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DoF sees inflation falling further as food prices ease

FINANCE Undersecretary Gil S. Beltran said inflation is expected to ease further in the second half, bringing the 2019 average towards the lower end of the 2.7-3.5% target band for the year.

The 2.7%-3.5% band is the inflation assumption issued by the Development Budget Coordination Committee (DBCC).

“(It will depend) upon oil prices because inflation is also affected by petroleum products but food items will continue to go down because it has happened for the last five or six months. [As for whether it will hit the DBCC assumption] it will be more towards the lower end” Mr. Beltran told reporters during a press briefing late Wednesday.

The Philippine Statistics Authority (PSA) reported that headline inflation in July slowed to 2.4% from 2.7% in June and 5.7% a year earlier, the lowest level in 31 months, or since the 2.2% inflation recorded in December 2016.

The July result matched the 2.4% median estimate in a poll of 17 economists which BusinessWorld conducted a week before the official data came out.

The Bangko Sentral ng Pilipinas (BSP) Monetary Board on Thursday cut its 2019 inflation forecast to 2.6% from already-downward-revised 2.7% which it adopted in its June 20 review, while slashing next year’s forecast to 2.9% from 3% previously.

For the August inflation outlook, Mr. Beltran said the Department of Finance “hopes” it will be lower than the July level. — Beatrice M. Laforga

Tax Appeals court rules against BIR after assessment by unauthorized officer

THE Court of Tax Appeals (CTA) affirmed the cancellation of the P151.3 million alleged tax deficiency of an oil trading firm after it was assessed by an unauthorized revenue officer (RO).

In a 23-page decision, the court, sitting en banc, denied the petition for review filed by the Bureau of Internal Revenue (BIR) against the 2017 decision and 2018 resolution of its third division, which cancelled the tax deficiency assessments of Royal Class Trading and Transportation Corp., which trades petroleum products of Pilipinas Shell Petroleum Corp and Petron Corp.

The court said the RO who finished the assessment against the firm was only assigned through a 3rd Indorsement Letter in 2013 and not through a Letter of Authority (LoA) which is required under the National Internal Revenue Code.

“(A)ll audit investigations must be conducted by a duly designated RO authorized to perform audit and examination of taxpayer’s books and accounting records, pursuant to an LoA. In other words, in case of re-assignment or transfer of cases to another RO, it is mandatory that a new LoA shall be issued with the corresponding notation thereto,” it said.

The CTA said the lack of new LoA in reassigning the case means the new officer continuing the investigation has no authority.

“Consequently, the subject tax assessments, which came about as a result of his examination of the books of account and accounting records of Royal Class for taxable year 2007, are void. It must be emphasized that a void assessment bears no valid fruit, and thus, it cannot attain finality,” the court said.

Initially, an LoA was issued in 2008 authorizing an RO to assess Royal Class. However, the 2010 Indorsement Letter directed a new RO to continue the investigation of the previous officer assigned, who was transferred to another district.

The BIR claimed that reshuffling of officers is a “natural occurrence of things” stated in Section 17 of the Tax Code and the RO indicated in the LoA “need not be the one to complete the audit.”

The tax appellate court, however, said it only states the power to assign or reassign officers but nothing on the discarding of an LoA.

“In other words, there is nothing in the law which prohibits the issuance of a subsequent LoA authorizing another RO, or new set of ROs, to continue the examination of books of account and other accounting records of the concerned taxpayer,” it said.

It also denied the claim of the bureau on the applicability of Revenue Memorandum Order No. 44-2010, withdrawing beginning June 1, 2010 a rule requiring the revalidation of LoAs after the failure of revenue officers to complete audits within the prescribed period.

The court said there was no revalidation of an LoA in this case and even if there was, the Indorsement Letter was issued in February, months prior to the effectivity of the order.

The decision was written by Associate Justice Erlinda P. Uy. — Vann Marlo M. Villegas

Project management in the transformative age

New platforms and drivers of productivity are creating new possibilities at unprecedented speeds, with steady advances in robotics, cognitive technologies and intelligent automation. To remain relevant and competitive, businesses are looking to implement digital strategies to keep up with the speed of change.

However, while disruption has become the new buzzword to reflect the new trends challenging traditional business paradigms, the truth is that the fundamental changes in business models across industries convey a deeper shift that can be better described as “transformative” instead of disruptive.

One of the defining traits of the transformative age besides the speed of change is the increasing dependence on connectivity. As Norman Lonergan, EY Global Vice Chair of Advisory puts it, “the transformative age goes beyond mere disruption, and is instead about being connected, whether to interfaces, data, experiences, or people.”

Local businesses are already being recognized for using digital technologies that have transformed the market and for leadership in their digital transformation efforts, such as through the International Data Corp. (IDC) Digital Transformation Awards. Efforts are being taken to address the technological needs of many organizations and future-proof various businesses ranging from real estate, hospitality, restaurants, and infrastructure. A Microsoft/IDC Asia Pacific white paper, ‘Unlocking the Economic Impact of Digital Transformation in Asia Pacific,’ predicts that by 2021, digital transformation will add an estimated $8 billion to the Philippines’ GDP and increase its annual growth rate by 0.4%.

CHALLENGES OF DIGITAL TRANSFORMATION
To successfully lead their organizations through digital transformation, leaders will need to be well-versed in all aspects of the business environment, have the foresight to anticipate change, and integrate the disparate parts of a company. It’s certainly no easy feat. While 80% of organizations are undergoing digital transformations, only 25% of digital transformation projects result in real benefits. This is according to the Project Management Institute (PMI), a leading non-profit professional association. Since ownership of digital efforts should cut across the C-Suite and the different groups within a company, company leaders, IT, and project managers must all partner for optimum results while maintaining a broad view of the organization.

Digital transformation projects can be especially challenging for global organizations or financial services companies. These often have legacy technology, third-party partners that contribute to the company’s complexity, and ingrained ways of conducting business. While smaller, digital-oriented startups merely have to execute their digital strategy, larger companies will need to take extensive current operations through digital transformation.

Some of the challenges that arise due to the nature of transformation projects are resource allocation and priority in staff selection when weighed against ongoing operations. Another one is the impact of the transformation on the organization’s people, of whom many will be participants in the transformation effort. Transformation projects may result in changes to an organization’s structure, business processes, workplace location, or workforce, which, in turn, may trigger a natural human tendency to resist change. Addressing this human side of change is a key factor in ensuring that the results of any transformation project will endure. Further challenge comes from the scale of transformation projects, with diverse stakeholders both internal and external that will have varied, and sometimes, competing interests.

STRATEGIES FOR SUCCESSFUL TRANSFORMATION
These challenges can be addressed through the principles used to manage a transformation journey. By choosing the approach that best addresses the needs of the project, organizations will help minimize risks, control costs, and increase value. Murat Bicak, PMI senior vice president of strategy, shares the following strategies for successful digital transformation.

Set clear goals and ROI metrics. There are several organizations that may still be confused about what it means to transform into digital. The effort encompasses more than the IT organization, and involves more than just digitization, according to Bicak. It is more about the business-wide use of emerging digital technologies to transform business processes and bring more value to both stakeholders and customers.

Ensure that C-Suite sponsors are actively involved in projects. Inadequate sponsor support is one of the leading causes of project failure, according to the PMI. Conversely, the most common reason that transformative strategies succeed is strong support and buy-in from leadership. Executives can be more effective by staying connected with the program, helping navigate challenges, communicating its role, and advocating the program.

Elevate the role of the project manager. The project manager role is evolving from that of an operational role to a strategy delivery role. Project managers are expected to bring forward expertise on innovation, strategy, and communication. Bicak adds that technical skills are only part of what project managers will need to lead digital transformation efforts, along with strategic business management and leadership.

The essence of project management is the application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements. It can be said that the rigor, discipline, standardized methodologies, and common language for complex change initiatives from project management can help increase the odds of success when applied to digital transformation. Investing in project management professionals by providing them with the tools, training, and skills they need to make their organizations as effective as possible will be key to driving the value delivery mindset needed for a successful project.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

 

Evert De Bock is an Advisory Principal from SGV & Co.

Anti-corruption body to probe flagged agencies

By Arjay L. Balinbin
Reporter

THE Presidential Anti-Corruption Commission (PACC) will investigate officials and employees of government agencies that were recently flagged for corruption, Chairman Dante L. Jimenes said by telephone on Friday.

Among the agencies are the Bureau of Internal Revenue, Bureau of Customs, PhilHealth and Philippine Charity Sweepstates Office, he said.

The law mandates PACC to fight corruption in various government institutions and ensure public officials behave in a manner that is worthy of public trust.

“All of them,” Mr. Jimenez said when asked which agencies will be probed, adding that they would zero in on the main tax agencies, the charity office and the national insurance provider. He added PACC would prioritize officials who volunteer for a lifestyle check.

President Rodrigo R. Duterte in his annual address to Congress last month decried persistent government corruption. He said the recent uncovering of massive fraud perpetrated against the public health insurance system proves that corruption is pervasive.

“Huge amounts of medical funds were released to cover padded medical claims and imaginary treatment of ghost patients. I am grossly disappointed,” he said.

Mr. Duterte also claimed to have fired and caused the resignation of more than a hundred officials and appointees of government “without regard to relationship, friendship and alliance.”

The president likewise vowed to pave the way for the removal of corrupt officials at the Bureau of Customs, where more than 60 people are under investigation for corruption.

Mr. Duterte later suspended lotto operations nationwide for alleged corruption, only to restore them four days after because the operations were found to be above board.

Mr. Jimenez said billions of pesos have been lost to corruption. “Number two, we want to look at their systems and their organization setups,” he said.

The PACC chief said they would submit reports to the president. “It will take time because of the sheer number of government agencies.”

Palace asks police to hasten Chinese death investigation

THE PRESIDENTIAL palace on Sunday urged the police to hasten its investigation into the death of a handcuffed Chinese national who fell from the sixth floor of a building in Las Piñas City.

Law enforcers were also tracing down the supervisor of the victim, presidential spokesman Salvador S. Panelo said in a statement.

“The palace is concerned with growing reports that foreign workers in the country are being subjected to coercion, illegal detention and other violations of law even by their own countrymen while in the Philippines,” he said.

“We need to put a stop to these illegal acts,” Mr. Panelo said, adding that the government would not tolerate abuse of any foreigner either by their fellow nationals or by Filipinos.

The Chinese Embassy in Manila earlier asked the government to punish casinos and Philippine offshore gaming operations that illegally hire Chinese workers, blaming them for aiding crimes such as money-laundering.

The embassy in a statement last week blamed unnamed Chinese companies and Filipinos for offshore gambling that targets those in mainland China, and for the illegal work being undertaken by thousands of Chinese citizens here.

The embassy said offshore gaming operations in the Philippines have led to crimes and social problems in China. It said China would take action to prevent cross-border gambling.

Mr. Panelo again urged foreign workers to report employers who violate Philippine laws. “No one is exempted from the strict enforcement of our laws,” he said.

The palace earlier said Chinese nationals who suffered abuse while working here should file complaints before local authorities.

The two countries are jointly cracking down on crimes against Chinese workers in Manila, Philippine Ambassador Chito Sta. Romana has said.

President Rodrigo R. Duterte’s pivot to China has led to friendlier relations and encouraged more Chinese tourists to visit the Philippines and Chinese workers to work here.

Last week, the Bureau of Internal Revenue (BIR) said it continues efforts to increase tax collections. It collected an initial P186 million in withholding taxes from Philippine offshore gaming operators and expects P170 million in taxes from companies employing foreign nationals. — Arjay L. Balinbin

State auditors cite Iloilo’s ‘extravagant’ expenses

THE COMMISSION on Audit (CoA) has called out some employees and officials of the Iloilo City local government for “excessive and extravagant” travel expenses.

In a report, state auditors said 11 government employees spent P5,000 in daily hotel accommodations and P2,000 for meals during seminars outside the city. These were more than the prescribed rate of P800 per day, according to the report.

Under the law, travel expenses — half of which goes to hotel accommodation, 30% to meals and 20% to other expenses — must not exceed P800 daily.

The audit body said reimbursement claims for travel expenses in excess, though supported with documents and receipts, were not certified by the agency head as necessary.

“Non-economical spending during official travels denotes excessive and extravagant use of government funds to the disadvantage of the government,” it said. — Vince Angelo C. Ferreras

Suicide bomb suspect denies allegations

ONE OF TWO alleged suicide bombers who slipped into the country from Sri Lanka has denied being one in a filing at the National Bureau of Investigation, the military said yesterday.

“Victoria Sophia Sto. Domingo executed an affidavit to the NBI’s Counter-Terrorism Division on July 22,” Armed Forces spokesman Brig. Gen. Edgard A. Arevalo said in a statement.

The suspect denied the allegations against her and her partner.

The Straits Times on Aug. 9 reported Ms. Sto. Domingo and her partner Mark Kevin Samhoon had slipped into the Philippines. Both were tagged as suicide bombers and were on a watch list of the Manila International Airport Authority.

“Victoria denied vehemently that she and her fiancé and the father of her newborn child are suicide bombers,” Mr. Arevalo said.

The suspect also denied that her mother is a terrorist financier. She accused her father of spreading the lie to authorities, the military spokesman said.

The military will continue to coordinate with the NBI, police and other agencies here and overseas “to strengthen our intelligence and security posture,” he added. — Vince Angelo C. Ferreras

US says yes to DFA’s help request in search for missing plane, student pilot

FOREIGN AFFAIRS Secretary Teodoro L. Locsin, Jr. on Sunday reached out to the United States for assistance in locating a missing plane and student pilot in Aurora. “We need a special satellite image that can penetrate jungle to detect plane’s aluminum,” Mr. Locsin told the US Embassy in the Philippines and Ambassador Sung Y. Kim via social media. “CAAP (Civil Aviation Authority of the Philippines) has no capability whatsoever in this weather for this mission,” he said. The US Embassy responded on the same day to Mr. Locsin’s request, saying in a social media post that it “is ready to assist. We’ve been in touch with Philippine authorities to determine what assistance is needed and how we can help.” A student pilot from OMNI Aviation Corp. has been missing since July 28, after leaving for Clark Airport from Baler, Aurora. — Charmaine A. Tadalan

Naboc River dredging to start October

DREDGING OF the Naboc River, which is contaminated with mercury and cyanide due to mining activities in Mt. Diwalawal, is targeted to start by October as part of the ongoing rehabilitation program. Department of Environment and Natural Resources-Davao (DENR-11) Regional Executive Director Ruth M. Tawantawan, in a statement Friday, said the “dredging activity will start on October this year and we aim to finish it before July of next year.” DENR-11 and the Compostela Valley provincial government have signed a Joint Special Order creating a technical working group (TWG) and working committees tasked to formulate and implement the Naboc River Rehabilitation Master Plan. The rehabilitation program, a priority project of Environment Secretary Roy A. Cimatu, was formally launched last July 16 through the signing of a memorandum of agreement between the DENR and the provincial government. Compostela Valley Provincial Governor Jayvee Tyrone L. Uy, for his part, said, “We hope that our timeline will be met so we could finally gain a step ahead in rehabilitating Naboc River.” In March this year, ball mill facilities for gold ore extracted from Mt. Diwalwal were given the final notice to move out and transfer to the government-designated site. The ball mill operators were first ordered to transfer in 2003 following the issuance of Executive Order No. 217. The Department of Science and Technology-Region 11, together with the University of the Philippines, is also setting up a mineral processing plant in Nabunturan that does not use mercury and cyanide.

Cebu City forms task force to beef up tax collection

MAYOR EDGARDO C. Labella has issued an executive order (EO) creating a task force to profile, inspect, and map all real properties and business establishments in Cebu City to intensify the collection of taxes and fees. “I’m very positive that if we can properly map and profile these properties, we can increase our taxable real property tax (RPT) rate base without necessarily increasing the tax rates,” the mayor said. In 2018, the Cebu City Treasurer’s Office collected P1.4 billion in RPT, exceeding its target of P1 billion. For this year, the city targets to collect P1.1 billion in RPT. Mr. Labella also said he wants to ensure that all businesses are paying their correct tax dues. Under the EO, the task force is also directed to evaluate the tax collection system to identify gaps and possible problems in the records. The task force is composed of the city treasurer, assessor, building official, City lawyer, and other heads of offices. The creation of the task force is pursuant to Joint Memorandum Circular No. 01, or the Revised Standards in Processing Business Permits and Licensing in all Cities and Municipalities, issued by the Department of Interior and Local Government, Department of Trade and Industry, and Department of Information and Communication Technology. — The Freeman

Messages of peace on Eid’l Adha celebration

MUSLIMS IN the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) held prayers Sunday in observance of the Eid’l Adha, or the Feast or Festival of the Sacrifice. It is one of the two most important holidays in the Islamic calendar, the other being Eid’l Fitr that marks the end of the fasting month of Ramadan. As agreed by religious and other Islamic leaders earlier, the celebration came ahead of Monday, Aug. 12, which has been declared a national holiday for the annual event that honors the willingness of Ibrahim to sacrifice his son in obedience to God’s command. “Here in the Bangsamoro, may the purity of our intentions in the struggle of attaining genuine peace and development be sustained,” BARMM Chief Minister Al Hajj Murad Ebrahim said in his message issued Sunday. Secretary Carlito Galvez, Jr. of the Office of the Presidential Adviser on the Peace Process also highlighted the pursuit of peace in his message, saying, “On this most sacred day, we are taking the lessons of Prophet Ibrahim’s sacrifices and virtues as we move forward in the Bangsamoro peace process, more particularly in the implementation of the Normalization Track of the peace agreement in Mindanao.”

DoST to help dengue detection kit manufacturer speed up production

THE DEPARTMENT of Science and Technology (DoST) is planning to assist the local company that produces the Biotek-M™ Dengue aqua Kit to manufacture more for distribution to a wider area. “We are planning to help the company who is still in the initial stage of commercialization na mag– (to) produce ng additional numbers,” DoST Secretary Fortunato T. de la Peña said in an interview with BusinessWorld. He added that the department may also help in the distribution to hospitals. The test kits are made by Manila Health Tek Inc., a company formed in 2013 by a team led by Raul V. Destura from the University of the Philippines (UP), according to the UP website. Mr. Destura and his group developed the technology as a project under the DoST’s Philippine Council for Health Research and Development. The Biotek-M™ Dengue aqua Kit helps diagnose dengue after two or three days from the onset of the illness. The Department of Health (DoH) is set to roll out the dengue kits this week to 304 hospitals in Region IV-A (CALABARZON covering Cavite, Laguna, Rizal, and Quezon), Region IV-B (MIMAROPA covering Mindoro, Marinduque, Romblon and Palawan), Region 5 (Bicol), Region 6 (Western Visayas), Region 8 (Eastern Visayas), Region 9 (Western Mindanao), Region 10 (Northern Mindanao), and the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). There will be one kit per hospital and each diagnostic session would cost P500. Last week, the DoH declared a national dengue epidemic after it reported a total of 146,062 dengue cases from January to July 20 this year. — Gillian M. Cortez

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