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Single-use trade


THE QUEZON City Environmental Protection and Waste Management Department (EPWMD) launched last Aug. 31 the trading of single-use PET (polyethylene terephthalate) bottles for reusable water containers, which will be undertaken every Friday at the QC Hall material recovery facility. A reusable bottle will be given for every one kilo of PET bottles. EPWMD head Frederika C. Rentoy thanked local government employees who were the main participants during the launch, where 152 kilos of PET bottles were collected.

Socialized housing developers in talks with Mandaue, others LGUs for partnerships

THE ORGANIZATION of Socialized and Economic Housing Developers of the Philippines Inc., (OSHDP) is now in talks with at least 15 local government units (LGUs) for partnerships on building low-cost housing projects. OSHDP President Marcelino C. Mendoza, in an interview, said the proposed collaborations are intended to help cities and municipalities build capabilities in providing affordable decent houses for the low-income segment. Among these LGUs is Mandaue City, which has a P1 billion budget for socialized housing. Mandaue City Mayor Gabriel Luis “Luigi” R. Quisumbing said only P230 million has so far been utilized due to lack of available land for housing sites. The city recently broke ground for a multi-storey housing project. Mr. Mendoza said OSHDP is reaching out to more LGUs to fast-track the development of mass housing around the country. — The Freeman
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MinDA: Federalism to foster more culture-responsive economies

THE MINDANAO Development Authority (MinDA) is advocating federalism, saying this form of government would foster localized economic policies that are more culturally responsive. Citing the recent rice shortage in the Zamboanga-Basilan-Sulu-Tawi-Tawi (ZamBaSulTa), Dr. Adrian M. Tamayo, MinDA’s public relations head, said the supply crisis should be assessed and understood within the context of the geographic and historical backgrounds of the area. “What happened is there’s already the cultural system of barter economy that occurs in Zamboanga, Basilan, Sulu, and Tawi tawi. Some others call this as backdoor. But in the course of time, it is actually a cultural economic set up,” he said at the Habi at Kape media forum last week. Mr. Tamayo also pointed out that the centralized set-up of the National Food Authority as well as logisitical considerations slow down supply distribution. “Given the legal and the rest of the instruments mentioned coming from the top, all of those regular economic activities were hampered because the decisions again were consistent with a centralized set-up. But where are the cultural context of the economic activity.? These were not understood and addressed and so therefore federalism will provide a leeway how to make these things — the culture, economic, political, structure, and even internal security — be addressed, he said. — Maya M. Padillo

Davao mayor acknowledges rape cases, says intervention program has been in place

DAVAO CITY Mayor Sara Duterte-Carpio has acknowledged that the city has the highest number of rape cases among major cities in the country, but stressed that the local government and partner agencies have been implementing an intervention program to address the problem. “This fact has been taken up in the Davao City Peace and Order Council in 2017, where it was discovered that many of these cases were incestuous rape or rape by someone who has a close relationship with the victim such as a neighbor or a friend,” Ms. Carpio said in a statement over the weekend. The Davao City Social Services and Development Office (CSSDO) was tasked to conduct research and lead the implementation of programs. “One of these interventions, and the most effective of which, targeted communities where children are taught about sexuality and sexual abuse, including when a touch by a family member is no longer appropriate and acceptable,” she said. Davao City Police Director Alexander C. Tagum said “the CSSDO-led interventions resulted in a significant drop in the incidence of rape cases from 120 in 2017 to 95 in 2018, both in the same period of January to June.” Ms. Carpio, daughter of the President, said this positive effect of local government action “should not be lost in the repertoire of the President and the attacks by those who hate President Rodrigo R. Duterte’s guts and humor.” — Carmencita A. Carillo

Nation at a Glance — (09/03/18)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Davao mining-free zone bill hurdles House on 3rd reading

A BILL declaring Davao City a mining-free zone passed unanimously on third and final reading at the House of Representatives.
Voting 204-0-0, the chamber approved House Bill 7871, prohibiting all forms of mining in the city, both large-scale and small-scale.
If enacted, the measure means Republic Act 7942, or the Philippine Mining Act of 1995, and RA 7076, the People’s Small-scale Mining Act of 1991, among other related laws, will no longer apply within the city.
Small-scale mining contracts, will be cancelled upon effectivity of the law and the contractors will be given just one year to undertake rehabilitation, regeneration and reforestation of the mining areas.
The government will also be banned from entering into new agreements allowing exploration; but existing mining contracts and permits will continue until they expire.
Dormant exploration permits will also be cancelled.
Under the measure, quarry permits will continue to be recognized, while quarry permits issued by local governments will be subject to review by the Department of Environment and Natural Resources (DENR).
“The DENR shall impose strict regulations in ensuring that not more than one quarry permit is granted to the same person, corporation, its affiliates, subsidiary or any entity that has essentially the same legal personality as the applicant or holder of an existing quarry permit in the City,” according to the measure.
Penalties for offenses range between P1 million and P10 million and 6-12 years’ imprisonment. For juridical entities, the penalties apply to the highest ranking official and the members of the board that authorized the violation.
The bill was authored by Representatives Alberto T. Ungab, Mylene J. Garcia-Albano, Jose Antonio R. Sy-Alvarado and Arnel U. Ty. — Charmaine A. Tadalan

LNG law being drafted ahead of Malampaya supply crunch

By Victor V. Saulon, Sub-Editor
THE Energy department and the Senate energy committee will draft a law covering the natural gas industry in preparation for a “critical” period next year when an integrated liquefied natural gas (LNG) facility should have started construction in preparation for the depletion of the country’s sole domestic source of the fossil fuel.
However, the Senate panel continues to have doubts about a provision that will allow the Department of Energy (DoE) to step in and initiate the project. For its part, the DoE has yet to agree to a counter-proposal that calls for it to formulate an energy mix that favors natural gas.
“We’ve been working closely with Senator [Sherwin T.] Gatchalian, the chairman of the [Senate] Committee on Energy. We’re currently talking about advocating the passage of a natural gas law wherein some of the salient points would be to address those concerns regarding the construction or the establishment of an LNG regas[ification] facility in the interim,” Leonido J. Pulido III, assistant secretary at the DoE, told reporters.
Separately, Mr. Gatchalian confirmed that his office is in the process of working with the DoE on a comprehensive LNG law, which will become “the ultimate framework of the LNG industry.”
“We want to make sure that the future of LNG will be viable and sustainable. We will have a framework to regulate the importation of LNG, the terminal activities of LNG, and also the liquefaction of LNG,” he said.
Imported natural gas is liquefied for ease of shipping, then regasified or reverted to its former state in the country of destination.
“Most of this is midstream,” he said, referring to the importation and trading section of the LNG value chain. He said the downstream or the exploration part will be discussed later.
Mr. Gatchalian said his counter-proposal to the DoE’s stand to undertake the project is to strengthen the DoE’s power to dictate the energy mix, which the industry must follow.
“Now, the market will be dictated and guided by the energy mix so instead of government spending taxpayers’ money on the project, you are actually creating space for the investors to come in,” he said.
He previously expressed doubts about the government, in general, entering in a business venture given past instances of corporate mismanagement and inefficiency.
Mr. Gatchalian said when the government enters a business and spends money for it, the risks are high, especially if it fails to make money or worse, if it loses taxpayers money.
“Hopefully, within six months the framework will be completed. It will take time,” Mr. Gatchalian said.
Mr. Pulido said about 13 companies have signified their intention to build an integrated LNG facility but none has so far submitted a formal proposal.
He said the biggest challenge is the size of the investment required to fund the project — around $300 million to $400 million if the facility is a floating storage regasification unit, or FSRU, and about $1 billion if it is onshore.
However, lenders will need assurance that the imported fuel will have a ready market, he said. Five gas-fired power plants in Batangas province, with a combined capacity of 3,211 megawatts, are the main customers of the Malampaya gas find. The offshore Palawan project is expected to be depleted by 2022 to 2024.
The five plants sell their power to Manila Electric Co. under different power supply agreements, one of which has already expired. The rest will lapse in 2022, 2024 and 2027, Mr. Pulido said.
He said lenders would want to see off-take agreements that are valid for 15 to 20 years.
“It is such an issue. We need to fix that as early as now so that these investors can get the financing they need,” he said.
He said a provision that would allow the DoE to come in and nominate one of its commercial arms to undertake the project either under a public-private partnership or a build-operate transfer scheme would ensure the continuity of the LNG facility.
“We think that the critical period would be middle to late 2019,” he said, given the length of time to build the facility.

ADB approves Malolos-Clark rail assistance package

THE ASIAN DEVELOPMENT Bank (ADB) has approved a $2-million technical assistance grant for the 51-kilometer Malolos-Clark railway.
The ADB approved the Railway Project Implementation Support and Institutional Strengthening project on Aug. 22, drawn from the Japan Fund for Poverty Reduction, according to ADB documents.
The grant seeks to “help the government to prepare project implementation and project management, establish the institutional structure as required under the policy framework for the future railway sector in the Philippines and develop the capacity to manage operation and maintain the ensuing project.”
This includes consulting services to support the Department of Transportation (DoTr) in land acquisition, resettlement and livelihood skills development activities for persons affected by the project; consulting services to support procurement activities; consulting services to develop and implement a public communication strategy with project affected persons; consulting services to develop and implement gender mainstreaming activities under the gender action plan; and other support by consultants and training as required to accelerate project implementation.
The Philippine National Railway (PNR) North 2 Malolos-Clark railway is among the government’s flagship infrastructure projects to decongest Manila, which will link Malolos, Bulacan to Clark International Airport and Clark Green City.
According to the National Economic and Development Authority (NEDA), the project will cost P211.43 billion, and will be co-financed by the ADB and the Japanese government.
The project is targeted to start construction by the third quarter next year, and completed by 2024.
NEDA said right-of-way clearing is ongoing, and detailed engineering design is expected to be completed by March or April next year.
The Philippine government also expects the exchange of notes and signing of the loan agreement with Japan in the fourth quarter this year.
The government is relying largely on infrastructure to boost economic growth to 7-8% until 2022, and reduce poverty rate to 14% by then. — Elijah Joseph C. Tubayan

PHL seeking greater SKorea market access for bananas

THE Philippines is considering a preferential trade agreement with South Korea to ease access for its banana exports, or may seek to include provisions for banana exports in the Association of Southeast Asian Nations (ASEAN) free trade agreement.
Trade Secretary Ramon M. Lopez said he met recently with his South Korean counterpart, Kim Chun, to explore greater market access for bananas to South Korea, including lower tariffs.
“We are considering options on a better process moving forward, either bilateral through a Pref(erential) Trading arrangement PTA or under ASEAN-Korea,” Mr. Lopez told reporters in a mobile message.
“We will push this forward and issue a paper in the next two weeks,” he added.
Mr. Lopez noted that the Philippines remains South Korea’s leading banana supplier, accounting for about 85% of the market. However, other countries are trying to increase their market access, possibly leading to stiffer competition in the future, he said.
A preferential trading agreement may cover only certain products or trade arrangements and may only be valid for a certain number of years.
ASEAN’s FTA with South Korea was signed in 2005.
Under the FTA, bananas, including plantains, fresh or dried, are classified as a “sensitive” commodity and its final status has not yet been negotiated.
Peru is expected to be granted zero tariffs by next year, while Vietnam, Ecuador, Costa Rica and Honduras will enjoy the same by 2022.
Philippine banana shipments to South Korea are subject to a 30% tariff.
South Korea is the Philippines’ third-biggest banana market after Japan and China.
Regarding the Regional Comprehensive Economic Partnership (RCEP), which South Korea is part of, Mr. Lopez reported “good progress” in the talks among the 10 ASEAN country-members and six non-ASEAN free trade agreement partners.
“[There is] good progress on RCEP discussions as we further fine-tune the key elements with agreements on more parameters, such as level of inclusion on tariff reduction and minimal exclusion list, got goods services and investments,” Mr. Lopez said, noting that more updates will be released in the next few months.
Participating countries include ASEAN member countries plus six of its FTA partners — China, Japan, South Korea, India, Australia and New Zealand.
If concluded, RCEP will be the largest economic trade bloc, representing close to half of the world’s population; almost a third of the global economy; and a quarter of the world’s exports.
Mr. Lopez also expects ASEAN members to sign a deal soon to strengthen e-commerce in the region. — Janina C. Lim

House bill filed seeking 60-day NFA rice buffer

HOUSE Agriculture and Food Committee Chair Jose T. Panganiban, Jr. has filed a bill proposing to increase the required rice buffer stock of the National Food Authority (NFA) to 60 days from 15 days.
House Bill 8131, or the proposed National Food Security Act of 2018, was filed on Aug. 22, amid a supply crisis and rising prices for the staple grain.
“This bill seeks to institute new measures for the NFA to more effectively handle its role of ensuring national food security and stabilizing rice supply and prices,” the ANAC-IP representative said in his explanatory note.
He also noted the bill is in line with other government efforts such as the ongoing push to legislate the Revised Agricultural Tariffication Act, which points to the need to “review and amend the NFA charter.”
Mr. Panganiban said initial capital of P25-billion needs to be allocated to the NFA for it to maintain a 60-day buffer.
“The budget for the purchase of rice stocks from the Authority for any pro-poor programs… shall be included in their respective allocations in the annual General Appropriation Act,” according to the bill.
The NFA, as proposed, will be reclassified as a Government Instrumentality vested with Corporate Powers (GICP), which makes it neither an agency nor a corporation. It shall also be an attached agency of the Office of the President, which can only be abolished upon approval of Congress.
The bill proposes governance by the seven-member Food Security Board, headed by the NFA Administrator with a representative from the Department of Agriculture as its vice chairman.
The Departments of Social Welfare and Development and Interior and Local Government, rice farmers and corn farmers shall also have seats on the governing board.
The bill also empowers the authority to hand out fines or imprisonment for “serious” offenses like hoarding, profiteering, and cartel behavior. — Charmaine A. Tadalan

CTA rejects Philip Morris refund claim

THE Court of Tax Appeals (CTA) has dismissed a claim by Phillip Morris Philippines Manufacturing, Inc. for a refund worth over P152 million, citing procedural faults like a lapsed filing deadline.
According to the decision dated Aug. 3, the tobacco company filed a Petition for Review against the Bureau of Internal Revenue (BIR) seeking “the refund or issuance of tax credit certificate in the total amount of P152,877,472.10 corresponding to the excise tax allegedly advanced or deposited by it on tobacco and cigarette products it exported.”
The decision, signed by CTA Associate Justice Cielito N. Mindaro-Grulla, said that review petition was denied “for lack of merit.”
In 2014, Phillip Morris filed an administrative claim for the refund of more than P150 million which allegedly represents “excise tax advanced or deposited by petitioner on tobacco and cigarette products it exported for the period covering January 12, 2009 to December 31, 2009.”
It added that it “has not been replenished or refunded under RR No. 3-08 including Product Replenishment Certificates (PRCs) with outstanding balances and Product Replenishment Debit Memo (PRDM) for replenishment.”
According to the BIR website, RR No. 3-08 “Amends certain provisions of existing Revenue Regulations on the granting of outright Excise Tax exemption on removal of excisable articles intended for export or sale/delivery to international carriers or to tax-exempt entities/agencies and prescribes the provisions for availing claims for product replenishment.”
The CTA ruled that the tobacco company’s claim for refund “is already barred by prescription pursuant to Sections 204(C) and 229 of the NIRC of 1997” which states that no tax credit or refund is allowed unless the petitioner files a claim to the BIR within two years since the payment of the tax or penalty.
According to Sections 204(C) of the NIRC of 1997, “No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty.”
Section 229 states: “In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty.”
CTA’s decision stressed, “Taxpayers are not left without recourse. Remedies were provided under the regulations.”
The court added, “Petitioner failed to comply with the required procedure when it belatedly filed the claim for refund or issuance of tax credit certificate.” — Gillian M. Cortez

OECD finds improvements in Southeast Asian SME policy framework

THE Organisation for Economic Cooperation and Development (OECD) said it found an improved policy environment for Small and Medium Enterprises (SMEs) in Southeast Asia since its last survey in 2014, particularly in terms of e-commerce access.
The OECD’s SME Policy Index: ASEAN 2018, published over the weekend, said the prioritization of the sector comes as incomes rise and trade barriers fall, opening up opportunities for SMEs producing goods and services.
“The report finds that most ASEAN countries are active in the area of SME policy and apply a mix of horizontal and targeted approaches. On the horizontal side, they tend to prioritize measures to cut red tape and streamline business registration. On the targeted side, they tend to focus on measures to enhance productivity and increase access to finance,” The OECD said in the report’s executive summary.
Carried out between July 2016 and October 2017, the OECD report covers SME productivity, technology and innovation; environmental policy; access to finance; access to markets and internationalization; institutional frameworks; legislation, regulation and tax; entrepreneurial education and skills; and social enterprises and inclusive SMEs.
On a scale of 1 to 6, the region scored highest in measures to enhance access to markets and internationalization at 4.55; promotion of entrepreneurial education and skills at 4.27; and institutional framework at 4.20.
It cited Singapore and Malaysia as having “an advanced stage of policy development in a significant number of policy areas, with policies adhering to international best practices.
Meanwhile, Indonesia,Thailand and the Philippines were tagged as “mid-level performers in most policy areas.”
“This indicates that their SME policy is well-elaborated and adequately implemented, though some limitations remain, often in monitoring and evaluation,” the report said.
On the other hand, Brunei Daruasalam and Vietnam are still considered relatively new to SME policy.
The Philippines scored best at 4.44 in the institutional framework category and worst at 3.36 on legislation due to regulation and taxes.
“Company registration is still rather burdensome in the Philippines. Further steps could be taken to streamline registration requirements among different government agencies. This could facilitate the creation of a single registration number to operate a business or at least reduce the number of registration numbers required,” it said.
The report also recommends removing the mandatory lending requirement which seems to “prevent banks from efficiently allocating credit.”
It added that the needs to Philippines enhance and improve international market access while boosting adoption of new technology.
“The Philippines has traditionally adopted a service delivery approach to SME policy providing services to help SMEs increase their competitiveness,” the report said.
“However, the country also pursues a secondary objective, which sees SME policy as a tool to decrease poverty and regional inequalities as part of its goal of building a predominantly middle class society by 2040,” it added.
The report noted that the private sector participation in SMEs is “relatively robust.” However, firms are hindered by “lack of infrastructure, rather weak institutions and relatively burdensome tax rates and regulations.
It added that government bureaucracy and graft and corruption remain commonplace particularly in the procurement.
In 2016, the Philippines had 915,726 registered enterprises. Of these, 89.6% were classified as micro-sized, 5% small and 4% medium, and 0.4% large.
SMEs accounted for 63.3% of employment and 36% of GDP that year. — Janina C. Lim