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Civil servants’ midyear bonuses due next week

THE GOVERNMENT will start issuing midyear bonuses to civil servants by May 15, the Department of Budget and Management (DBM) said.
“Starting May 15, more than 1.5 million government workers will receive their fiscal year 2018 midyear bonus, which is equivalent to one month basic salary,” Budget Secretary Benjamin E. Diokno said during a briefing yesterday.
He added that he signed on May 8 the guidelines for government agencies giving out the bonus.
Mr. Diokno said that about P36.2 billion has been allocated for the midyear bonus.
To qualify for the bonus, the government personnel should have “rendered at least a total or an aggregate of four months of service from July 1, 2017 to May 15, 2018; remain in the government service as of May 15, 2018; and obtained at least a satisfactory performance rating in the applicable performance appraisal period.”
The bonus covers all civilian personnel, whether regular, casual, or contractual in nature, appointive or elective, full-time or part-time, in the Executive, Legislative and Judicial Branches, the Constitutional Commissions and other Constitutional Offices, state universities and colleges, and selected state-run corporations under the Compensation and Position Classification System (CPCS).
It also includes personnel of the Armed Forces of the Philippines, employees of the Department of National Defense and personnel of the Philippine National Police, Philippine Public Safety College, Bureau of Fire Protection, and Bureau of Jail Management and Penology of the Department of the Interior and Local Government; the Philippine Coast Guard of the Department of Transportation and Communications; and the National Mapping and Resource Information Authority of the Department of Environment and Natural Resources.
However, it excludes government corporations that are exempt from the CPCS, government corporations under the Governance Commission on Government-Owned and -Controlled Corporations, those hired without employer-employee relationships and funded from non-Personnel Services appropriations/budgets such as consultants, jobs on a piecework basis, student-workers, and those under job orders. — Elijah Joseph C. Tubayan

Why not make FQ like EQ?

With the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) law, tax forms have been revised and new tax forms have been introduced and circularized under Revenue Memorandum Circular (RMC) No. 27-2018.
One of the notable new forms is BIR Form 1601-EQ, otherwise known as the Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded). It is filed by every withholding agent or payor required to deduct and withhold taxes on income payments subject to creditable withholding taxes. The deadline for filing this return is on the last day of the month following the close of the quarter. However, taxes withheld during the first two months of every quarter shall be remitted to the Bureau of Internal Revenue (BIR) using BIR Form 0619-E, on or before the 10th day (for over-the-counter filers) or the 15th day following the month of withholding (for taxpayers enrolled in the electronic filing and payment system or eFPS filers). As of this writing, the BIR has yet to circularize this monthly remittance form.
Under the creditable withholding tax system, taxes withheld on certain income payments are intended to equal or at least approximate the tax due of the payee on said income. The income recipient is still required to file an income tax return to report the income, and to pay or carryover/refund the difference between the tax withheld and the income tax due, as applicable.
With the enactment of the TRAIN Law, the creditable withholding tax rates will range from 1% to 15% by Jan. 1, 2019. Currently, the tax rate ranges from 1% to 32%.
Under the old form (BIR Form 1601E), taxpayers had no option to carry forward or offset over-remitted expanded withholding taxes in the succeeding month or period. Although the overpaid withholding tax may be recovered by filing a claim for refund or for issuance of a tax credit certificate (TCC) within two years from the date of the erroneous payment, the affected taxpayer may find this costly, time-consuming and tedious as it will automatically trigger a tax audit or examination. Hence, in most cases, the affected withholding tax agent would opt to forego the over-remittance in favor of the BIR.
With the implementation of BIR Form 1601-EQ under RMC No. 27-2018, taxpayers can now heave a sigh of relief, being given the option to carry forward any over-remitted expanded withholding taxes to the next quarter, at least within the same calendar year. The last phrase means that only the over-remittance in the first to third quarters can be carried forward to the succeeding quarter. In the event of over-remittance in the fourth or last quarter, the taxpayer’s option would still be to file an application for refund or TCC.
The carry-forward feature of the new tax form will benefit taxpayers especially when over-remittance is sometimes unavoidable due to the following reasons:

(1) Application of incorrect withholding tax rate;

(2) Cancellation of transactions subject to withholding tax; or

(3) Any other errors that taxpayers may inadvertently commit in the preparation of tax returns.

It is important to note that in case of over-remittance, it is the responsibility of the withholding agent/payor to correct any BIR Form No. 2307 (Certificate of Creditable Tax Withheld at Source) issued to the income recipient, to ensure that no excess creditable withholding tax will be claimed by the same income recipient as settlement of its income tax liabilities.
On a related note, another new tax form circularized under RMC No. 27-2018 is BIR Form 1601-FQ or the Quarterly Remittance Return of Final Income Taxes Withheld. Just like BIR Form 1601-EQ, this new tax return shall be filed and paid not later than the last day of the month following the close of the quarter. Taxes withheld during the first two months of every quarter shall be remitted to the BIR using BIR Form 0619-F, on or before the 10th day (for over-the-counter filers) or the 15th day following the month of withholding (for eFPS filers). As of this writing, the BIR has yet to circularize this monthly remittance form.
Unlike the new quarterly return on creditable withholding tax (BIR Form 1601-EQ), however, BIR Form 1601-FQ does not have the carry-forward feature. Perhaps this is something that the BIR may want to reconsider adopting as it will help cut down on overpayments and potential refunds.
One classic example of a situation where overpayments often happens is on income payments to a non-resident alien who was initially identified as not engaged in trade or business at the beginning of the calendar year but is subsequently identified otherwise at the latter part of the year. In which case, the nonresident alien is taxed under the final withholding tax system at the beginning of the calendar year but thereafter subjected to withholding tax on compensation upon reclassification.
With the issuance of new tax regulations, circulars, orders and advisories covering the TRAIN Law, there is reason for the BIR to incorporate built-in measures to address errors and lapses in the filing and payment of taxes. As reforms in the tax system and policies are under way, we can expect the transition period to be one of adjustment and fine-tuning for both taxpayers and tax enforcers alike. For this, the BIR should be given credit for simplifying the filing system through the revised and enhanced tax forms.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
 
Renz Anthony K. Boaloy is an assistant manager with the Client Accounting Services group of Isla Lipana & Co., the Philippine member firm of the PwC network.
renz.anthony.k.boaloy@ph.pwc.com
(02)845-2728.

Humanistic management and competitiveness

Following tradition, President Duterte released an Executive Order on Labor Day to somehow address the expressed needs of the country’s workers. As expected, most labor groups were not satisfied, claiming that the EO was a mere “reiteration” of existing law and regulations or, worse, “useless.” Some said that the president has reneged on his campaign promise to end the notorious practice of “endo,” which refers to the repetitive hiring of employees under short-term contracts.
I’ll give the president and his labor executives some credit for effort.
Since he took office almost two years ago, I have seen more frequent media reporting about the government’s thrust to regularize more employees: CNN Philippines, Jan. 16: “Labor Dept. orders PLDT to regularize 8,000 workers, pay P66M in claims”; and Philippine Daily Inquirer, April 6: “Up to 10,000 Jollibee workers to be regularized.”
While it’s unclear how many such reports actually materialize into regularized employees, business leaders have argued against regularizing more employees. They worry that more businesses will close because they will not be able to afford the additional expenses for employee pay and benefits. They also worry that the country will attract fewer foreign investors, presumably because these mainly look for low-cost employees. Donald Dee, president of the Employers Confederation of the Philippines (ECOP), argues, “You cannot change the business model all over the world. [If] you want to dissuade investments, [if] you want people to turn away from the country, then you do it. But what they’re asking for does not make sense. It’s unfair.”
The debate on contractualization has been never-ending and has become increasingly complicated. But I think that much of the debate has been muddied by confusion on some basic issues. A major confusion is that some business leaders equate labor rates with labor costs. That is, they believe that paying employees less per unit of time reduces a company’s labor cost. This is not always the case.
Jeffrey Pfeffer, professor at Stanford University and author of “Six Dangerous Myths about Pay” in Harvard Business Review, explains what any student of management accounting knows: labor rates and labor costs are not the same thing.
A labor rate is what an employee is paid per unit of time, say, per day. Labor cost, on the other hand, is what the company spends on labor to produce a unit of output. Labor cost factors in the labor rate, but takes productivity into account. Simply put, a manager who pays employees double the market rate may actually have lower labor costs than the competition because his or her employees are three times more productive!
The simplistic argument against better pay and security of tenure for employees wrongly assumes that employee productivity is fixed. To be competitive, the argument goes, businesses need flexibility in shedding employees based on changes in demand and competition.
Humanistic managers find this argument unsound. They believe that investing in employees is crucial to competitiveness and, in fact, lowers total labor costs because of higher productivity.
Anna Meloto-Wilk, cofounder and president of personal care manufacturer and retailer Human Nature, points out that “truly viable and sustainable businesses should have a clear path toward regularization with the costs of full time employment factored into their operating expenses. Salaries and taxes should be part of operating expenses and any business person worth his salt should be able to factor in those costs and still be profitable over time.”
She further explains why their workers are more productive: “Because our merchandisers are regularized, we are able to train them better. We don’t have to incur the cost of training new workers every five months which impacts our business positively. They are also able to build better relationships with our retail partners and are more confident to make decisions on the floor because of their experience.”
Can humanistic management scale up and be applied to larger businesses?
Mercadona, Spain’s largest grocery store chain, with more than 1,500 stores all over the country, has over 70,000 employees, all of whom have permanent contracts and salaries above the industry average, including bonuses. Furthermore, Mercadona invests heavily in its employees’ training, and yearly staff turnover is consistently below 5%. Its employees give consistently excellent service to customers while maintaining low prices for its goods. Now that is true competitiveness.
Business leaders who insist on being competitive by maintaining cheap and insecure employees are making a dangerous mistake. They are actually making their businesses, and ultimately our country, less competitive. Worse, they deprive their fellow Filipinos of the opportunity to live decent lives.
Humanistic management is a more decent and competitive strategy. Mediocrity is always easier than excellence, but that is a business choice.
 
Dr. Benito L. Teehankee s a full professor of management at De La Salle University. He is vice-chair for CSR of the Management Association of the Philippines, and chair for research of the Shareholders’ Associaiton of the Philippines.
benito.teehankee@dlsu.edu.ph

Intellectual property, innovation, and prosperity

The BusinessWorld Economic Forum 2018 is fast approaching this coming May 18 and it has a timely theme, “Disruptor or Disrupted? The Philippines at the Crossroads.” Focus is on the challenges, risks and potentials of artificial intelligence (AI) and other technological advances.
Endless trial and error, research and development, intangible and intellectual creations, are at the heart of innovation and economic disruptions. The role of property rights protection in general and intellectual property rights (IPR) in particular cannot be overlooked.
Here are some numbers showing the degree of competition among countries and economies in encouraging and protecting innovation and IPR as shown by three data sources. These are the
(1) World Intellectual Property Organization (WIPO), INSEAD, and Cornel SC Johnson College of Business, “The Global Innovation Index 2017” (GII); (2) Property Rights Alliance (PRA) — International Property Rights Index 2017 (IPRI); and the (3) US Chamber of Commerce (USCC) — Global Innovation Policy Center (GIPC), International IP Index (IIPI) 2018.
WIPO’s methodology is interesting.
The overall GII score is computed by getting the simple average of the Input and Output Sub-Index scores. The Innovation Input Sub-Index is comprised of five pillars: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. The Innovation Output Sub-Index is composed of two pillars: (6) Knowledge and technology outputs and (7) Creative outputs.
Each pillar is divided into three sub-pillars and each sub-pillar is composed of individual indicators, for a total of 81 indicators. Cool.
Data on GDP per capita income at purchasing power parity (PPP) $ values are from the International Monetary Fund (IMF), World Economic Outlook database, April 2018. The numbers in parenthesis of each report (WIPO-GII, IPRI, IIPI) represent the total number of countries included in their respective reports (see table).
Global Rankings
These numbers show the following:
One, countries with high global rank and scores in innovation and IPR index are also those with high per capita income. Conversely, countries with low global rank in innovation also have low per capita income.
Two, the Philippines in particular exhibits this low ranking. Placing only 73rd out of 127 countries in WIPO-GII 2017 report, 64th out of 127 countries in PRA-IPRI 2017 report, and 38th out of 50 countries in the GIPC-IIPI 2018 report. Our GDP per capita income of only $8,300 at PPP values is low, and even lower if nominal GDP prices are used, less than $3,000.
Three, many East Asian economies are rising in ranking, landing in the top 25% in global ranks.
To further reiterate the importance of intellectual property (IP) and innovation, 70 independent and free market-oriented think tanks and institutes worldwide sent an open letter to WIPO Director General Dr. Francis Gurry, during the 2018 World IP Day last week, April 26.
The letter was spearheaded by the PRA in the US and Minimal Government Thinkers is among the 70 co-signatories. The letter was also sent to UN Secretary-General Antonio Guterres, and Director-General of the World Health Organization (WHO) Tedros Adhanom Ghebreyesus.
The letter highlighted some important facts, among them:

* In 2016, a record 3.1 million new patents were filed worldwide. These patents protected groundbreaking technological processes, helped cure devastating diseases, and modernized everyday conveniences.

* Copying is not the same as inventing and enforcement of IP rights helps prevent counterfeits that undermine innovation and help finance criminal organizations. This shadow economy of counterfeits is responsible for nearly 2.5% of global imports, amounting to nearly $461 billion.

* 10% of global pharmaceutical trade is thought to be counterfeit. These “medicines” have serious health consequences, including death. New medicines require research, trials, $2.8 billion, and up to 12 years. IP Rights incentivize commitment and collaboration.

* Removing trademarks through plain packaging has costly economic, health, and security consequences. $300 billion is the implied loss to the beverage industry if such packaging is applied to alcohol and sugary drinks.

Another global group, the Biotechnology Innovation Organization (BIO) is also promoting innovation in biotechnology of innovative health care, agricultural, industrial, and environmental products.
Governments, national and multilaterals like the UN and WHO, should help encourage and respect IPR and innovation. Some cases however show that they do otherwise.
For instance, the 2016 UN High-Level Panel on Access to Medicines, their report has portrayed patents and IP as harmful to global development and human rights. Backward thinking.
The enemy of public health and human rights are counterfeits and substandards — medicine, food, and drinks — and the criminal organizations that manufacture and sell these products.
 
Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.
minimalgovernment@gmail.com.

Fighting malaria and dengue

The world was well on its way to controlling malaria — a very old disease transmitted through mosquito bite, much like dengue — until recently, it seems. This was according to a commentary authored by Teodoro Padilla, executive director of Pharmaceutical and Healthcare Association of the Philippines (PHAP), as he quoted the key findings of the 2017 World Malaria Report of the World Health Organization (WHO).
“The current pace is insufficient to achieve the 2020 milestones of the WHO Global Technical Strategy for Malaria 2016-2030 — specifically, targets calling for a 40% reduction in malaria case incidence and death rates,” Padilla quoted the 2017 World Malaria Report. To date, he noted, countries are either moving towards elimination, or are reporting significant increases in cases.
This is a concern, in my opinion, primarily because malaria, like dengue, can result in death unless detected and treated promptly. To date, malaria is said to be the 9th leading cause of sickness in the Philippines. And based on how we have gone about dealing with dengue so far, including a controversial and scandalous vaccination program, perhaps we need to rethink how we deal with malaria as well.
The positive side for us is that about 90% of malaria cases and deaths occur in Africa, noted Padilla. But, he also cited data from the Department of Health (DoH) that in the Philippines, malaria is endemic or prevalent now in 58 provinces, with 14 million Filipinos at risk. Current interventions include early diagnosis and prompt treatment; vector control; and, LGU capacity building.
In this regard, Padilla noted that “vector control is the main way to prevent and reduce malaria transmission.” And, by this, he refers to the use of insecticide-treated mosquito nets, indoor residual spraying with insecticides, and elimination of stagnant water in flower pots, old tires, empty bottles, and plastic containers, and other places.
He also cited a report by the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) that as of 2017, at least 13 research-based pharmaceutical companies were working on 53 potential medicines, vaccines, diagnostics, and vector control projects that were in discovery to advanced stages of clinical trials.
Another recent news item came to mind in this regard, and that was the US government’s approval — through the Environmental Protection Agency (EPA) of an anti-mosquito paint that was made in Japan. The US EPA is the regulator commissioned by the US Federal Government to ensure the protection and preservation of human and environmental health.
I believe this product is a big step in the right direction, considering Padilla’s emphasis on “vector control” as a way to beat malaria and other diseases like dengue. Prevention, obviously, is always better than cure. Why wait to get sick before dealing with the problem when there are available ways to prevent or avoid getting sick?
Painting walls with anti-mosquito paint, in my opinion, is a far more efficient and effective way of dealing with mosquito-transmitted diseases than with spraying insecticides or the use of insecticide-treated nets or screens. It is for the simple reason that painting, as opposed to other methods, requires human intervention only at the start.
Spraying, on the other hand, must be done periodically but consistently. It requires the use of consumables every time, and manual labor to do the actual spraying. In this line, people tend to get complacent and forget the chore, or at least do it inconsistently. Moreover, in terms of government intervention, the purchase and use of consumables can lead to corruption.
Mosquito nets may be more effective than spraying, in this sense. However, use of nets can be cumbersome — if the type to put up and put down every time you sleep. As window screens, treated nets are effective mainly in keeping mosquitos out. But what about those already in? Or those that pass not through open windows but other openings like doors and holes?
Painting walls with anti-mosquito paint is one-time work, and repainting may be required only perhaps after five or 10 years. Walls, including ceilings, also are the biggest surfaces in any house or school building. And, use of paint per can be computed on per square meter basis, and therefore accountability and controls versus corruption can be implemented. In contrast, can one effectively measure and account the use of insecticide sprays?
Information available indicates that while the US-approved anti-mosquito paint was developed by a Japanese company, the “technology” was first created in South Africa to prevent the spread of malaria. And, other than the US market, the product has also been reportedly approved and commercially launched in Malaysia and Singapore.
I believe that encouraging the use of anti-mosquito paint in all government buildings and public schools and hospitals and other public facilities will be a more effective and efficient means of combating malaria and dengue and other insect-transmitted diseases. For sure, it will be more effective than an allegedly questionable vaccination program for public school kids. Even adults can get malaria and dengue, so why should we intervene only at the child level?
Most, if not all, public facilities require or need some form of painting, anyway. Can we not encourage Public Works and local governments to use anti-mosquito paint at least in public schools and public hospitals and health facilities? Even churches, and other facilities where large groups of people congregate, should consider the use of anti-mosquito paint.
Such a paint technology is now available, not like in the past when we had to settle for mosquito nets and sprays and lotions. The technology and their products have apparently been tested in Africa, in the United States, in Malaysia, and in Singapore. We should make the effort to at least look at the technology and check the products that can be made available to us, locally.
Beyond public buildings and facilities, even private developers should start looking into the use of anti-mosquito paint in new housing units, common areas of condominiums, and maybe in shopping malls. I believe such an intervention will be a relatively small price to pay in fighting malaria, dengue, and other mosquito-borne diseases.
 
Marvin A. Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
matort@yahoo.com

Remember Marx for how much he got wrong

By Noah Smith
ON May 5, admirers of Karl Marx celebrated his 200th birthday. Marx didn’t make it to 200, but the ideas he injected into the global conversation and the ideologies that bear his name far outlasted the German economist and philosopher.
As socialist ideas grow in popularity in the US, and as the memory of the Cold War fades, respect for Marx is enjoying a bit of a resurgence. In The New York Times, philosophy professor Jason Barker declared that Black Lives Matter and the #MeToo movement are carrying on Marx’s legacy of social critique (a point of view shared by conservatives, who are naturally less happy about it). Meanwhile, writing at The Week, Ryan Cooper said that it was time to normalize the man many consider to be the founder of communism.
But something about this celebration of Marx sits uneasily.
For those who have read history or lived through the 20th century, it’s hard to forget the tens of millions of people who starved to death under Mao Zedong, the tens of millions purged, starved or sent to gulags by Joseph Stalin, or the millions slaughtered in Cambodia’s killing fields. Even if Marx himself never advocated genocide, these stupendous atrocities and catastrophic economic blunders were all done in the name of Marxism. From North Korea to Vietnam, 20th century communism always seem to result in either crimes against humanity, grinding poverty or both. Meanwhile, Venezuela, the most dramatic socialist experiment of the 21st century in a nation with the world’s largest oil reserves, is in full economic collapse.
This dramatic record of failure should make us wonder whether there was something inherently and terribly wrong with the German thinker’s core ideas. Defenders of Marx will say that Stalin, Mao and Pol Pot exemplified only a perverted caricature of Marxism, and that the real thing hasn’t yet been tried. Others will cite Western interference or oil price fluctuations as the reason for socialism’s failures. Some will even cite China’s recent growth as a communist success story, conveniently ignoring the fact that the country only recovered from Mao after substantial economic reforms and a huge burst of private-sector activity.
All of these excuses ring hollow. There must be inherent flaws in the ideas that continue to lead countries like Venezuela over economic cliffs.
The best way to look for those flaws is to follow Cooper’s advice and read Marx with judicious detachment. My favorite example of this is a 2013 post in which University of California-Berkeley economic historian Brad DeLong tried to boil Marx’s big ideas down to their essentials, and evaluate each one. While noting some trenchant and foresighted observations the German thinker made about capitalism, DeLong also chronicles his mistakes.
Marx, DeLong writes, failed to appreciate the degree to which capital investment raises worker productivity and living standards. He didn’t predict the shift from manufacturing to services. And he underrated the power and usefulness of the signals and incentives created by the price system in a capitalist economy.
Karl Marx
Those mistakes alone would be enough to hobble an economy and send any economic doctrine to the rubbish heap. Collectivization of agriculture seems to have been particularly disastrous for farm-based societies like 20th century China and Russia. But they can’t explain why communism was so often accompanied by atrocities, or why leaders like Mao and Stalin persisted in failed policies long past the time when wise, benevolent leaders would have changed course.
The brutality and insanity of communist leaders might have been a historical fluke, but it also could have been rooted in another of what DeLong sees as Marx’s mistake — the preference for revolution over evolution. DeLong writes:
[Marx believed] that even though the ruling class could appease the working class by using the state to redistribute and share the fruits of economic growth it would never do so… Hence, social democracy would inevitably collapse… and the system would collapse or be overthrown.
But overthrowing the system has usually been a disaster.
Successful revolutions tend to be those like the American Revolution, which overthrow foreign rule while keeping local institutions largely intact. Violent social upheavals like the Russian Revolution or the Chinese Civil War have, more often than not, led both to ongoing social divisions and bitterness, and to the rise of opportunistic, megalomaniac leaders like Stalin and Mao. Even the French Revolution, though it eventually led France to become a stable liberal democracy, only did do after almost a century of atrocities, short-lived dictatorships and civil strife.
Meanwhile, the most successful examples of socialism — the mixed economies of the Scandinavian countries, France, Germany, and Canada — came not from the violent overthrow of the old order, but from gradual change within the democratic, partly capitalist system. These countries have plenty of private businesses, but also fairly high taxes, universal health care, strong social safety nets and a variety of other government tools that keep capitalism from resulting in runaway inequality.
Even in the supposedly capitalist bastion of the US, the social safety net is a lot stronger than people give it credit for — thanks to government benefits, America’s child poverty rate is at an all-time low. Meanwhile, almost all rich countries now have progressive income taxes, universal public education and laws against child labor — all things that Marx demanded in 1848 in the Communist Manifesto.
In other words, real socialist success has been of the gradual, incrementalist kind, more in line with the visions of thinkers like Eduard Bernstein than to the dramatic, violent prophecies of Marx. Through repeated experimentation, societies like those of Denmark, France and Canada have found ways to use government to make society more equal without killing the golden goose of private enterprise.
So, although Marx was far-sighted in identifying some of the problems of capitalism, he got the solution very wrong. Remembering this is the best way to commemorate his birthday.
 
BLOOMBERG
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Peso drops back to P52:$1 level

THE PESO weakened on Wednesday to return to the P52-per-dollar level.

THE PESO dropped on Wednesday, retreating to the P52 level, as the dollar strengthened across a band of currencies.
The local currency closed yesterday’s session at P52.015 against the greenback, 16.5 centavos weaker than the P51.85-per-greenback finish on Tuesday.
The peso traded weaker the whole day, opening the peso at P52 against the US currency. It slipped to as low as P52.055, while its best showing for the day stood at P51.95.
Dollars traded inched up to $733.9 million from Tuesday’s $727 million.
Traders interviewed Wednesday said the peso slid as it tracked the weakness of other currencies against the dollar.
“The peso was just keeping in track with the global dollar move as it strengthened overnight,” a currency trader said over the phone.
Another trader said the market has been “seeing a broad-based US dollar up-move,” although it was contained in the dollar-peso exchange.
“We’re moving down, but the peso was resilient compared to the other Asian currencies. I guess one of the reasons why is that market players continue to hike rates tomorrow,” the trader said.
Investors are on a wait-and-see stance ahead of the Bangko Sentral ng Pilipinas’ monetary policy meeting today.
In a BusinessWorld poll, nine out of 11 economists said the monetary authority will likely hike benchmark rates as inflation hit multi-year highs in the previous months.
“We’ll see how it goes [on Thursday],” the trader said, adding that the market is also anticipating gross domestic product (GDP) growth data to be announced today.
The trader also noted that data showing a wider trade deficit released Wednesday did not affect the currency exchange.
“Not really. In a way it should, but when it was announced, we were just trading within the same band.”
The country’s trade deficit widened anew in March as exports slumped. The balance of trade in goods expanded to a $2.61 billion deficit in March, wider than the $2.1 billion deficit recorded in March last year.
“But if you look at it in a medium-term, if we continue to see the trade deficit improve, I guess we can see the peso [strengthen].”
For today, the first trader sees the peso moving between P51.95 and P52.10 versus the dollar, while the other gave a lower P51.90-P52.10 range.
Meanwhile, a third trader said: “The peso is expected to appreciate as investors will likely shift their focus to the local GDP growth report.”
The trader expects the peso-dollar rate to move between P51.80 and P52.20. — K.A.N. Vidal

PSE index slips as Trump pulls US out of Iran deal

LOCAL STOCKS fell on Wednesday as investors fled global markets following geopolitical tensions in the Middle East.
The bellwether Philippine Stock Exchange index (PSEi) shed 0.29% or 22.30 points to close at 7,555.27 yesterday.
The broader all-shares index also dipped 0.19% or 8.84 points to 4,620.49.
“Local equities were affected by (United States) Pres. (Donald J.) Trump’s decision to pull the US out of the Iran nuclear deal as investors took another temporary flight to safety to dollar assets on fresh Mideast geopolitical tension fears and the negative implication on earnings for affected firms worldwide,” PCCI Securities Brokers Corp. Research Head Joseph James F. Lago said in an e-mail.
Analysts noted this move will strain US’ longstanding alliances, disrupt oil markets and boost tensions in the Middle East.
Mr. Lago also noted that investors had gone bargain hunting in the morning given optimism ahead of first-quarter economic growth figures to be released on Thursday.
Overnight, the Dow Jones Industrial Average closed flat, adding only 0.01% or 2.89 points to 24,360.21. The S&P 500 index slipped 0.03% or 0.71 point to 2,671.92, while the Nasdaq Composite index went up 0.02% or 1.69 points to 7,266.90.
Mr. Trump’s announcement on Iran also dragged down most Asian indices, with Japan’s Nikkei 225 losing 0.44% to 22,408.88, and the Shanghai Composite index losing 0.08% to 3,158.81.
Back home, sectoral counters were split between gainers and losers. Financials gave up 1.37% or 26.02 points to 1,860.52. Services plunged 0.93% or 14.22 points to 1,510.72, while holding firms edged down 0.13% or 10.53 points lower to 7,600.17.
Meanwhile, industrials inched up 0.37% or 41.61 points to 11,096.08. Property gained 0.31% or 11.18 points to 3,593.21, while mining and oil added 0.12% or 12.29 points to 10,095.22.
The market saw thin trading for the day, with 1.21 billion issues switching hands valued at only P4.96 billion, much lower than the P7.23-billion turnover on Tuesday.
“Our muted value turnover of only P5.0B was really reflective of everyone’s waiting for GDP (gross domestic product) data [today] at 10 a.m., as well as the BSP’s (Bangko Sentral ng Pilipinas) much awaited decision on interest rates at 4 p.m. We hope that GDP beats the 6.8% consensus to give the market its much needed boost,” Papa Securities Corp. trader Gabriel F. Perez said in an e-mail.
Decliners trumped advancers, 113 to 73, while 59 stocks remained unchanged. Foreign investors remained on selling mode, resulting in net sales of P638.33 million, higher than the P225.77 million recorded in the previous session.
PCCI Securities’ Mr. Lago said the local central bank might implement a slight tightening or raise its benchmark rates in a gradual manner in light of rising inflation.
“If it adjusts its policy rates, it will be on a gradual path so that it has room for all of its other tools when inflation pressures eases late in the year or in 2019,” Mr. Lago said. — Arra B. Francia

DoLE set to complete list of ‘endo’ violators

By Gillian M. Cortez
THE DEPARTMENT of Labor (DoLE) in a statement on Wednesday said it will submit to Malacañang a list of violators in connection with President Rodrigo R. Duterte’s Executive Order (EO) No. 51 on job contractualization.
The department also on Wednesday said it has issued an advisory on the renewal of registration of contractors.
DoLE in its statement said it “has been conducting inspections of establishments in the country for compliance of labor laws and standards and occupational health and safety.”
“Fast-food chains, malls, and manufacturing companies are some of the priority industries being inspected,” the statement also said, adding that “more compliance orders to regularize workers across all regions are underway.”
DoLE was mandated to carry out these inspections by EO 51, which Mr. Duterte signed on Labor Day.
According to the statement, the Bureau of Working Conditions (BWC) is validating DoLE’s list before it is sent to the Palace. DoLE’s Regional Offices 4B (Mimaropa), 6 (Western Visayas), 7 (Central Visayas), 11 (Davao) and 12 (Soccsksargen) have so far contributed to the list.
“We have actually until May 25 to submit the report,” Labor Secretary Silvestre H. Bello III told reporters on Tuesday. “(But) it’s very possible we have a partial submission by May 10.”
Mr. Bello said the tentative list so far has “around 850 plus” companies.
Asked about his agency’s update regarding the malls, Mr. Bello said, “SM, would you believe nag-voluntary regularization sila (undertook voluntary regularization)!”
“They regularized 4,000 and there is a commitment by the end of the year, they will regularize another 5,000, but kailangan pa rin i-validate namin yan (but we still need to validate that). But obviously nakikita (it’s clear that) we’re very serious in implementing,” he added.
SM was sought for comment as of this reporting.
In DoLE’s statement, Mr. Bello was also quoted as saying, “We gained the support of ECOP (Employers Confederation of the Philippines) and they vowed to kick out from their organization any employer who will not obey the orders of the President and DoLE.”
Asked how DoLE will handle violations, Mr. Bello said, “If the employer’s issue is on contractualization, we will declare those employees as ‘regular.’ If the issue is on minimum wage, then we will ask them to pay for the difference.”
For establishments that refuse compliance, “I-pa-file natin sila ng kaso (We will file a case at the) NLRC (National Labor Relations Commission),” Mr. Bello said.
Meanwhile, DoLE also said it has issued Labor Advisory No. 06, as also posted on the agency’s Web site, on the renewal of registration of contractors under Department Order No. 174.
DoLE said renewal applications by labor contractors with no inspection findings or pending cases shall be acted upon.
Applications with inspection findings and canceled registrations will be denied. On the other hand, applications with pending cases will be processed upon presentation of proof of compliance or of dismissal of the case.

Duterte places 69th in Forbes’ World’s Most Powerful People

By Arjay L. Balinbin, Reporter
PRESIDENT Rodrigo R. Duterte ranked 69th among the 75 “World’s Most Powerful People” list by Forbes magazine, which cited his nationwide campaign against crime and drug trafficking. “Duterte was elected president of the Philippines in 2016 on the strength of a campaign that promised execution of drug dealers and other criminals. So far his war on crime has already resulted in the killing of thousands of people across the archipelago country,” Forbes said in its list published in the business magazine’s May 31 issue.
The magazine also pointed out that Mr. Duterte’s “raw and vulgar vocabulary keeps him in the headlines.”
“He called Obama ‘son of a whore’ and has used homophobic slurs to describe opponents,” Forbes added.
Sought for comment, Presidential Spokesperson Harry L. Roque, Jr. said: “President Rodrigo R. Duterte has many times acknowledged that the true source of power is the people. As Chief Executive for almost two years, he has faithfully served our people by promoting the interests of the Filipino people and the Filipino nation first.”
“The anti-drug war, the pursuit of an independent foreign policy, the pro-poor policies and programs of the Duterte administration among others are reflective of the current government’s advancing the welfare of the greatest number of our countrymen. The Presidency, in the mind of PRRD, begins and ends with public trust where real power emanates,” Mr. Roque also said in his statement.
Topping Forbes’ list are Chinese President Xi Jinping (1st), Russian President Vladimir Putin (2nd), and United States President Donald J. Trump (3rd). Mr. Duterte has sought closer ties with these leaders.
Forbes noted that it is the “first time ever” that Mr. Xi topped the list.
“Russian President Vladimir Putin (No. 2) has been knocked out of the top spot, a title that he held for four consecutive years. A little over one year into his term, President Donald Trump falls to the No. 3 spot,” Forbes said.
Notable newcomers to the list include Mohammad Bin Salman Al Saud, Crown Prince, Saudi Arabia; Jerome H. Powell, Chair, Federal Reserve; Moon Jae-In, President, South Korea; Lee Hsien Loong, Prime Minister, Singapore; and Joko Widodo, President, Indonesia.
As for the methodology, Forbes contributor David M. Ewalt explained in his article: “First, we asked whether the candidate has power over lots of people. Next we assessed the financial resources controlled by each person. Are they relatively large compared to their peers? For heads of state we used GDP, while for CEOs, we looked at measures like their company’s assets and revenues. Then we determined if the candidate is powerful in multiple spheres. There are only 75 slots on our list — one for approximately every 100 million people on the planet — so being powerful in just one area is often not enough. Lastly, we made sure that the candidates actively used their power.”
“To calculate the final rankings, a panel of Forbes editors ranked all of our candidates in each of these four dimensions of power, and those individual rankings were averaged into a composite score,” Mr. Ewalt also said.

Roque joins Bello in Kuwait mission

PRESIDENTIAL Spokesperson Harry L. Roque, Jr., left for the State of Kuwait on Tuesday night, May 8, upon the order of President Rodrigo R. Duterte.
“Secretary Roque joined Labor Secretary Silvestre H. Belo III, former (Labor) Secretary Marianito Roque, Labor Attache Rustico dela Fuente, and Deputy Chief of Mission in Kuwait Mohd Noordin Lomondot in meeting Kuwaiti officials,” the spokesman’s office said in a statement Wednesday night.
According to Roque’s office, the delegation met officials of the Kuwaiti Interior Ministry.
“(T)he Philippines and Kuwait look forward to the normalization of ties,” the statement went in part. “Kuwait, on its part, has expressed the value of Filipinos in Kuwait. A Memorandum of Agreement is expected to be signed and agreed upon after the meeting.”
Mr. Roque’s office added that Kuwait has agreed “to create a Special Unit within the Police that the Philippine Embassy can liaison with regarding complaints of Filipino workers which will be available 24 hours(,) and a Special Number that Filipino workers can call for assistance (also available 24 Hours).”
“The meeting of officials between the two countries likewise saw the release of four drivers. It guaranteed that all remaining undocumented Filipinos (under 600), except for those with pending cases, will be allowed to go home — at least 150 of them will be joining the Philippine officials in returning to the Philippines,” the statement said. — Arjay L. Balinbin

Palace leads launching of new coins, bank notes

new coins 2
THE MONETARY Board of the Bangko Sentral ng Pilipinas (BSP) presented the New Generation Currency (NGC) enhanced bank notes and coins to President Rodrigo R. Duterte at Malacañang Palace on Wednesday, May 9.
The presentation was led by BSP Governor Nestor A. Espenilla, Jr. and Finance Secretary Carlos G. Dominguez III.
In his speech, Mr. Duterte said he was grateful to the BSP for taking the lead in “creating stronger and safer financial systems and safeguarding the integrity of the Philippine currency.”
He noted the need to change the design of bank notes and coins. “The law requires us to do so. This is to enhance its security features as well as to prevent forging and improve durability. Initiatives like this are meant to promote public trust and confidence in our financial system,” the President said.
He added: “The new generation currency banknote and coin series highlight our nation’s most significant events, sites and people. We also included endemic flora [and fauna] as well as other well-known Filipino symbols to showcase the best of what our country has to offer.”
The President also called on the BSP to “(i)ntensify your (programs) against counterfeiting and conduct more campaign [drives] in order to protect our citizens from confusion and deceit.”
“I also enjoin the BSP to remain vigilant in ensuring price and financial stability, instituting banking reforms and sharpening strategies. We do this because public interest is at the heart of this administration’s priorities,” he also said.
In a press release, the BSP said the NGC bank notes were issued in 2010 and their design enhanced in December 2017. “The enhanced NGC bank notes bear the signature of the 16th President of the Philippines Rodrigo R. Duterte and the signature of the 4th Governor of the Bangko Sentral ng Pilipinas, Nestor A. Espenilla, Jr.”
Other Monetary Board Members who attended the event were Felipe M. Medalla, Juan D. de Zuñiga, Jr., and Antonio S. Abacan.
Also present were BSP Deputy Governor Diwa C. Guinigundo, Deputy Governor Chuchi G. Fonacier, Assistant Governor Dahlia D. Luna, and other BSP officials.
Also in his remarks, the President said another official will be fired soon.
He called out officials who travel abroad to attend conferences on climate change.
“Unless the hypocrite big powers adapt it heartily, then we could have a climate change, but at the rate the world is turning,… itong (this) climate change could be a farce if we cannot compel the industrialized nations to follow,” Mr. Duterte said. — Arjay L. Balinbin

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