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DTI to add more construction materials for certification

THE Department of Trade and Industry (DTI) said it will be adding more construction materials to the list of products subject to mandatory certification and labeling standards to support the government’s aggressive infrastructure campaign.
Trade Undersecretary for the Consumer Protection Group Ruth B. Castelo said the DTI, through its Bureau of Product Standards (BPS), is currently reviewing its current rules and the list of products to be included.
“By the end of the year we’ll have more products in the mandatory list,” Ms. Castelo told BusinessWorld in Pasay City last week, noting that the proposed materials are “mostly for construction.”
“We will increase it because of the building program,” she added.
She said pole line hardware and polyvinyl-chloride pipes are under consideration while reinstating flat glass, plywood and galvanized iron sheets — items removed from the list in 2015.
The glass industry appealed that the removal of the material from the list has encouraged the influx of cheap imports, posing safety risks.
TQMP Manufacturing Glass Corp. said it is expecting glass to be reinstated by the last quarter of the year at the latest.
“It is the consumers that will benefit the most, by ensuring the quality of flat glass that are being installed in residences and commercial buildings,” said Nonito B. Galpa, Executive Vice-President of TQMP’s subsidiary, Pioneer Float Glass Manufacturing, Inc., in a text message over the weekend.
Pioneer was formerly known as AGC Asahi Glass. TQMP bought the firm from AGC Asahi Glass Ltd., a world leader in glass, chemicals and high-tech materials.
As to the plans of constructing a new float furnace — part of its over P5-billion expansion plan to nearly triple its production capacity, Mr. Galpa said the firm first has “to make sure that the situation is favorable for us.”
“Having flat glass reverted to the mandatory standard status, other concerns like technical smuggling, must also be addressed,” he added.
The BPS is tasked to implement mandatory product certification for various building and construction, electrical and electronics, chemical and consumer products under its product certification scheme.
Such products cannot be sold or distributed in the Philippines without the necessary Philippine standard or import commodity clearance mark.
As of April 2018, there are 85 products the BPS deems critical to safety and required to undergo mandatory certification. — Janina C. Lim

House panel confirms receipt of spending plan; budget hearing starts Tuesday

THE House Committee on Appropriations has confirmed that Speaker Gloria M. Arroyo has transmitted the National Expenditure Program (NEP) in time for the budget hearings beginning Tuesday.
“The Office of the Speaker officially transmitted (the budget) to the Committee on Appropriations, so on Tuesday we can begin our hearings,” Committee chair Karlo Alexei B. Nograles told BusinessWorld in a phone interview Saturday.
Mr. Nograles also said “social services” and “infrastructure” will be the priority of the General Appropriations Act (GAA) of 2019.
Under the NEP, the education sector will receive the highest allocation with P659.3 billion, followed by infrastructure with P555.7 billion, and interior and local government with P225.6 billion.
The first sector to be subject to review is the Development Budget Coordination Committee (DBCC) which will discuss the proposed budgets of the Department of Budget and Management, National Economic and Development Authority, Department of Finance, and Bangko Sentral ng Pilipinas, Mr. Nograles said in a statement Sunday.
Appropriations Committee Vice-Chair Jose Ma. Clemente S. Salceda said he is looking out for the DBCC’s “revenue forecast and underlying assumptions and macroeconomic framework.”
Ways and Means Committee chair Dakila Carlo E. Cua said the DBCC economic forecast is “the most critical.”
After the DBCC, the Committee on Appropriations will next review the proposed budgets of the Philippine Charity Sweepstakes Office (PCSO), Philippine Amusement and Gaming Corp. (PAGCOR), and Department of Agriculture (DA) among others. — Charmaine A. Tadalan

Subsidies rise 7.34% in first half led by NIA

SUBSIDIES given to government-owned and -controlled corporations (GOCCs) rose 7.34% in the first half of the year, the Bureau of the Treasury (BTr) said.
Total subsidies the national government remitted to state-run firms hit P62.49 billion in the six months to June, equivalent to 33.08% of the P188.93-billion subsidy target for 2018.
The National Irrigation Administration (NIA) captured the largest share of subsidies in the first half at P16.58 billion, or about a quarter of the total.
This was followed by the Philippine Health Insurance Corp. (PhilHealth), which obtained P15.21 billion and Land Bank of the Philippines (LANDBANK), which received P12.33 billion.
The Local Water Utilities Administration was the sole GOCC that did not require subsidies during the period.
Also receiving subsidies that period were the Tourism Infrastructure and Enterprise Zone Authority at P3 million, Cagayan Special Economic Zone at P6 million, and the National Home Mortgage Finance Corp. at P11 million.
Subsidies cover operational expenses that are not supported by the GOCCs’ respective corporate revenue or to fund specific projects or programs.
In June, subsidies fell 69.92% year on year to P9.72 billion but were significantly higher than the P3.83 billion in May.
In June the National Food Authority received the largest share of subsidies with P5.2 billion, followed by P3 billion for NIA. — Elijah Joseph C. Tubayan

Developing a skill-based talent strategy

Companies around the world are now understanding that the talent paradigm is shifting. There is, in fact, a continuous war for talent worldwide, with a pressing need for businesses to develop a skills strategy that looks at both the need to operate the business in a cost-efficient matter, while redefining the business model at the same time.
In Singapore, government and the private sector have come together to develop Industry Transformation Maps (ITMs), which are part of their strategy to sustain their economy into the future. The ITMs are designed to be road maps tailored to industries to address specific challenges collaboratively, by trade associations and chambers, businesses and government, in order to develop skilled manpower. While ITMs are perceived to still need streamlining and improvement, the basic concept is sound.
Each ITM includes a relevant Skills Framework, which was established to provide a common skills repository for individuals, companies and training providers to help people remain competitive and employable in the disruptive business environment. However, for companies to truly benefit from the Skills Framework, they need to adjust the context to their own business needs.
A recent EY article, Skills at the heart of talent strategy, identifies five key considerations for companies:
ALIGN YOUR TALENT WITH THE BUSINESS STRATEGY
As more disruptions occur, companies are starting to see that their past successes are not guaranteed to carry them into the future. Digital, for example, is a primary concern. Companies need to identify the right skills to sustain their strategic digital goals in their work force plan, regardless of industry. Without a clear idea of how digital will impact future operations, some companies may struggle to balance the need to “buy” or hire digital talent, and “build” or develop the talent internally through training. They will also need to constantly monitor the skills development of the existing work force in order to manage possible obsolescence.
PLAN YOUR WORK FORCE BASED ON SKILLS
To remain competitive and successful, organizations need to have the right people with the right skills, when they need it and at a reasonable cost. This means identifying the optimal number of people and the type of skills profiles needed. This includes analyzing existing competencies and abilities, and projecting how they will fit into future business needs, and performing a gap analysis between the required work force strength, the changing job requirements, and the necessary training to develop the right skills and competencies.
HIRE FOR SKILLS
Another traditional practice that companies should consider changing is how they recruit talent. Recruitment teams should place more emphasis on skills-based interviews — combining the parameters of knowledge, attitude and competencies, as opposed to the usual getting-to-know-you interviews. The interview process should replicate the work environment as closely as possible, and should ask questions that specifically assess the needed competencies for the role. One such technique is using a behavioral event approach, where candidates are asked to describe their behavior in an important situation in the past, so that the evaluation is based on actual events.
Likewise, this goes back to the earlier point about skills-based manpower planning. Recruitment can leverage effective job profiling to identify candidates who have the right skills for a position, independent of academic degrees. It also allows candidates to better communicate how their knowledge, skills and competencies are relevant to potential employers, as well as how they fit into the organizational culture.
IMPLEMENT SKILLS-BASED REMUNERATION
To better develop and retain needed skills, companies can consider shifting from a “fixed-pay” remuneration system to a skills-based one where wages and pay progression are linked to knowledge, skill mastery and competency. This, however, will require companies to accurately measure their employees’ perception of rewards and balance against a cost-benefit analysis that is specific to the company’s strategy. Using data analytics, companies can better make holistic decisions on reward programs.
Having a skills-based pay system may result in higher wage costs since employees receive more wages, incentives and bonuses for acquiring the right skills. However, it may also translate into leaner work force models, higher productivity and new avenues of business for the company.
INVEST IN TRAINING
One of the oldest jokes in the business world has one manager asking another, “What if we train our people and they leave?” To which the other manager says, “What if we don’t, and they stay?” This illustrates the challenge some companies face in weighing return on investment for skills training. One way to address this is by shifting perspectives to see training as a long-term investment in the company’s success, and not a short-term cost. Proper training can help people add value to the company and expand their job scopes.
At the same time, employee surveys also often indicate that training is one of the key elements that employees look for in a job. By providing useful and relevant training, companies can help their people stay engaged and motivated.
This also boils down to the need for companies to create a corporate culture that embraces lifelong learning and flexibility. This is particularly important for businesses that are becoming more and more reliant on technology. A culture of learning can encourage your people to learn with enthusiasm, allowing them to maintain their lifelong employability and be more productive.
In SGV, we have made lifelong learning a consistent part of our corporate DNA since the company’s inception. Training is a major investment from Day One of a new employee. Even senior partners are provided with learning and development opportunities. True and effective training goes beyond classroom lectures although we also have those consistently. The bulk of the actual training for our people is on-the-job supported by a powerful and inclusive culture of mentoring. And as our people progress through the organization, they in turn become leaders and mentors who embody our values of excellence, service and stewardship to empower successive generations of professionals.
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.
 
Clairma T. Mangangey is a Partner and the Head of Learning and Development of SGV & Co.

TRAIN 2: The failures it addresses

In the 2018 SONA, President Duterte affirmed his unequivocal ownership of TRAIN 1 and 2. What welcome news for TRAIN advocates who felt orphaned when, previously, the President hinted that he will leave the tweaking of TRAIN 1 (in view of inflation) to the ‘wisdom’ of Congress! A successful flagship economic program will ensure Duterte a bright legacy; a mangled one will sink that legacy no matter the political projects. Even so, TRAIN 2 still has ways to go.
Three questions are always posed on TRAIN 2:
1. WHAT IS THE MARKET FAILURE THAT TRAIN 2 IS TRYING TO ADDRESS?
In Economics, we are drilled to press upon policy makers the canon that “a market failure is necessary but not sufficient for an efficient government intervention.” A market failure is economist-speak for the social waste resulting from unbridled interaction of private actors pursuing self-interest. A government intervention in a market failure, if properly executed, can expunge the waste; but badly done, it can also produce a bigger social waste — a government failure. Good governance abhors intervention without a social waste to correct. TRAIN 2 can create a social mess if not targeted to a failure. In real economies such as the Philippines, government routinely violates the canon in either of two ways: (i) by intervening despite there being no failure; or (ii) by failing to lift an extant intervention even when the original market failure has long expired. The expiry may come about because the market has grown and/or technology has improved. Subsequent well-meaning administrations can try to clean up the mess left behind by past administrations and recoup the foregone welfare. Thus, the familiar canon should read, “A failure, whether market or government, is necessary but not sufficient for efficient government intervention.”
Let us apply this to the Philippines.
The prevailing VAT-, tax-, or tariff-free incentives enjoyed by some corporations were granted by past administrations. The idea then was that investors were shying away from the country because of institutional or market deficits. For example, the extant market may be too small for current fixed capital investment requirement — a ‘missing market’ failure. An analogous idea in trade policy is the ‘infant industry argument.’ No firm — not even a monopolist — will break even under laissez faire in a missing market failure. But a direct or indirect (tariff) subsidy or a tax holiday can push firms to profitability and induce entry. If so, such a subsidy or tax holiday could eliminate a social waste.
An incentive frequently offered to induce entry into a missing market is a franchise. The entrant loses money in the first years and recoups in the following years when the market has grown sufficiently. The franchise acts as an indirect subsidy in the form of future profits protected by the franchise in the remaining years. When the market has grown and matured sufficiently to allow for two or more firms to be viable, the continued protection from rivals now becomes a socially costly since other investors will now want to enter, based only on market returns. After sufficient recoupment, the franchise overstays its usefulness and becomes wasteful. This is usually taken care of by a sunset clause in the franchise contract — say, 25 years — specifying the number of years of effectivity. Unfortunately, many of the so-called pioneer or infant industry contracts did not have sunset clauses, thereby granting “forever incentives.”
In this paradigm, the current corporate incentive system has overstayed and now become a ‘government failure.’ And the sitting government is in the right to try to correct it. There may have been market failures at the start but which either market growth and/or technical progress have cured. TRAIN 2 is designed to lift or replace such government failures. We have done this to good effect in the past.
The NASUTRA sugar monopoly, the coconut levy, and the Oil Price Stabilization Fund (OPSF) were government failures that impoverished farmers and nation. Their abandonment was a great relief to suffering Filipinos. The second question is:
2. WHY LIFT ‘COST-US-NOTHING’ INCENTIVES?
The most potent argument over the years in favor of maintaining overstaying incentives is the ‘cost-us-nothing’ argument. It goes this way: “You don’t collect from these firms what you otherwise will collect if the incentives aren’t there, yes, but you don’t collect anything anyway if nobody invests.” How valid is this?
The argument is valid if the extant problem is a missing market failure — in a missing market failure no investor will enter the market without a subsidy or some tax-free privilege! No tax revenue without entry anyway. The argument is, however, invalid if the market has grown enough and/or the technology has changed enough so that some investors will enter even without the subsidy.
For example, the cost of solar power generation has fallen so that by 2018, some investors are willing to enter even without the fit-in tariff. So the fit-in tariff for solar — though perhaps helpful in 2009 — may now be overstaying and wasteful. This is one reason why Germany has moved from granting to auctioning additional access to fit-in incentives. The burden of showing that the missing market still exists should rest on the shoulders of the retain-defenders.
3. IS TRAIN 2 CONFUSING APPLES AND ORANGES?
Modality matters.
In the rule-of-law world, the state is obligated to recompense the holders for the loss of contractually granted privileges. One has to make the case that such a privilege to such a firm has already sufficiently recompensed the firm for its investment and could be lifted. The process cannot however be arbitrary.
For example, the water regulator, MWSS, cannot, in the rule-of-law world, unilaterally do away with tax incentives granted to water concessionaires in the concession contracts without proper compensation.
Institutions matter.
The old adage, “A bird in hand is better than two in the bush,” applies especially under weak institutions. That X pesos implied in automatic incentives are naturally valued more than X pesos still to be reimbursed by BIR. Different delivery modalities render the same nominally equivalent pesos as apples and oranges — non-comparable. And even if such comparability is provided for in the bill, can Congress be trusted to comply? A serious populist mangling looms if TRAIN 2 passes before the mid-term elections. The DoF TRAIN 1 took a beating in Congress and the demonization of TRAIN 1 is still strong and will threaten TRAIN 2. And mitigation measures taken will also need time to pull inflation down.
TRAIN 2 is needed but “haste makes waste” and we may regret a hasty and Congress-battered TRAIN 2.
 
Raul V. Fabella is a retired professor of the UP School of Economics and a member of the National Academy of Science and Technology. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.

The sharing economy index

The “sharing economy” involves strangers sharing several services among themselves without being forced or mandated by a government to do so. They do so voluntarily, allowing suppliers to earn income for services they are willing to provide to consumers who are willing to avail of them at a price both have agreed upon.
A new report, the first edition of the Timbro Sharing Economy Index (TSEI) 2018, was published last week by several free market think tanks in the world. It was produced by Timbro, the biggest free market think tank in Sweden and the Nordic countries, co-sponsored by other free market institutes like the Americans for Tax Reforms (ATR), Center for Indonesian Policy Studies (CIPS) and the Institute for Democracy and Economic Affairs (IDEAS, Malaysia).
Timbro defines the sharing economy service (SES) as “a platform that facilitates agreements between identifiable suppliers of marketable services and identifiable customers demanding said services. The transaction may not involve any transfer of ownership and is conducted on a case-by-case basis, where neither party is bound to engage in future transactions. The SES activity must lower the costs of transactions beyond merely providing advertisement.”
The index is compiled using traffic volume data and scraped data and some 286 worldwide were classified as SES. Monthly traffic data was collected for the services in 213 countries. The largest company in their data set is Airbnb with almost 1.5 million suppliers judged as active in an average week.
Of these 286 SES companies, one-third supply housing and one-half fall into the broad category of business services.
One drawback of the construction of their index though is that the database is not shown and it underestimates app-centric services. Thus, ride-sharing services like Uber and Grab have not contributed much to the ranking and scoring.
The index scoring seems suspect so I add a factor, individuals using the internet as % of population from the World Bank’s World Development Indicators (WDI) database 2018 since SES is highly dependent on internet connectivity and use. This somehow reduces the pessimism implied by TSEI (see table).
Tsei Ranking and Score and Internet use
We go back to SES in public transportation in the Philippines and other Asian countries. Buses and taxi are also part of SES but they are not internet-based and hence, lack the transparency and safety that are available in internet-based companies like Grab and Uber. In the latter, even before the car arrives, the passengers already knows the name of the driver, the car model, and plate number. The driver also knows the name/s of the passenger/s even before they meet. This helps establish trust between driver and passenger.
Enter government regulators like the Land Transportation Franchising Regulatory Board (LTFRB) regulating and restricting new internet-based SES, the transport network vehicle service (TNVS) and Transport Network Companies (TNCs).
Since SES is a voluntary arrangement between service providers and customers, the providers should be free to expand or reduce their services/vehicles, and free to set its pricing and the customers are free to agree or decline the pricing offered by the providers.
The three levels of control and restrictions practiced by LTFRB — (1) franchise control or limited number of accredited TNVS, (2) surge price control, and (3) abolition of per minute pricing in heavy traffic or flooded areas — are policies that distort the incentives system in a sharing economy.
The agency’s intervention diseconomy can only result in (a) less TNVS supply when demand for them is high and hence, (b) more people stranded in streets and offices unable to go home or their next destinations earlier.
Does LTFRB derive pleasure and contentment seeing thousands of people unable to get safe and comfortable rides daily?
Perhaps.
After all, it continues to implement its irrational intervention diseconomy policies. Of course it will not admit this, always providing the alibi that it is “protecting public welfare” even if its policies result in the opposite effect.
A regional player in ride-sharing, Go-Jek, plans to enter the Philippine market.
This is good news on several levels — good for customers because it strengthens competition and expands choices, good for the dominant player Grab because it will deflect or disprove accusations of being a monopoly, and good for new small players because an opportunity for merger with a new regional multinational will allow them to learn more about the sector.
There should be more multinationals from abroad coming into the Philippines and there should be more local companies becoming multinationals and going abroad. Government regulators like LTFRB should simply reduce their appetite for intervention diseconomy and distortion.
 
Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.
minimalgovernment@gmail.com.

A rare opportunity for Sec. Berna Romulo-Puyat

Expectations could not be higher for newly confirmed Secretary of the Department of Tourism, Bernadette “Berna” Romulo-Puyat. Following Wanda Teo who used her position as a piggy bank for the entire Tulfo clan, the public now demands a sensible, no nonsense tourism program.
The stakes could not be higher. Apart from the fact that 2.22 million Filipinos depend on the tourism industry for their livelihood, tourism revenues are now an important contributor to help minimize our widening current account deficit.
The Aquino administration did a splendid job in developing the country’s tourism industry.
From a minor cog in the economy, it has become a major contributor to gross domestic product. Under the baton of former Secretary Mon Jimenez, foreign tourist arrivals expanded from just 3.5 million visitors in 2010 to 6 million visitors in 2016. Even local tourism flourished with some 66 million Filipinos travelling across our islands. Tourism revenues increased from just $2.5 billion in 2010 to $5.6 billion six years after.
Secretary Berna must supersede the performance of former Secretary Jimenez for the Duterte administration to claim that it performed better then its yellow predecessor. Talk about a job cut out for her.
Last week, I had the privilege to have lunch with Secretary Berna along with colleagues from the Bulong Pulungan group. I have known of Secretary Berna since high school as we have many friends in common. However, this was the first time I was able to have an earnest conversation with her.
As first impressions go, I was fairly impressed with her disposition. Apart from having the beauty and charm befitting a tourism marketer, I found her to be articulate, pragmatic, and focused. She clearly understands the principles of branding and the importance of infrastructure in tourism development. As a government worker, she has thrived at the Department of Agriculture for 12 years, so its safe to say that she knows how to navigate the bureaucracy to get things done.
From what I gather, at the heart of Secretary Berna’s agenda is sustainable and responsible tourism. In other words, creating a vibrant tourism industry without damaging the environment and its heritage sites. Also, to minimize tourism’s social costs like prostitution, gambling, and drug use.
In her short discourse, she promised to work with local government units to ensure that the environmental disaster in Boracay never happens again. Painful as it was for Boracay’s stakeholders, she sees the proverbial silver lining in the incident as it made other government units aware of the importance of environmental law enforcement. So hard was the lesson that the President himself warned LGUs to strictly enforce environmental laws in his state of the nation address.
To Sec. Berna’s relief, foreign visitor arrivals still increased by 10.4% in the first half of the year despite Boracay’s closure. Destinations like Mactan, Siargao, Palawan, La Union, and Bohol benefitted while virgin territories like Siquijor, Romblon, and Panay were discovered. For its part, Boracay has been able to heal itself from years of inundation.
Sec. Berna has spent the last three months killing fires left by Teo and consolidating the DoT’s budget, whatever is left of it. She is strengthening the internal audit systems of the DoT to prevent abuses in the future.
In terms of promotions, she has been meeting with the likes of J. Walter Thompson, Evident Communications, and BBDO Guerrero to strategize the country’s next tourism ad campaign. We were told that the “It’s more fun in the Philippines” slogan will continue to be used, albeit refreshed. I consider this a wise move considering the traction and recall the slogan has already built up.
The next campaign will still feature our beautiful beaches, but emphasis will be given to local gastronomy, heritage tourism, and agricultural tourism
THE OPPORTUNITY
I have no doubt that Sec. Berna will succeed in as far as tourism arrivals and revenues go. Everything is working to her favor, not the least of which is the commissioning of numerous provincial airports and more access roads to and from tourist destinations. Infrastructure is a great enabler of tourism and it is all coming on-line in the next few years.
Numbers aside, Sec. Berna has the rare opportunity to forever change the way our country is perceived by the rest of the world. I’m not talking about our image as a tourist destination, but our image as a people, as a culture, our heritage, our achievements, our competencies and our aspirations. I am talking about our country brand.
Even today, despite the great advances we’ve made economically, we are still perceived by the world as a third world country with third world mentality. We are associated with national disasters, grime, and squalor.
To foreigners, images of Smoky Mountain and the annoying jeepney still come to mind when speaking about the Philippines. The jeepney has been used as our icon for decades. It is a national symbol that ceased to be cute a long time ago — it is now a symbol of backwardness.
These images do not give justice to the talent of the Filipino, our achievements in the BPO and electronics space, our strength, resilience, and creativity. It certainly does not do justice to the fact that the country is now among the fastest growing economies in the world with aspirations to be a developed economy by the year 2040.
Country branding refers to the process of defining, building and managing a nation’s image. It is an important component in national development given its effect on tourism, global trade, investments, and diplomacy. It also has a profound influence on our sense of identity as a people and national pride. If ever, Secretary Berna will be the first Secretary to shape our country brand since former Secretary Jose Aspiras in the 1970s.
How the country should be branded is not for me to say — it is something that should be decided upon by experts in global communication. We can look at best practices from other nations.
Germany, for instance, built an image associated with precision and technology. France established theirs based on design and craftsmanship. Both nations have intentionally crafted these images to lend credibility to their exports, industries, and of course, in tourism.
Malaysia and Singapore have crafted their image as modern, progressive economies with advanced infrastructure and strong institutions. All these are meant to make them the first choice of foreign investors
Spain built its image around its passion for life and the humanities. It serves as the perfect building block for its goal to be the global champion in tourism, gastronomy, and agro-industries — a goal it achieved.
If the Philippines does not purposely craft images and perceptions that it wants to be associated with, then the world will do it on its own based on the inputs it receives from international media. Let’s face it, most of the news feeds circulated about the Philippines are of negative persuasions. Hence, the urgent need to manage it.
The importance of country branding cannot be over emphasized since it also affects our “soft power.” Soft power is the ability to influence policy and global decisions on the back of who you are as a nation and the gravitas you wield. It is the ability to attract coalitions, followers, cohorts, and cliques not by force or money but by persuasion.
At this time in our history when government is pursuing an independent foreign policy, soft power is a tool we cannot do without.
At this time when China is encroaching on our borders and the US is looking inwards, soft power will play an important role in defending our sovereignty.
At this time when we need to attract more foreign investments to keep the economy growing apace, soft power is the way in which we can compete against our aggressive neighbors.
Secretary Berna’s role as the tourism chief is clearly much larger than merely increasing visitor arrivals. Her work has sway on the nation’s foreign policy, defense, and the economy.
Having the rare opportunity to shape our country brand is great responsibility and a great opportunity. Done right, Secretary Berna can come down in history as the someone who has changed development trajectory of the Philippines forever.
 
Andrew J. Masigan is an economist

Inflation and the regions

President Rodrigo Duterte’s third State of the Nation Address (SONA) was so boringly bereft of his usual colorful language and blitzkrieg declarations, but not at all uneventful. In the hour-and-a-half waiting for the SONA, Filipinos were watching live, the daring coup on the House floor that ousted House Speaker Pantaleon Alvarez and instantly installed Gloria Arroyo as the new House Speaker by 184 votes and 12 abstentions (philstar.com July 23, 2018).
“Two weeks ago she (Arroyo) called me to do something about the inflation,” President Duterte said in a speech in Zamboanga the day after the SONA (ABS-CBN News July 26, 2018). Aha, so that’s the reason why Arroyo, an economist by discipline (Ph.D. Economics — University of the Philippines) was “chosen” to replace the seemingly well-entrenched Alvarez, a close Duterte ally. But forget the political conspiracy theories about who planned and executed the Alvarez ouster. Forget the similar fate of Sen. Aquilino Pimentel III who had to turn over the Senate presidency, reluctantly, to Sen. Tito Sotto in May; and the added shaming of Pimentel by a rogue PDP-Laban “convention” just last Friday, that “removed” him as party president. The PDP-Laban will yet clarify if the coup was valid and within the party rules.
Yet the insistent political noise will only worsen the already-frightful inflation expectations and other economic worries in this country, where the brusqueness of how things are being done slaps the collective consciousness to look the other way, and pretend all is well.
But the latest Social Weather Stations (SWS) survey showed that the Duterte administration’s net satisfaction rating was down to +58% (still very good), from December’s “excellent” level of +70%. The administration scored the lowest when it came to fighting inflation, which reached its highest level in at least five years in April (interaksyon.com May 11, 2018).
And inflation slipped further to 4.6% in May and skidded to 5.2% in June.
President Duterte must have really felt it, when data from the Philippine Statistics Authority (PSA) showed that the inflation in his beloved Davao was at 5.0%, much higher than the 4.6% national inflation rate in May, and stretched up to 5.4% in June, when national inflation was at 5.2% (Sunstar June 15, 2018). He would have seen that inflation in nine (9) regions (out of 17) has been higher than the national inflation rate, with the Autonomous Region in Muslim Mindanao (ARMM) outrageously up to 7.0% in June, from 6.1% in May.
It is interesting to note that the Visayas incurred high overall inflation rates: Central Visayas (VII) has 6.4%; Eastern Visayas 6.3%; and Western Visayas 6.1%, caused mainly by price increases in transportation and fuel of about 8.0% (all inflation data from PSA).
Is this scenario of the regions being more punished by inflation than the National Capital Region (NCR), which shows 5.8% in June from 4.9% in May — a reason for devolving them as federal states independent of Imperial Manila? The diligence of a loving parent would look at the regional inflation figures and necessarily worry for the regions that are so vulnerable to economic turns that affect the poor citizens living on the resources of where they are staying. Or, should the national government ask, how are the regions handling the money doled out to them?
A BusinessWorld chart “How dependent are regions on national revenue?” showed that the regions outside the NCR have an average of about 85% dependency on the National Government (NG) revenues (bworldonline.com July 13-14, 2018). This is computed from each region’s total operating income minus local sources of income equals the externally sourced “income” as funded by the National Government (NG) expressed as a percentage of total operating income. By this chart, the most dependent on NG is the ARMM, whose total current operating income is funded a whopping 98.01% by the NG. And by the PSA chart on regional inflation, the ARMM has the highest inflation rate (7.7%) in the country as of June 2018.
The third most dependent region on NG is the Zamboanga peninsula (IX), with 86.9% dependency, and an inflation rate of 6.7%, the second highest inflation rate among the regions. The Bicol Region (V) depends 84.48% on NG, and shows 6.9% inflation on the subsidy of NG. SOCCSKSARGEN (XII), the fourth most needing of NG support (86.9%), has inflation of 5.9%. It is only the Cordillera Administrative Region (CAR), the second most supported by NG next to ARMM, availing of 88.7% NG funding and boasting of 3.9% inflation, or better funds management than NCR’s 5.8% inflation as of June 2018.
Could there be some correlation between the huge subsidies of NG to the regions, and the higher inflation rate of these regions vis-à-vis NCR and the total national? Should directed monetary policy be insinuated in the re-calibration of subsidies by NG to the regions — the control of money supply by the regional treasuries could be helped by strict implementation and monitoring of their budgets such that planned expenditures not used up do not leak out as inflationary excesses. How much is enough money for the regions, individually?
Sen. Juan Edgardo Angara has filed Senate Bill No. 1788, to include in the computation of internal revenue allotment (IRA) the VAT paid on imported goods collected by the Bureau of Customs (BoC), increasing funds for local government units (bworldonline.com June 28, 2018). Senate President Pro Tempore Ralph Recto and Sen. Aquilino Pimentel III have filed bills that will increase the IRA of LGUs from the current 40% to a 50% share under the Local Government Code, which has been unchanged since its enactment in 1991 (Ibid.).
In the Duterte administration’s determined move to federalism, the Consultative Commission has proposed a change of the 1987 Constitution to a federal charter which will include government revenue-sharing provisions setting the share to 50%-50% between the national government and federated regions (Ibid.).
Will the new House Speaker Gloria Arroyo, the economist — cooing in Duterte’s ear that he must do something about inflation — gently say to him that with the problematic calibration of revenue-sharing in the evidently continuing dependency of the regions on national funding, it is not yet the time to disaggregate the regions into autonomous federal states?
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

Consultations on for Bangsamoro charter

By Arjay L. Balinbin, Reporter
THE Moro Islamic Liberation Front (MILF) held its first Bangsamoro Consultative Assembly at Camp Darapanan, Sultan Kudarat, Maguindanao Sunday, July 29, amid efforts to acquaint residents and voters in the proposed Bangsamoro Region with the draft Bangsamoro Organic Law (BOL) signed by President Rodrigo R. Duterte last week.
The BOL, scheduled for approval in a plebiscite scheduled later this year, will be the basis for the organization of the said region, on the watch of leaders of the MILF and other stakeholders.
“The assembly was expected to gather at least 50(-)70,000 Bangsamoro, tribal communities or IDPs (internally displaced persons), and migrant settlers from all over Mindanao who will decide on the fate of the BOL, which, according to MILF leaders, is 80%-90% compliant (with) the Comprehensive Agreement on the Bangsamoro signed between the GPH (government of the Philippines) and the MILF,” the Committee on Information of the MILF Central Committee said in a statement.
MILF chairman Al Haj Murad Ebrahim said in a television interview on July 24 that he is “confident” the BOL “would be acceptable to the Moro people” although he pointed out it is only 80% to 90% compliant with the 2014 peace deal with the GPH.
“We started immediately our consultation. We started from the top level of our organization and the acceptability is quite high because I think they understand that we are in a negotiation and we expected we cannot get all (that) we want,” the MILF leader said.
In a phone interview, University of the Philippines (UP)-Diliman law professor Antonio G.M. La Viña said the first test for the BOL “is the plebiscite.”
“For me, the most important is winning Cotabato City, because I think that is needed for the viability of the Bangsamoro. Isabela City of Basilan is not as important as Cotabato City. The six municipalities in Lanao del Norte are important sana pero uphill yan (would have been important but that would be an uphill [campaign]). Kasi it’s the (Because it’s the) whole of Lanao del Norte that has to vote,…the same with the barangays in North Cotabato,” Mr. La Viña said.
Under the law, the Bangsamoro territory includes all the present member-areas of the Autonomous Region in Muslim Mindanao (ARMM) such as cities and municipalities in the provinces of Basilan (except Isabela City), Lanao del Sur, Maguindanao, Sulu, and Tawi-Tawi. The new law also covers the cities of Isabela in Basilan island and Cotabato in the Mindanao mainland, 39 villages in North Cotabato (officially Cotabato province), and six municipalities in Lanao del Norte such as Baloi, Munai, Pantar, Nunungan, Tagoloan and Tangcal, which will have to vote in a plebiscite for their inclusion in the new autonomous region.
Asked about the significance of Cotabato City, Mr. La Viña said, “Cotabato City, obviously, is where the Bangsamoro will be based. It’s just strange that your capital is not a member of (the) Autonomous Region. So, talagang it would be (it would really be) a defeat if Cotabato City is not (included). I think the President has to campaign, help them to get the ‘yes’ vote.”
Cotabato City is the regional center of the ARMM, although it is administratively part of the SOCCSKSARGEN region composed of South Cotabato, North Cotabato, Sultan Kudarat, Saranggani, and General Santos City.
“Isabela, which is a city in Basilan, is not that important because it’s far….The law says ARMM has to vote as a unit. The current ARMM — you can expect that to be a ‘yes.’ There is no possibility that is a ‘no.’ Because mag-isa lang ang Lanao del Sur (is voting as one). Sulu, Tawi-Tawi, and Basilan don’t have many people. So, the voters are in Maguindanao and in Lanao (del Sur),” Mr. La Viña said.
Cotabato City Mayor Frances Cynthia Guiani-Sayadi said in an interview with ABS-CBN on July 28: “Kung ano man ‘yung lalabas sa plebisito ng (Whatever the outcome of the plebiscite on) ‘yes or no’ to Bangsamoro Organic Law [will be], we really have to respect it, kaso naniniwala ako (but we believe that) no matter anong (how you) campaign [for it] mo sa residente ng (before the residents of) Cotabato City, they have a mind of their own.”
“I will respect the outcome of the plebiscite, but if elections or the plebiscite were held today, it would not win in Cotabato City,” she added.
The next challenge, according to Mr. La Viña, is the next elections. “Will the MILF win enough seats to have leverage with other parties and the political families of the Bangsamoro? I actually say they have a good chance because the provision in the Bangsamoro Law requires people to vote for an individual and also for parties, and more seats are reserved for parties. The families, I think wala namang (they don’t have) political parties. So, I think the MILF will dominate. So, I think it’s a challenge in getting enough people elected and then having the alliance there,” he said.
“But the real test for the Bangsamoro is the practicality there, when it gets implemented. Will the money flow? Will the promised budget flow? Will they be able to spend it properly? Will the President actually resist intervening or influencing it? Kasi (Because) that is the real autonomy and the law doesn’t really settle that. So, that is the real test, whether they can implement it effectively,” he added.
In an e-mail interview, lawyer and political consultant Michael Henry Yusingco said: “One huge challenge for the BTC (Bangsamoro Transition Commission) and the MILF is how to coax the Misuari faction of the MNLF (Moro National Liberation Front) and the sultanates of Sulu to participate in the formation of the Bangsamoro government.”
He added: “Giving these two groups a role in the BTA (Bangsamoro Transition Authority) could be a welcome move but the question remains if such an invitation will be accepted.”
“Also, to what extent will they allow these groups to participate in the formation of the Bangsamoro government? To what extent will they allow these groups to exert influence in the transition from ARMM to BARMM (Bangsamoro Autonomous Region in Muslim Mindanao)? These are questions that have no clear answers as of now because the Misuari side and the Sulu sultanates have yet to express any unequivocal position on the BOL. We must all keep an eye on this particular matter,” Mr.Yusingco also said.
He added that the Office of the Presidential Adviser on the Peace Process (OPAPP) and even Mr. Duterte, “will play a crucial role (as) facilitators.”
He said both “must recognize the hard work put in by the BTC and MILF to shepherd the BOL to its enactment and their privilege to reap the fruits of their labor.”
“At the same time, both these offices must also reckon with the realities on the ground and that is, not all Moro groups participated in the passage of the BOL. And yet these groups must have a place in the new Bangsamoro government structure. Helping the BTA find their place is the big challenge.”
On whether the BOL will get enough “yes” votes in the identified Bangsamoro areas, Mr. Yusingco said: “Around October of last year, the BTC in collaboration with the Institute of Autonomy and Governance (IAG), where I am a fellow, held consensus-building workshops on the then BBL in the HoR (House of Representatives). Those activities intensified early this year. Along the way, a genuine spirit of cooperation and collaboration between the BTC, civil society groups in Mindanao, lawmakers and their staff became palpable.”
He said when the BBL was being deliberated in the Senate last May, “there was no feeling of animosity or anxiety, and all the personalities involved were eager to work together to get the best possible outcome. In the HoR, there were some drama but the consensus built by the workshops held strong and the House heeded the call of the President in the end.”
Meanwhile, in the Bicameral Conference Committee level, “it was obvious that it was not just the lawmakers who were doing the work. The BTC and civil society groups were there to give their 100% support. And personally, I believe the BOL will enable the Bangsamoro to properly exercise self-governance in their region. So taking all of these together, I think the BTC will have a great chance at convincing the Bangsamoro community to vote yes for the BOL,” Mr. Yusingco said further.
For her part, UP-Diliman Department of Political Science chairperson and professor Maria Ela L. Atienza said in an e-mail that “one important challenge for the MILF is the setting up of a new, more responsive and effective Bangsamoro government after the plebiscite and elections if legal questions at the Supreme Court level are hurdled.”
She added: “The MILF has to prove that it is capable to have a good working autonomous government that will be an improvement from the criticisms of the current ARMM set-up and track record. This may address pro-IS (Islamic State) militancy in two ways. First, by addressing the needs of Moro people on the ground, this can decrease Moro dissatisfaction and distrust that often lead them to sympathize and support IS groups from outside. Second, the MILF’s armed forces together with the AFP (Armed Forces of the Philippines) can now pursue and crack down on pro-IS militants like the BIFF (Bangsamoro Islamic Freedom Fighter), ASG (Abu Sayyaf Group) , etc. as well as drive out foreign fighters. We must remember that many pro-IS groups are splinter groups of the MILF that broke away after each peace process with the government breaks down.”
An effective and responsive Bangsamoro government, Ms. Atienza also said, “can possibly bring in back to the fold these local splinter groups and their sympathizers.”
“Thus, the MILF has an important opportunity to prove itself, address slowly but more appropriately problems in the area and establish a more viable peace in the area. However, this process takes time. Thus, threats to peace can still continue while the new government is still being strengthened and failure to address problems and distrust among sectors, even if at the level of perceptions, can lead to further conflict,” Ms. Atienza added.
For Mr. La Viña , “We have to deal with them because it’s them who want independence….They will become powerful, more powerful if the Bangsamoro doesn’t work. Basically that is how the MILF became stronger; because, unfortunately, the agreement with the MNLF on the ARMM did not work. [It was] not the fault of the MNLF, [it was] the fault of the government and the Congress. They did not give them the real autonomy which was needed, so they have an excuse why the ARMM was managed badly. They were not given the real autonomy. All the decisions were still made in Manila, in many instances.”
Also sought for comment, UP-Diliman political science assistant professor Perlita M. Frago-Marasigan said: “All I can say is that now that the BOL had already been enacted into law, its detractors will do everything to delay its implementation.”
“Aside from hurdling challenges pertaining to its constitutionality, the majority of the people of the Muslim Mindanao region must also approve the creation of a Bangsamoro autonomous region as defined by its elite crafters. The Muslim Mindanao region does not speak in one voice. Caution must also be taken to ensure that there will be no conflicting provisions in the BOL and the envisioned federal design of the government,” Ms. Marasigan also said.
Mr. La Viña said there are still some objections even from Moro groups, “but from a hundred mistakes, a hundred flaws and problems in the draft BOL when it went to the Bicam, it was reduced to around five political problems remaining.”
“Well, we can never [come up with a] perfect bill or a perfect law. That’s a contradiction in terms to say [that there is] a perfect law,” he also said.
Jerome Succor Aba, spokesperson of the Suara Bangsamoro (Voice of the Moro), said in a statement that they believe Mr. Duterte’s signing of the BOL “will not help resolve the decades-old conflict in the Bangsamoro areas, but will only enhance national government’s control in resources and territories as the Duterte government continues its implementation of Martial Law and other repressive measures against the Moro people.”
“The MILF’s admission that BOL was not a perfect law also opens the floodgates of doubts and disunity among the Moro people — some saying less was gained compared to the previous ARMM agreement with the Moro National Liberation Front (MNLF). Worse, Duterte’s plan for charter change and federalism further divides the Moro people as they question the place and validity of BOL once federalism will come in,” the Suara Bangsamoro also said. “Because of this, Suara Bangsamoro is more inclined to encourage the Moro people who are fighting for the defense of their lands and resources, their economic, socio-political and cultural rights not to lose hope and that if they want to continue to fight for their rights through a peace negotiation that pushes for people’s demands, they should present their proposals to the NDFP (National Democratic Front of the Philippines) which is currently negotiating for the agreement on socio-economic reforms,” Mr. Aba added.

Sara Duterte has ‘influence’ on national scene, says Arroyo ally

By Charmaine A. Tadalan, Reporter
A LEADING ally of House Speaker Gloria Macapagal-Arroyo said Davao City Mayor Sara Duterte-Carpio “wields a lot of influence…, in the national scene,” when sought for comment about the mayor, following a power struggle in the House last Monday, July 23.
Shortly before President Rodrigo R. Duterte’s arrival in Congress to deliver his State of the Nation Address that day, a power play had ensued, leading to the ouster of House Speaker Pantaleon D. Alvarez and the election to his post of former Philippine president and incumbent Representative Gloria Macapagal-Arroyo of Pampanga’s 2nd District.
Mr. Alvarez and Ms. Carpio have been known to be at odds in the Davao Region’s political scene, especially after Mr. Alvarez, secretary-general of the ruling PDP-Laban, branded Ms. Carpio early this year as being part of the opposition when she formed her own party, Hugpong ng Pagbabago. News reports quoted Ms. Carpio as saying in response that Mr. Alvarez “messed with the wrong girl.”
“At this time, Mayor Sara Duterte has shown she wields a lot of influence, not only running the affairs of the City of Davao, even in the national scene,” Davao City Rep. Karlo Alexei B. Nograles said in a phone interview on Saturday.
He added: “Much of her opinion and what she says holds a lot of political sway and influence on the way people think and the way people perceive things, especially when it comes to the national scene, in terms of national politics.”
The congressman also noted, “She’s showing good numbers and I think a lot of Filipino voters trust her and have a high approval of her.”
Ms. Carpio has been among the leading names in recent senatorial polls.
“She’s very capable. She has the capacity in serving in a higher position,” Mr. Nograles said.

DoT to start issuing seals to operate for Boracay establishments by Aug. 16

By Louine Hope Conserva, Correspondent
BORACAY, MALAY — Accreditation for establishments in Boracay that are compliant with all environmental and legal requirements will be released beginning Aug. 16, in time for the October 26 reopening of the island tourist destination.
The accreditation, which will come from the Department of Tourism (DoT), will serve as the final control seal for determining which businesses would be allowed to operate after the island’s six-month closure for rehabilitation work.
“No DoT accreditation, no opening of establishments for tourism activities,” DoT-Western Visayas Regional Director Helen J. Catalbas said in an interview.
She explained that they will use as basis the final report of the multi-agency Boracay Inspection Committee, which is in charge of checking compliance to all national and local requirements.
The DoT held a meeting with Boracay stakeholders last July 25 for updates and preparations for the reopening.
Maylynn “Nenette” Aguirre-Graf, a member of the municipal council of Malay and president of the Boracay Foundation Inc., said it was a good meeting because it gave the business sector and residents an opportunity to express their concerns, particularly on the requirements for accreditation.
“Because whether they accept it or not, we live here and we are the ones who are privy (to) what needs to be done,” she said.
Ms. Graf also said that they are relieved that the government has finally released a clear list of requirements after a period of confusion since the island’s closure last April 26.
The Boracay Inter-Agency Task Force will set up a one-stop shop composed of member agencies where establishments can get their various compliance certificates.
Representatives of the Department of Environment and Natural Resources (DENR), the Department of the Interior and Local Government (DILG), and the DoT will be present at the center.
“The one-stop shop is part of the government’s assistance to establishments in observing a ‘No compliance, No operations’ policy upon the reopening of Boracay,” said DENR Secretary Roy A. Cimatu, chair of the task force.
Mr. Cimatu said the center will temporarily be located at the DENR operation center in Casa Pillar, but a final venue will be decided upon and opened this week.
The DENR chief said they already have the data on compliant and non-compliant businesses, which will be subject to a final validation.
“So if they are already compliant, they can go to the venue to secure their clearances. The three member agencies will schedule a visit to these establishment to validate their compliance,” he said.

Group flags HIV-related discrimination in workplace even with legal penalties

By Gillian M. Cortez
DISCRIMINATION related to the human immunodeficiency virus (HIV) is still predominant in the workplace, despite widespread awareness now on the illness, a labor organization reported.
“It is sad to see that despite years of work, stigma and discrimination still persist,” said Shauna Olney, chief of International Labor Organization’s (ILO) Gender, Equality and Diversity and of ILOAIDS (ILO Programme on HIV/AIDS and the World of Work), at the launching last week of ILO’s report, “HIV Stigma and Discrimination in the World of Work: Findings from the People Living with HIV Stigma Index.”
“People living with HIV have a right to work and no one should deny them that,” she also said in a statement by ILO.
ILO partnered with the Global Network of People Living with HIV (GNP+) for this study, which reported that “In many countries, people had their job description changed, the nature of their work changed, or they had been refused promotion as a result of having HIV.”
In the report, the organizations gathered data from 10,000 respondents from 13 different countries worldwide between 2014 and 2017.
“Between five (percent) and 40% of respondents had lost a job or source of income during the preceding 12 months. Between 15% and 80% of those had suffered job loss
wholly or partly as a result of their HIV status,” the study reported in its summary findings.
Gender is also a factor in the discrimination on HIV-positive workers, with the report citing higher unemployment in some countries among women than among men.
“The lack of independent income among women means women living with HIV do not enjoy economic autonomy to the same extent as their male counterparts,” the report read.
The report also said unemployment among HIV-positive transgenders “remained high,” although in countries like Belize, Cameroon, Nicaragua and Uganda, majority of transgender respondents were employed either full-time or part-time.
“What this report shows is that we still have a long way to go in our efforts to combat workplace-related stigma and discrimination against people living with HIV,” GNP+ Programme Manager Sasha Volgina said.
ILO and GNP+ recommended “Interventions to reduce work-based stigma and discrimination and to (provide) more supportive workplaces (that) have the potential to deliver far-reaching results.”
The report also said workplaces should provide more than financial security and assurance for HIV workers, because “(t)he workplace can be an effective entry point to facilitate access to HIV prevention, treatment, care and support services. It can also be a key site to enforce human rights obligations by ensuring HIV stigma is minimized and discrimination does not occur.”
Article VII, Section 35 of Republic Act 8504, or the Philippine AIDS Prevention and Control Act of 1998, states “Discrimination in any form from pre-employment to post-employment, including hiring, promotion or assignment, based on the actual, perceived or suspected HIV status of an individual is prohibited. Termination from work on the sole basis of actual, perceived or suspected HIV status is deemed unlawful.”
An employer found guilty of such discriminatory acts could face six months to four years in jail and pay a fine not exceeding P100,000, besides removal of licenses or permits if found guilty.
The Department of Health (DOH) released its 2018 First Quarter report on HIV on July 3, reporting that 3,730 people were diagnosed with the disease during the first four months of this year.
The Joint United Nations Programme on HIV/AIDS (UNAIDS) also reported last week that the Philippines has the fastest growing rate on the disease in the Asia-Pacific region.

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