns.

Suddenly, Gretchen Diez, who just needed to pee, became the new face of the LGBTQ+ movement in the Philippines. She vowed to “pursue legal action” to make sure that what happened to her does not happen to any trans woman in any part of the country.

Some Filipinos have questioned her motives, branding her making a big issue out of the honest mistake of a janitress who was clueless about LGBTQ+ rights as political opportunism. Well, given the political process in the Philippines where fame, no matter how gained, qualifies one for public office, the emergence of Gretchen Diez as a politician may not be far in the future. In fact, she had expressed her willingness to run for public office. She has told mainstream media that she is willing to maximize all of the power she has to fight for the cause of the LGBTQ+ community even if takes running for office.

Fame earned in some mundane calling like in show business, sports world, and broadcast journalism brought Joseph Estrada and son Jinggoy, Ramon Revilla, son Bong, and son-in-law Robert Jaworski, Freddie Webb, Tito Sotto, Lito Lapid, Manny Pacquiao, Noli de Castro, and Loren Legarda to the Senate. Loy Ejercito, Ralph Recto, Francis Pangilinan, Grace Poe, JV Ejercito, and Nancy Binay were carried by the fame of their spouse or father to that once august hall where statesmen ruled.

So why begrudge the political aspirations of a transgendered person just because she became famous for wanting to pee in a toilet apropos to her orientation? After all, Bong Go was catapulted to the Senate simply by being the personal aide of the President.

Oscar P. Lagman, Jr. is a retired corporate executive, business consultant, and management professor. He has been a politicized citizen since his college days in the late 1950s.

FIRe, Innovation and rising income

September 2, 2019 | 8:57 pm

Next week, on Sept. 9, the BusinessWorld Industry 4.0 Summit with the theme “Winning Together in the Fourth Industrial Revolution” (FIRe) will be held at the Shangri-La at The Fort, BGC, Taguig City. This big event is a partnership of BusinessWorld, the Department of Information and Communications Technology (DICT), and the Philippine Chamber of Telecommunications Operators (PCTO).

The main speakers will be DICT Secretary Gregorio Honasan II, Senator Grace Poe, Anthony Oundjian of Boston Consulting Group, and Dr. Jose Ramon Albert of the Philippine Institute for Development Studies.

FIRe is the most recent of the technological revolutions that modern humans have invented. I searched for the approximate timeline, here is what I got. Others will have slightly different years but the period will not be far from what I have stated in Table 1.

Taking this timeline, I am curious how major economies and ASEAN countries have developed since the First Industrial Revolution, at least from 1800. I found data from the University of Groningen, Groningen and Growth Development Center (GGDC) – the Maddison Project Database, version 2018. Bolt, Jutta, Robert Inklaar, Herman de Jong and Jan Luiten van Zanden (2018), “Rebasing ‘Maddison’: new income comparisons and the shape of long-run economic development,” Maddison Project Working Paper, nr. 10, www.ggdc.net/maddison. (See Table 2.)

Here are some important points to consider from the data in Table 2:

• One, growth and income from the First to Second Industrial Revolutions was modest, per capita income of the United States of America and the United Kingdom expanded only two to three times after 100 years.

• Two, incomes from the Second to Third Industrial Revolutions have expanded by 1.5 to 2.5 times after 50 years. Since ASEAN countries have no data in 1900 except for Singapore, we use 1913 as the region’s Second Industrial Revolution income baseline. For the region, there was a decline or a modest increase in income from 2013-1950, that is after World War II.

• Three, the recurring belief that the “Philippines was the second strongest Asian economy after Japan after World War II” is a myth, not true. In the ASEAN alone, Malaysia and Singapore had per capita incomes nearly two times that of the Philippines.

• Four, the Third Industrial Revolution ushered fast growth in wealth worldwide, with incomes expanding by 1.5 to four times (Singapore) and eight times (Japan) in just 30 years between 1950-1980.

• Five, the Fourth Industrial Revolution (FIRe) was even more expansionary in terms of the material wealth and prosperity of people. Incomes have increased two to six times (Vietnam), and seven times (Singapore) from 1980 to 2016. The Filipinos’ incomes expanded only more than two times during that period. Marcos’ Martial Law’s repression of the economy, and huge natural disasters (the Pinatubo eruption in 1990, the big earthquake in 1991) contributed to this sad story.

We have entered the beginning of FIRe, where smart mobile phones have become affordable to billions of people and they have more access to internet, where drones take aerial photos and videos much better, where robots and modern machines are used more in manufacturing, commerce, and restaurants.

It is also in FIRe period where intellectual property rights (IPR) are becoming more and more prominent. Innovation is the keyword that is almost interchangeable with modern IR and innovation cannot happen fast if innovators’ patent and trade secrets of their inventions, trademarks and brands of their companies, copyrights to their compositions, are not respected and protected.

On Sept. 24, strong advocates of private property and market competition, the Geneva Network (UK) and the Minimal Government Thinkers (MGT, Manila) will launch a new report, “The importance of IPR for progress: A reform agenda for ASEAN countries” at the Holiday Inn Makati. Speakers will be DTI Secretary Ramon Lopez, Philippine Chamber of Commerce’s IPR Committee Chair Jess Varela, Geneva Network Executive Director Philip Stevens, and yours truly for MGT.

IPR protection ensures more innovation, which fuels endless modernization and disruption under FIRe. Humanity’s material prosperity is further ensured. More people, rich and poor, will ride cars, motorcycles, e-bikes and they will ride horses and bicycles only for leisure and sports. This is the positive impact of continuing IR and innovation, enabled by private property protection and market competition.

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Thought leaders ponder the future of business and why sustainability matters

September 2, 2019 | 8:55 pm

Tough choices, turbulent world — these are the challenges that today’s CEOs face. Globalization 4.0 is changing the business equation such that now they have to aim for sustainability with the same vigor they put into pursuing profitability targets. As discontent with the old order continues to escalate because of perceived global imbalance, people are turning to businesses to help solve society’s problems.

The 2019 Management Association of the Philippines (MAP) CEO Conference boldly brings this discussion in a forum that will tackle the future of business and how business leaders can navigate the pressure points in this emerging world order. Thought leaders will provide insights that can help expand the arsenal of strategies and options as they face the future.

With climate change and sustainability becoming two of the world’s most serious challenges, businesses have to review the way they operate alongside governments and communities to address the triple bottom line — profits, people, planet. Keynote speaker Henry K.H. Wang (President, Gate International) will speak on “Business Sustainability Impacts and Future Developments,” sharing his extensive knowledge on energy and sustainable business.

A figure in the international speaking circuit, Mr. Wang has published over 100 papers and speeches plus several books on climate change and renewable energy, and holds international patents on new process inventions.

Author and innovation strategy consultant Deepa Prahalad will explore the profound changes that are moving the needle to close the gap between the haves and the have-nots. With the business environment continuously in a state of flux, it’s time to realize “The New Fortune at the Bottom of the Pyramid.” Ms. Pralahad’s book, Predictable Magic: Unleash the Power of Design Strategy to Transform Your Business, was selected by Fast Company as one of the Best Design Books of the Year. She will share her thoughts about emerging markets and innovation.

Businesses cannot operate in a vacuum and they have to pay attention to their stakeholders — regulators, investors, employees, governments and NGOs alike. Companies are now expected to disclose their sustainability efforts and performance, yet many still have to define the linkage between what they do and the value these create for their businesses and stakeholders. Sustainability is more than just a compliance requirement, it is poised to become a core business agenda. In “How Sustainability Practices Impact Shareholder Value,” Andrew WK Chan (Sustainability & Climate Change Leader, PWC South East Asian Consulting Services, Malaysia) will share the insights gained from PWC’s research, especially on the factors that will establish the link between sustainability performance and value creation.

All these raging issues cannot just be plain talk. Social entrepreneurs are showing through their initiatives that development can be a major undertaking that can combine doing well by doing good. These pioneers will take the spotlight in the panel discussion on “Doing the Unthinkable,” where a new breed of entrepreneurs will share their experiences in building enterprises anchored on engagement with their communities.

Four Filipino social entrepreneurs who are slowly changing the world will discuss their philosophies and how they animate what they do. Jeannie Javelosa, founder of Echostore and of Gender-Responsive Economic Actions for the Transformation of Women (GREAT Women), is an advocate for culture and sustainable development, providing opportunities for underprivileged women in the Philippines and in Southeast Asia and helping them establish their own micro-enterprises and gain access to global markets. Illac Diaz, founded Liter of Light, which has helped thousands rise from energy poverty through a clever and environment-friendly lighting concept using recycled plastic bottles to avoid relying on traditional and centralized energy providers such as coal, nuclear or hydro plants. Mr. Diaz works to empower communities in the Philippines and around the world through several pioneering programs in rammed earth, bamboo, and PET plastic bottle construction. Georgianna Carlos, who made it to Forbes’ 30 Under 30 Asia 2019 list, is the Co-Founder and CEO of Fetch! Naturals — a premium pet care brand that uses only natural ingredients such as neem or jicama. Bro. George Maria will talk about “Yamang Bukid,” a successful agri-farm endeavor that shares the harvest of the enterprise with the employees and staff whom they consider partners in their initiatives.

The future of business places people front and center. Today’s competitiveness will hinge in a large measure on the ability of organizations to leverage their human capital. “How Top Tier Companies Across the Globe Create Organizational Excellence” highlights human capital development as key to outstanding results, particularly the actions that produce the most significant increases in energy, performance and relationships. Deanna Murphy (founder and CEO, People Acuity), author of the book Shift Up! Strengths Strategies for Optimal Living, will talk about people acuity — clearly seeing and effectively optimizing people in a people-focused human economy. She will be joined by psychologist, coach, and adventurer Steve Jeffs (Chief Innovation Officer, People Acuity), who translates his passion for extreme sports and environments into results. He focuses on helping people to achieve what was previously impossible.

Clearly, the 2019 MAP Conference is where we expect ideas to trigger innovation and action by providing Filipino business leaders with the spark and inspiration to begin the process of reinventing themselves, at least for those who intend to sustain their operation now and in the future.

Mark this not-to-be-missed Conference in your calendar: Sept. 10 at the Makati Shangri-La. This is spearheaded by the MAP and BusinessWorld, along with knowledge partner PwC/ Isla Lipana & Co.

Platinum sponsors include Ayala, Shell, BDO, SM Investments and Sun Life Financial. Diamond sponsors are EON and FranklinCovey. Gold sponsors are Divina Law and Navarro Amper & Co./Deloitte Philippines. Silver sponsors are BPI, Development Dimensions International (DDI) Philippines, Digital Out of Home, Inc., Maynilad, Meralco, NOAH Business Applications, SGV and Unionbank. Bronze sponsors are Air21, BDB Law wts, FPH, FWD, Gardenia, Grand Hyatt, Healthway Medical, IP Converge, Megawide, MPTC, NLEX, P&A Grant Thornton, Philippine Coffee Board, PLDT, RSM (Reyes Tacandong & Co.), STRADCOM, Teleperformance and The Bellevue Manila.

Print Media Partners are the Philippine Daily Inquirer, The Daily Tribune, The Manila Times, and The Philippine Star. Broadcast Media Partner is ANC. Makati Shangri-La is the Hotel Partner. The Conference will be livestreamed by BIPStream.

Junie S. del Mundo is the Chair of the MAP CEO Conference Committee and the CEO of The EON Group, a fully-integrated communications agency.

map@map.org.ph

junie.delmundo@eon.com.ph

http://map.org.ph

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