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Tale of two years

The year 2018 was a stellar one for Baguio’s Team Lakay that saw four of its stalwarts being crowned as champions in ONE Championship.

Flyweight Geje Eustaquio, strawweight Joshua Pacio, bantamweight Kevin Belingon and lightweight Eduard Folayang made last year a stretch to remember for their team as they ascended to the top of their respective divisions, with prospects of further soaring high.

This year though it has been a rough one for the popular mixed martial arts team as barely four months into 2019, said world titles are already out of its hands.

First to see his title go was Pacio, who lost by a narrow split decision to Japanese Yosuke Saruta on Jan. 19 in Jakarta. Then a week later it was Eustaquio who fell, losing to Adriano Moraes of Brazil by unanimous decision.

And just last Sunday in Japan, Belingon and Folayang followed suit, losing their titles by way of disqualification over illegal blows and technical knockout against Brazilian Bibiano Fernandes and Japanese Shinya Aoki, respectively.

While it saw its championships be taken away from them, one cannot go to Team Lakay and say it did not try hard to keep them.

Having a chance to track their performances this year, the Team Lakay champions competed against their challengers.

The Pacio and Eustaquio fight could have easily gone their way while Belingon just had it unfortunate to have been given a red card and thus the disqualification loss.

Folayang’s is a bit tricky as he never really got a chance to show what he was capable of, with Aoki going for the quick finish. But looking at how he trained and physically built himself up for the fight, he could have stand toe-to-toe with the Japanese legend had the fight did not go the route it did.

Sans a title right now in ONE, it is surely a not-so-familiar sight considering the year 2018 Team Lakay had.

It is by no means the end for it though, because if there is any team that could rise anew from such adversities it is them.

Built on hard work and insatiable appetite to learn, I am sure Team Lakay would use this rough start to the year as motivation in once again rising to the top.

The road back may be thorny along the way. Then again there is really no easy way in the world of mixed martial arts, something Team Lakay is very aware of.

It may be down right now but I am not counting it out. The year is still early and who knows, it may regain the title it lost and even add to them.

 

Michael Angelo S. Murillo has been a columnist since 2003. He is a BusinessWorld reporter covering the Sports beat.

msmurillo@bworldonline.com

Healthy Federer

Roger Federer almost didn’t make the trip to Florida. Still recovering from a disappointing loss in the final of the Indian Wells Masters, he wasn’t quite sure of the value of a stint at the Miami Open. After all, he unceremoniously crashed out in the second round of the tournament last year. After careful consideration, though, he decided to give it a go. No doubt, he factored in the fact that it was slated to be held at the Hard Rock Stadium for the first time. Key Biscayne had been its home since 1987, and the site of his one-and-done appearance following a first-round bye.

Considering how Federer ended the Miami Open with the trophy in his hands, he couldn’t have been happier with his choice to compete. “It would have been easy to say ‘Last year just didn’t work out. Let me not come back,’” he disclosed following his emphatic victory in the final. “I’m glad I changed my mind.” Indeed. Notwithstanding his supposed candidacy for the rocking chair, he and his 37-year-old body held up quite well. Only once was he challenged en route to his podium finish; he went three sets after losing the first in his opener against World Number 46 Radu Albot because, he argued, “I didn’t have a plan.”

True, Federer had outside help. Most crucially, top seed Novak Djokovic failed to move past the fourth round, paving the way for him from the four spot. Still, he clearly learned from his close call. Kevin Anderson claimed only four games in the quarterfinals. Dennis Shapovalov was barely better in the semis, taking six. And in the final, John Isner proved decidedly overmatched, managing to prevail in just five; he was dominant throughout, winning every single point on his first serve and losing a mere three on his second. In short, he was a steamroller en route to his record 101st ATP Tour title and second in a month.

Given Federer’s sharpness of late, it’s fair to contend that he’s a threat to win anywhere he plays and regardless of the strength of the field. Needless to say, it helps that he’s in prime physical shape. “This is a good phase, a good stretch for me right now,” he noted. “I really feel super healthy. That’s why I have been able to play every day for the last four weeks. That’s something that maybe hasn’t always been the case for the last few years.” And so confident has he become that he’s poised to include a clay-court schedule in his itinerary for the first time in three years. Which, in a nutshell shows that his continued run of success isn’t a question of if, but how.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994.

WB cuts Philippine growth forecasts

By Melissa Luz T. Lopez
Senior Reporter

THE World Bank scaled down its growth forecast for the Philippines as public spending will likely soften this year, together with concerns about the dry spell that could affect food prices and badly hit the poor.

In its Philippines Economic Update report, the multilateral lender now pegs 2019 growth at 6.4%, slower than its older 6.5% estimate even as the latest projection is still faster than last year’s actual 6.2% pace due to stronger private consumption.

However, World Bank senior economist Rong Qian said that domestic risks “have increased” with the delayed enactment of the P3.757-trillion national budget as well as the 45-day public works ban ahead of the May 13 elections that began on March 29 which are expected to derail government spending plans.

“The limited public spending may negatively impact the Philippines’ growth prospects for 2019,” Ms. Qian said in a press briefing on Monday.

REBOUND
Consumer spending — which is widely estimated to contribute 70% to overall economic growth — increased by a slower 5.6% last year as inflation surged to a decade-high 5.2%, with a nine-year peak of 6.7% seen back in September and October.

For 2019, the global lender expects consumption growth to recover to 5.9% and even strengthen to six percent next year as inflation eases, and amid more remittance inflows and with new jobs available in the country. Election-related expenses should also support faster expansion.

The central bank is growing confident that price increases will settle back to target this year as food supply issues are addressed, with the full-year pace now seen at three percent. However, the World Bank flagged that the El Niño could cause trouble.

“An intensified El Niño may lead to food supply constraints, affecting the poor and vulnerable the most as they are spending a relatively larger proportion of their income in food,” Ms. Qian said.

The World Bank’s estimate also falls within the government’s reduced growth goal of 6-7%, coming from 7-8% originally. This also factors in external risks from nagging trade tensions between the United States and China and weak demand for Philippine exports.

Ms. Qian said the bank expects the budget to be enacted “very soon,” with the measure now under review before President Rodrigo R. Duterte signs it into law. She added that this will pave the way for public investments to recover in the second semester as government tries to catch up on delayed projects.

The economist sees a narrower fiscal gap for the full year, as she flagged the need for “prudent” fiscal policies and for additional tax reforms to improve the state’s revenue collections.

The country is currently operating under a reenacted 2018 budget, which leaves new programs and even big-ticket infrastructure projects unfunded.

The World Bank also scaled down its growth estimates for 2020 and 2021 to 6.5% annually, down from 6.6% amid a slower world output. Ms. Qian added that the Philippines may feel the pinch via tighter financing conditions, which could make borrowing abroad more expensive.

SOCIAL INVESTMENTS
Amid rapid economic growth, the global lender flagged the need for increased human capital investments in the Philippines, with quality of life still in the middle of the pack compared to other countries.

Gabriel Demombynes, program leader for human development for Brunei, Malaysia, Philippines and Thailand, said the Philippines ranks 84th of 157 nations in the World Bank’s Human Capital Index.

“On average, a Filipino child — in the absence of renewed efforts on human capital — will reach only 55% of potential in terms of lifetime income. But this is an average figure, some children face much more limited prospects,” he said, noting that index scores are much lower in Eastern Visayas and in the Bangsamoro region in Mindanao.

“The risk that the Philippines may be left behind by technological change is high,” the same report added.

Mr. Demombynes noted that budget support for social programs have risen “substantially” since 2010, but added that the country needs to focus on malnutrition in women and babies, improve the education system and implement the newly enacted Universal Health Coverage law.

Factory growth weakens in March

MANUFACTURING in the country improved at its slowest pace in eight months in March, as output increased at the softest rate in seven, according to the latest monthly survey IHS Markit conducted for Nikkei, Inc., that blamed softer demand for Philippine goods abroad and port congestion.

The seasonally adjusted Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) clocked in at 51.5 in March, easing from the preceding month’s 51.9 to signal a “modest improvement” in operating conditions. It was the weakest improvement since August 2018’s 51.9.

March also marked the fourth straight month that improvement of business conditions eased.

A PMI reading above 50 indicates improvement in business conditions from the preceding month, while a score below that point signals deterioration.

The manufacturing PMI consists of five sub-indices, with new orders having the heaviest weight at 30%, followed by output with 25%, employment with 20%, suppliers’ delivery times with 15% and stocks of purchases with 10%.

Among the seven tracked members of the 10-country Association of Southeast Asian Nations, Philippine manufacturers saw the third-fastest pace of expansion, down from the second spot in February as Vietnam outpaced with a 51.9 reading. Myanmar led the list with 52.4. The Philippines topped the region in January.

Still, the country’s PMI score is above the regional average of 50.3, which also improved from February’s 49.6.

FACTORS
Factories covered by the March survey reported that they enjoyed strong customer demand, particularly from the construction sector at a time of a state-led push for infrastructure projects.

“While many businesses saw volumes of work increase from February, others reported decreased production due to falling sales and reduced supply of raw materials,” Nikkei said in a press statement, describing the increase in new orders as below average.

Firms also reported longer delivery times due to congestion woes at the Port of Manila.

“Slowing output growth and a comparably modest rise in new business hampered manufacturers in March, with the PMI sliding for the fourth month running,” the statement quoted IHS Markit Economist David Owen as saying.

“Port congestion at Manila continues to increase lead times and reduce raw material supply, and will likely harm exports if the problem is not contained,” he added.

“However, managers will be pleased with reports of even softer price pressures, which should boost profit margins.”

There was also “a marginal fall in work fore numbers in March,” the statement added.

In February, the Alliance of Philippine Customs Brokers and Trucking Associations flagged a brewing port congestion as truckers noted that they could not find space to drop their empty containers at the Port of Manila.

The Bureau of Customs said it was looking to tighten enforcement of a 90-day limit for empty containers, and was looking to require international shipping lines to set up warehouses outside the capital.

Still, Mr. Owen said the recent PMI trends show weaker growth in production during the first quarter.

Factories also pointed to weaker overseas demand and “administration issues” which affected last month’s sales.

Still, manufacturers bought more input stocks in anticipation of new orders, although such growth is still softer than previous increases.

What’s more, business sentiment about future prospects also dropped to an all-time low by the end of the quarter, amid doubts about output growth for the rest of 2019. — Melissa Luz T. Lopez

ASEAN Manufacturing Purchasing Managers’ Index, March

ASEAN Manufacturing Purchasing Managers’ Index, March

MANUFACTURING in the country improved at its slowest pace in eight months in March, as output increased at the softest rate in seven, according to the latest monthly survey IHS Markit conducted for Nikkei, Inc., that blamed softer demand for Philippine goods abroad and port congestion. Read the full story.

ASEAN Manufacturing Purchasing Managers’ Index, March

Committed investments approved by PEZA down as of Feb. in value terms

By Janina C. Lim
Reporter

VALUE of committed investments approved by the Philippine Economic Zone Authority (PEZA) fell in value terms year-on-year in 2019’s first two months despite an increase in number of projects, reflecting what the agency’s head said was cautiousness ahead of the May 13 mid-term legislative and local elections and possible policy changes under the incoming 18th Congress.

PEZA gets the second-biggest haul of such pledges — in terms of both foreign and total investments — after the Board of Investments.

Data PEZA provided last week bared a 16.62% drop in value of investment pledges to P17.522 billion as of February from P20.988 billion in last year’s comparative two months, even as number of projects increased by 28.77% to 94 from 73.

But committed information technology investments, which made up the biggest segment of total approved projects in the same period, grew in value by 54.01% to P3.003 billion from P1.950 billion last year, as number of projects increased by 27.27% to 28 from 22.

Monthly data were not immediately available.

POLICY SHIFTS WATCHED
PEZA Director-General Charito B. Plaza linked the decline in value of approved project pledges to investors’ cautiousness ahead of the mid-term elections.

“After election na talaga makita ang (we will see an) increase because investors have a wait-and see-attitude. Policies, laws might be changed with the new congress,” Ms. Plaza said in an interview last week at her office in Taguig City.

PEZA has said it expects 2019 approvals to be flattish from 2018.

Last year saw value of committed investments approved by PEZA drop 40.968% to P140.242 billion from P237.57 billion in 2017 due to the government’s move to remove tax incentives deemed redundant as part of a reform package that would also see corporate income tax rates slashed. Committed foreign investments forming part of that total fell by 12.72% to P68.321 billion from 78.278 billion in the same comparative years.

Asked if the uncertainties in the proposed alteration of the tax regime are also to blame for the January-February decline, Ms. Plaza replied in the negative, citing the Senate’s cautiousness towards the bill concerned — now being discussed in a committee — as it sought estimates of potential job losses the reform could entail.

The House of Representatives approved on third and final reading House Bill No. 8083, or the “Tax Reform for Attracting Better and High-quality Opportunities,” on Sept. 10 last year.

But Senate President Vicente C. Sotto III on March 21 said he doubted that tax reform packages will hurdle the chamber in the remaining session days of the 17th Congress that is now on a Feb. 9-May 19 break. Remaining sessions of the current Congress will run May 20-June 7.

Committed projects approved by various investment promotion agencies are different from foreign direct investments tracked by the central bank, since the latter involve capital that is actually infused in the economy.

What’s new on April 15?

April 15 is the deadline for the most important type of tax payment — the annual filing of income tax returns (ITRs). Almost all registered taxpayers are required to pay this tax, with only a few exceptions. For the government, the income tax is where the bulk of the Bureau of Internal Revenue’s (BIR) collections come from.

Given that “April 15” is a deadline, it is not necessary to wait until the last day to handle your tax filings. In fact, it is usually better to file your returns and pay the taxes due as soon as possible. The BIR might reject your filing if you used wrong and outdated forms, or if you failed to submit attachments.

If you had waited for the last minute before filing your returns, then you may not have time to correct them.

It is especially important to learn about ITRs now in light of the changes prescribed by TRAIN Law. Under the tax reform, new rates, forms, and deadlines were implemented. For the Annual Filing of ITRs, only the rates and forms were affected.

BIR FORM NO. 1701A
The first of the Annual ITR forms to be updated was BIR Form No. 1701A. Disseminated under Revenue Memorandum Circular (RMC) No. 17-2019, the new form partially replaces BIR Form No. 1701.

Unlike the old BIR Form No. 1701, it does not cover all self-employed and professionals. Only taxpayers availing the 8% rate and taxpayers availing the Optional Standard Deductions under the graduated rates should use 1701A. Notably, it also does not cover mixed income earners.

BIR FORM NO. 1700
A few days after issuing RMC 17-2019, the BIR released another set of new forms under RMC 19-2019. Among these new forms is BIR Form No. 1700 or the Annual ITR for Compensation Income Earners.

Generally, employers take care of filing the ITRs of their employees under substituted filing. However, certain employees are not qualified for substituted filing and, as such, are still required to file their own returns. For these types of employees, they are now required to use the new BIR Form No. 1700.

BIR FORM NO. 1702-RT
Another form released under RMC 19-2019 is BIR Form No. 1702-RT. The form is used by corporations, partnerships, and other non-individuals subjected to regular income tax rates. The new form cuts down the pages in half, retaining only four pages instead of the previous eight.

BIR FORM NO. 1702-EX
For tax-exempt corporations, partnerships, or non-individuals, the BIR has also issued the new form for BIR Form No. 1702-EX. This was also released under RMC 19-2019 alongside BIR Forms No. 1700 and 1702-RT.

The form is only three pages long, cut down from seven pages.

BIR FORM NO. 1701
For self-employed and professionals not covered by 1701A, the BIR has released an updated BIR Form No. 1701. As disseminated under RMC 37-2019, BIR Form No. 1701 will cover individuals (including mixed income earners), estates and trusts.

Note that BIR Form No. 1701A is different from BIR Form No. 1701 and covers different types of taxpayers. Self-employed and professionals need to make sure that they are using the right form for annual ITRs.

Individuals availing neither the Optional Standard Deduction nor the 8% Income Tax should use this form, not 1701A. This means, for example, individual taxpayers availing itemized deductions.

EASE OF PAYING TAXES
Making tax returns simpler is not just about making tax compliance easier. Improving the ease of paying taxes can affect a country’s business competitiveness and even improve its revenue collections.

One of the most notable studies that measures the ease of paying taxes is the World Bank’s Doing Business report. In its latest release, the Philippines – despite dropping in the overall rank – increased its score on Paying Taxes. From a score of 69.27 in 2018, the Philippines raised its score to 71.80 in 2019.

As might be surmised, improving the scores here could attract more entrepreneurs to invest in the country.

The other potential effect of improving the ease of paying taxes is broadening the taxpayer base. Shortening tax returns and making sure that tax compliance is easy can encourage taxpayers to comply. With a broader taxpayer base comes more taxpayers to collect from and, therefore, higher revenues.

As of the BIR’s latest annual report, there are only 19 million registered taxpayers despite having a working population of over 40 million. If these taxpayers were encouraged to comply and pay their taxes, the government could see an increase in its revenue collections.

However, shortening tax returns is not the key to improving the ease of paying taxes. To actually make a significant impact, the tax system needs to be modernized.

For example, Singapore, one of the leading scorers in the Doing Business report, conducts almost its entire tax compliance electronically. As of 2017, 100% of Singapore’s Value-Added Tax returns, 97% of Personal ITRs, and 69% of Corporate ITRs are filed electronically.

Already, the BIR has taken steps toward this by initiating the Electronic Tax Software Providers Certification System. Under this new initiative, the BIR authorizes the development of third-party software for the automation of tax compliance. Applications, such as the TaxWhizPH mobile app, will enable their users to file their returns anytime and anywhere.

The TaxWhizPH mobile app is free to use and can be downloaded at the Play Store for Android users and App Store for iOS users.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

 

Raymond A. Abrea is a member of the MAP Tax Committee and one of the 2017 Outstanding Young Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and Founding President of the Asian Consulting Group (ACG) and the Center for Strategic Reforms of the Philippines (CSR Philippines).

consult@acg.ph.

map@map.org.ph

http://map.org.ph

2019 elections: A litmus test of Duterte’s foreign policy

Three years after his election on May 9, 2016, the Philippine midterm elections this year will serve as a litmus test of President Rodrigo Duterte’s actions, including his decisions to recalibrate Philippine treaty relations with the US and pivot to China. In 2016, Duterte downplayed the ITCLOS arbitral award and entered into a policy of economic rapprochement with China. Three years thereafter, how do we assess Duterte’s foreign policy choices? Here, I seek to explain the hedging strategies of the Duterte government towards China by examining relevant literature on weak states’ hedging strategies and Great Power competition. It is also my objective to frame Duterte’s foreign policy as an outcome of the uncertain post-cold war unipolar environment, and of the interplay of domestic and state preferences in foreign policy.

There has been no other time when scholars have become more keenly interested in China’s challenge to US hegemony than in the late nineties to the 2000s. In a 2005 article published in the Wall Street Journal Asia, Joseph Nye compared US and China’s power and concluded that China was not only a distant match to US military and economic power, it was, compared to the US, a weaker soft power. Soft power is an important point of reference, because it underscores the global reach of the US-led liberal democratic institutions and their role in global ordering.

Yet, China has already made an incredible growth leap at 15%, from only 2% in the late seventies. Her military advancement is evident. With Trump’s rejection of the Trans-Pacific Partnership, China, through the One Belt One Road, leverages against the US beyond the Pacific Rim.

From a perspective of “power transition,” the above scenario reflects David Lai’s notion of a “second phase” in US-China relations (2009-2050) or the period of perceived power parity between US and China. At this moment, China, having gained in internal power due in big part through its recent industrialization, evolves as a challenger to the US’ long-standing hegemony in the international order. China’s dissatisfaction with US hegemony and the heightened enmity between the two powers may lead to war.

Hedging has been Duterte’s primary response to the uncertain power transition by an assertive China in the South China Sea (SCS) and the US, ambiguous in its commitment to the Mutual Defense Treaty (MDT). In balancing our relationship with these competing powers, hedging seeks to ensure that the Philippines is no more than loyal to only one state by maximizing benefits from both powers and at the same time incorporating measures as a fallback from abandonment. As a middle ground to great power politics, weak states employ hedging strategies, which Cheng-Chwee Kuik defines as a smart tool based on “mutually counteracting” policies of benefit-maximization and contradiction.

Given the challenges of power shifts in the SCS, Duterte has had to effect a demonstrable separation from its ally by “downgrading” treaty relations, with a substantial reduction of joint patrols, refocusing of Balikatan war games, and a cancellation of CARAT war exercises, while at the same time maintaining the Mutual Defense Treaty (MDT,1951), Visiting Forces Agreement (1998) and the Enhanced Defense Cooperation Agreement (2014) as the hallmarks of Philippines-US relations. These moves were imperative when PH-China relations were at their lowest in 2016, mainly as a result of President Benigno Aquino III’s policy of full bandwagoning to the US.

Today, the Defense and the Executive Departments’ initiatives to review the MDT are anchored on a continuing quest for US assurance to enforce article 4 in case of an external attack. Defense Secretary Lorenzana’s interest is in the clarification of the treaty’s ambiguous language such the coverage of “armed attack,” particularly actions short of force, as in a foreign power’s installation of military structures in the Philippine Exclusive Economic Zone.

There is a number of written works on the logic of hedging by weak states, but the arguments by National Defense College researcher Mico Galang, who contextualized foreign policy analysis under Duterte, on the theory of power transition, resonate with the points here. Like other scholars such as Inge Bekkevold and Pan Zhenqian, among others, Galang has argued that the cold war lens no longer presents a viable framework for foreign policies based on US-China bipolarity, where the dynamic transcends ideological dichotomies.

To examine Duterte’s rapprochement solely in terms of economic maximization towards China is to provide an incomplete picture of his simultaneous hedging with the US as a risk-contingency measure against continuing Chinese assertions, post ITCLOS arbitration. Hence it is of import to qualify the measures that were put in place in 2018. Last year, US and Philippine top officials held a groundbreaking of EDCA’s humanitarian assistance and disaster relief (HADR) warehouse construction project in Cesar Basa Air Base in Pampanga. Duterte resumed the joint Balikatan exercises and launched the Sama-sama and Kamandag counter-terror and HADR-oriented trainings. More strategically, he approved the budget for the second horizon of arms modernization — a move to enforce and support the military’s planned shift to territorial defense.

It is significant to note that the connection between the Philippine military and the US has been fostered by decades of long cooperation on key security issues, US aid to AFP’s modernization, and adoption of core military doctrines. Coupled with the historical primacy of the military in maintaining regime stability, Duterte could not have opted for an absolute pivot to China.

Finally, it is important to look into how these counteracting practices of loyalty and defection are further supported by a diversification of our security partners to actors like Japan and Russia, a topic that I intend to pursue in my next column.

 

Alma Maria O. Salvador is an Assistant Professor of Political Science. Acknowledgement goes to her masters students of PoS 230 section A, SY II-19/20, who shared their thoughts on the theory of power transition: Dustin Abad, Samantha Alcantara, James Amsua, Mikaela Bona, Jayson Cervantes. Angel Chan, Chester Consigna, Tamara Damary, Geliq Garcia, Kenneth Magallones, Heisenberg Rivarez, Nia Tiu, Carrisa Galla and Stephanie Valera.

The DFA’s scorecard

The Department of Foreign Affairs (DFA) is arguably the most inefficient agency under the Duterte administration. It is certainly among those that deliver the least service to the Filipino people.

For those unaware, the DFA’s mandate is composed of seven key components: to protect and defend national sovereignty; to contribute to national security; to assist in national development; to protect the rights of Filipinos abroad; to project a positive image of the country; to promote Filipino culture; and to forge mutually beneficial relations with other countries.

How does the DFA measure up?

In terms of protecting our sovereignty and ensuring national security, the DFA’s passive position towards China’s flagrant encroachment on the West Philippine Sea is a disservice to the citizenry and future generations of Filipinos. The fact that the DFA has not asserted our rights based on our victory in the Permanent Court of Arbitration at the Hague leads many to believe that it is working for China’s interest. Its actions suggest that it is not opposing the encroacher, but abetting it. Worse, the manner by which it bends backwards to feed China’s interest is something I look at with trepidation. Abetting onerous loan availments, allowing Chinese people employment opportunities which could otherwise be given to Filipinos, and facilitating lucrative deals in telecommunication, transport and infrastructure seem dubious. In this aspect, I view the DFA as having undermined Filipino interest.

ECONOMIC DIPLOMACY
As far as its role in national development is concerned, unfortunately, the DFA is stuck in the 1980s paradigm of OFW-centered diplomacy. Even today, the primary purpose of our embassies abroad remains to be the protection of our OFWs. Nothing wrong with this — but it should not be the end-all-be-all of its existence. Our embassies should also be utilized to promote investments, trade and tourism. Doing so is what is called “economic diplomacy” and this is what our aggressive neighbors like Vietnam, Thailand, and Indonesia have been doing for years.

Sure, some of our embassies abroad have trade and commercial consuls — some even have tourism consuls. But let’s be honest, they are token positions, too few and defanged by minuscule budgets. In southern Europe, for instance, there is only one trade consul to facilitate trade and investments in Portugal as well as in France, Spain, Italy, Greece and the other Mediterranean countries. It is physically impossible for one person to cover such an enormous territory. No surprise, our intake of investments is minuscule and we suffer a trade deficit with most.

The DFA will argue that assigning commercial consuls is the responsibility of the Department of Trade and Industry. True, but I contend that the DFA must take the lead in economic diplomacy since our embassies abroad are funded by the DFA’s budget. Besides, doing so it part of its mandate.

So in the realm of national development, the DFA, to me, fails again.

As for promoting Filipino culture abroad, I have seen, first-hand, how our embassies try their best to initiate events to promote Philippine culture. Their efforts, however, are greatly constrained by lack of funds. It is a case of “A” for effort but “D” for impact.

In terms of fostering a good image abroad for the country, the DFA’s efforts have been reduced to killing public relations disasters, managing bad news, and contextualizing the politically incorrect statements of the President. In short, its efforts have been defensive, not proactive.

Back home, the DFA’s presence is strongest felt in passport processing. How does the DFA fair? The time it takes a citizen to secure an appointment is between 7 and 15 days. After completing the application process, one must wait another 7 to 14 days before the passport is delivered. Thailand, in contrast, allows its citizens to simply walk in for passport application and the same is delivered within 4-6 working days. The DFA’s performance is inferior to our neighbor to the west, though not by much. To be fair, it is a huge improvement to what it was some 10 years ago.

VISA-FREE ENTRY
Nowhere is the DFA’s ineffectiveness more evident than in forging bilateral treaties to obtain visa-free entry for Filipino citizens in foreign lands.

According to the Global Passport Power Rank of 2019, the Philippines’ passport is at the 63rd position among 169 countries in terms of strength. The Philippine passport allows its holder visa-free entry to 34 countries, visa-on-arrival in 26 countries, but mandatory visa requirement for 128 countries.

For context, Singaporeans enjoy visa-free entry to 127 countries, visa-on-arrival in 39 countries, and visa required for 32 countries. The Philippine passport is of equal strength as those of Zambia and Cape Verde.

Countries in which Filipinos have the privilege of entering visa-free include: ASEAN, Bolivia, Brazil, Colombia, Costa Rica, the Ivory Coast, Dominican Republic, Ecuador, Fiji, Gambia, Haiti, Hong Kong, Israel, Macau, Micronesia, Mongolia, Morocco, Palestine, Peru, Rwanda, St. Vincent & the Grenadines, Suriname, Taiwan, and Vanuatu.

Aside, from ASEAN, Hong Kong, and Taiwan, none of those countries are frequented by Filipinos. Hence, they serve little purpose to the majority.

So, unfortunately, in this aspect too, the DFA fails yet again.

Admittedly, it is not easy to negotiate visa-free privileges, especially for a country like the Philippines. Several factors work against us. Among them is the sheer size of our population, relatively low per capita income, and the risk of overstaying, low human capital index (level of educations and skills), our political and geo-political conditions and threats of terrorism.

However, it is still within the power of the DFA to negotiate visa-free privileges by virtue of reciprocity, our newfound economic vitality, our status as founding member of ASEAN, and existing trade, diplomatic and defense treaties with counterpart countries. The bottom line is that the DFA must take the initiative.

The Philippines has existing free trade agreements with China, Japan, India, South Korea, New Zealand, United States, Iceland, Liechtenstein, Norway and Switzerland. These countries are low hanging fruit for which the DFA can negotiate visa-free entry. All, except China and India, enjoy visa-free entry to the Philippines. Unfortunately, the rule of reciprocity has not been lobbied for by the DFA.

OPTIONS
Filipinos who travel frequently to Europe, North America, Australia, and Japan have no choice but to go through the tiresome process of visa application each time. I am one of them. Fortunately, I have found a way to get around it. Obtaining dual citizenship and having a second stronger passport have worked for me.

Securing a second citizenship no longer takes five to ten years as it did before. Due to the financial crisis, certain countries have programs that award residency status in less than a year and citizenship within two years in exchange for investments. This is their way of infusing capital into their economies. The good news is that monies invested are not a sunken cost but remain in one’s asset portfolio, albeit parked in the country where citizenship is sought.

Many of the countries with citizenship programs have visa-free privileges to nations frequently visited by Filipinos. A list of these countries and how to apply for citizenship can be found in www.artoncapital.com and www.enterph.com.

Based on my research, three countries stand out as having the best inward immigration programs: Bulgaria, Montenegro, and Portugal.

Bulgaria is an excellent choice. As the newest member of the European Union, Bulgaria is hard-pressed for capital to fund its infrastructure and social development needs. Bulgaria offers one of the fastest immigration processing today with permanent residency granted in 6 to 12 months and citizenship in as fast as two years. Investment requirement is 511,000 euros in bonds, which can be financed for as low as 190,000 euros. Physical presence is not necessary, neither is an interview. Citizenship privileges even extend to children older than 18. Bulgaria has the world’s 11th strongest passport with visa-free entry to 116 countries and visa-on-arrival to 42 countries.

Portugal is my second choice. The Iberian nation has launched its immigration program following its financial crisis in 2010. The minimum investment requirement is among the lowest in the EU at only 350,000 euros. The applicant’s net worth is not looked into, neither is an interview necessary. Physical presence of the applicant is only required for 7 days out of the year and one can earn residency in 6 months and full citizenship in six years. As a resident, however, one gets access to the entire EU without a visa. Portugal enjoys visa-free entry to 124 countries and visa-on-arrival in 42 countries. The citizenship privilege extends to children under 18.

Montenegro is my third choice. As we all know, Montenegro is expected to be admitted to the EU by 2022. Montenegro is the fastest growing economy in Europe with terrific prospects in real estate and tourism. Permanent residency is granted upon application and investment of 350,000 euros (100,000 euros donation and 250,000 euros in real estate) or 450,000 euros in real estate. Citizenship is granted in as short as three months and this extends to children and dependents. Physical presence is not necessary. Citizens of Montenegro have visa-free entry to 77 countries and visa-on-arrival in 41 countries.

Note that aside from the investment required by each country, applicants must still pay for government permits and fees that range from 40,000 to 50,000 euros. Professional fees for facilitating agencies range from 10,000 to 65,000 euros, depending on the country and how fast you would like your citizenship processed.

Obviously, these options are suitable only for those with investable financial resources. The rest must rely on the DFA for their visa-free privileges.

It’s unfortunate that Filipinos have to apply for second citizenship just to enjoy visa-free entry to certain countries. The DFA has been remiss in serving the populace in this manner, among many others aspects. Perhaps if the Secretaries appointed to the DFA spent more time fulfilling their mandate and less time playing Malacañang’s politics and drinking its proverbial cool aide, maybe the DFA can serve the Filipino people better.

 

Andrew J. Masigan is an economist.

Overdue time for educating Filipino voters

During episodes of DZMM’s series on senatorial candidates, the station’s field reporters asked ordinary folks in the streets who they would vote for senator. Many said they would vote for candidates who can provide jobs or access to housing while many others said they would choose candidates who can enforce the law. A few said they would choose candidates who can “fix” things if and when they find themselves in conflict with the law.

The impression the ordinary folks gave with their answers was that they do not know what the responsibilities and duties of a senator are. Yet, in a Social Weather Stations’ survey, the satisfaction rating of Senate President Tito Sotto was +61 or “very good.” It makes one wonder what the respondents of the survey based their rating of Senate President Sotto on when they do not even know what the function of a senator is, much less the role of the Senate president.

Many are extremely puzzled why senatorial candidates like Bong Go, who is known to be no more than the personal assistant of President Duterte, and Lito Lapid, who sat out his previous terms in the Senate in total silence, are, according to surveys, among those most likely to win in the coming senatorial race.

More appalling and sickening to others is why former senators Jinggoy Estrada and Bong Revilla, who are accused of massive graft and corruption, lead in the surveys on senatorial candidates. Both claimed it was their assistants, not them, who had plundered the enormous sum of taxpayers’ money. If so, that makes them inept. Reelecting them is like retaining the services of a bantay-bahay or a security guard after the place has been looted clean.

In his Philippine Daily Inquirer column last Sunday, retired Supreme Court Chief Justice Artemio Panganiban wrote that many of the senatorial candidates are not even fit to be barangay kagawad and that some probable winners are not known for their honesty — his polite way of saying they are known to be corrupt.

He suggests that in the choice of senatorial candidates, voters should consider not only the general qualities of trustworthiness, honesty and diligence, but also the job descriptions of senators, which are:

• the knowledge on how a bill becomes a law and the ability to participate meaningfully in the lawmaking process;

• the ability to ask relevant questions during legislative oversight hearings and investigations in aid of legislation;

• the legal background (not necessarily of a lawyer) and political savvy to unravel the yearly national budget;

• the probity to practice fair play and objectivity when senators act as judges during impeachment and electoral tribunal proceedings, or as members of the Commission on Appointments in scrutinizing presidential nominees/appointees, or as diplomats in weighing treaties and international agreements needing ratification;

• the serenity to wear a statesperson’s garb when the Senate exercises its extraordinary responsibilities to ratify treaties, to declare a state of war, to approve amnesties, to authorize the President to exercise emergency powers, and to revoke or extend martial law and/or the suspension of the privilege of the writ of habeas corpus;

• the independence and intelligence to safeguard the long-term public interest when Congress calls for amendments or revisions to the Constitution.

In an assembly of the Catholic Bishops’ Conference of the Philippines early this year, the bishops set several guidelines for Catholics in political life. Running counter to the traditional view that the Church should stay neutral in politics because of the separation of Church and State, the institutional leaders of the Church counseled the lay faithful to engage in principled partisan politics — “principled” in the sense that Christians should be guided by moral values and first principles, “partisan” in the sense that, ultimately, every voter has to choose a particular candidate representing a particular party, and “politics” in the sense that the winner in a political contest is given the legitimacy and power of decision-making for the community.

The bishops also reminded their faithful that it is their right and their duty to vote for candidates who work for the common good. Hence, candidates should be elected not on the basis of personal favors given to the voter, but on their record of public service and commitment to work for the common good. They set as criteria in the choice of candidates for public office the following:

Conscience. Is the candidate a person of conscience, i.e., a person of moral integrity? Is he/she God-fearing? Does he/she respect human rights? Is he/she transparent and accountable for his/her actions? Are there no charges of corruption in his/her public record?

Competence. What is the educational background of the candidate? What is his/her record of service, either in government or in private life? How is his/her health — physically, mentally, etc.? Popularity alone as a public figure or simple name recall cannot be an assurance of competence in public office.

Compassion. Concern for the poor and marginalized should be the hallmark of a public official. Working for social justice, protecting the rights of minorities are likewise attributes of a compassionate leader.

Companions. Who are the candidate’s supporters and advisers? What is their reputation and integrity? Does the candidate belong to a political party with a clear platform? Or did he/she join a political alliance out of convenience or personal interest? Is he/she a member of a political dynasty?

Commitment. Does the candidate show political will to attain his/her objectives? Does he/she hold on to key principles — e.g., maka-tao, maka-bayan, maka-kalikasan? What is his/her stand on key issues, such as peace-building in Mindanao and peace negotiations with insurgent groups, the protection of the environment, antipoverty measures, and foreign relations?

About eighty percent of voters are Catholic. It is apparent that the great majority of them do not know it is their duty to vote for candidates who work for the common good. They have elected into public office, the Senate in particular, show business stars and sports heroes simply because they are celebrities, never mind if they lacked the competence for public office and the commitment to serve the people.

If the Catholic bishops want their faithful to vote for candidates who will work for the common good, they should tell the ignorant voter — they are called “mga bobong mamboboto” in social media — what the qualifications of the candidates should be. Cagayan de Oro Archbishop Antonio J. Ledesma has done that through an article in the Inquirer and Dagupan-Lingayen Archbishop Socrates Villegas has posted on social media a video that discusses those qualifications.

But what is imperative at this time is the education of the “bobong mamboboto” in principled politics without being partisan. As the bishops have said, the midterm election is crucial as the checks and balances in government are being undermined. They cite the Senate as the only institution that is holding out as the country inches towards total control.

The bishops should therefore direct priests and lay ministers to present to Mass attendees (captured audience) the desired qualifications of candidates for public office. That can be done by projecting on the screens, which most churches now have in the transepts, those qualifications just before the start of Mass or before the end of the Mass.

In the church where I hear Mass, the priest, before giving his final blessing, asks the congregation to say with him a prayer for good governance. It asks God to grant President Duterte and Vice-President Robredo the strength, courage, and wisdom to bring about a system of governance that would redound to the well-being of the people, especially the poor. The bishops can direct priests to lead a prayer during Mass asking God to grant voters the wisdom and courage to choose candidates, particularly those candidates for senator, who will work for the common good.

 

Oscar P. Lagman, Jr. is a member of Manindigan! a cause-oriented group of businessmen, professionals, and academics.

oplagman@yahoo.com

The Bangsamoro

By Benjamin R. Punongbayan

THE NEW autonomous region in Muslim Mindanao, Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), would have been inaugurated by the time this commentary gets into print. I am happy about this development, and I hope it will usher in a much more successful autonomous Muslim region than its predecessor had been. The entire country needs and, I am sure, wants it to be so.

To be sure, there are a lot of difficult problems and challenges that BARMM (Bangsamoro) will face and it will deal with all these practically entirely by itself. In a lunch meeting several days ago at the American Chamber of Commerce, the guest speaker, the well-known Amina Rasul-Bernardo, presented, among others, a list of these difficult challenges. Among these problems, I thought the most fundamental is the current extent of illiteracy in the region — about a third of the entire population cannot read and write. That, by itself, is a humongous restraining factor in trying to drive and achieve a reasonable rate and pace of economic, social, and political developments in the region over the near term.

The other great obstacle is the probable continuing occurrence of violence, especially of the kind induced by foreign elements who may likely try to exploit the current weakness and instability in the region. Of course, the national government will be the spearhead in dealing with this problem, but occurrences of violence will certainly disrupt or even set back development efforts in the region. Clearly, our Bangsamoro brothers and sisters will have their hands full. They need all the help the rest of us Filipinos can give them.

On the brighter side, Bangsamoro got a good break in getting its allocation of funds from the national government. Of course, any amount of funds it receives may still not be enough to meet the funding requirements of the activities Bangsamoro wants to do right away. But I thought Bangsamoro got a good deal, considering that the national government itself is very much wanting in financial resources and there are so many competing uses for the available funds.

Bangsamoro will keep all the local taxes it itself imposes, including some national taxes collected in its jurisdiction but now wholly ceded to the region (capital gains tax, donors tax, etc.).

From the national tax collections, the biggest item the region will receive from the national government is an annual block grant computed at 5% of all BIR and Customs collections after deducting all local government unit (LGU) allotments, determined based on actual amounts three years earlier. After 20 years, certain deductions will be made from the annual block grant. However, the total of these deductions would not be substantial. In addition, Bangsamoro will also keep 100% of all national taxes collected in its jurisdiction for the first 10 years, reduced to 75% thereafter. Income from exploitation of natural resources within the jurisdiction of the region accrues to it in full, except for income from fossil fuel and uranium, which goes to the national government.

To get an idea of the magnitude of the funds going to Bangsamoro from the national government, let us translate the foregoing provisions to estimated annual amounts for the first year of its operation while in transition. The block grant would amount to P77.3 billion for the first year and the BIR tax collections from the region based on the BIR collections budget for 2019 amount to P4.0 billion (not including the BIR collections budget for Basilan, which does not show a breakdown between Basilan City and the rest of the island); or a total of P81.3 billion for the first year. (Note that this total does not include any Customs collections budget for 2019 for the sub-ports located in Bangsamoro as these are not yet obtainable.) The overall effect of all the omissions mentioned above would not be significant and, had these been included, the result would further support the conclusion in this commentary with regard to the Bangsamoro funds coming from the national government.

To appreciate the significance of this estimated annual amount of P81.3 billion fund allocation, it is equivalent to P19.7 thousand per person in Bangsamoro. In comparison, the 2019 internal revenue allotments (IRA) budget for all LGUs in the country, including Bangsamoro’s predecessor, adjusted to include the share of LGUs in Customs collections, translates to P6.8 thousand per capita. Therefore, on a per capita basis, the allotment from national taxes of Bangsamoro is practically triple that of the LGUs in the rest of the country. (The 2019 IRA budget appears to still not include the share of LGUs in Customs collections, as was decided by the Supreme Court last year; the adjustment was made to make the numbers comparable. The population figures used in the foregoing calculations were based on the total population forecast for 2019, and was extrapolated to obtain the equivalent 2019 population forecast for Bangsamoro, including Cotabato City, based on the 2010 Census.)

On the basis of fund availability, therefore, Bangsamoro has a good start indeed.

I thought I would express a few observations regarding the government structure of BARMM. The overall structure is a parliamentary system, which fuses the executive function with the legislative. The legislative body, the Parliament, stands alone and does not have any other legislative chamber that works with it. The fusion of the executive and legislative functions is a good choice, as it may bring more effective results; legislation and execution can be done much more quickly as compared to that of the national government, where there is a separation of such powers. However, I feel that a one-chamber legislature fused with the executive may tend to lead to abuse of power. It may be more effective to add another legislative chamber, call it a senate, which participates in the approval of legislation and, therefore, provides a check on the main legislative body. This is usually the structure of most parliamentary systems around the world. There are a number of ways of how a second chamber in a parliamentary system participates in the legislation process. One of these may fit the cultural, social, and political settings of Bangsamoro.

There is another good feature of the Bangsamoro Parliament. Fifty percent of the members of Parliament are elected through political party proportional representation. This will strengthen the political parties in the region and avoid a political circus — something that the national government badly needs.

Part of the Bangsamoro government structure is the position of a ceremonial head of government that is given the title of Wali. The Wali is chosen by consensus by Parliament and has a regular term of six years. Not knowing any negative impression of the present Sultan of Sulu by the people of Bangsamoro, I thought the Sultan of Sulu would have been a good choice as Wali and which should have been provided in the BARMM organic law. The Sultan as Wali can provide political benefits in two ways — as a factor and symbol of unity among the Bangsamoro people and as an excellent posturing with regard to the Philippine claim of Sabah, assuming that there is a continuing desire to pursue the claim. I realize that there could be an obstacle to this scenario. There seems to be tension in Bangsamoro between its two major ethnic groups. I thought, though, that the group now in political power may create a similar position as that of the Sultan of Sulu and that these two persons can rotate as Wali in a way similar to the rotation of the King of Malaysia among the Malaysian Sultans.

It is now clear that there is a problem with the integration of the Sulu region into Bangsamoro. This problem could be both political and ethnic in nature and which should have been anticipated. Nevertheless, the solution that is being proposed is to restructure the entire Philippines into federalism to accommodate the Sulu region as a separate state. I thought this proposed solution is like using a sledgehammer to drive a small nail. I am not trivializing the issue; not at all. On the contrary, I believe it is a very serious one. What I mean is that such a solution is forcefully drawing all 108 million Filipinos into a minimally-analyzed adaptability of an untried structure to deal with a problem involving about 1.3 million of our brothers and sisters. It is a horrible way of solving a problem, no matter how serious the problem is.

We need a solution that is dedicated to the problem. That solution is right before us to take and is much easier to implement. All that is needed is to split the present Bangsamoro into two parts, into two mirror-image-like autonomous Muslim regions: the mainland part and the Sulu archipelago part. I realize that such a step requires a constitutional amendment and a referendum involving the entire Filipino nation. But so with the so-called federalism solution.

I assume that there is no problem between the two major ethnic groups with splitting Bangsamoro into two parts, because that is what it will be under the so-called federalism solution. Let us do it then. Let us amend the Constitution accordingly by ConAss and hold a referendum — but for that proposal only and for no additional other. Let us not overcomplicate things.

The Philippines is beset by too many serious problems. At least, we seem to be getting one fixed — Muslim Mindanao.

Let us all wish our brothers and sisters in Bangsamoro well in their difficult endeavors!

 

Benjamin R. Punongbayan is the founder of Punongbayan & Araullo, one of the Philippines’ leading auditing firms.

ben.buklod@yahoo.com

First 3 PPP festival films identified

THE Film Development Council of the Philippines (FDCP) has announced the first three entries to this year’s Pista ng Pelikulang Pilipino (PPP), which will be held from Sept. 13 to 19 in cinemas nationwide.

The first three films selected are: Cuddle Weather by Rod Marmol, about two sex workers forming a relationship as “cuddle partners” only to realize they want something more; LSS (Last Song Syndrome) by Jade Castro, a story about two people finding themselves in a series of almost-but-not-quite romantic encounters as they follow fast-rising indie-folk band, Ben&Ben; and, Three Panti Sisters by Perci Intalan, the story of three gay sons who are called back by their estranged and terminally ill father and told that they can have their part of the P300-million inheritance in exchange for each of them giving him a grandchild.

The other five entries will be announced in June.

The PPP, considered the flagship program of the FDCP is a week-long celebration screening “quality Filipino genre films.” This year’s festival is also part of Sandaan celebration of 100 years of Philippine cinema.

Jose Nepomuceno’s 1919 movie Dalagang Bukid is said to be the first Filipino film ever made.

FILM GRANT
In all, the annual film festival will have eight entries — three of which are in an “advanced stage of development or production,” according to a press release, and five more films which have been finished or are in post-production are set to have their Philippine premiere in the festival. Each entry will be given a co-production and marketing fund of P2 million which includes production equipment worth P1 million.

Last year, only select entries were given a chance to apply for a marketing and distribution grant from the FDCP, but this year, all entries will be given a grant.

“One of the changes we introduced in this year’s PPP was our method of selection. After last year’s run, we wanted this year’s installment to be more inclusive,” Mary Liza Diño-Seguerra, FDCP chairman and CEO, said in vernacular during a press conference on March 28 in Gloria Maris restaurant in Cubao, Quezon City, as streamed on the festival’s Facebook page.

The changes, she explained, were made after “numerous consultations” with film producers in order to see how the festival “can help give them a platform to reach a wider audience.”

“At the end of the day, PPP is not just a celebration of Philippine cinema,” she said.

COMMERCIAL RIGHTS
Aside from the co-production fund, Ms. Diño-Seguerra also announced that, unlike other film festivals, the FDCP is giving the full commercial rights of the film to the production company which made it.

“We’re not going to take any rights [away] from them, this is the full support of the FDCP so we can help them address [not having] marketing and distribution funds for their films,” she explained.

Another change they implemented with this year’s run is giving student ticket discounts because “the market of PPP are the students,” said Ms. Diño-Seguerra, and lower cinema admission rates for provincial cinemas. — Zsarlene B. Chua

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