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DTI estimates halal export growth of 6-8% per annum

THE Department of Trade and Industry (DTI) has estimated growth in halal exports to come in at about 6-8% each year amid strong global demand.

In a news conference on Thursday in Makati City, the Undersecretary overseeing the Trade Promotions Group and Special Concerns, Abdulgani M. Macatoman, said the 6% to 8% estimated growth for the halal industry is driven by increasing demand both from countries with large Muslim populations, with halal products also viewed favorably by health-conscious consumers.

DTI Export Marketing Bureau Assistant Director Anthony B. Rivera said 2018 halal exports were estimated at $560 million in 2018.

Of this total, 90% consisted of food and non-alcoholic beverages, with the remainder personal care products, cosmetics pharmaceuticals, and detergents.

These exports were supplied to the Middle East, Southeast Asia and South Africa, according to Mr. Rivera.

Mr. Macatoman said the marketing of halal products is “nearing the end of the awareness stage.”

He added that recent talks with Malaysia, which committed to recognize all the country’s halal certifying bodies, may yield increased access for Philippine halal products.

The Philippines has nine halal certifying bodies, but only six have so far been recognized by Malaysia’s Department of Islamic Development, according to Mr. Macatoman.

During the 2019 Gulfood exhibit, held in February in Dubai, Filipino exhibitors posted sales of $83 million, up from $80 million a year earlier.

Gulfood is the world’s largest annual food, beverage and hospitality exhibition.

Meanwhile, at the Malaysia International Halal Showcase (MIHAS) held earlier this month, Philippine sales also grew to $11 million from $10 million in the previous year.

MIHAS is hosted by Malaysia’s Ministry of International Trade and Industry and organized by the Malaysia External Trade Development Corp. — Janina C. Lim

El Niño impact on prices to show up in ‘2-3 weeks’

THE Department of Trade and Industry (DTI) said any impact of El Niño on food prices could start showing up at the retail level in the next few weeks.

“As of now wala pa naman [there are no increases due to El Nino]. Pero ‘pag naramdaman na ‘yan [But when the effects of El Niño start emerging], maybe in two to three weeks, we’ll know the impact on production then we’ll find out if [retail prices will] increase,” Trade Secretary Ramon M. Lopez told reporters in Makati City late Wednesday.

He noted that prices of vegetables and freshwater fish might increase.

As of April 2, lost agricultural output due to El Niño was estimated at P5.05 billion on volume of 276,568 metric tons, according to the Department of Agriculture’ Disaster Risk Reduction and Management Operations Center.

As for other commodities, prices of sugar and certain cuts of pork are “stable,” he said.

Sugar currently averages P2,200 per 50-kilogram bag, but Mr. Lopez said the price needs to fall to around P2,000 in order for food producers to be “competitive.”

Meanwhile, chicken prices have been fluctuating, he said.

Mr. Lopez said farmgate prices of chicken are at around P60 to P70 per kilo, and as a result the average selling price should be around P110.

The DTI added it will release a new set of suggested retail prices (SRP) for basic necessities and prime commodities (BNPCs) amid a request for a P0.25 to P0.50 increase from sardine canners.

“April maglalabas kami. May mga natatangap kaming request on increase sa sardines kasi mahal inputs nila, [We will issue a new SRP in April. We have been getting requests to raise the suggested price for sardines because inputs have become more expensive.]”

Mr. Lopez said the DTI will consider the request of some of the 20 canned sardines manufacturers for a “minimal” increase.

All other canned goods manufacturers were not affected and have not asked for an increase, according to Mr. Lopez.

The last SRP list was released in February, with 56 out of 242 items in the BNPC list rising 1% to 5%. — Janina C. Lim

Transport dep’t inaugurates upgraded Marinduque Airport terminal, runway extension

THE Department of Transportation (DoTr) said Thursday that it inaugurated the rehabilitated passenger terminal and extended runway at Marinduque Airport.

In a joint statement with the Civil Aviation Authority of the Philippines (CAAP), the DoTr said the combined P21.9-million development project positions the airport to receive more flights.

“The government recognizes that developing an airport such as that of Marinduque’s will provide a boost to the province’s trade, economy, and tourism,” the DoTr said.

The P9-million passenger terminal building rehabilitation was completed last month, while the P12.8-million runway extension was finished last November.

Ahead of the inauguration on April 1, Cebu Pacific subsidiary Cebgo started using the refurbished airport by mounting thrice weekly flights to and from Manila.

“The rehabilitation project improved the 560-square meter passenger terminal building by dropping the height of its ceiling, installing air-conditioning units and X-ray machines, and replacing its accordion walls with glass walls, making it more convenient, safer, and more secure,” it said.

“(The runway extension) increased the usable runway length to 1,533 meters of concrete from the previously 1,400 meters. The concreting enabled the airport to accommodate turbo prop aircraft such as ATR and Q400,” it added.

Marinduque Airport is located in the town of Gasan and is the only such facility on the island of Marinduque. — Denise A. Valdez

Mining industry worst in Asia for risk-reward balance despite DENR changes, Fitch says

THE Philippine mining industry is expected to continue to underperform in Asia as a result of weakening reserves, a poor regulatory framework, corruption, and increasing resource nationalism, a Fitch research unit said.

The Philippines was rated 13th in Fitch Solutions Macro Research’s Outlook for Asia’s Mining Sector report released Thursday. The report covers 13 countries and measures a country’s mining risk and reward.

The Philippine score was 42.6, graded at 46.5 for rewards and 36.7 for risks.

It said one of the factors that affected the results were the uncertainty surrounding environmental policy, as well as corruption.

The uncertainty persists despite the replacement of former Department of Environment and Natural Resources (DENR) Secretary Regina Paz L. Lopez with Roy A. Cimatu in 2017.

“In the case of the Philippines, despite the replacement of anti-mining Environmental Minister Gina Lopez with the more accommodating Roy Cimatu in 2017, government regulations on the basis of environmental protection and general policy uncertainty will continue to plague the mining industry in the coming years. The country scores 42.6 in our Asia Mining Risk/Reward Index and is placed last out of 13 Asian countries, (unchanged) from last quarter,” the report explained.

President Rodrigo R. Duterte appointed Ms. Lopez in June 2016. She implemented an uncompromising environment-focused policy on the mining industry and ordered the suspension of many major miners in early 2017.

In May 2018 the Commission on Appointments rejected her appointment, bringing on Mr. Cimatu. A number of metal miners were able to resume operations, but the ban on open-pit mining remains.

In 2012, President Benigno S.C. Aquino III signed Executive Order 79, which suspended the permit process for miners pending a new fiscal regime for the industry with a revenue split that was more favorable to the government.

President Duterte also ordered a move to increase domestic processing of nickel in 2016 to allow the Philippines to capture more value from its ores rather than ship them to China and Japan for processing.

Asked to comment, Mines and Geosciences Bureau (MGB) Director Wilfredo G. Moncano told BusinessWorld that he contests Fitch’s findings.

Weakening reserves “may be true for one or at the most two mines but, overall mineral reserves ready to be developed are in fact increasing. Three of the priority mines for development once the new fiscal regime is put in place via the approval of TRABAHO Bill will increase the reserves of gold and copper.”

He add that the DENR and the MGB have been seeking ways to streamline the approval process for mining companies and which could start showing results by the second half of the year.

“The DENR and MGB are undertaking the review of the regulatory framework with the end of streamlining and reducing the steps, period of approval, documentary requirements and signatories in line with the Ease of Doing Business Act. The streamlining should be in place by 2nd half of the year,” he said in a text message.

On corruption, Mr. Moncano said: “There may be a few bad eggs left in the bureau, but their irregular acts have been largely controlled. Employees have been investigated. Also, Regional Directors are rotated to other regions to prevent or reduce corruption.” — Vincent Mariel P. Galang

PHL urges ASEAN to strengthen disaster financing system

THE Philippines called for stronger cooperation among member states of the Association of Southeast Asian Nations (ASEAN) on disaster risk financing and insurance (DRFI), citing the region’s vulnerability to natural disasters.

During the 23rd ASEAN Finance Ministers’ Meeting in Chiang Rai, Thailand, Finance Secretary Carlos G. Dominguez III said the liberalization of catastrophic risk insurance will allow for greater access to financial services to protect against calamities in the region.

He added that liberalizing catastrophic risk insurance will also encourage the development of disaster risk information and modeling systems within ASEAN, which can be used to “assess the economic and fiscal impacts of natural disasters, including the sharing of disaster risk data and information at the national level.”

Speaking on behalf of the Philippine government, Mr. Dominguez said ongoing activities such as “regional capacity building on information and experience sharing, awareness and education on DRFI as well as sharing of experiences among member states on fiscal risk management” can be enhanced through intersectoral cooperation.

According to the website of the ASEAN DRFI Programme, three sectoral bodies of the association developed the ASEAN DRFI Roadmap in 2011.

The roadmap aims to strengthen the capacity of member states to effectively manage the impacts of disasters, enhance the financial resilience of the ASEAN Community and promote regional cooperation on DRFI for a disaster- and climate-resilient region.

The Philippines is one of the countries in the region most vulnerable to natural disasters. In 2013, super-typhoon Yolanda (international name: Haiyan) claimed over 6,000 lives and cost the Philippine economy about P571 billion, dampening economic growth by about 0.9 percentage points.

Late last year, the government availed of a parametric insurance policy from the international reinsurance market with a maximum coverage of P20.49 billion, protecting national and local government assets, including public schools in 25 disaster-prone provinces.

In a report from Lloyd’s published in October, the Philippines had the third-highest insurance gap out of the 43 countries surveyed with $4.9 billion, equivalent to 1.3% of its gross domestic product and only lagging Bangladesh and Indonesia.

In terms of underinsurance, or expected losses that will exceed insurance coverage, the country’s shortfall amounted to $4.2 billion. — Karl Angelo N. Vidal

Banana growers seek gov’t assistance over new Japan import testing regime

banana

DAVAO CITY — The Pilipino Banana Growers and Exporters Association, Inc. (PBGEA) has asked the government to assist the industry after Japan implemented stricter tests for chemical residue in fruit imports.

Stephen A. Antig, PBGEA executive director, said in a news conference that the problem was first reported in August 2018 when Japanese inspectors found that some bananas from the Philippines contained Fipronil insecticide beyond the maximum residue limit (MRL).

These bananas were traced to two PBGEA members and other independent exporters, according to Mr. Antig.

Mr. Antig said while the Department of Agriculture’s (DA) Bureau of Plant Industry (BPI) sent a certification containing the names of cleared banana export companies, the Japanese government is still awaiting for an explanation of the assessment process and new protocols put in place.

“(The Japanese government) received the list of audited companies (who are supposed to be) compliant with Japanese standards, but they have not received any report on the process (of) how the companies were audited and selected to be in the list,” the PBGEA, through Mr. Antig, said in a March 20 letter addressed to DA Secretary Emmanuel F. Piñol.

Following the MRL violation, the Japanese government ordered 100% testing of all bananas from the Philippines instead of its previous practice of conducting sample inspections, Mr. Antig said.

He added that the longer process will particularly hurt the industry during the Golden Week holiday in Japan which runs from April 28 to May 6, when limited or no cargo inspections are expected.

“Even the Japanese traders are worried because they might not have bananas in the stores,” Mr. Antig said, noting that the Japanese market accounts for about 50% of the export production of PBGEA members.

George Y. Culaste, officer in charge of the BPI, said in an April 3 letter to PBGEA that the agency has “instituted corrective measures with the issuance of the new banana export protocol which now incorporated food safety.”

“However, our resources at BPI cannot meet the needs of the huge banana industry hence we rely heavily on monitoring and the premise that licensed exporters, packing facilities and registered growers are indeed compliant to the protocol,” Mr. Culaste said.

He noted that the Japanese government has sent 13 notifications so far to BPI and “it is very difficult to convince” them “that the corrective measures are deemed sufficient to lift the 100% mandatory MRL testing.”

Mr. Culaste said BPI will be submitting its comments to the latest set of questions. — Carmelito Q. Francisco

Anatomy of an invasion?

Let’s put this up front: values are everything. And thus, two dictums come to mind: “With integrity, nothing else matters; without integrity, nothing else matters.” Also, “a people that stands for nothing will fall for anything.”

So it’s a puzzle why, despite the mandate for an “independent foreign policy,” our government is utterly besotted with a country we have no commonality with whatsoever, be it history, culture, democratic republican values, human rights, and religion.

But (so they say) China, like the Philippines, is “Asian.”

Whatever that means.

India, Iraq, and Turkey are Asia too.

Yet unlike those countries, we’ve never allowed 120,000 of their workers (others estimate 200,000) to come in these past few months, plus an additional 3.3 million of their people within the past three years.

Add to that loans that a Supreme Court justice felt the need to call out.

Add the US$1.4-billion trade deficit that we endure against that country.

And let us not forget their continued intrusion and poaching of our territory in the West Philippine Sea.

So, why the subservience to this wannabe superpower?

The talking point for those supporting our “China-as-master” policy is that any alternative action might harm the 120,000 Filipinos working abroad. Which is ridiculous.

By that logic, we might as well not stop or regulate foreign workers from or do anything against the US, Saudi Arabia, Canada, Malaysia, Singapore, Australia, or Japan (which have greater Filipino populations than HK), as well as UK, Italy, Spain (which have greater Filipino populations than China).

And if the Filipino overseas population is so crucial as to trump national security considerations, then the one country we should not be pissing off then is the US, which has 4 million plus Filipinos, compared to the 200,000 combined for HK and China.

A variation of the scare tactic touted about is that our 10 million OFWs will be jeopardized should we do anything to hurt Chinese feelings. Not true.

Practically all of the 10 million are not in China; in fact (if one lumps China, Taiwan, Macau, and HK in the count) the top figure would only be around 300k, less than the Filipino population in Malaysia (est. 350k).

Furthermore, those countries would not want to get rid of their Filipino workers due to their English skills and competence. More importantly, those Filipinos contribute to their local economy.

silhouettes soldiers

Compare that with the Chinese workers here, with their tightly controlled work and pay conditions, and utterly ignorant of Filipino or English: not only are they taking jobs away from Filipino workers (BPO, construction, manufacturing), they’re not even contributing to the local economy, as well as jacking up real estate prices.

Filipinos also are not from a country that grabs the territories of other countries, or pose security threats in terms of security or industrial espionage, as well as cyber attacks, on other countries; China has a long history of doing just that to other countries.

Finally, our foreign workers also have protection, albeit modicum, by way of the WTO, ASEAN, or FTA provisions on services, with countries proven to abide by international law and the rule of law.

So it’s really pretty bizarre that our government is kowtowing to China because it’s a) allegedly an upcoming superpower, b) allegedly will be the top economic power, and c) they prop up our economy with funds.

Yet we’re the ones who have to give their workers employment?

And we’re the ones who have to keep importing their products?

Considering we have 2.2 million Filipinos unemployed, around 5 million underemployed, and precisely 10 million Filipinos forced to go overseas because of apparent lack of work (and compensation) available in the Philippines.

Which leads to the thought that perhaps China is not that rich, secure, and powerful at all?

If that’s the case, perhaps we’re better off a) pivoting our independent foreign policy to better, more reliable allies; and b) fast-tracking our military development and civilian reserve force to protect our territories.

Yet, prudence also dictates that even considering the employment and safety concerns of our overseas Filipinos in China (a serious matter needing anticipation and competent handling), compare that with the dangers the 90-100 million Filipinos living in the Philippines potentially face.

Millions of Chinese, anecdotally, are here concentrated in strategic areas such as Metro Manila, Cagayan, Clark, Subic, Cagayan De Oro, and other important cities.

More importantly, they ensconced themselves inside numerous but dispersed condominiums and worker compounds. Theoretically, they could prove a substantial distraction internally for our defensive forces should the latter need to engage a bigger external hostile force.

For context, our PNP is only 120,000 strong, our AFP only has 172,000 active personnel. And they’re scattered all across the country.

Another context: it took only 129,435 Japanese troops to invade the Philippines in 1941.

We’ve probably been invaded already and just don’t know it.

Not really. But clearly there’s a need to correct this situation.

 

Jemy Gatdula is a Senior Fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence.

jemygatdula@yahoo.com

www.jemygatdula.blogspot.com

facebook.com/jemy.gatdula

Twitter @jemygatdula

MORE de-bureaucratizing laws, please

From January to March 11 this year, Congress has created and passed 77 new laws, 28 of national application (table below) and 49 being local or franchise laws. The dates when they were approved by the President this year are also here.

New Republic Acts (RA) of national significance, 2019

From the perspective of tax-conscious taxpayers and regulations-wary entrepreneurs, five of the 28 national laws are good laws on lesser bureaucracies, lesser taxes required: RA 11203, 11231, 11232, 11234, and 11239.

There are 15 bad laws on more bureaucracies needing more taxes, more regulations: 11180, 11194, 11199, 11200, 11201, 11206, 11210, 11214, 11215, 11223, 11228 to 11230, 11235, and 11241.

And eight are somehow neutral laws: RA 11168, 11188, 11202, 11207, 11211, 11216, 11222, and 11227.

Laws of local application include: creating another legislative district, another barangay, high school, polytechnic institute, state university, sports training center, city prosecution office, creating or upgrading a district hospital, granting citizenship to foreigners, extending or renewing a franchise, recognizing an Academy, special provincial/city holidays, renaming a public school, etc.

Majority of these are certainly bad laws because they further expand bureaucracies and offices that require expanded taxes and fees. There is endless welfarism with no timetable at the local and national levels. Congressmen, Governors and Mayors create or convert new schools, news hospitals, new barangays in their locality without spending their local resources because they pass funding to the national government via the General Appropriations Act.

In this midterm election campaign, do we see more national and local politicians promising less burden to taxpayers and entrepreneurs? From their various campaign promises and legislative agenda, the answer is No. Bad.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers

minimalgovernment@gmail.com

The Chinese connection

The public opinion surveys of the past year or so have confirmed that most Filipinos distrust China while wholeheartedly favoring the United States. Over a majority of the population are skeptical of the former’s intentions, and would like the Philippine government to do something about its occupation of the West Philippine Sea.

China has militarized the Philippines’ Exclusive Economic Zone, and its coast guard cutters have been harassing Filipino fisherfolk, driving them from their traditional fishing grounds, and in some instances even robbing them of their catch. It has lately sent hundreds of sea craft that it insists are non-military and unarmed in the vicinity of Pag-Asa island. The lone barangay of the Philippine municipality of Kalayaan is on Pag-Asa, but past experience suggests that China could very well be eyeing it for occupation.

The flotilla of Chinese vessels and the seeming threat to Pag-Asa seem to have moved the Duterte regime to protest the Chinese presence via the Department of Foreign Affairs, and President Rodrigo Duterte to warn the Chinese to keep off the island or else risk war.

Mr. Duterte said in one of his rambling speeches that if China tries to occupy Pag-Asa, he will send more troops there on a “suicide mission” to defend the island. Even Duterte ally Senator Richard Gordon has weighed in by declaring that a country that sends its military forces to the WPS and harasses Filipino fisherfolk is no friend of the Philippines, contrary to what Mr. Duterte and his henchmen have been saying.

Both the DFA’s diplomatic protests and Mr. Duterte’s attempt at a little saber-rattling are a bit too late. As Mr. Duterte has said a number of times, China is now in control of the WPS. Despite the presence of Philippine troops there, it is quite capable of seizing Pag-Asa if it wants to. As usual contradicting his own statements, Mr. Duterte said in the same speech that he wasn’t really about to go to war with China, and was apparently just bluffing about sending a “suicide mission” to Pag-Asa. He pointed out that the Philippines is entirely at the mercy of Chinese missiles, which that country has deployed on its artificial island-bases — to the construction of which the Duterte regime did not object when it was going on. Neither did the government protest China’s positioning its missiles within striking distance of the rest of the Philippines, including its capital.

Those who have been protesting the regime’s do-nothing policy in the face of Chinese aggression can’t be blamed for suspecting that the seeming shift in its China narrative is intended to influence the results of the midterm elections that are barely five weeks away. Because much of the electorate is dissatisfied with his China policy, it does seem like an attempt to convince the voters that Mr. Duterte and his candidates for the Senate and local posts aren’t really afraid of displeasing China by defending Philippine sovereignty. Despite their demonstrated partiality for, and embarrassing subservience to China, they have had to reluctantly acknowledge the anti-China — and together with it, the pro-US — sentiments of most Filipinos.

The reality is that in its determination to be the next world hegemon after the United States, China has a distinct disadvantage. US prestige and power may be in decline globally, but as the opinion polls have found, it is still the US that most Filipinos trust while being skeptical of China. The reasons are deeply rooted in the history of Philippines-China relations and those between the Philippines and the US.

China and what is now the Philippines have had mostly trade relations that go back several centuries, and many Filipinos have a Chinese ancestor or two in their family trees. But Spanish colonial rule, with its racist foundations, downplayed the first and made the second a disadvantage.

Not only did Spain isolate the Chinese in enclaves called “parians” during its 300-year occupation of the Philippines; it also subjected them to periodic massacres and mass arrests until the 18th century, which imperiled even the liberty and fortunes of those with mixed ancestry (mestizos). As a consequence, most Filipinos echoed Spanish racism by disparaging and discriminating against the Chinese among them.

The US experiment in colonial rule was initially assured through the use of force, but relied as well on cultural power to compel obedience from the “natives.” That power was generated through the forcible use of the English language and the indoctrination of the political elite under its tutelage on such alleged US values as freedom, democracy and individual rights, and the benevolence and supremacy of “the American way,” which eventually found expression in the US-established educational system as well as in the arts, literature, and mass media of the Philippines.

Quite possibly the most successful experiment of its kind in history, US colonialism and imperialism made the Filipino mind a bastion of approval and support for US hegemony. There are material and institutional bases for it such as military and economic aid, and, among others, compacts like the Mutual Defense Treaty and the Visiting Forces Agreement. The use of force is still part of its arsenal of conquest and domination, but US preeminence in the most strategic areas of Philippine life and governance has mostly been assured by its ideological supremacy in the public sphere.

The Philippine population’s US connection is both materially and subjectively based. Together with its minimal subjective influence, China is in contrast still perceived through an anti-communism lens. A legacy of the Cold War, anti-communism has always been the main ideological bias of both US-influenced media and the US music, film, and television industries whose market is the entire world.

China is no longer the socialist country it once was, and is blatantly and aggressively capitalist. But the perception that it is still the China of Mao Zedong persists, with some of those opposed to Chinese intrusion into the WPS attributing its brazenness to its supposed “communism.” The truth is that it was during the period of socialist construction when China made mutual respect and benefit the basis of its international relations, in contrast to its current focus on advancing its interests no matter the consequences on other countries.

China has been trying to influence the Filipino mind through scholarships, films, TV program sponsorships, and familiarization trips with the approval and support of the Duterte regime. These efforts have nevertheless had little visible effect on the Filipino millions, among other reasons because they have been addressed only to a small segment of the population, and cannot even begin to compare with the power of the English language that was early on assured by US colonial policy in the Philippines in the 1900s.

English is the conduit through which the US culture industry keeps US political and ideological influence dominant in this neo-colony. That dominance is the primary reason for the failure of the Duterte regime’s campaign to make its Chinese connection widely acceptable — and for the continuing support for US political, economic and strategic interests among most Filipinos.

Despite its economic power and growing military might, it will take China several generations to even approximate the ideological ascendancy of the US in this country and in much of the world that it seeks to dominate. Hence its use of intimidation, such early 20th century capitalist tricks as the conspicuous display of military power known as gunboat diplomacy, and other far from subtle means to achieve its aims in the Philippines as well as in the rest of the planet.

 

Luis V. Teodoro is on Facebook and Twitter (@luisteodoro).

www.luisteodoro.com

An analysis of the new Corporation Code

Change is generally good. Revising obsolete laws is a good exercise. Old laws trap us and our businesses in old practices and mindsets. New ones provide a chance for a clear framework, simple implementation and a fresh start.

Contrary to popular wisdom that our problem is too many good laws that are not implemented well, the truth is we have too many bad laws. This is made worse by confusing rules, corrupted regulations and arbitrary enforcement.

The Revised Corporation Code now in effect is a big improvement from the past one. Let us look at some of the provisions and analyze their consequences. As in all things, there are unintended consequences.

ONE-PERSON CORPORATION
The new code allows the formation of a corporation by one person or one stockholder. The previous requirement was for at least five stockholders. This resulted in the use of nominal stockholders who do not contribute in any significant way, or in unnecessarily expanding the number of owners which made the corporate vehicle less efficient and more problematic.

A one-person corporation embodies the corporate law idea that a corporation is a different entity with a separate personality from the individual natural person.

The effect is that it is easier to set up corporations and entrepreneurs will use less of the sole proprietorship mode. The challenge is for the Securities and Exchange Commission to make it less expensive and faster to incorporate to make the change meaningful.

There is no longer a minimum authorized capital stock. Previously, there was an amount of which 25% was set as subscribed capital stock and another 25% to serve as the paid-up capital. This was a pointless mathematical exercise and did not create any value or better regulation. Everyone was just meeting the minimums regardless of the need of the business or the financial capacity of the incorporators.

PERPETUAL CORPORATE TERM
Corporations used to die at the end of their corporate life which is 50 years. A positive act was needed to extend it. The amended law allows companies to exist forever and applies to existing and future corporations. A positive act is required to kill the corporation.

Although the stated purpose is to prevent business from closing down because of non-renewal of registration, over the passage of time, we may see a slew of “zombie corporations” which exist in paper and hold assets but with none of the mortal stockholders around.

Under the new law, corporations with expired registration papers can be resurrected.

ADOPTION OF TECHNOLOGY
There is a semblance of electronic filing under the old regime. But as any user can attest, it is slow, with a clunky user interphase and very limited capability. SEC staff has a long wish list for a truly interactive system that will allow faster approvals and simpler monitoring. The current provider will have to step up or ship out.

A previous SEC circular allowed the use of videoconferencing and teleconferencing in certain instances. This rule is now in the new law. Stockholders may participate and vote without being personally present. Directors or trustees may also participate and vote in regular and special meetings through remote communication.

With this rule liberalization, stronger corporate cyber-security measures are essential. Otherwise, the next batch of intra-corporate disputes will revolve around the integrity of the communication by electronic means, the authentication of disputed identities and electronic record-keeping.

FORM OF ARTICLES OF INCORPORATION
In contrast with the recognition of technology, it is unfortunate that the new law copied and crystallized the form for incorporation in its Section 14. The superior approach is for legislation to provide guidelines on content and allow the regulator to prescribe the design and the procedure. This will provide flexibility and inject dynamism specially for the electronic system of filing and monitoring and the changing times.

To cast forms into laws is a bad practice that calls for rethinking to avoid this persistent bureaucratic problem. Forms are forms and laws should deal with substance.

ALTERNATIVE DISPUTE RESOLUTION
With the costly and lengthy formal, adversarial and court-based resort to solve conflicts, the new law calls for the institution of alternative dispute resolution mechanisms for intra-corporate issues. Given the powers of the SEC, it can answer the cry of business people for ways and means to address discord in the boardroom.

There are two key areas that the Revised Corporation Code does not answer.

The first is on control of corporation. One of the most contentious and vexing issues in our body of corporate laws is the question on how to determine control of the corporation — is it the “control test” or the “grandfathering rule.” Cases involving actual and beneficial interest are routinely ruled upon by the courts all the way up and down the Supreme Court. This affects business climate and affects investment certainty.

Recent laws and rulings may be pointing to convergence and a new law ideally can contain a chapter on control that will once and for all clarify the controlling regime.

The other is on rules on conflicts of interest. A form of private sector corruption that is particularly harmful and not easy to detect is the self-dealing of directors with their companies that is beneficial to the concerned individuals but not to the corporation even if knowledge or information was gained from their positions of trust and confidence. The new law is basically a rehash of the old provision.

Overall, the Revised Corporation Code is an improvement and the change is good.

Fate in the economy

By Tony Samson

THERE are just too many variables and events beyond the control of a corporation such as the price of oil, a new regulatory regime, entry of competition, disruptive technology, and rhetorical excesses from the top.

Thus does fate and randomness affect the success or failure in the economy. Especially at risk are conglomerates, the corporate equivalent of empires. Both conglomerates and empires are run by dynasties, as are political positions — we just have a family tradition of public service. Can we help it if people vote us in…with our massive resources at hand?

The Chinese dynasties of old attributed the success and good fortune of empires to what they called the “mandate of heaven”. This mysterious force dispensed success in battles and good fortune to the ruler and his people, with these triumphs used as justification for legitimacy in fending off usurpers and rivals.

Such a heavenly mandate, however, had a downside too. When earthquakes, floods, and famines descended on the country causing hardship and death on the people, they believed that such misfortunes were a sure sign that the mandate of heaven had been withdrawn. This signaled to the masses that they no longer had the right ruler, just the opening that the rivals were waiting for.

This attribution of a divine hand in the fortunes of men is not limited to the ancient (or even modern) East. German sociologist Max Weber, in his 1905 book, The Protestant Ethic and the Spirit of Capitalism, delved into the protestant work ethic to explain the economic growth of Europe and America. The Calvinist belief that worldly success was an indicator of eternal salvation made material wealth something to be diligently pursued and publicly admired. This belief seemed to explain the economic rise of the West.

The supernatural, not necessarily divine, dimension in worldly endeavors is quite pronounced too in our culture. This influence goes beyond religion and combines the oriental mandate from heaven with the Weberian material success as a sign of heavenly favor. It can be argued that the work ethic is Protestant in nature. It can be argued that it is the distrust of wealth and the embrace of poverty and the poor in the Catholic faith that has kept us back as an economic powerhouse.

The idea of the “mandate of heaven” lingers with our taipans who are students of Chinese lore. A string of successes gives an entrepreneur the feeling that he is doing the right thing and heaven (or luck) is smiling on him. But what happens when fortunes are reversed? The trusty cash cow dries up with the entry of cheaper competitors. An acquisition of a large company is mired in a regulatory tangle, leaving the seller in a testy mood. A high-profile court case shuts down the borrowing window of a developer.

Such reverses can be explained as part of the routine ups and downs of doing business. However, as they continue in a succession of failures and losses, the mandate of heaven, first, then the support of stockholders and investors are abruptly withdrawn. The fall becomes a self-fulfilling prophecy.

It is not surprising that taipans are a superstitious lot. They openly embrace feng shui (no harm in being safe) in designing their offices. They have mirrors in strange places which can hardly be reached to check if lettuce has stuck between the two front teeth. They’re up there to ward off bad chi. This superstitious streak is inclusive. The blessing of a new office may feature a priest in the morning and a geomancer in the afternoon.

Even casual observers of the business or political scene see fortune’s reverses as a sign that the leader is losing his Midas touch. Even a minor incident can lead to corporate disaster. Two pieces of luggage lost at the airport would attract media attention and the ire of authorities and very quickly the contractor in charge is summarily replaced.

A string of bad luck is not easily overcome by its victims. Few businessmen have the patience of Job to be able to ride out one misfortune after another. As with the emperors of old, visited with plagues and disasters, it is those being ruled that act, often with astonishing speed.

 

Tony Samson is Chairman and CEO, TOUCH xda

ar.samson@yahoo.com

ROS and Magnolia begin best-of-7 semifinal series

By Michael Angelo S. Murillo
Senior Reporter

THE semifinal round of the PBA Philippine Cup begins today with the pairing between second-seeded Rain or Shine (ROS) Elasto Painters and sixth seeds Magnolia Hotshots Pambansang Manok kicking things off at the Smart Araneta Coliseum.

A best-of-seven affair, Rain or Shine and Magnolia tussle in their scheduled 7 p.m. Game One encounter looking to take early control of the series and pad their push to make it to the finals of the season-opening Philippine Basketball Association tournament.

Rain or Shine as the second seed after the elimination round had a twice-to-beat advantage in the quarterfinals but saw no need to use it as they eliminated the Northport Batang Pier at the first instance, 91-85, on April 7.

Magnolia, meanwhile, survived a best-of-three quarterfinal series with the Barangay Ginebra San Miguel Kings that went the full distance, completing a comeback from being down a game in the series with an 85-72 victory in the rubber match Game Three on Wednesday.

Leading the way for the Elasto Painters is James Yap, the former star player of Magnolia, who is averaging a team-high 14.7 points per game.

Maverick Ahanmisi has been good for 12.1 points while Norbert Torres and Beau Belga are adding 9.1 and 8.6 points, respectively, for Rain or Shine.

Over at the Hotshots, Paul Lee and Ian Sangalang led their team against a loaded Barangay Ginebra team in the previous round, with the former averaging 17.7 points in the three games and the latter good for 15 points per game in the series.

Also stepping for the Hotshots were Jio Jalalon, Mark Barroca, Robbie Herndon and Aldrech Ramos.

While they are the higher-seeded squad, Rain or Shine knows that in the semifinals it will be an equal field and that it has to adjust accordingly to what Magnolia will throw at them, in particular on defense.

“We have to attack their pressure defense. They did a good job dictating the tempo of the game against Ginebra. If we can limit our turnovers and limit their points, I think we can be able to pull off a win,” Rain or Shine coach Caloy Garcia was quoted as saying by the official PBA Website heading into Game One.

For the Hotshots, they hope to continue what they did well against Barangay Ginebra in what they expect to be another tough grind against Rain or Shine in the semifinals.

“It’s all about our grit and will that carried us past Ginebra. Now it’s the start of another tough series versus the No. 2 team (Rain or Shine), and we need to be more determined, have that consistent effort, defensive mindset and the desire to win,” Magnolia coach Chito Victolero said of his team.

In their lone encounter in the Philippine Cup eliminations, Rain or Shine edged Magnolia, 75-74, on Feb. 13.

Mr. Yap starred in said game, finishing with a game-high 18 points, including a huge three-pointer for the Elasto Painters down the stretch.

Meanwhile, the other semifinal pairing will see number one team Phoenix Pulse Fuel Masters against number five and defending champions San Miguel Beermen.

Their best-of-seven semifinals begin on Saturday at the Mall of Asia Arena.

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