Home Blog Page 11232

Tourism share of GDP hits 18-year high in 2017

By Christine J. S. Castañeda
Senior Researcher
THE TOURISM industry’s contribution to the economy was the highest in 18 years in 2017, the Philippine Statistics Authority (PSA) said.
According to preliminary data compiled by the PSA, tourism’s direct gross value added (TDGVA) accounted for 12.2% of gross domestic product (GDP) in 2017 higher than the sector’s 10.7% share in 2016.
TDGVA measures the tourism-related value created by various industries. Last year, the combined economic contribution of tourism activities was P1.929 trillion at current prices, up 24.2% from a year earlier.
The TDGVA indicator is based on the results of the Philippine Tourism Satellite Accounts report, which the PSA compiles from the Department of Tourism.
Transportation had a 22.8% share of gross value added, followed by food and beverage services and entertainment and recreation services, which contributed at 20.9% each.
“The improvement in tourism’s share to GDP last year… was partly a result of more inbound tourists taking advantage of the relatively cheaper peso versus their local currencies as well as stronger domestic tourism spending amid manageable inflation,” said Angelo B. Taningco, economist at the Security Bank Corp.
Domestic tourism expenditures hit P2.645 trillion last year, up 25.5%. Domestic tourism expenditures were equivalent to 22.8% of household spending in 2017, according to the PSA.
Tourism expenditure by non-residents amounted to P448.6 billion in 2017, up 43.9%.
“Compared to the country’s total exports, the share of inbound tourism expenditure was 9.2%. Inbound tourism ranked third among the biggest export items in 2017, after semiconductors at 21.9% and miscellaneous services at 15.7%,” the PSA said.
Employment in the tourism industries was estimated at 5.3 million in 2017 or 13.1% of the total working population, up from 12.8% a year earlier.
Mr. Taningco added: “My tourism outlook for this year is somewhat positive as I expect healthy inbound tourism spending on the back of a cheaper peso but domestic tourism spending might be hampered a bit by domestic inflation rising sharply.”
The economist also said that the six-month closure of Boracay Island “will surely not contribute positively” to tourism output. “I think though that the negative effect would be marginal if the island’s shutdown is not more than six months,” he added.

Q1 building permit approvals up

By Jochebed B. Gonzales
Senior Researcher
THE NUMBER of approved building permits continued to grow in the first quarter albeit at a slower rate compared to a year earlier as well as a quarter earlier, the government reported yesterday.
According to preliminary results from the Philippine Statistics Authority, the number of construction permits rose 2.6% from a year earlier in the first quarter to 36,002. The growth rate is lower than the 3.6% booked in the preceding quarter and the 7.1% posted in the first three months of 2017.
These construction projects were equivalent to 8.569 million square meters of floor space, up 11.6% year on year, with the value of the construction amounting P101.729 billion, up by about a third from a year earlier.
Residential construction approvals, which accounted for 70.4% of the total approved building permits in the first quarter, declined by 1.2% from a year earlier, though on a value basis construction amounted to P64.439 billion, up 70.6% from a year earlier.
Single-detached homes accounted for 21,776 permits, followed by apartments at 3,109. Duplexes and quadruplexes numbered 379 while condominiums and other residential projects were 44 and 54, respectively.
Permits for non-residential construction increased 11.8% to 5,587 and the corresponding projects were valued at P31.099 billion with a floor area of 3.377 million square meters. Within the category, commercial building permits were up 20.2% year-on-year at 3,579 and institutional building permits rose 13.3% to 1,081.
Region IV-A (Calabarzon) topped the regions with 8,199 in approved construction permits, with 6,129 of them residential.
Region VII (Central Visayas) and Region III (Central Luzon) followed with 4,333 and 3,589 permits, respectively. Approved non-residential projects in these regions numbered 614 and 735, respectively.
Among the provinces, Cavite had the most number of approved permits, comprising 10.9% of the total or 3,934. Cebu had a 5.1% share or 1,844 while Batangas accounted for 4.3%, equivalent to 1,546.
In terms of value, the National Capital Region (NCR) had projects amounting P36.439 billion, with P31.696 billion representing residential construction, notably mostly condominiums which were valued P27.416 billion. The value of non-residential projects in the region during first quarter was P2.436 billion.
Projects in Calabarzon were valued P14.906 billion while Central Visayas and Central Luzon came in at P13.115 billion and P8.082 billion, respectively.
Sought for comment, Angelo B. Taningco, economist at Security Bank Corp., said: “I think the increase in non-residential construction appears to be in response to strong office demand, whereas the decline in residential construction may be related to rising inflation, which tends to restrict household spending.”
Despite the residential segment’s dip in volume of permits, Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort, noted the growing space meant for residential occupancy especially in Region IV-A.
“The 29.2% increase in residential building [by floor area] reflects the continued growth in housing loans of banks and the expansion of developers, especially in areas outside Metro Manila where more lots/spaces are available,” he said.
“Region IV (including Cavite) is also host to the country’s biggest industrial zones/areas outside Metro Manila and also a host to growing commercial/retail/office space areas,” added Mr. Ricafort.
Moving forward, the economists were upbeat on construction activity, maintaining a rosy outlook for the real estate sector as well as the government’s aggressive infrastructure spending.
“Overall, my outlook on construction activity is positive especially with buoyant office demand, relatively low interest rates, and the government’s strong push for public infrastructure,” said Security Bank’s Mr. Taningco.
RCBC’s Mr. Ricafort added: “Construction activity could still continue to grow in the coming months/years, reflecting the boom in real estate activities and increased growth in infrastructure spending.”

Monetary Board sees inflation momentum slowing — minutes

By Melissa Luz T. Lopez
Senior Reporter
INFLATION momentum has been easing as price spikes due to tax reform have decelerated, the central bank said as it decided to raise rates last month in order to temper future price increases.
Higher interest rates are viewed as a means of softening the impact of possible increases in transport fares, power rates, and minimum wages, according to highlights of the Monetary Board’s May 10 policy meeting.
The policy-setting body of the Bangko Sentral ng Pilipinas (BSP) raised rates by 25 basis points last month, marking the first tightening move in nearly four years which brought benchmark rates to the 2.75-3.75% range.
“[T]he Monetary Board believed that a timely increase in the BSP’s policy interest rate will help arrest potential second-round effects by tempering the buildup in inflation expectations,” according to the four-page highlights of the meeting published yesterday.
The central bank said inflation pressures could become more broad-based over the coming months as they now see the full-year average at 4.6%, well above the 2-4% target.
Despite this, the BSP noted that “inflation momentum has started to slow down” even after April inflation hit a five-year high at 4.5%.
“[T]he impact of the new tax appears to have mostly dissipated based on month-on-month trends while a majority of CPI (consumer price index) items remains within or below the target range,” the BSP also said.
On a month-on-month basis, inflation slowed from 0.7% in March to 0.3% in April, according to government data. This fell further to 0.2% in May. On a year-on-year basis, inflation was a 4.6% in May.
Policy makers introduced a preemptive tightening move in May amid faster year-on-year price increases for basic goods and services.
Petitions for higher minimum wages, transport fare hikes and electricity rates are viewed as key risks that could push prices up, the BSP said.
“The Monetary Board observed that strong domestic demand allows some scope for a measured adjustment in the policy rate without adversely affecting the country’s economic growth momentum,” the central bank added.
Faster-than-expected rate hikes in the United States — which, in turn, will push global yields higher — are also expected to drive faster inflation. Meanwhile, slower global economic growth, geopolitical tensions and the removal of rice import limits are expected to help offset price spikes, the central bank added.
Inflation has averaged 4.1% as of the end of May. BSP Governor Nestor A. Espenilla, Jr. said on Tuesday that latest data showed that inflation is slowing and may be nearing its peak, which could have come earlier than previous expectations of a steady ascent until the end of the year.

DoE values S. Korea proposed power projects at $4.4B

THE Department of Energy (DoE) has estimated at around $4.4 billion the proposed investments of four South Korean companies covering energy projects in the Philippines.
“We welcome these investments, especially as we anticipate the growth of our economy and expected demand due to the government’s ‘Build, Build, Build’ Program,” said Energy Secretary Alfonso G. Cusi in a statement.
Mr. Cusi, who has said he had received letters of intent from the foreigners, came from an official visit to South Korea led by the President.
He identified the four companies as SK Engineering & Construction, Sy Enc Co., Ltd., BKS Energy Industry Ltd., and SK E&S. Their letters were formally submitted during the Philippines-Korea business forum and luncheon in Seoul.
“We are expecting more Korean firms to express their interest in investing in Philippine energy projects. We are hoping that this will result in a more robust energy sector for the country, help our job generation efforts and boost our economy,” Mr. Cusi said.
The DoE described SK Engineering & Construction as an engineering, procurement and construction (EPC) contractor in the Philippines. The company intends to invest $2 billion in Quezon province with its proposal to build a coal-fired power plant and expand its local operations.
The EPC contractor handles all activities related to power plant development — from design, procurement, construction and commissioning up to the handover of the project to its end-user or owner, the DoE said.
Its proposed power plant project in Quezon is expected to generate at least 3,000 jobs yearly during the construction period. During the operational period, it can create 600 jobs.
The second-biggest investment proposal came from SK E&S at $1.6 billion. The company is engaged in power generation, district energy, and city gas in and outside South Korea. It submitted a proposal for an liquefied natural gas (LNG) terminal, which is projected to create 2,200 jobs during the construction period.
BKS Energy Industry Ltd. submitted a proposal for a solar power generation with an investment of $500 million in the Philippines. Its plan is expected to create about 1,000 jobs a year.
Renewable energy company Sy Enc Co. submitted a proposal for a wind power generation project. It also plans to expand its Philippine operations with an investment of about $255 million that could create 10,000 jobs. — Victor V. Saulon

British chamber to brief UK businesses on RA 11032

THE British Chamber of Commerce Philippines (BCCP) said it is set to meet with businessmen in the United Kingdom next week to discuss ease of doing business developments in the Philippines, following the enactment of Republic Act (RA) 11032 or the ease of doing business law.
“We are leaving again for the UK on Friday evening, and I have a meeting in Manchester with the chambers of commerce in the UK maybe next week, and I will discuss ease of doing business issues [in the Philippines],” BCCP chairman Chris Nelson said in a phone interview on Wednesday evening.
“I would like to increase the relationship between the Philippines and the UK by trying to attract more companies to invest in the Philippines,” he added.
Mr. Nelson said the new law is “something the BCCP can use to promote and help make the Philippines more attractive to UK companies, especially the small and medium-sized enterprises (SMEs) because that is what the BCCP tends to focus on.”
In an interview last Sunday, Mr. Nelson also said he recently “spent two weeks in the UK, from the 30th of April to mid-May, promoting the Philippines to British companies.”
“I met over 90 companies across nine different cities and towns organized by the chambers of commerce and the Department of International Trade, so this is to promote trade and investment between the two countries. And now we are following up with those contacts to hopefully get them to start doing business in the Philippines,” Mr. Nelson narrated.
The BCCP, Mr. Nelson also said, is “currently in discussions with eight” UK companies. He noted too that businessmen often ask him back home about “regulations and ease of doing business” in the Philippines.
The BCCP is set to hold its fourth joint economic briefing on foreign direct investment in the Philippines, with Finance Undersecretary Karl Kendrick T. Chua and Trade Secretary Ramon M. Lopez expected to take part. The event will be held at the Makati Diamond Residences on June 19.
“With the current aggressive stance of the government, roads are opening for foreign investors, but sustainability is critical. Representatives from various industries will also be sharing their experiences and insights on current government policies and initiatives that either support or go against their goals for achieving profitability,” the chamber said on its website. — Arjay L. Balinbin

ANZ sees more PHL investment interest in Australia

ANZ Philippines CEO Anna Green said the bank has received inquiries from major corporations seeking “opportunistic” investments in Australia.
“We certainly see Philippine conglomerates looking at Australian assets with more interest,” Ms. Green told reporters in a media roundtable yesterday.
She said the companies are basically interested in Australian assets that work with the companies’ own supply chains, and that the increased interest can be attributed to growing trade between the Philippines and Australia.
Ms. Green and Patrick Vizzone, Head of Food, Beverage, and Agribusiness for ANZ International said that the industries the corporations are looking at are food, beverage, and agriculture (FB&A), energy, and infrastructure.
Ayala Corp. last month entered the Australian renewable industry space through a $30-million investment in a joint venture (JV) with UPC Renewables.
In 2016, Universal Robina Corp. acquired Consolidated Snacks Pty Ltd.
Mr. Vizzone says trade between the Philippines and Australia is growing albeit coming from a low base.
Australia and New Zealand have a free trade agreement with the Association of Southeast Asian Nations.
“It’s still early days… Over time as the Philippines grows, trade between the two countries will continue,” he said.
Imports from Australia are mostly agriculture, forestry, and fisheries products, and minerals and fuels, while exports from the Philippines are mostly manufactured goods. — Patrizia Paola C. Marcelo

Smart tech to help PHL achieve sustainable agri goals

The Philippines is hoping to modernize and strengthen its agriculture sector, with both the state and private companies promoting the adoption of advanced technology and smart farming methods to increase harvests and minimize losses.
In early April officials broke ground on the country’s first state-funded smart farm, part of the P128-million ($2.5-million) Smart Plant Production in Controlled Environments (SPICE) program, designed to develop and promote urban farming and high-tech plant conservation.
Located at the Department of Science and Technology’s nursery of indigenous and endemic plants in Quezon City, and operated in coordination with the University of Philippines-Diliman and the University of Philippines-Los Baños, the facility will serve as a greenhouse for new technology and modern farming methods.
According to officials, techniques such as vertical farming, micropropagation, cryopreservation and hydroponics will be practiced, with the aim of developing technology to boost crop production and reduce the need for manual labor.
The SPICE project is part of a wider drive to reform and modernize the sector through the introduction of new techniques and the wider application of technology, a policy direction of increasing importance as the country’s population expands and the issue of food security becomes more pressing.
The Philippines has been identified as one of the countries most at risk from climate change, with the Global Climate Risk Index 2018, released by Bonn-based NGO Germanwatch, ranking the country as the fifth most affected by changing weather patterns over the past 20 years.
Among the changes in climatic conditions has been the more frequent occurrence of El Niño weather cycles, often characterized by lower rainfall and higher temperatures, threatening crop outputs. The last major El Niño event, in 2015 and 2016, reduced harvest yields by 4.5% and cut returns along the food production and processing chain.
To support new smart farm initiatives and help reduce the impact of climate change, government agencies and the private sector have been working with farmers to improve their understanding of sustainable farming practices.
The Department of Agriculture, through its Agricultural Training Institute, has partnered with the Social Institute for Poverty Alleviation and Governance to deliver courses teaching farmers in Central Luzon about climate-smart practices, including the use of modern technology, and crop and soil management.
Such education programs are vital to raising awareness of the potential benefits of technology in farming, according to Takashi Sumi, president and CEO of local firm Atlas Fertilizer.
“Agriculture technology exists in the country, but farmers must be better educated on how to use it and informed of the benefits,” he told Oxford Business Group (OBG). “Machines are generally viewed as too expensive for farmers to acquire, even though they would increase harvest efficiency significantly.”
In addition, the Philippine subsidiary of multinational agricultural firm Monsanto launched a smart farm initiative in February to provide training to corn growers.
The nationwide program will see farmers learn about how new technologies can improve corn planting and cultivation, including the use of high-yield and disease-resistant strains of corn. Taking place at 16 smart farm centers across the country, the program aims to reach 20,000 growers in its first year.
On top of efforts to increase yields and returns, the focus on sustainable farming techniques is also expected to generate a number of business opportunities for service providers in the agriculture sector.
The anticipated take up of new farming practices, including the deployment of machinery to ease the manual workload, should increase demand for farm equipment and support services in rural areas, while greater use of irrigation, greenhouses and a potential move towards organic production could bolster demand for related materials, technology supplies, and fertilizer and seed.
In addition to education and training, the successful transition to more sustainable practices will also require greater access to credit for farmers, according to some industry figures.
“Farmer cooperatives should receive more support from the government, particularly in terms of credit,” Fernando Malveda, chairman of LEADS Agricultural Products, told OBG. “They have plenty of land but very little money for necessary inputs.”
He added that adequate support could see the Philippines go from being a net agricultural importer to a net exporter.
Supporting the call for more finance, the Philippines Mindanao Jobs Report, released by the World Bank in June last year, stated that greater access to credit was key to improving the productivity of farmers on the Philippines’ second-largest island, and was essential to facilitating a shift towards high-yield and high-value crops.

A Supreme but humble Court

It’s quite gratifying to see that, after so many years writing and speaking publicly against the dangers of the “Living Constitution” theory and allowing the Supreme Court to assume prerogatives not provided for in the Constitution, that people are slowly coming around to my points of view.
Of course, that it took their huge disagreement with the Supreme Court’s quo warranto ruling (of which this column agrees the Supreme Court ruled correctly and decisively) is beside the point.
One particular aspect is symptomatic of the passé view regarding the Supreme Court (i.e., that the members thereof are possessed of greater wisdom and are apolitical).
Thus, people look at the relatively simple qualifications laid in the Constitution for members of Congress: natural born citizen, at least 35 years of age on the day of the election (for Senators) or 25 (for members of the House), able to read and write, a registered voter, and resident of the Philippines for not less than 2 years (for Senate) or 1 year (for House) immediately preceding the day of the election.
The qualifications for president are just as simple.
On the other hand, the Supreme Court justice’s qualifications do seem more detailed: natural born citizen, at least 40 years but not more than 70, must be practicing law for at least 15 years, of proven competence, integrity, probity, independence, and on good behavior.
So some people look at the apparently more demanding requirements and believe it implies Supreme Court justices are more able than officials of the other two branches of government. Nothing could be further than the truth.
No.
To repeat: Supreme Court justices are not better than members of Congress or the President. To believe otherwise is to go against the philosophy of our Constitution.
The Executive, Congress, and the Supreme Court are three equal branches. That must always be remembered.
The reason for the differences in qualifications has to do with functions: members of Congress are better off varied, with differing backgrounds, age, educational attainment, and professional and personal experience. The reason is to better channel as much as possible the electorate, the People, so that the laws would more accurately reflect their needs of the time and within the foreseeable future. That is the reason for the short 3 or 6-year terms.
The Supreme Court has a far narrower function: decide cases and determine constitutionality of laws. That is the reason why justices are all lawyers and are not subject to shorter terms (justices serve until 70 years old, provided they remain on “good behavior”).
Unlike Congress, the Supreme Court is NOT mandated to engage in policy. The dispensing of wisdom and expertise in political, scientific, social, economic, security, etc., are not primarily asked of Supreme Court justices.
law
Because, if policy wisdom and expertise are indeed needed, then why limit membership to lawyers? There are many intelligent, experienced, and astute businessmen, economists, doctors, soldiers, etc.
That such are not needed of justices is precisely because the Supreme Court’s function is limited to the legal. Its warrant is narrow, albeit complicated and highly technical.
Congress’ function is complex in a different way: laws are supposed to cover a variety of experiences, interests, and consequences. That is why its members come from a variety of professions. The People are tasked every election to come up with the appropriate combination and lineup they believe suit their needs within that period.
Perhaps the ego and pomposity of many lawyers contributed to this misunderstanding. They grandiosely pile up powers and prestige on the Supreme Court that have no basis in the text, structure, and history of our Constitution.
Oftentimes, ideological machinations play a role as well (see The Living Constitution theory).
For example, some lawyers keep erroneously calling the Supreme Court the “Defender of the Constitution,” when our Constitution says no such thing.
The true and actual Defender of the Constitution — as well as being its true final interpreter — is the People.
Put another way, not only the Supreme Court but every Filipino, including members of Congress and the Executive, are duty bound to study and interpret correctly the Constitution.
The Congress should correctly take into account the Constitution when making laws and the President when executing them. Both commonsensically require interpretative functions.
The Supreme Court does have expressed interpretative mandate but only relating to its expressed powers under Article VIII, Sections 1 and 5, of the Constitution.
Of course, to grant Congress or the President powers and privileges not found in the Constitution (such as considering the latter the “Father of the Nation”) is also equally wrong.
We have a very good and profound constitutional system. Citizens certainly should take the time to study and appreciate it more.
Then hopefully we get to finally understand what it means to have a government of, by, and for the People.
 
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

Surveillance state

Upon the declaration of martial law in 1972 and in the 14 years that followed, the Marcos terror regime arrested, abducted, and detained over a hundred thousand political activists; artists, writers and critical journalists; teachers, professors, lawyers and other professionals; student, labor and peasant leaders; Muslims and indigenous people; and members of the opposition and other regime critics.
Accused of rebellion, subversion and/or sedition, but only in rare instances charged in the regime’s military kangaroo courts, many of these men and women were tortured, summarily executed, or forcibly disappeared.
The basis for their arrest, abduction, detention, and, in many cases, their extrajudicial killing, were the dossiers that the civilian, police and military intelligence agencies kept on hundreds of thousands of men and women whose phones they tapped, whose movements they monitored, and whose conversations with friends, colleagues, and associates they listened in on with the use of then available devices, or which their spies in the media, academia, and various labor, student, and farmer organizations reported.
The files these agencies kept included not only records on what these men, women and even children did or said where and during what occasions, who their friends and relatives were, their addresses and places of work, what they wrote if they were writers, and what they said in a television or radio broadcast if they were broadcasters, but also photographs, tape recordings and films, and other data.
In not a few instances, the only information amassed — much of it raw and unverified — proved little or nothing of the crimes these individuals were later accused of by their military captors. But they were nevertheless used not only to condemn them to prolonged detention or even death, but also in the effort to extract further information through torture.
The official justification for this criminal enterprise of violating due process, the presumption of innocence, and the right to a fair trial was, in Ferdinand Marcos’ words, “to save the Republic and reform society.”
But by the time he was through and on his way to Hawaii in 1986, both the Republic and Philippine society were in ruins with the decimation of at least two generations of the men and women who were among the most committed to the changes Philippine society has long needed to rescue it from the poverty and injustice that has been its people’s lot for centuries.
At the height of the EDSA 1 civilian-military mutiny, in apparent awareness of the need to preserve the regime’s dossiers on perceived “enemies of the state” for whatever use he and his cohorts in the military would have for them in the emerging Corazon Aquino regime, former Marcos Defense Minister Juan Ponce Enrile made it a point to instruct his minions to “secure the NISA (National Intelligence and Security Authority) files” in Malacañang as a group of protesters was storming the palace.
The dossiers the present day NICA (National Intelligence Coordinating Agency — the NISA as renamed and reorganized in 1987) no doubt still maintains are among the means through which post-Marcos regimes have kept watch on various groups and individuals regarded as potential or actual threats to national security.
The surveillance state is not just a threat; it has been a reality for decades.
Since the Fidel Ramos regime, to make NICA’s job and that of its fellow agencies easier, a national ID system has been proposed either by past Philippine presidents or by members of Congress.
But only during the present regime has the proposal advanced to the present stage, in which a national ID system bill only needs the signature of President Rodrigo Duterte to become law.
In defending the bill, its prime mover, former Philippine National Police Director General, now Senator Panfilo Lacson, has downplayed the possible use of a national ID system against every citizen’s right to privacy on the argument that in getting a driver’s license for example, Filipinos are already compelled to reveal such details about themselves as date of birth, address, etc. — which, however, is no argument for the further erosion of privacy rights.
Lacson also failed to mention that it was exactly because of the possibility that that right may be violated that the Supreme Court struck down in 1998 then President Ramos’ Administrative Order 308 establishing a “National Computerized Identification Reference System.”
In addition to further eroding the right to privacy, however, is its most probable use to label and condemn individuals as criminals or terrorists who may either be unaware of the need to obtain such an ID card or who fail to procure one for whatever reason. Its adherents have in fact cited as one of its supposed advantages its use as a means of identifying “terrorists” and “preventing crime.”
The claim that it can do either presumes that an individual who intends to commit a criminal and/ or terrorist act can’t or won’t get a national ID card. It’s an assumption that’s being challenged daily not only by the fact that such individuals do get papers and whatever else they need to get around. There is also the distinct possibility that once the system is in place, it will encourage criminal syndicates to organize their own means of marketing fake IDs. Diplomas, passports and other papers can, after all, be faked and are still being faked with impunity in this country.
The argument that possession of a national ID card will enable the holder to easily access government services may be sound. But it forgets that once millions more demand health, education, welfare and other social services, unless these are enhanced and government capacity to provide them improved, what will ensue will be a critical failure to meet the surge in the demand for them.
But even more distressing is the use of the system to harass, intimidate, and suppress dissenters and protesters, which is highly likely in the context of the unprecedented empowerment of the police and military under the current regime.
Will a person who can’t produce an ID card, who failed to procure one, who has the same name as an alleged criminal and terrorist, or who has lost his card, also lose his freedom and rights as well when stopped at a police or military checkpoint in, say, a remote barangay in the Visayas or in Mindanao? And to what extent, given the possibility that the database of the Philippine Statistics Authority will be hacked by any one of the legions of computer geniuses all over the globe, can information on individuals who are being targeted for whatever reason by government or private entities be used against them?
There is no arguing against the need of governments for information necessary to protect their constituents and to safeguard national security.
But the legitimacy of those needs has too often been used by surveillance and police states against the very people they’re sworn to protect, as the entire planet witnessed during the Marcos dictatorship and as it is still seeing today in the country of our sorrows. Once in place the national ID system will complete the Duterte police state.
Note the utter fallacy of the claim by bureaucrats who are in favor of the system that no one has anything to fear if he or she isn’t doing anything wrong or illegal. It ignores the all too real outrage that the prisons of this country are crammed to the rafters with the innocent, and its cemeteries full of the bones of those who did nothing wrong, while the real terrorists and assassins who put them there walk the corridors of power.
 
Luis V. Teodoro is on Facebook and Twitter (@luisteodoro). The views expressed in Vantage Point are his own and do not represent the views of the Center for Media Freedom and Responsibility.
www.luisteodoro.com

Let’s watch the Swiss get radical and see what happens

By Clive Crook
THIS Sunday Swiss voters will decide whether to try what may be the boldest financial experiment ever contemplated — dismantling their orthodox banking system and building a new one based on so-called sovereign money, or Vollgeld.
The proposal is probably far too radical to have much chance of success. Yet that’s a pity.
The idea of sovereign money isn’t crazy. It has a long and distinguished academic pedigree and, as a practical matter, there’s a lot to recommend it. Switzerland would do the world a favor by giving the plan a try. At the very least, give the Vollgeld sponsors some credit (forgive the expression) for reviving an interesting debate.
Vollgeld, the Chicago Plan, narrow banking, limited-purpose banking — these and other variants of the same basic idea start from the fact that in a conventional financial system, banks as well as governments can create money. How so? Consider what happens when a bank issues a loan. It credits the account of the lender with a deposit, and that deposit is by definition money. In this way, banks can expand their balance sheets, simultaneously adding to their assets (loans) and liabilities (deposits), expanding the supply of money at will.
Vollgeld’s big idea is that this power to create money should be taken away from banks and strictly reserved for the government.
What would this mean in practice?
Banks could not lend out the proceeds from on-demand deposits; instead they’d have to hold an equal amount of reserves at the central bank. Lending would be done by different institutions raising funds in other ways — by issuing equity, say, or selling mutual funds or bonds. Financing loans this way does not create money.
In a conventional system, there’s a fundamental mismatch: Supposedly safe deposits are used to finance risky loans — and if the loans go bad, the government is typically expected to step in and make depositors whole.
In a sovereign-money system, deposits are safe because they’re backed one-to-one with reserves — and risky loans are financed with explicitly risky liabilities. If the loans go bad, the supporting investors (equity holders, mutual fund purchasers) expect to bear the loss.
bank
On the face of it, this sharp separation of money and credit would have many advantages.
For a start, there could never be a run on a narrow bank, because the deposits would be backed in full. You wouldn’t need deposit insurance, and you’d eliminate the resulting subsidy to risk taking. Boom-and-bust credit cycles would be damped without (in theory) throttling the supply of credit. As the economy expanded, the government would issue new money in return for goods and services, or perhaps by sending checks to citizens; its fiscal position would be stronger, so it could lower taxes.
On plausible assumptions, and without going into technicalities, there’d be less debt, lower interest rates, faster growth — and the central bank could target zero inflation without needing to worry about the “zero lower bound.”
Not bad — so what’s the catch?
Essentially, this plan to reduce financial risk demands of policy makers an extraordinary appetite for risk. A restructuring as radical as this would drastically disrupt an industry that, for all its faults, is a vital and deeply integrated part of the modern economy. The scope for unintended consequences is vast.
In addition, one of the biggest purported benefits of Vollgeld might fail to fully materialize.
You could make narrow banks safe by requiring them to back their deposits one-for-one — but that wouldn’t stop moral hazard migrating to the new suppliers of credit. One can easily imagine circumstances in which these new lenders would be deemed too big to fail, or their creditors too politically salient to be left to their fate. Regulating these institutions might not be that much easier than regulating the current system.
Nonetheless, let’s hope that Switzerland goes ahead, dismantles the financial core of its rather successful economy, and rebuilds the system from the ground up on these new and possibly superior principles.
It would be great to see the idea tested at long last — preferably somewhere else.
 
BLOOMBERG

I hope Howard Schultz doesn’t run for president

By Joe Nocera
BEFORE Howard Schultz came along, the most famous example of a chief executive trying to use his company for social good was William Norris, the CEO of Control Data Corp. Based in the suburbs of Minneapolis, Control Data was a highly successful maker of so-called supercomputers; by the early 1980s, it was a $5-billion company with 60,000 employees.
But Norris, who was a superb computer engineer, also believed that corporations had a social mission to improve the communities in which they operated. He took to spending about 7% of Control Data’s revenue on social programs, including opening factories in struggling urban areas.
Alas, Norris and Control Data missed the moment when supercomputers gave way to workstations and desktop computers, and by 1985 the company was deeply in the red. Norris soon left the company, and by 2000 Control Data had ceased to exist.
Critics claimed that Norris’s emphasis on social programs is what caused him to take his eye off the ball.
Had he been more focused on profits — and on the business itself — he might have seen the coming competition and adapted to it. It seemed an affirmation of one of Milton Friedman’s maxims: “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”
In the intervening years, two things happened.
First, the emphasis on profits, especially short-term profits, became ever-more pronounced, as shareholder activists became ever-more powerful. And second, the “corporate social responsibility” movement took hold.
But the latter always struck me as more for show than for accomplishing something significant.
For instance, in 2004 Ford Motor Co., which considers itself an environmentally conscious company, overhauled its River Rouge factory complex to make it “green.” But the vast bulk of its profits still came from gas-guzzling pickup trucks.
Which brings me back to Howard Schultz, who announced Monday, via Andrew Ross Sorkin’s column in the New York Times, that he would be leaving Starbucks at the end of June.
Starting in 1987, when he bought a small coffee chain with a handful of stores, Schultz built Starbucks into an enormously successful company, with more than $22 billion in annual revenue, $3 billion in net income, and about 28,000 stores. The Starbucks brand is one of the most powerful in the world; the Chinese are so enamored that the company is opening about two stores a day in that country.
At 64, Schultz is leaving Starbucks the same way Sandy Koufax left baseball: while he’s still on top.
He co-wrote a book about veterans — which Starbucks displayed prominently in its stores.
Schultz was so troubled by the riots in Ferguson, Missouri, in 2014 that he started an initiative called #RaceTogether. It included writing that phrase on Starbucks cups (which was widely derided) and holding forums with employees to talk about race, which were powerful and moving. Afterward, Schultz vowed to hire 10,000 disadvantaged youths. And he opened a Starbucks store in Ferguson and other low-income neighborhoods across the country.
It is sadly ironic that after all that, a Starbucks manager in Philadelphia put the company under a black cloud by calling the police on two black men waiting in a store for a friend.
But in his last act as Starbucks’s chairman, Schultz organized a one-day course on unconscious racial bias for all employees, even shutting down its stores for an afternoon late last month. Was it criticized? Yes, by some. Will it make a difference? It’s hard to know. But that didn’t stop Schultz from trying.
“If he wakes up one day and decides he wants to help improve race relations, what’s wrong with that?” Mellody Hobson, an African American financial executive who sits on Starbucks board, told me after Ferguson. “He could be doing something else. Or nothing.”
In an e-mail exchange I once had with Schultz, he said his goal was to “re-establish the American dream not just for a select few but for everyone.”
One thing Schultz has always insisted is that a company didn’t have to choose between profitability and doing good.
“I’ve never seen it as a bifurcated question,” he said in 2012. “I’ve always seen it in parallel.” His view is that customers and employees both want to be part of a company whose values align with their own. “If a company does the right thing,” he said, “it will be embraced.” He added, “I don’t believe any company can build an enduring enterprise based on profitability.”
On the other hand, Starbucks has a huge advantage over most corporations — it sells coffee for $4, $5, even $6 a cup, and sells that coffee to customers who are price insensitive.
Starbucks can afford to build a plant that brings higher costs, or provide health care for part-time baristas, or shut its stores for an afternoon at a cost of $12 million. Could Walmart do that? Could McDonald’s? Could Pepsico? It’s doubtful.
I hope Schultz doesn’t run for president.
As I said in a recent column, I don’t think he would have the stomach for it, especially once the mud-slinging begins. He is guileless, and he wears his sincerity on his sleeve. These qualities may make him a decent human being and a charismatic CEO, but he’ll be ripped to shreds if he goes into politics.
Schultz wants to stay in the public arena once his post-Starbucks life begins at the end of this month.
“One of the things I want to do in my next chapter is to figure out if there is a role I can play in giving back,” he told Sorkin.
With a lot of ex-CEOs, “giving back” is little more than a platitude. I don’t think that will be the case with Schultz.
Whatever he does next will be done with the same sense of purpose, the same guilelessness, and the same sincerity, as his efforts at Starbucks. And who knows? It might even make a difference.
 
BLOOMBERG

Lawmakers flag resistance in Mindanao to BBL

By Camille A. Aguinaldo
and Charmaine A. Tadalan
SENATE MAJORITY Leader Juan Miguel F. Zubiri on Thursday said he is expecting the constitutionality of the proposed Bangsamoro Basic Law (BBL) to be challenged before the Supreme Court (SC) once enacted, claiming that some political clans and groups wanted the proposed measure to be derailed.
Tawi-Tawi Representative Ruby M. Sahali, for her part, claimed that Speaker Pantaleon D. Alvarez effectively risked his leadership by supporting a provision for a continuing plebiscite on inclusion in the BBL, which she said other lawmakers from Mindanao opposed.
Speaking at the Kapihan sa Senado forum in Pasay City, Mr. Zubiri said, “I am sure someone would file against this law in the Supreme Court after the President signs it. There are political clans who want to see this derailed. There are certain groups that don’t want this approved because this will change the landscape of the region.”
Without naming names, the senator, who sponsored the bill in the Senate, said some political families have disagreed with the proposed structure of the Bangsamoro government under the bill.
“Politicians and political families are angry at me now but I have to be a statesman here. I have to prevail over local political concerns. I apologize to them,” he said.
Mr. Zubiri said the bicameral conference committee version of the proposed BBL should be compliant with the 1987 Constitution in order to pass judicial review and to prevent the measure from being stalled. He also warned that if the bill becomes faulty, conflict may ensue in the region.
“This is the last step of the government in the comprehensive agreement with the Bangsamoro so the MILF (Moro Islamic Liberation Front) will surrender their arms and they will finally sign the final peace agreement. If the SC strikes this down, peace in Mindanao will definitely be endangered,” he said.
Both chambers of Congress passed the proposed BBL on third and final reading on its last day of session last May. According to House Majority Floor Leader Rodolfo C. Fariñas, the bicameral conference committee on the bill is set on July 9 to 13.
Congress is also expected to ratify the proposed measure in the morning of July 23 before the President delivers his third State of the Nation Address (SONA).
Mr. Zubiri also said he wanted to involve President Rodrigo R. Duterte and national security officials during the bicameral version committee hearing, especially on possible deadlock situations in the deliberations.
He also reiterated that the Senate version of the bill could withstand judicial review due to the amendments introduced by Senate Minority Leader Franklin M. Drilon.
“These simple words and phrases actually mean a lot in keeping compliance to constitutional requirement. I think the House (of Representatives) will accept these simple but very important amendments,” he said.
For his part, Moro Islamic Liberation Front first vice-chair Ghazali Jaafar said on Thursday, “When there is no BBL, there is no decommissioning for us. That is the policy.”
“If this BBL passed in Congress (and) brought into law is inutile, how can we sell it?” he also said at a forum on BBL and federalism.
Ms. Sahali, for her part, defended the House version of the bill, saying it retained 95% of the BBL version submitted by the Bangsamoro Transition Commission, chaired by MILF peace negotiator Mohagher Iqbal.
“The Bangsamoro Basic Law that we adopted in the House (of Representatives) was a law (that) if ratified, it would be accepted. (It has) political acceptability to all the people, it will withstand legal scrutiny of the Supreme Court, it is constitutionally defensible,” said Ms. Sahali, who was among those who pushed for the passage of the bill at the House of Representatives.
Sa totoo lang po (To be honest) in ensuring the House (delivers the) BBL, it almost collapsed the leadership of our Speaker,” she added.
“The whole congressmen from Mindanao (were) almost bolting off their support for the Speaker, kapag ni-retain pa rin ang (if we retained the) provision…(on) the continuing plebiscite for the next 25 years,” Ms. Sahali said.
But the periodic plebiscite was removed in the BBL version approved by the House on third and final reading.