Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 11043

Breaking the routine: Will ChaCha now go forth?

By Charmaine A. Tadalan and  Gillian M. Cortez
AFTER ATTEMPTS by the past administrations to overhaul the 1987 Constitution, is the government’s bid, on President Rodrigo R. Duterte’s watch, toward federalism likely to succeed this time?
Charter change has been a recurring episode since the Marcos era, with a total of six constitutions adapted by the country since its independence in 1898, according to the state gazette.
For much of the Commonwealth until the postwar era, the 1935 Constitution was the sacred law of the land, revived after the end of Japanese occupation and the Pacific War.
But by Ferdinand E. Marcos’s second term at the ominous dawn of the 1970s, the idea of charting a new law that was supposed to keep up with the times began to take shape, if only to be severely compromised by bribery charges at the Constitutional Convention (Con-Con) then, and, at last, by the outcome of a Marcos-tailored constitution ratified at the start of martial rule with the nation held at gunpoint. In hindsight, it was this episode that spawned the persistent campaign since for constitutional revision in the post-Marcos era.
After Mr. Marcos was toppled by the 1986 People Power Revolution, his successor Corazon C. Aquino sought to restore the spirit but not the actual body of the 1935 Constitution by dismantling remnants of the Marcos dictatorship and his legal framework, the 1973 Constitution. She issued Proclamation No. 3, practically declaring a revolutionary government and providing a provisional “freedom” constitution, and formed a constitutional commission in the manner followed now by Mr. Duterte, to draft a new charter that was ratified in a plebiscite the next year.
But in less than a generation’s time, there have been attempts to revise the 1987 charter by the administrations of Presidents Fidel V. Ramos, Joseph E. Estrada and Gloria M. Arroyo. Only now, in Mr. Duterte’s time, is the call to revise the Constitution’s nationalistic provisions, particularly on foreign equity, gaining traction.
Past charter-change campaigns before Mr. Duterte were either tainted by political motives akin to Mr. Marcos’s designs for power or opposed by concerted protest action precisely on that suspicion. The Senate, too, had opposed these charter-change moves, as political science professor Gene L. Pilapil of the University of the Philippines pointed out in an interview.
Back then, the charter-change campaign, especially on Ms. Arroyo’s watch, advocated a unicameral legislature and was therefore aimed at the Senate.
“Institutionally, the fate of these charter change campaigns was determined by the opposition of the Senate who stood to be the most negatively affected in the shift,” Mr. Pilapil said. “But at the same time, (the chamber was) in a position to be the one to vote on whether or not there will be a call for a constituent assembly or a constitutional convention.
Fast-forward to the present: a constitutional change is underway, this time not simply to introduce amendments.
The shift to a federal system was a key advocacy in Mr. Duterte’s presidential campaign in 2016. Six months into the presidency, he issued an executive order organizing the Consultative Committee (Con-Com) to Review the 1987 Constitution, but it wasn’t until January this year that he completed the appointments to this body. As of this reporting in June, the review body had until July to furnish the President a draft constitution ahead of his third State of the Nation Address (SONA).
“This is the first time in the history of this country, where a presidential candidate… already espoused federalism,” former Senate President Aquilino “Nene” L. Pimentel, Jr., who is part of the Con-Com, told BusinessWorld in an interview.

Fast-forward to the present: a constitutional change is underway, this time not simply to introduce amendments.

In the controversial Con-Con of the early 1970s where he also took part, Mr. Pimentel opposed Mr. Marcos’s designs for power and was subsequently detained, together with other delegates opposed as well to the Marcos dictatorship. In the present political environment, he appears to be more open to the possibilities of genuine political reform via constitutional amendments. And like Mr. Duterte, Mr. Pimentel is also a leading advocate of federalism.
“So, if you become a federal state under our proposal, then every state determines the kinds of investments which go to their area and the incentives they will give without seeking the permission of a centralized government agency like NEDA (National Economic and Development Authority),” Mr. Pimentel said.
Con-Com member Arthur N. Aguilar, chairman of the subcommittee on economic affairs, shares Mr. Pimentel’s regard of the work ahead for this body. “Right now, It’s centralized in NCR, CALABARZON, and Central Luzon. That’s about 60% and all regions are in fact languishing, so (the federal system will) empower the regions to plan and have a greater degree in (the economy),” he said.
Mr. Aguilar also cited the recently enacted Ease of Doing Business Act of 2018 as a “precondition” to strengthening an inclusive economy. “When you bring down the permits and licenses to the regions, then it must be easier for businesses to grow from there, and then the regions would have, hopefully, greater share of the tax revenues, that they can plan their own infrastructure (program) and invite investments to generate employment and livelihood,” he said.
Adapting a federal system is believed to devolve government’s power and spread it out across the federated regions. The proposed charter being finalized by the Con-Com intends to grant regions autonomy over economic development, tax policies and foreign and trade relations, among others.

This is the first time in the history of this country, where a presidential candidate… already espoused federalism.” — Former Senate President Aquilino “Nene” L. Pimentel, Jr. told BusinessWorld

These reforms should take effect at least three years after a federal system is in place. But some regions, like Davao and Bicol, are seen to develop faster than the others, according to Mr. Aguilar.
University of the Philippines Professor Antonio Gabriel M. La Viña also echoed in this statement, saying “We have so many successful local governments compared to years ago. Many local governments can take care of themselves (And) many local governments would rather not deal with Manila anymore and that gives them an opportunity for all of them in a regional level. There are so many local governments that have expanded already.”
The UP Professor said that the spread in government power will be convenient for regions. “In (a) archipelagic country it’s always better to disperse. The nearer the regional center is to the local, the better,” he explained.
Unlike the 1987 constitution, Mr. La Viña stressed “Federalism is about creating entity in the region that will now exercise same powers as the national in that same level, and it’s better there. They don’t have to go to manila. They don’t have to go to manila (because) it stops there in the regional level. You’ve been giving the regional level the power to do that.”
For its part, Commissioner Amabelle C. Asuncion of the Philippine Competition Commission (PCC) has advised the committee to ensure consistency in the regulation of competition across the country. “This will preclude (federated regions) from passing their own competition law or forming their own competition commission, so it will be centralized, nationalized,” she said.
The effect of Federalism on business is still up for debate since it will depend on what type of Federal government the Philippines will choose to shift to. Chamber of Commerce of the Philippine Islands President Jose Luis U. Yulo, Jr. said, “It must be further noted that each country has their own versions of Federalism and not all are necessarily successful great countries.Therefore, the economic impact of federalism will greatly depend on the details of the devolution of powers and how these powers are managed.”

“People are beginning to see beyond the big promises that federalizing the form/structure of government is not the correct ‘means,’ and in fact will be counter-productive…” — Christian S. Monsod, member of the 1986 Constitutional Commission

As promising as federalism sounds, however, Mr. Pilapil as well as lawyer Christian S. Monsod, a member of the 1986 Constitutional Commission, still note the public skepticism toward yet another charter-change drive.
A June 2018 Pulse Asia Survey reported 67% of Filipinos are not in favor of amending the 1987 Constitution either at the present (30%) or in the future (37%) while a mere 18% supports Charter change. The same survey showed 62% of the population opposed to federalism now (28%) or in any other time (34%), with only 28% in favor and the rest, undecided.
“People are beginning to see beyond the big promises that federalizing the form/structure of government is not the correct ‘means,’ and in fact will be counter-productive, to address the most urgent problems of mass poverty and gross inequalities, where we are the laggards in our part of the world,” Mr. Monsod said.
He pointed out, further, that the move toward federalism is not even included in the Philippine Development Plan 2017-2022 and Ambisyon Natin 2040, the medium and long-term plans for development. In fact, the plan has about 300 targets, based on strategies to address the issue of underdevelopment of outlying regions.
Mr. Monsod also sees the federalism drive as heading toward “constitutional authoritarianism” — and this is where the latest enterprise on charter change is still haunted by the ghost of Marcos.
Like Mr. Monsod, Mr. Pilapil expects the Senate to handle the present charter-change enterprise with scrutiny. “The Senate may not agree to a joint vote. Even with a separate vote, (convening Congress into a constituent assembly) may not get the ¾ vote of at least 18 senators to approve (the) new constitution (expected to be proposed by the Con-Com).”
“In which case, the charter change project will die a quiet death. And we will have wasted precious time in addressing the real problems of mass poverty and gross inequalities,” Mr. Monsod said.
Atty. Ramon A. Pedrosa, Chairman Emeritus of the CCPI, said Federalism “is a unitive system. The desideratum of granting hithereto national power to subsidiary entities will divide the country.”
The CCPI chairman added that giving regions their own power could possibly lead to weakening of the peso and rising of inflation. “Unless firm monetary and fiscal policy is reserved at the center, the new-found independent economic policies at the local federated level may create a situation where the buying power of the peso may deteriorate into runaway inflation,” Mr. Pedrosa said.
Mr. Yulo added that the Federated regions possibly passing different laws that govern business and economy could make it “become more difficult to do business within our own country.”
Mr. Pilapil said the goal of a federal system to end the dictates of “Imperial Manila” could be better achieved by amending the present Local Government Code.
“(The) problem is, Congress has not even done a single review of the Local Government Code as a first step to amending it, since (it has been) 26 years after (its enactment) — a mandatory review that should be done at least every five years under Section 521 of the code,” Mr. Pilapil said.
Mr. Monsod agreed with that suggestion, noting as well that what the Philippines need now is not a new constitution, but rather the full implementation of the 1987 Constitution and its provisions on social justice, human rights, and local autonomy.

Analysts cite Duterte’s options and China’s odds in sea row

IN THE SECOND of three presidential debates in 2016, then-candidate Rodrigo R. Duterte asked contender Grace Poe, by way of testing her relative inexperience in her five-plus years in public office, what she would do in a Chinese attack on the Philippine Coast Guard.
Ms. Poe answered at that forum in Cebu (posted on YouTube by Bloomberg TV Philippines) that she would summon the military chief and the head of the Transportation Department, being the mother agency of the Coast Guard, and engage other nations with whom the Philippines observes such commitments as the Visiting Forces Agreement:
“Ang kailangan natin gawin ay siyempre ang Presidente, kailangan bumangon agad….Mabilis na babangon ang Presidente at itatawag ang head ng AFP (Armed Forces of the Philippines) at ng head ng DoTC (Transportation Department), sapagkat nandiyan napapailalim ang Coast Guard….Ngayon, meron tayong Visiting Forces Agreement. Meron tayong kasunduan sa ibang bansa kung papaano tayo dedepensahan. Totoo, ayaw natin umasa sa kanila….Kung ano ang pwede natin gawin sa pagkakataon na yun, kailangan ay depensahan natin ang ating bansa. Pero ang totoo, kailangan din natin ng tulong ng ibang komunidad para tayo madepensahan. Pero hindi nangangahulugan na hindi natin palalakasin ang ating military.”
Mr. Duterte won the presidency that year and was immediately confronted by this issue of the Philippines’ maritime tension with China which, as some critics have pointed out, exposed his own relative inexperience in an arena much broader than the national scene, geopolitics.
Since then, the Hague arbitral court ruled in the Philippines’ favor in its dispute over Chinese expansion toward the archipelago’s exclusive economic zone (EEZ). Mr. Duterte sought to revive and nurture the country’s relations with China — and also sought to alienate traditional ally the United States. In the course of this foreign policy, Chinese militarization has advanced in the disputed South China Sea, prompting other world powers to step up pressure on China, while Filipino fishermen contended with the gut issue of recovering their threatened livelihood amid the pursuing Chinese coast guard in our EEZ.
The criticism against Mr. Duterte, not all of it by personalities identified with the opposition Liberal Party, has in turn led to this issue acquiring a political color. And further complicating this matter, as analysts see it, is Mr. Duterte’s raising the specter of war.

Mr. Duterte won the presidency that year and was immediately confronted by this issue of the Philippines’ maritime tension with China which, as some critics have pointed out, exposed his own relative inexperience in an arena much broader than the national scene, geopolitics.

‘LAST COUNTRY TO WANT WAR’
“The President constantly talks about war,” said foreign policy expert Richard J. Heydarian of De La Salle University (DLSU) in a June 6 interview for this article. “That is part of a deliberate attempt to lure false choice for the Filipino people. To say we have only two options is completely devoid of realities on the ground.”
“We know that China is the last country to want war in the South China Sea,” Mr. Heydarian said. “First and foremost, China relies on stability in the South China Sea as (its) oil and gas pass through the South China Sea. Any war will affect China’s trade and strategic interests.”
“The moment they declare war, (this) will immediately alienate every other country that has not seen it (China) as an aggressive power. All these fence-sitters will now consider aligning with the US and the rivals of China. The moment China engages with the United States, this will be used as a pretext (by the US) to also step (up its) military presence in the area,” Mr. Heydarian also said.
He further pointed out that China “wants to be a regional leader. Being a regional leader is all about legitimacy and authority. It’s not about brute force. The moment China is seen as an aggressive force, China will lose legitimacy and authority. And China’s bid to become the center for East Asian architecture will come to an end.”
Also sought for this article, defense analyst and Institute for Policy, Strategy and Development Studies fellow Jose Antonio A. Custodio noted how “countries as far away as Europe have decided to participate in showing the flag and sailing through the South China Sea. Now these are very powerful countries with very capable militaries which in fact, from a maritime and naval dimension, outmatch that of China. Hence, China will be hard-pressed to proclaim its ownership of the area when navies steam through these waterways with impunity.”
As this story was written in June, US bombers had reportedly flown by Chinese defense installations and occupied islands in the South China Sea, on the heels of French ships also sailing by the disputed waters the previous month. France and Britain have agreed to sail its warships there, following warnings by US Defense Secretary James Mattis of Beijing’s “intimidation and coercion” in the South China Sea.
“Global powers are doing that to prevent China from redefining the world order and international system of relations that grew out of the experience in World War Two,” Mr. Custodio said. “That is not merely doing it for the Philippines’ behalf but in order to protect the accepted system of international norms where unilateral declarations of ownership and control especially of large areas is not acceptable.”
Indeed, a report last May (and released in June) by the Congressional Research Service of the US Congress had articulated the “US position on territorial and EEZ disputes in the Western Pacific (including those involving China)” to include the following “elements”: that “the United States takes no position on competing claims to sovereignty over disputed land features in the ECS (East China Sea) and SCS” — a position that, to be sure, is also qualified in the report — and that “the United States supports the principle of freedom of seas, meaning the rights, freedoms, and uses of the sea and airspace guaranteed to all nations in international law. The United States opposes claims that impinge on the rights, freedoms, and lawful uses of the sea that belong to all nations.”
‘CASUS BELLI’
The US pressure on China has been widely regarded as an effort to catch up from its stance in this region during the previous Obama administration.
“We see that when the Chinese started the reclamation in 2013, for two years, everyone was in a state of shock and awe,” Mr. Heydarian said. “Even the United States did not react, in the Obama administration. And I think it will forever dent President Obama’s administration. The US was an absolute failure in the first years. Only recently did they take up the cudgel, and, in reality, the US on their own has not been very effective against China. It has actually given China an excuse that any militarization is defensive.”
The report to the US Congress last May is quite notable for its tenor in describing China’s strategy in the South China Sea: “Some observers characterize China’s approach for asserting and defending its territorial claims in the ECS and SCS as a ‘salami-slicing’ strategy that employs a series of incremental actions, none of which by itself is a casus belli, to gradually change the status quo in China’s favor.”
China’s “incremental actions” may well refer to developments in the South China Sea up to this point, notably Chinese installations last year, as monitored by Washington think tank Asia Maritime Transparency Initiative (AMTI).

The US pressure on China has been widely regarded as an effort to catch up from its stance in this region during the previous Obama administration.

“During Duterte’s administration, China’s militarization has seen an acceleration,” Mr. Heydarian said. “Only now do we see the full weaponization of islands and…, contested land features. In the past few months alone this year, we have seen China deploying electronic jamming equipment, surface-to-air missile sites, anti-cruise ballistic missiles, and nuclear-capable bombers, and likely soon, they will also deploy jet fighters as they have said consistently in the past few weeks.”
He added: “Under Duterte, it seems the Chinese are also expanding their strategic footprint in the Benham Rise. We’re facing Chinese ships in the Eastern and Western coastlines.” This, despite recent efforts by the Duterte government to keep watch over what his Executive Order No. 25 now officially calls the Philippine Rise.
Mr. Heydarian took note of how other countries in the region are dealing with China. “We look to Malaysia,” he said. “In the past two decades since Mahathir resigned in (2002), Malaysia adopted a policy where China will not creep into Malaysian claimed waters and will not claim land features in the South China Sea. They (the Malaysians) have been completely disproven. That is why when Mahathir returned (to power), he is now taking a proper stance on China both in Chinese investment, and then of course questioning the necessity to remain quiet when China is clearly undermining Malaysia’s interests in the South China Sea.”
The analyst also cited Vietnam and Indonesia as “countries (that) are stepping up their efforts” before China. Vietnam, which is no stranger to conflict with China, is a case in point, going by AMTI’s June 13 report (as of this article’s writing) on Vietnam’s dredging activity at Ladd Reef in the Spratlys.
At the same time, “Vietnam has issued strong words as it has called for the removal of these Chinese military installations,” Mr. Custodio for his part said. “Indonesia also has acted assertively against Chinese encroachments. It is only the Philippines through the Duterte administration which is doing what Beijing wants.”
“As long as the Duterte administration remains in position, it is expected that the Philippines will not do anything to displease China,” Mr. Custodio said, adding that “the Philippines has broken ranks with its ASEAN (Association of Southeast Asian Nations) partners on the matter of Chinese aggressive expansionism in the South China Sea.”
Said Mr. Heydarian: “We are now alone as one of the major claimant states that is hoping that by being meek towards China we’re gonna get their mercy. I have yet to see the mercy.”
“This is a self-inflicted appeasement policy vis-a-vis China,” said professor Renato Cruz de Castro of DLSU’s International Studies Department who was also sought for comment. “The other side would consider you weak and not respect you and, in fact, deal with you with utmost contempt. That’s what’s happening right now.”
“We should use diplomacy to create a coalition of states that of course would legally and diplomatically challenge China. That is our approach. We have to rely on that,” Mr. De Castro also said.
Even without a formal coalition, there is a broad understanding — among the global powers and ASEAN’s more assertive members — that weighs against China’s expansion. The need now is for the coordination of this common interest, with or without the Philippine initiative in this effort.
“The US should put forward a maritime security initiative where (it) will help (the) Philippines, Vietnam, and other counties to develop their capabilities,” Mr. Heydarian said. “(This) has to be multilateral — it’s important all major powers with interests in preserv(ing) order and the status quo to help the community. You have the Australians, and the Japanese and Indians have conducted military drills as well. Britain and France have sent ships as well. Remember, France, Britain, and US are all members of the UN Security Council. Russia, by the way, is not taking China’s side. Russia is helping Vietnam in developing their submarines and maritime capabilities. China is against four members of the UN Security Council. The message here is it’s not China versus US. Its China versus the international community.”
Mr. Duterte, however, sees the geopolitical situation differently. Amid the US pressure on China, he said, on the occasion of the 120th anniversary of the Department of Foreign Affairs, that “even the United States has shown a little bit of apprehension” toward China.
He added that “if you go against China, Russia will join the fray.”
For his part, Foreign Affairs Secretary Alan Peter S. Cayetano asserted that Mr. Duterte, “even before he won, knows independent foreign policy. He understands geopolitics.”
And to criticisms of the Philippine position on the South China Sea, Mr. Duterte said: “(W)hat do you want? What kind of pugnacious attitude would I have to adopt to convince the Chinese to get out?”
‘SUBMISSION AND WAR’
“It’s completely misguided and it’s ignorant to imply that our choices here are submission and war,” Mr. Heydarian said. “There is a wide spectrum of strategies the Philippines can adopt. We should upgrade our security pacts with America. We can upgrade our maritime capabilities with India, Australia, and Japan.”
He added: “The reality is that, (al)though Duterte has not been a huge advocate of deterrence with China, the AFP has been very clear that their duty is to protect our territorial sovereignty. You have this kind of dissonance with Philippine foreign policy. We need internal checks that the Executive doesn’t undermine our national interest.”
On the other hand, the DFA has been criticized for what Mr. Custodio describes as its “obfuscating game.”
“It claims it has done a lot to protest what China is doing when in fact it has no previous documents to prove that it did protest,” he said. “In fact, while it goes through the motions to unwillingly protest, it has accelerated internal moves to undertake joint operations with China knowing full well that this will put the Philippines at a great disadvantage as this is tacit recognition of Chinese suzerainty over the area.”
In a press conference on June 14, when this article was being written, Mr. Cayetano maintained that the Philippines was standing firm on its sovereignty.
“I’m assuring you that we’re taking all diplomatic action,” Mr. Cayetano said. “May (We sent a) note verbale, may verbal protest, may written protest, may demarche. So iba-iba ’yung paraan ng (we have taken different steps in terms of) diplomatic action. Meron ding pong minsan ’yung (Sometimes we seek an) inquiry. Ngayon ang sinasabi natin (Now, what we have been saying) from the start that I took over, we do not believe in megaphone diplomacy or microphone diplomacy. We will do our work. We will get the results we want. We have the same objective as past administrations to secure our national territory and protect our sovereign rights. But we will not announce to you every single time we do something.”
Mr. Heydarian, in our interview, had recommended that “We can openly threaten China to embarrass them with the arbitration award. The nine-dash-line doctrine is increasingly disappearing from Chinese diplomatic lingo. They cannot defend it anymore as it was equivocally struck down by arbitration. They are using a different doctrine. So the arbitration award is a continued source of leverage.”
But on that matter, Mr. Cayetano said he had consulted a number of experts who advised him, “’Sir, tignan niyo ’yung sinubmit niyo sa arbitration award. Hindi niyo naman pina-define na nasa EEZ ang Scarborough. Ang sinabi niyo lang, traditional fishing ground.’ So bakit dati hinihuli natin ang Chinese at Vietnamese? Ngayon hindi lang nawala ang control, nasa award pa tuloy na it’s traditional fishing ground of both.” (Sir, look at what you submitted for arbitration. You did not ask that Scarborough [Shoal] be defined as part of the EEZ. You just [cited it as] traditional fishing ground. So why did we even apprehend the Chinese and the Vietnamese [in the past]? Now, not only did we lose control, it’s even in the [ruling] that it’s traditional fishing ground for both.)
“It’s a complex, legal (matter). But this is being brought out by the legal experts sa atin (among us),” the country’s top diplomat continued.
“Pero hindi ibig sabihin na inaatras natin kung kanino ’yun. Kung sasabihin natin, halimbawa, ni Willard, kotse ni Willard ’yun sabi ko kotse ko. Sasabihin ko hindi ako makikipag-usap kay Willard kung ang sasabihin na lang niya ay kotse niya ’yun. At sabihin niya rin, ‘Hindi ako makikipag-usap kay Alan kung sasabihin na lang na kotse mo ’yun.’ Kung sasabihin niyo, ‘Willard, Alan, huwag kayo magbago ng stand ninyo pero mag-usap kayo kung pwede MWF si Willard may gamit, Tuesday, Thursday, Friday, ako may gamit.’” (But it doesn’t mean we are withdrawing [the matter as to] who it [e.g. Scarborough] belongs to. If we say, for example, Willard says he owns the car that I say is mine. I will say I won’t talk to Willard if all he’’ll insist is that it’s his car. And he’ll also say, ‘I won’t talk to Alan if all he says is it’s [his] car.’ And if you say, ‘Willard, Allan, don’t change your stand but talk among yourselves if it’s possible that MWF [Monday-Wednesday-Friday], Willard will use [the car], Tuesday, Thursday, Friday, I’ll have the car.’”)
“Ngayon, kung ako may control, may talo ako doon. So sasabihin ko, ‘Willard, bakit ko pagagamit ko ito three times a week nasa akin?’ Pero kung siya hindi in control, hindi ba mas maganda na pansamatala, Monday, Wednesday, Friday, nasa kanya. Kaso sa wala at all.” (Now, if I had control, I’d still lose. So I’ll say, ‘Willard, why will I let this [car be used] three times a week that I have it?’ But if he is not in control, wouldn’t it be better that for the time being, Monday, Wednesday, Friday, he has it. Better than nothing at all.)
“President Xi (Jinping) and President Duterte agreed na mahirap na umatras sa posisyon ang bawat bansa (that it would be hard for each of the countries staking a claim to withdraw their position). Ang Vietnam, Malaysia, hindi sila aatras sa kanilang posisyon. Ang Pilipinas hindi aatras sa kanyang posisyon. Ang China hindi aatras.”
“So that’s why they have to answer it that way because they never agreed to give up their position at this point in time. But ang sinasabi ng China (as China would say), look at our history. For 40 years, we negotiated boundary disputes on land and after 40 years, most of them have been resolved, so why can’t we talk and resolve here?”
Relations between the Philippines and China, which are now hinged on this unresolved maritime tension, are being watched by this country’s sectors as well as by the citizenry, among whom the polls show China enduring a problematic regard. But with its long experience with adversity and resistance, the nation carries on, regardless of government. — R.S.Torre with interviews by Arjay L. Balinbin, Dane Angelo M. Enerio, and Camille A. Aguinaldo

Two years of Duterte: A mixed picture of drug war, economic boom

PRESIDENT RODRIGO R. Duterte’s two years in office in the Philippines have been marred by controversy, but with one big success: a booming economy. The jury is still out if that’s because, or in spite, of him.
The brash, 73-year-old leader — nicknamed The Punisher when he was a crime-busting town mayor for two decades — has led an anti-drug war that’s killed thousands of people, been labeled a misogynist, angered Catholics with his blasphemous statements and sidelined some of his enemies.
Yet an economy growing more than 6 % and rising incomes have helped keep his popularity intact.
He’s pushed through a tax reform plan, poured money into a 9-trillion-peso ($170 billion) program to build roads and railways, added jobs and kept growth momentum going.
The remaining time of his single six-year term in office will be more challenging. The economy’s outlook is turning sour as inflation surges to a five-year high, investors dump the nation’s stocks and the currency hits a 12-year low against the dollar. That’s not to mention mounting global risks, such as a U.S.-China trade war and rising interest rates.
STILL POPULAR
Duterte’s satisfaction ratings remain high compared to his predecessors
As Duterte enters his third year in office, here’s a look at how his administration has performed on some key indicators.
TAX REFORM
A comprehensive tax plan implemented this year — which lowered income taxes and raised levies on sugary drinks and oil products — boosted government revenue by 19% in the first five months of the year compared to the same period last year. That’s given Duterte more room to spend on projects to support an economy expanding near its potential growth of 6.9 % to 7 %.
Duterte’s government has also taken a hardline stance against tax evasion, winning big in a settlement against cigarette maker Mighty Corp. for alleged wrongdoing.
TAX BOOST
Duterte’s tax reform implemented this year is showing positive impact on collection.
Duterte’s flagship program is dubbed Build, Build, Build, and involves almost 5,000 projects that are expected to generate 43 million jobs by the end of his six-year term. The focus is to spend 859 billion pesos completing 32 of 75 key infrastructure projects by 2022, including upgrading Manila’s airport and rail links from the capital to northern provinces.
DUTERTE’S “GOLDEN AGE” OF INFRASTRUCTURE
The infrastructure push will widen the budget deficit to 3.2 %of gross domestic product next year, above the government’s cap of 3%, Finance Secretary Carlos Dominguez said on Monday.
INFLATION
The tax law boosted fuel costs, and coupled with rising oil prices and a weak currency, pushed up the inflation rate to 4.6 % in May. The central bank will miss its 2 %to 4 %target this year and is worried about price pressures spreading more broadly in the economy and adding to wage demands. Governor Nestor Espenilla has raised interest rates twice this year, with economists predicting he’ll tighten some more in the second half of the year.
CURRENCY
The peso has been one of the hardest hit in Asia this year as stocks take a worse beating than their emerging-market peers. Overseas investors have pulled $1.22 billion out of equities so far this year, exceeding the combined inflows in 2016 and 2017. Since Duterte took office in 2016, foreign investors have withdrawn more than $613 million.
RED TAPE
The Philippines slumped the most in Asia in a global competitiveness ranking by Switzerland-based IMD, dropping nine places to 50th of 63 economies. Stamping out red tape by speeding up bureaucratic processes and queues was one of Duterte’s three biggest campaign pledges, along with restoring law and order and fighting corruption.
PUBLIC ORDER
Duterte’s security policies have been among his most controversial moves. He has repeatedly ordered police officers to shoot drug suspects who resist arrest, and promised to protect authorities from criminal cases in an effort to fight crime and drug dealers. But he’s been criticized for supposedly encouraging summary killings in the drug war that’s left at least 4,000 dead, based on police data. He’s also imposed martial law in the southern island of Mindanao to combat terrorism. The government have said crime rates have eased, but private surveys show 1.5 million families have still been victimized by common crimes during the first quarter of the year. — Bloomberg

China’s Modern Silk Road Project: What it means for the Philippines and the world

Richard Javad HeydarianBy Richard Javad Heydarian
IN THE 21ST CENTURY, infrastructure development has become the new pivot of geopolitics. Power and influence are no longer measured by military prowess or economic size alone but also the ability of international actors to provide the necessary capital and technology to overhaul decaying or underdeveloped public infrastructure around the world.
Asia’s leading economies have all pitched in. Japan has launched the Connectivity Initiative and Partnership for Quality Infrastructure projects, South Korea introduced the “New Northern” and “New Southern” Policies, and India has its own International North–South Transport Corridor project. The biggest of all projects, however, is China’s.
On May 14, 2017, Beijing launched the Belt and Road Initiative (BRI), China’s modern version of the Silk Road. During the summit of global leaders, President Xi Jinping opened up the mega-event as the keynote speaker in front of leaders from as many as 28 nations, all of whom were more than eager to tap into Chinese infrastructure development largesse.
At its very core, the event served as the chief register for China’s new role in the international economic system and, more personally, Xi’s emergence as a global leader. And the timing couldn’t be any more perfect, given America’s abrupt withdrawal from its historical role as the anchor of the global free trade regime.
Through the BRI, which Xi has dubbed as “the project of the century,” not only does China reiterate its commitment to globalization, it also puts itself in the prime position to shape the post-American international economic order.
Over the coming decade, China is expected to invest up to $5 trillion in transcontinental infrastructure projects, which will connect the country’s industrial heartland to the world’s largest consumer markets in Western Europe. The mega-project is slated to cover as many as 64 nations across four continents (Asia, Australia, Africa and Europe), accounting for 62% of the world’s population and about a third of the global gross domestic product (GDP).
China’s policy banks, namely the Development Bank, Bank of China, Export-Import Bank of China, The Industrial and Commercial Bank of China, are set to play a central role in funding the ambitious transcontinental infrastructure initiative.
But over the next two decades, even if China were to spend as much as $8 trillion on the BRI projects, this would amount to only 1.5% of the annual GDP of recipient nations. According to the Asian Development Bank, individual states would need to spend close to 5.1% of their GDP to address their profound infrastructure needs.
The threat, therefore, isn’t falling into a debt trap for most countries, including the Philippines, but instead in a possible “investment chimera”: namely, large investment pledges that never come into fruition, but are enticing enough to soften geopolitical tensions, if not buy influence over, recipient nations.
CHARMING THE WORLD
The BRI’s genesis goes back to 2013. In a high-profile conference in October that year, which was attended by the entire Standing Committee of the Politburo (SCP) and practically all key foreign policy players in the country, the Chinese president held the first-ever policy-meeting about “peripheral nations” (China’s immediate neighbors) since the founding of the modern Chinese state.
Dubbed as the “Peripheral Diplomacy Work Conference,” the event saw the Chinese paramount leader emphasizing the “extremely significant strategic value” that Beijing attaches to its relations with neighboring countries. He highlighted the centrality of deepening economic cooperation and security partnership with nations in the Middle Kingdom’s historical backyard.
Highlighting the centrality of “maintaining stability in China’s neighborhood” to his new foreign policy strategy, the Chinese leader underscored his country’s commitment to “encourage and participate in the process of regional economic integration, speed up the process of building up infrastructure and connectivity. We must build the Silk Road Economic Belt and 21st Century Maritime Silk Road, creating a new regional economic order.”
To prove its determination to realize the BRI vision, China has set up an initial $40-billion Silk Road Fund, with an additional $50 billion to be provided by the Beijing-based Asian Infrastructure Investment Bank (AIIB).
STRATEGIC OBJECTIVES
In 2016, the AIIB approved $1.7 billion in loans to nine projects under the BRI. During the BRI summit in Beijing, Xi pledged another US$113 billion, with Chinese policy banks (e.g., China Development Bank, Bank of China, Export-Import Bank of China, The Industrial and Commercial Bank of China etc.) expected to shoulder up to $1.3 trillion in investments over the coming years.
Half-a-trillion dollars worth of projects and mergers and acquisitions (M&A) deals were announced in 2016 across seven infrastructure projects, a third of them within China. Between 2013 to mid-2017, about 50 major Chinese state-owned enterprises were involved in about 1,700 BRI-related projects.
The BRI is a comprehensive, deliberate, yet flexible strategy, which aims to achieve seven key objectives simultaneously, which are both geopolitical and economic:

1. Develop hinterlands and underdeveloped regions, particularly those with large ethnic minorities;

2. Outsource internal infrastructure glut and productive overcapacity amid an economic slowdown;

3. Develop export markets’ infrastructure for next stage of trade;

4. Expand domestic supply-chain beyond the Pearl River Delta, and internationalize Chinese industrial standards;

5. Save China’s troubled State-Owned Enterprises (SOEs), which employ millions of workers;

6. Lock in rare commodities key to Chinese long-term development;

7. Gain a foothold in key sectors of foreign countries for geopolitical gain, push back against Western influence

The ultimate goal is to mitigate, if not eliminate, existing imbalances in the Chinese economy, while shaping the next chapter of the international economic order along Beijing’s preferences, standards, and interests.
The BRI means emerging countries across Asia, Africa and Europe — developing Oceana as well as Latin American nations may one day be included — increasingly relying on Chinese capital, engineering and, likely, even labor. Between 2000 and 2014, China has invested up to $350 billion around the world, a staggering number that is expected to exponentially increase under the BRI strategy.
THE INVESTMENT CHIMERA
Crucially, the operationalization of the BRI means a growing portion of the world relying on Chinese legal, regulatory, and technological standards. This would make China a global cultural power, similar to where the West and Japan stand today. In fact, China is already establishing parallel international courts to oversee dispute-settlement cases vis-à-vis the BRI projects, especially in matters of debt-repayment and implementation standards.
The problem, however, is that, as one authoritative study by the Center for Global Development put it, “China’s behavior as a creditor has not been subject to the disciplines and standards that other major sovereign and multilateral creditors have adopted collectively.”
There are also concerns over foreign currency fluctuations, since Chinese loans tend to be made in Renminbi or dollars, to which the former is pegged. In fact, the Chinese regime itself fails to provide comprehensive, systematic, centralized, and transparent cross-border reports of its projects. The terms of the agreements also lack transparency.
In some cases, China has pushed for onerous debt-settlement measures including 80:20 debt-to-equity ratios, with financing ratios ranging from 75:25 to 80:20 (with Beijing in clear command position).
It’s precisely the concerns over economic viability as well as China’s aggressive, if not neo-colonialist debt settlement arrangements in places like Sri Lanka, that have forced even Pakistan, a key strategic partner, as well as Myanmar and Nepal, to reject major hydroelectricity projects under the BRI worth close to $20 billion.
Chinese infrastructure projects across key Southeast Asian countries such as Thailand and Indonesia have also been hobbled by delays, concerns over quality, as well as terms of agreement. In Laos, there is fear of long-term debt trap by China.
Despite the lofty pronouncements and pledges, however, BRI investments may not be as large and consequential in the long run. Only a minority of beneficiaries, especially small economies with low sovereign credit ratings, are at risk of a so-called “debt trap.” If anything, what’s even more likely is what can be described as “Chinese Chimera.”
Despite repeated announcements about a new “golden age” of bilateral relations, the first year of Duterte’s administration, for instance, only saw $31 million (PHP 1.61 billion) in Chinese investments, 5% that of Japan’s ($600 million).
Yet, the (limited) Chinese investments may instead have a significantly negative impact on the institutions of host nations, especially where transparency and accountability regimes are sorely lacking. The other concern with BRI-related investments is the competence and economic viability of Chinese contractors. In the case of the Philippines, several of them have been blacklisted by the World Bank for their anomalous track record.
This doesn’t even include concerns over exorbitant interest rates (3-6%), as well as China’s willingness to observe bidding competitiveness procedures, follow standard practices in good governance and environmental sustainability, and, above all, provide jobs for the locals, rather than relying on fully-integrated Chinese supply of capital, technology and labor.
Nonetheless, the Asian Development Bank (ADB) estimates that Asia alone confronts an $8-trillion infrastructure-spending gap over the next decade. Developing countries in Asia need $1.7 trillion annually to cover their infrastructure needs. This makes the BRI an indispensable infrastructure boost, which will have to be welcome with cautious embrace by targeted beneficiaries, including the Philippines.
 
Richard Javad Heydarian is a nonresident fellow of the Stratbase ADR Institute.

Can energy from waste be the answer to the garbage problem?

By Victor V. Saulon
Sub-Editor
SEVERAL PROJECTS at different stages of development are in the process of making use of waste to come up with a useful output, the most ambitious of which is energy, either for the proponent’s own use or to serve a small surrounding community.
Holcim Philippines, Inc., through its co-processing brand Geocycle, is among those that have hurdled the strict permitting process, as well as safety and environmental requirements to make a productive use of waste.
Jon Alan M. Cuyno, Geocycle technical manager, said the waste management arm of the listed company co-processes waste materials coming from industries and other biomass.
“[We’re] producing cement while disposing waste materials and by using it [waste] as alternative fuel or alternative raw material,” he said.
The waste material is not necessarily from cement. It may come from several industries, including manufacturing plants, and even from the agriculture sector.
An example of that waste is the un-taxed cigarettes that were ordered to be destroyed by the Finance department, or the shredded currency bills that the central bank wants to get rid of.
Private companies would prefer not be tagged with anything relating to waste disposal, but food manufacturers would often tap Geocycle to dispose of expired grocery items.
For brand security, these waste items cannot just be brought to a landfill because there is no assurance that the product will not find their way back to grocery shelves. For some, even small bits like packaging materials cannot be brought to a regular landfill, again for brand security. Many multinationals also have a strict no-landfill policy, thus the need for entities such as Geocycle.
“If we talk about industries, what we offer is waste management services. It being services, pag may problema sila sa waste materials nila, nagbabayad sila. Si Geocycle ang binabayaran (if they have a problem with waste material, they pay. Geocycle is paid),” Mr. Cuyno said.
Geocycle’s co-processing plant is not incineration, he said, pointing to the temperature that reaches 2,000 degrees Celcius to turn waste into ash. Incineration reaches a temperature of only 300-600 degrees Celcius, he added.
He said waste material that goes through an incinerator will not have any useful output.
“[It’s] basically size-reduction,” he said, adding that the waste material is simply reduced in size but will still be placed in a landfill.
In cement co-processing, the ash is chemically bound with the cement, thus Geocycle has strict standards in prequalifying the waste materials that go into its plant. These are run under laboratory tests before going through a simulation if the material would affect the produced cement and at the same time pass emission and safety standards for the workers handling them.
Mr. Cuyno said these standards are not set locally. Global standards are used for co-processing as Holcim traces its origins from Switzerland, which has stricter environmental and safety regulations.
Even countries outside the homebase follow the same standards “as if they were in Switzerland,” he said. Given a lax local standard and a strict Swiss standard, the foreign one is followed, he added.
Geocycle started lobbying for approval of its co-processing facility as early as 2003, through the Department of Environment and Natural Resources and Department of Science and Technology. Its co-processing plants in Bulacan and La Union started operating after Holcim secured its treatment storage disposal permit in 2003, Mr. Cuyno said.
Like Geocycle, other entities are on their way to harnessing energy from waste. One of them is Metro Clark Waste Management Corp., which is looking at a waste-to-energy project once the cost of putting up a facility would become a profitable business proposition.
Several local government units are also looking at similar projects. For instance, Davao City is planning to build a waste-to-energy facility that can produce around 12 megawatts of electricity once completed in the next four years.
But the coast is not yet clear for them. There will always be a threat of a court-issued restraining order that could halt a project and cause costly delays.
Environmentalists are also watching closely. Jorge A. Emmanuel, energy technology specialist at Silliman University, said waste-to-energy facilities would encourage communities to produce more waste instead of doing the opposite.
“My fear is that this will enable this vicious cycle of continuing more and more waste in our society instead of actually reducing it,” he said.
“There have been successes of zero-waste around the world,” he said. “It can be done. It has been shown to work here in the Philippines.”

In the Philippines, technology is seeping into agriculture

By Anna A. Mogato
Reporter
AGRICULTURE in the Philippines has always been associated with manual labor and backward traditional farming methods. For the Department of Agriculture (DA), the stigma of farming being a poor man’s job doesn’t make it easier to fulfill its mandate of reaching food security or attracting more people to join the sector. However, progress is already creeping into the sector slowly but surely.
In the past few years, both the government and the private sector made efforts to address self-sufficiency in important food staples through the introduction of hybrid seeds, innovative farming techniques and technology to the agriculture sector.
Agriculture Secretary Emmanuel F. Piñol in May unveiled the department’s key strategies that was “designed in such a way that they will not be just answering the needs of the people in six years but beyond 10 years, 20 years and even 50 years.”
One of these was a revolutionary guide map (www.farmersguidemap.gov.ph) which plots which crops are best grown for each area in the Philippines and where there are shallow water tables. It also indicates fertilizers needed to make up for the nutrients lacking in the area’s soil and the poverty incidence of the community selected.
“We cannot use carabaos anymore. We cannot use primitive farming methods forever,” Mr. Piñol said in preamble to the use of solar-powered irrigation system, which costs less from the traditional irrigation systems.
“Today, NIA (National Irrigation Administration) computes that for every hectare of irrigated farm, the government must spend P450,000. With the solar-powered irrigation system, we are only able to spend P150,000 per hectare and we are able to construct the solar-powered irrigation system in just a matter of 60 days.”
With the first solar-powered irrigation already set in place, the DA is eyeing to set up 170 units nationwide.
In terms of smaller scale technology, the DA also began the use of drones, which were intended to be used in vegetable farms to spray fertilizers and pesticides on a strawberry farm in Benguet last April.
This is amid farmworkers opting out because of other job prospects such as construction work. Mr. Piñol also said that the Pantawid Pamilyang Pilipino Program, more commonly known as “4Ps,” has made farmworkers “lazy.”
For farmers who stayed, however, the long-awaited use of drones and solar-powered irrigation systems to make their work easier are welcomed with open arms. The real challenge, however, is how to make these farmers pick up a smartphone and analyze the data to increase their farm yield.
APPS
This could be good news for the tech-savvy individuals who would want to get into farming but refuse to part with their phones as they tend over their fields, especially with the government’s campaign to achieve rice self-sufficiency to wean off from importing.
The Philippine Rice Research Institute (PhilRice), more known for its invention and promotion of hybrid rice seeds, has been tinkering with the computer to develop mobile and desktop applications for some time now.
PhilRice senior science research specialist Wilfredo B. Collado said that with DA’s policy to achieve food self-sufficiency for basic food staples, PhilRice is also eyeing to “have an impact” in making the country’s rice trade “more competitive” by 2022.
“[We are] generating cutting edge agricultural innovations, vigorously guided by science and supported by policies,” he added.
One of the earlier apps PhilRice has managed to churn out is the Rice Crop Manager (RCM), a desktop application launched in 2013 intended to be used by the agency’s extension workers who reach out to the farmers nationwide. The RCM recommends what farmers need to increase their crop yield. It has so far generated 1.46 million recommendations.
However, Mr. Collado said that this does not mean that PhilRice has managed to break through that much farmers, as the RCM can give out as only as much as three recommendations per farmer.
“The slow internet connectivity is the main problem right now [as well as] the promotion of this technology especially in the provinces,” he added.
“The recommendations given to them is also not just the problem. The issue is the financial capacity of the farmers to buy fertilizers, the prices are very high [or] not all the fertilizers recommended can be found in the area. Some other issues were also in receiving the RCM recommendations.”
Mr. Collado said that among the farmers covered by the RCM, about 20% were unable to receive the recommendation or did not understand the data. In some instances, the extension workers were unable to explain the results of the RCM to the farmers.
As for the issues in the unavailability of fertilizers and pesticides, Mr. Collado said that PhilRice is “trying to really partner” with other agencies in the DA and other private companies like chemical companies, pesticide companies. “Actually,” he added, “there are already requests coming in to partner with us.”
Another project the agency is working on is an app based on the decade-old Leaf Color Chart (LCC).
In the past, the LCC, was simply printed on paper and costs about P50. With the proliferation of cheaper Android smartphones, senior research specialist Ailon Oliver V. Capistrano, who is part of the new LCC project, saw an opportunity to enhance it.
The usual chart, he explained, has four green panels. Users would compare the leaves of the rice plant to the green panels. If it falls below the least green panel, there’s a recommendation on how much nitrogen fertilizer should be applied.
“We had the idea of making it an app since the original model was based on the user’s perception so there may be variations on how we see color,” Mr. Capistrano said. “Since the app is camera-aided, we minimize the variation.”
The LCC Android app is being tested until September and is set to be released for free on the Google Play store by January.
Another mobile app PhilRice has developed, the AgriDOC App, is expected to help farmers to rise in the value chain.
Nehemiah L. Caballong, an information and communications technology expert in the agency, said: “we also want farmers to become entrepreneurs. To move up the supply chain and not be just growers.”
The AgriDOC App is a farm management tool which can keep records on expenses and activities. It also allows farmers to view their farm area through Google Maps. There is also a calendar to remind users of farm-related tasks.
Since it was made available on the Google Play store last January, around 604 farmers have already been using the offline app.
Given its functions, Mr. Caballong said that they have received feedback from the users to also expand the app’s monitoring to other crops, not just rice.
“Well, now our main focus is to improve the system and simplifying interface before we can add the other crops. We’d have to collaborate with other agencies for this like BPI (Bureau of Plant Industries) for this.”
With all the programs PhilRice has set in the pipeline, Mr. Collado said that they “envision a resilient rice farming community, benefiting from a sustainable environment and we also would like to improve rice trade.”
“It’s a problem (rice trade),” he said. “We want to improve the efficiency of rice production, product quality and rice supply so with these, we really would want to improve our post production processes.”
MOVING UP THE VALUE CHAIN
Where PhilRice is left stumped, an international company can step in. On a larger trading scale, Dutch solutions and service provider company Peterson Projects and Solutions (Thailand) Co. Ltd. is eyeing to marry blockchain technology and agriculture in Asia, specifically in rice trade.
Its program manager Chrissa Marey A. Borja, who has overseen a few projects for agricultural supply chain for the company, said that the end-goal is to help smallholder farmers get ahead by increasing their financial capability.
A financial and accounting system, she said, can allow smallholder farmers to apply for a loan or become entrepreneurial — eventually eliminating the need for third-party lenders that lend at high interest rates.
The establishment of the blockchain, she added, can make it easier for farmers to trace where the agricultural produce came from and to ensure if it was grown within a proper set of standards set by a certification board or cooperative.
But given that the blockchain can only work for countries that have reached self-sufficiency in the product being traded, Ms. Borja said the rice blockchain system will not be seen in the Philippines any time soon. The system could be used, however, to ensure food safety purposes in rice importation, one of the issues the government is seeking to address given the annual importation of rice from Thailand and Vietnam.
“We can talk about tech all day,” Ms. Borja said. “But the heart of farming is still the farmer and land.”

Is the green economy the new status quo?

USUALLY the story goes like this: businesses are taking advantage of loopholes to increase profits at the expense of the environment and local communities, and the policy makers are scrambling to close these loopholes. However, more and more, we’re seeing evidence of the opposite: businesses are taking advantage of the market demand for sustainable and ethical products, and policy makers are trying to regulate to incentivize and replicate these behaviors.
Business-as-usual is still the usual, of course. But policy makers in some countries are working to redesign their whole economic system to weed out perverse incentives in the economy, and design in desired catalysts for greener and fairer workplaces, products and lifestyles.
“The SDGs [Sustainable Development Goals] represent an entire agenda around development that presupposes the transition to the green economy,” said Achim Steiner, Administrator of the UN Development Programme.
His words came during an address last night on the side lines of the UN’s High Level Political Forum, at which world leaders gather to assess their progress against the agreed-upon Sustainable Development Goals.
The event, entitled “Transforming our economies and lifestyles: greener and fairer for future generations,” homed in on finance and lifestyles as key drivers for inclusive, green economies. The Partnership for Action on Green Economy (PAGE) — a UN program that helps governments go through precisely this process of reorienting their economies to value sustainability and social equity — hosted the event.
Lena Hök, from construction and development group Skanska remarked on the role that financial institutions could play in reorienting market incentives. “When financial institutions raise environmental or social demands on their investments, it gets a real leverage in the business world,” she said. “Green bonds and investments signal to companies the need to integrate sustainability processes into their core business, measure their work and be transparent with the performance. By doing so business gets a better understanding of their risks and business opportunities as well as a clearer pathway on how to contribute to the sustainability agenda.”
Some organizations may already be ahead of the pack. “We’re currently witnessing a zeitgeist moment, where consumers want companies to define who they are and what they stand for,” said Lance Gould, cofounder of Silicon Valley Story Lab. This is also reflected in the priorities of job applicants, according to CEO of BNP Paribas USA, Jean-Yves Fillion. “They are not so much focused anymore on ‘How much am I going to make? What is my career path?’ They ask about ‘what are your values? What are your sustainability goals?’” he said.
While the mood in the room was upbeat and optimistic, some of the speakers acknowledged that it won’t all be plain sailing ahead. “We have to be honest that there won’t be only ‘win-win situations,’” said Rita Schwarzelühr-Sutter, State Secretary for the Environment from Germany. “We must therefore ensure the success of structural transformation without causing harsh structural breaks.”
Since 2013, The Partnership for Action on Green Economy (PAGE) has grown into an increasingly prominent alliance of UN Agencies, international partner organizations and governments. The partnership is recognized as an innovative and efficient model of excellence for delivering on the 2030 Agenda. Drawing on the expertise of five UN Agencies — UN Environment, the International Labour Organization, the UN Development Programme, the UN Industrial Development Organization, and the UN Institute for Training and Research — PAGE challenges business-as-usual growth and business models, and places sustainability at the heart of economic systems. At the global level, PAGE partners with the donor community, the wider UN system, governments, civil society and the private sector to amplify and accelerate transitions to greener, more inclusive development, and to support future generations and sustainable development pathways. — The Partnership for Action on Green Economy (PAGE)/Reuters.

QUOTES FROM THE EVENT

“We have an entire agenda around development that presupposes that the transition in the green economy context is actually something that’s going to happen. Because without it, the attainment of the Sustainable Development Goals or the 2030 Agenda is purely a theoretical exercise.”

— Mr. Achim Steiner
Administrator
UN Development Programme

“This issue of sustainability is clearly on the table of discussions within companies. The question isn’t anymore ‘should we do something?’ the question is ‘how can we focus on things that matter? How can we focus on things that align with priorities that were developed by the UN?’”

— Mr. Jean-Pierre Clamadieu
CEO, Solvay

“It’s what we do, but as well it’s what we decide not to do anymore; we have to be consistent…We decided to stop financing companies which principal activity is connected to exploring, producing, and distributing oil and gas from shale and from oil sands.”

— Mr. Jean-Yves Fillion
Chief Executive Officer, BNP Paribas USA; Chairman, BNP Paribas CIB Americas

“We have an imperative need to change the model. We will not be able to continue developing with just one planet because the resources are simply not enough. This is why we have to change dramatically and we have to do it fast.”

— Mr. Daniel Calleja-Crespo
Director General for the Environment, European Commission

“I don’t believe in frightening people into shifting their lives. I believe in making sustainable lifestyles attractive and reachable for all.”
“I propose to the politicians to dare to be a bit bold when talking to the financing market: and to push them. It doesn’t necessarily mean to regulate them, but to push them, and don’t be afraid.”

— Ms. Karolina Skog
Minister for Environment and Energy Sweden

“Let’s be clear: the benefits of a green economy go beyond the strictly environmental. Those whose livelihoods are threatened the most by environmental degradation and climate change are often amongst the poorest and most affected by fragility. The shift to a green economy therefore is not just imperative to safeguard our planet, it is also a key piece to address the puzzle of inequalities, create quality jobs and strengthen the resilience of individuals, communities and societies”

— Mr. Neven Mimica
Commissioner for International
Cooperation and Development
European Commission

“To capitalize on the momentum of people’s interest in sustainable consumption and production, we need to make sustainable choices easily available and attractive to consumers… We need economic revolution to do that: we need a transformation from a fossil-fuel based, single-use economy into a circular economy which is based on renewable materials and maximal lifecycles for different products and materials.”

— Mr. Kimmo Tiilikainen
Minister for the Environment,
Energy and Housing, Finland

“The defining feature of the world today is inequality within countries and between countries. And inequality, of course, excludes a lot of people, particularly indigenous peoples, who are the ones who still maintain a lot of the world’s biodiversity and protect a lot of the world’s remaining tropical forests.”

— Ms. Victoria Tauli-Corpuz
UN Special Rapporteur on the Rights of Indigenous Peoples

“An inclusive green growth economic model is one of the sure ways to achieve sustainable development, as it turns environmental limitations and constraints into opportunities by transforming current economic systems.”

— Ms. Patricia Appiagyei
Deputy Minister for the Environment, Science, Technology and Innovation
Ghana

“If construction corporations take the aim to build for a better society, including counting on their carbon footprint, the energy efficiency, the water efficiency, etc., then we have a large step we are taking forward just by doing that.”

— Lena Hök
Senior Vice-President
Sustainability, Skanska AB

“We should remind ourselves the banking is socially useful when it’s done right: it’s about channeling money to socially useful products. We all need to work on making baking beautiful.”

— Mr. Jens Frølich-Holte
State Secretary
Ministry of Foreign Affairs, Norway

“Given our enormous challenges in our countries of poverty, inequality and under-development; it is imperative that we as leaders share our experiences and more importantly strengthen existing partnerships in order to build economies that are both inclusive and sustainable — with the SDG’s at their center. In doing this we must ensure we leave no one behind.”

— Ms. Edna Molewa
Minister of Environmental Affairs
South Africa

“For the first time in human history, a new model is possible… There is no choice to be made between the green and the gold – between the economy and the environmental opportunity – we can do it all at the same time.”

— Mr. Erik Solheim
Executive Director
UN Environment

“Green bonds differ from conventional bonds in that the proceeds are used specifically for projects with tangible environmental benefits. Although the green bond market is still only a small fraction of the global bond market, development of standards and taxonomies continues to encourage growth. Particularly, the expansion of the Green Bond Principles in 2017 opened up additional qualifying categories and introduced new opportunities for green bond issuance.”

— Ms. Anna Zubets-Anderson
Vice-President, Senior Credit Analyst
Moody’s Investor’s Service

From the pages of SparkUp

Since May 2017, SparkUp, BusinessWorld’s multimedia platform for the business-minded youth, has been covering millennial-led start-ups and small and medium enterprises. A year later, it gathered about 500 readers — a crowd composed of business students and young entrepreneurs — in a convention called SparkUp Summit held at the Samsung Hall of SM Aura, Bonifacio Global City, Taguig. On these pages, we run the stories of the summit’s speakers — stories that first saw print in the second issue of BusinessWorld SparkUp and available online at sparkup.ph. Together, these young men and women represent the next generation of business people: creative, idealistic, ambitious, passionate, and most importantly, out on a mission to serve the country.

Continuing the family legacy in the age of e-commerce

By Robert A. Vergara, Jr., Digital Reporter
LIKE MANY Filipino-Chinese boys, 29-year-old Joshua Aragon, CEO and co-founder of online grocery platform Pushkart.ph, grew up as if he were destined to become a businessman.
Hailing from the Go family of mall and supermarket chain Ever Gotesco, Aragon was exposed to operations at an early age, allowing him to learn the fundamentals of running a business.
But his dad always told him: “When you turn 30, make sure you’re starting your own business. You should be able to start something by yourself because after 30 it will be riskier for you because you already have your family and kids. Whatever you want to do, start before you’re 30.”
And so Aragon left the family business in 2015.
He tapped former De La Salle University-Manila schoolmate Bryan Reyes, whose background is in information technology. After several discussions on possible ways to “innovate” and “improve Filipinos’ lives,” the two came up with the idea of creating a digital grocery platform that will allow users to buy grocery items in as fast as 15 minutes.
“One of the low-hanging fruits was online groceries because my family runs a supermarket chain,” he admitted. Launched in April 2017, Pushkart.ph has two partners: Fisher Supermarket and of course, Ever Supermarket. The company charges users P199 for every purchase below P2,000. Delivery of products worth above P5,000 is free.
In a year, the platform has already amassed an estimated 100,000 users and keeps growing by 30% per month in terms of revenues and basket size.
This year, the company eyes expansion in provinces outside Luzon, specifically in Cebu, Davao, and Bacolod.
For Aragon, it’s the timing that really brought the company to its early success.
Philippine e-commerce has witnessed an unprecedented growth in the past three years, as many Filipinos shift from traditional brick-and-mortar shops to their online counterparts to buy goods and services. From fashion items and electronic gadgets, consumers can now also use the internet to fill their pantries.
“I see that there’s a lot of people who are afraid of the inconvenience of traditional groceries, so this is the right time right wave to get into the market,” he said. “From our point of view it’s convenience. An average Filipino spends two to four hours shopping in a day, so that’s the pain point we’re trying to solve.”

Start-ups’ kuya

By Pola Esguerra del Monte, Multimedia Editor
AS FAR AS the internet is concerned, everyone who enters its realm is “at least 18 years old.” That includes the 13-year-old self of Iran-born Forbes under 30 lister Shahab Shabibi, back when he was lurking at 3 a.m. on Yahoo! Messenger (“My parents didn’t mind; I had high grades.”) to chat with a programmer he was building a company with.
Today, at 22 and finally legal, Shabibi is still a builder of things. After the success of rapsong.ir — that company he started in his teens which became Iran’s first underground music portal — as well as a Tarafdari, Iran’s leading sports social media network with more than five million visitors every month, he moved to the Philippines in 2010 and realized he could use his knack for innovation for a deeper social purpose.
“When I came to the Philippines, it was a very eye-opening moment for me,” he told SparkUp. “When I began studying, that was the time that I started getting a better understanding of what is really happening here,” he said. “And then I remember, I had this moment where I realized that what I’ve been doing in Iran is not so amazing. To make another entertainment website, to make another sports website, is not something that truly changes people’s lives. I found myself looking at more fundamental problems that I haven’t seen before.”
That idea came to him while he was working at Rocket Internet in 2014, where he was tasked to setup carpooling platform Tripda. “People started e-mailing me ‘Wow, this is amazing!,’ ‘I’m saving two hours a day!,’ ‘I don’t need to commute anymore!’ I realized that I had never heard this from any of my users back in my previous platforms,” he said. “That’s when I thought to myself that technology can really change people’s lives. And that’s the time I decided that I want to be here and I want to build a company here.”
That company turned out to be Machine Ventures, of which he is the CEO and co-founder together with Harvard-educated health tech guy Farouk Meralli. “Back in our home countries, these problems didn’t exist and that there was a big calling for us that we should do something here,” he said. “We set up Machine Ventures with the idea of solving real world problems using technology as means to make it very big and scalable. We started looking at what is happening in the Philippines and identified a few key issues: lack of infrastructure, poverty, and lack of mainstream quality education.”
The first product the company hatched is HeyKuya, an SMS-based personal assistant service, that gave job opportunities to men, through food delivery and travel booking, among others, to over 15,000 users. In only five months, HeyKuya was acquired by a similar Indonesian personal assistant service called YesBoss.
LESSONS
The acquisition served as a validation, but it also taught Shabibi new lessons.
“As much as we wanted to be about impact, about solving problems, there is this unavoidable discussion about the financial side of things,” he said. “That really helped us to understand that, we don’t want to just build solutions, we want to build sustainable solutions, we want to build solutions that economically make sense in the way every stakeholder would be willing to continue what they are doing because it is also financially reasonable.”
He reflected: “Another realization that I had afterwards is that it is really sad that you cannot control your company after you sell it.”
With Machine Ventures, however, with him at the helm, the journey was just as tough—perhaps even tougher.
“The Philippines is probably one of the hardest countries to setup a company in,” he observed. “Generally, entrepreneurship is very tough but I would say in the Philippines it is much more magnified in terms of all the other inefficiencies that are out there, like supplier deliveries most likely won’t happen on schedule. Likewise, you definitely can’t pay suppliers easily because you go to the bank and all these processes are very lengthy and very tedious.”
But this reality only toughens him up. Machine Ventures is now composed of 24 people who “the resilience and the ability to not take ‘no’ for an answer.” He says: “We believe in that idea of learning entrepreneurship by doing, and learning by mastery, not just taking a course and passing an exam but literally going through the journey with someone who has done it before, and as you do that more and more, you learn.”
Right now, what keeps him busy is the launch of another new venture, MyKuya, a service similar to HeyKuya, whose mission is to create one million job opportunities over the next three years.
“We are building it as a platform where people can get things done, but on the other hand, it also opens a lot of people to job opportunities, the ability work whenever they want, to be their own boss, to have self-respect and self-dignity in what they do in day-to-day basis,” he said.
With all these plans, does he consider himself a social entrepreneur? “I mean, that’s a buzzword right? If I say ‘yes, I’m a social entrepreneur,’ it would probably get more clicks,” he laughs. “But I would say that as an entrepreneur, I have the responsibility and I’m on a mission to solve problems, and the biggest problems are often social problems,” he said. “And the same way that I’ve tried to solve smaller problems in my own little way before, now we are focused on solving bigger problems, and they happen to be social.”

How a 24-year-old plans to send 3,500 college kids to school

By Robert A. Vergara, Jr., Digital Reporter
IT WAS IN Africa that Carmina Bayombong, child of non-government organization workers, first caught glimpse of poverty. This was cemented around a decade later at the University of the Philippines Diliman where while finishing her degree in industrial engineering, she met other students who were forced to drop out due to lack of resources.
This led Ms. Bayombong, now 24, to establish InvestEd: a Filipino start-up engaged in matching student borrowers with lenders via an online platform.
Launched in December 2016, InvestEd offers student loans amounting from P10,000 to P80,000. Students need only to create a borrower account invested.ph online, get notified of qualification within seven business days, be interviewed for a final assessment, and sign a loan agreement that they will pay their loan after finishing their degree.
InvestEd gets investors — lenders — who are promised that they can grow their money for 7%-11% per annum with a minimum amount of P100,000, deposited in tranches.
To secure their investment, a six-point approach to repayment is enforced. This includes multiple matching, where a lender is matched with at least three borrowers to reduce risk, as well as a credit investigation technology using a credit scoring and profiling algorithm powered by artificial intelligence. Lenders are repaid bi-monthly over 12 to 36 months, depending on the student’s loan amount and starting salary. An amortization schedule is provided after depositing their pledge.
Invested was recently awarded a $100,000 grant from the government of Dubai last week to grow its number of loaners from 70 to 3,500. The company is also currently developing a scoring system to conduct the applicants’ background check using social media data, as well as a technology that will shorten the application process to 10 minutes.
“In 2017, we had a different business model,” Ms. Bayombong shared. “We didn’t have service fee, and we only had a very low interest rate. It couldn’t even cover 20% of our costs. We could’ve kept our previous business model and just rely on donations and lenders. With that model we would probably help a thousand students in 10 years.”
But with the revamped and “more sustainable” model, she says, “we could help 10,000 students in just three years.”

Funny shirts, serious business

By Pola Esguerra del Monte,Multimedia Editor
SO HOW have you been since our last interview?
“Ayun,” Ali Sangalang, the writer, answered with a straight face. “Ang yaman na namin.”
Chuckling, Panch Alvarez, the artist, quickly interjected: “Hindi, joke.”
“Naka-Uber pool kami,” Sangalang clarified.
From the first ten seconds of the interview, one can already glean how the founders of Linya Linya, purveyor of witty shirts, work together: Sangalang is the guy who spews humor without effort. Alvarez, his schoolmate-turned-colleague at ad agencies and in Malacañang, sees right through him and interprets his lines through art.
They decided to put their collaborative art on t-shirts bought by the bulk in Divisoria. The two, who grew up wearing Pidro, would hull those shirts to a printer in Parañaque and then onto bazaars in Rockwell. At the end of the day, they’d spend their earnings on booze.
“Ganoon ka-strategic ’yung mga decisions namin,” Sangalang noted.
It didn’t take long before they realized that it takes more than just creativity and a little capital to run a business. That’s where musician Jim Bacarro, who completes the triumvirate behind Linya Linya, came in.
Armed with a supply of 250 shirts — the sum of their initial investment — they set up an online store. In a day, they sold three shirts.
Bacarro, who quit his job in marketing to do Linya Linya full time, had a panic attack. He recounted: “I talked to my wife,” referring to actress and singer Saab Magalona. “I said, ‘Look. I’m really, really in love with this. Can you give me at least six months to see where this goes?’”
Only then did the company have a semblance of a system and strategy. It included getting only fixed salaries (“Sweldo ha,” Bacarro emphasized. “Hindi pa dividends.”) amounting to P6,000 each for a month, enough to pay the rent.
After opening a first stall at the UP Town Center, Linya Linya has grown into a 15-store-strong T-shirt company. Advertisements are plastered at the back of buses plying EDSA, close to their market: the average working Filipino who toils in the lamentable traffic situation but still manages to laugh despite the daily struggle.
Like the pace of buses along EDSA, success will take time. “In terms of what we’ve done, I don’t think we’re there yet,” Alvarez said. “But we’re continuously getting there. We’re getting there.”

1...11,04211,04311,044...13,062Page 11,043 of 13,062
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube