PRICES of canned meat could rise by about 25% should mechanically deboned meat revert to higher import duties, according to the Department of Trade and Industry (DTI).
“Looking into what’s best for the country and people, we should really keep the tariff at 5%. If not, we will all see higher major costing for the basic canned meat products that will push up prices of a basic commodity consumed by the mass-based market…” Trade Secretary Ramon M. Lopez told reporters in a mobile message over the weekend.
“My rough estimate, if the tariff goes up to 40% from 5%, costs and price of canned products will go up by around 25%. Assuming a P25 canned meat product, the price can go up to P31. We should not allow this thing to happen,” he added.
This estimated hike is due to the absence of local supply for mechanically deboned meat.
Price pressures on a basic commodity like canned goods are politically sensitive because of the impact on inflation.
Inflation in June spiked to 5.2%, the highest level in five years, exceeding expectations of both government and market analysts.
He said 40% tariffs will be “unfortunate” for manufacturers, who will bear the brunt of higher duties on one of its main ingredients, and ultimately force consumers to bear any added cost.
“Manufacturers may leave or reduce operations, leading to job losses,” he said, noting that it may be preferable for them to operate overseas and export products to the Philippines.
He added there is no evidence to blame manufacturers for causing inflation pressure, as prices of their products have been stable.
The DTI has long called for the current 5% duty levied for mechanically deboned meat imports to remain in place permanently even after a tariff regime is imposed on rice.
The tariff on mechanically deboned meat was supposed to revert to its original level of 40% since the commodity was among those offered at 5% in exchange for extending the quantitative restriction (QR) regime on rice.
The Philippines failed to legislate rice tariffs in time for the QR expiry, and economic managers instead, extended the validity of the QR waiver.
This allowed trade partners to continue bringing in some products at low tariff rates while the country was given more time to fulfill its commitment to the World Trade Organization.
The DTI’s position may not sit well with meat producers who have been lobbying for the imposition of higher tariffs on mechanically deboned meat to do away with technical smuggling. They claim that prime meat products are being misdeclared as mechanically deboned meat to take advantage of lower tariffs. — Janina C. Lim
OVERALL GOVERNMENT borrowing in May grew 74.55% as the Bureau of the Treasury (BTr) accepted more bids at its twice-a-week auction of government securities, especially on the shorter-dated notes.
According to BTr data, gross borrowing was P57.97 billion in May, against P33.21 billion a year earlier and P36.69 billion in April.
Of the total, P55.44 billion was borrowed domestically, up 97.87% from a year earlier.
The BTr awarded P26.44 billion worth of Treasury bills and P29 billion worth of Treasury bonds that month, compared to the P3.31 billion and P24.72 billion it raised in bills and bonds a year earlier, respectively.
In May the central bank tightened benchmark rates by 25 basis points, a highly anticipated move that prompted the market to borrow more shorter-dated tenors in the BTr auctions.
Funds borrowed overseas meanwhile fell to P2.54 billion in May from P5.18 billion a year earlier due to a reduction in project loans.
In the five months to May, overall gross borrowing fell 33.18% year on year to P302.58 billion.
This is equivalent to 34.07% of the P888.23 billion worth of borrowing planned for the year. — Elijah Joseph C. Tubayan
AN INTERNET ADVOCACY group has expressed its support for a selection process favoring the highest committed level of service (HCLoS) to be committed by the new entrant to the telecommunications industry, the so-called “third player.”
In a letter to the Department of Information and Communications Technology (DICT) distributed to reporters Friday night, the Better Broadband Alliance (BBA) said the HCLoS draft of the terms of reference (ToRs) for third-player selection best fulfills the objective of prioritizing public service.
It cited the Public Service Act and Public Telecommunications Policy Act, which according to the group’s interpretation “prevent the government from using SUF (spectrum user fee) as the sole criterion for awarding a license to provide a telecommunications service.”
“A process that selects the (third player) only on the basis of SUF without a review of its proposed service to the public is not only legally questionable, but will also produce a result that relegates public service to the backburner,” it added.
The government is looking at two draft ToRs in the selection a third player — a draft that favors HCLoS and one that calls for an auction. The HCLoS draft assigns points to the prospective entrant’s investment and coverage over a five-year period, which is supported by the DICT. The auction draft seeks to award frequency spectrum to the highest bidder, which is supported by the Department of Finance (DoF).
The auction draft requires a minimum bid price of P36.58 billion from the interested company. The bid amount will be considered its SUF payment for its first five years of operations in the country.
The SUF is a yearly government fee based on spectrum use, type of service and economic classification of the areas covered by a telco provider.
Last week, DICT held a public hearing on the two draft ToRs with representatives from telcos, consumer groups and the public. A vote taken at the meeting showed that 75% of the participants also favor an HCLoS process.
BBA also considers the auction process “anti-competitive” because the third player would end up being penalized by paying for spectrum, putting it at a disadvantage relative to incumbents PLDT, Inc. and Globe Telecom, Inc.
It added that if the government wishes to generate revenue from spectrum fees, it must not make the third player bear them alone, but also make PLDT and Globe pay. This means, however, that customers will eventually take the burden of pricier services.
BBA also proposed to remove the power from the National Telecommunications Commission (NTC) to unilaterally terminate the selection process.
“Allowing the NTC to unilaterally terminate the process for any reason or for no reason at all, without any liability whatsoever, will lay waste to the entire process set forth in the ToR,” it said.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez
DAVAO CITY — Banana farming company Marsman Estate Plantation, Inc. (MEPI) has asked the Presidential Agrarian Reform Council to allow it to create an “ad hoc negotiation task force” to resolve the remaining issues on its lease arrangement with a minority of agrarian reform beneficiaries (ARBs).
In a statement released over the weekend, MEPI said the request was filed after the company signed last week with 17 ARBs a “document which allows them to enjoy higher land rental rates.”
These rates were previously only given to members of the Davao Marsman Agrarian Reform Beneficiaries-Multi-Purpose Cooperative, the largest cooperative in the plantation.
The 17 ARBs, the company added, are members of the Sto. Tomas Agrarian Reform Beneficiaries Cooperative.
At present, 502 ARBs, comprising two-thirds of the total, have signed the new deal under the agribusiness venture agreements, which have been amended four times since last year.
MEPI Chief Operating Officer Victor S. Mercado, Jr. said the land rental rate is P50,000 a hectare and is retroactive to 2017.
He added that this rate “remains the highest in the industry.”
Each ARB is also offered a health insurance benefit of P100,000 per ailment per year for those under 75, mortuary benefit of P25,000, and the right to nominate one employee for the company.
The new agreement was a result of the company’s meeting with the ARBs last month, presided over by the Department of Agrarian Reform.
Mr. Mercado said the new offer “still stands for the other minority ARBs who have yet to accept the increased rental and other privileges.” — Carmelito Q. Francisco
LONDON — The global economy is starting to show signs of strain from the “America First” push of US President Donald Trump who will hear renewed pleas to step back from a broader trade war when he visits Europe in the coming week.
Against a crescendo of measures and counter-measures, and threats of more to come, caution about investment is growing among employers in many countries around the world, including in the United States.
At the same time, central bankers on both sides of the Atlantic are sounding nervous about the risk of an escalation of the tensions.
Mr. Trump has vowed to stick to his promises of protection for US industries against what he says is unfair competition from China, the European Union and beyond, even if many analysts say his punitive tariffs are likely to backfire on the US economy.
Ripping up the playbook for global trade of recent decades, he hit metal imports with tariffs in June and has threatened to curb car imports from Europe with a 20% duty.
On Friday, Washington implemented tariffs of 25% on $34 billion of Chinese imports, part of a total $500 billion of goods from China that could be targeted for US duties. Beijing swiftly retaliated in kind.
“The world has to be prepared for an escalation of the trade conflict in the months to come,” Raoul Leering, a trade analyst at ING bank said in a note to clients.
“For now, Mr. Trump’s voters back his stance on trade, suggesting he’s unlikely to back down, particularly ahead of the mid-term elections, where the Republicans will be fighting to hold on to a majority in the Senate.”
However, after the elections in November it was possible that the economic costs of Mr. Trump’s approach would be clearer and prompt a rethink, Mr. Leering said.
But trying to predict the White House’s next moves has proven unwise.
Foreign capitals initially hoped that Mr. Trump, who basks in his reputation as a dealmaker, was merely talking tough on trade in order to win a few concessions from other countries.
But the talk is turning into real barriers to trade. RHETORIC MEETS REALITY?
The US Federal Reserve said on Thursday it saw signs that worries among companies about trade were curbing investment, a cloud over the otherwise strong US economy.
On the same day, Bank of England Governor Mark Carney warned that uncertainty about trade could cause market interest rates to snap higher around the world.
That would further complicate the challenge for many economies, especially developing ones, which are already trying to cope with the impact of rising US interest rates.
“At the moment, protectionism is largely just talk, and tweets,” Mr. Carney said.
“But what if rhetoric becomes reality?”
Even though the measures and counter-measures announced so far by the United States, the EU and China — plus Mexico and Canada as US North American Free Trade Agreement partners — would double bilateral tariffs and take US duties to their highest levels in 50 years, their impact was unlikely to be major, Mr. Carney said.
But at least one percent of global economic output — and 2.5% of America’s — could be lost if the United States raised its tariffs by 10 percentage points against all its trading partners, a hit which would be amplified if other countries followed suit, Mr. Carney said.
The World Trade Organization says the trade spat has already hurt forward-looking indicators, and business surveys showed a hit to manufacturing in Europe and Asia in June, with German factory growth at an 18-month low.
Mr. Trump kicks off his visit to Europe at a summit of leaders of North Atlantic Treaty Organization countries in Brussels on Wednesday and Thursday where he is expected to hammer home his calls on other countries to spend more on defense.
While not on the summit’s official agenda, European leaders will voice their trade concerns to Mr. Trump, diplomats said.
Mr. Trump is then due to visit Britain where he will meet Prime Minister Theresa May — as well as Queen Elizabeth — before flying to Helsinki to meet Russian President Vladimir Putin.
In June, the British leader warned both Mr. Trump and EU leaders of the dangers of entering a tit-for-tat trade war.
She must tread a fine line when she hosts Mr. Trump, given the importance her government has placed on getting a trade deal with the United States after Britain leaves the European Union.
Other European leaders are likely to be less inhibited when they meet Mr. Trump in Brussels, given the scale of alarm at the prospect of an isolationist America.
“There are no winners in a trade war, and the trend is pointing in the wrong direction,” Steen Jakobsen, chief economist at Saxo Bank, said.
“The US, of course, is now actively breaking down the very international organizations that have supported growth and globalization since the end of World War II and after the fall of the Berlin Wall.” — Reuters
A CONSUMER GROUP is studying whether to file a complaint before the competition regulator against oil companies on the seeming unison in their price adjustments for petroleum products each week.
“I’m studying it,” said Victorio A. Dimagiba, president of consumer advocacy group Laban Konsyumer, Inc. (LKI), in a chance interview.
His group last month asked the Department of Justice and the Philippine Competition Commission (PCC) to look into the upward and downward adjustment in oil retail prices in similar or identical amounts.
In an affidavit, he said a number of service stations along Fairview Ave., Quezon City were selling diesel at the same amount per liter. He also questioned the discounts given by some fuel stations and whether the retail prices of fuel products are in fact higher than what they should be.
Mr. Dimagiba, a former undersecretary of the Department of Trade and Industry, said he believes that the discounts are staged. He said consumers need to be informed whether the behavior in the retail market of fuel products are in order.
Sought for comment, PCC Commissioner Johannes R. Bernabe said Mr. Dimagiba’s affidavit will form part of the agency’s data set.
“We’re incorporating it as part of our information when we look into all these allegations of possible anti-competitive practices in the fuel retail sector,” he said in a chance interview.
Mr. Bernabe said he had told Mr. Dimagiba that his affidavit cannot be called a verified complaint. He said the door is always open for the consumer group to formalize its observations into a complaint to trigger a PCC preliminary investigation within 90 days.
“He knows the process,” he said. “He’s aware of it.”
Asked whether the PCC is on its own doing an investigation on the oil companies and their petroleum prices, he said: “I cannot confirm nor deny it.”
Mr. Dimagiba said that in the meantime, he had achieved his objective of informing PCC of his observations in the fuel market, including the weekly increase or decrease of petroleum product prices at the same amount, and the identical pricing in some areas.
“Whether I will file… maybe yes. But I’m updating my data. Maybe I will use four weeks [worth of data],” he said, adding that his submission should prove consistency and show in detail the price behavior, identity of the dealers and the location of the retail stations.
Mr. Dimagiba said he is aware that the PCC is itself establishing baseline data on a number of sectors in which it suspects anti-competitive practices. — Victor V. Saulon
According to the World Bank’s June 2018 Global Economic Prospects report, the Philippines is the 10th fastest-growing economy in the world, stimulated by rising consumption, sustained remittance inflows, stable investment, improved government spending and accommodative monetary policy. These were key considerations for some recent mergers and acquisitions (M&A) deals characterized as defensive, synergy-driven, and horizontally and vertically integrated. These recent deals are leading some parent companies to further penetrate the existing market and to also enter into new markets. What this trend tells us is that strategically, companies are doing it because they need to grow and survive over the medium- to long-term.
In addition, these recent deals have one common need — to find new avenues for growth in mature markets or cope with accelerating change.
In an article published in an EY (Ernst & Young) publication titled Private equity briefing: Southeast Asia, the SGV Transaction Advisory Services team highlighted the current M&A environment in the Philippines and how its vibrant economic landscape will translate to increased M&A activity.
• The Philippines ranked 42nd out of the 125 countries in the 2018 Venture Capital (VC) & Private Equity (PE) Country Attractiveness Index, climbing up from its 45th spot in 2014. The index, published by the University of Navarra, measures PE and VC attractiveness based on economic activity, depth of capital market, investor protection and entrepreneurial opportunities.
• In 2017, M&A activity was 43 transactions with a total value of $13 billion. These represent a decline of 8.5% in terms of deal volume and a 42.9% increase in deal value from 2016. Three of the top transactions in terms of value over the last two years occurred in 2017.
• The sectors with the most active M&A activity in 2017 were financial services, energy and consumer goods. With the Philippine economy forecast to grow by 6.9% annually from 2017 to 2021, these sectors, including construction, will continue to play a pivotal role in potential M&A deals.
• Aggressive infrastructure projects will promote M&A. This is on the back of the current administration’s pledge to spend P8 trillion to P9 trillion on infrastructure until 2022 or up to 7.0% of GDP through the completion of various infrastructure projects.
• The Philippine Competition Act was finally signed in July 2015. The law ensures fair market competition among businesses, regulates monopolies, reviews M&A deals with transaction values above P2 billion ($38 million), and assesses whether a transaction will restrict competition in the relevant market. This will further increase the confidence level of domestic and foreign investors as it protects and maintains a level playing field for business opportunities.
Moreover, we summarize the top deals in 2017 based on deal values (and excluding intragroup acquisitions) as follows:
• A power generation company acquired another coal-fired power generation company. The transaction will enable the buyer to improve its baseload capacity to further ensure its ability to provide an affordable and reliable supply of power to its customers, particularly in Luzon. The additional power assets will also provide an opportunity for the buyer to increase its footprint in clean coal technology. The transaction will result in the production of electricity in an environmentally responsible way.
• A consortium formed by a global infrastructure asset management company and a Singapore-based investment company acquired a geothermal energy company. The acquisition will enable the consortium to acquire a significant economic interest in the target company to promote long-term growth for the target company.
• A Japanese tobacco manufacturer acquired the tobacco-related assets (including intellectual property) of an integrated tobacco company. The transaction will allow the Japanese bidder to enhance its market share in the Philippines, utilizing the target company’s distribution network and brands, including its manufacturing equipment, and inventory.
• An investment holding company acquired another investment holding company with investments in electricity distribution. The acquisition will realign the buyer’s portfolio towards a more appropriate strategic ownership mix. The transaction is expected to deliver incremental profits and cash yields to the bidder.
• A Switzerland-based alternative asset management company and a private equity firm acquired a business process outsourcing service provider. The acquisition will enable the target company to enhance and expand its operations both organically and through select acquisitions.
• A toll road project developer and construction company acquired a company engaged in the operation and maintenance of an expressway. The transaction will have improved economies of scale and efficiency of operations and will enable the bidder to procure financing and credit facilities under more favorable terms. The merger will enable productive use of the properties currently owned by both the target company and the bidder.
• An investment holding company acquired a shipping company. The transaction will provide another growth platform for the buyer’s retail business.
• A company engaged in the trading of refined petroleum and chemical products acquired another company engaged in the selling and marketing of liquefied petroleum gas (LPG) and other petroleum products. The acquisition of the LPG business is a strategic fit for the buyer as it broadens its product portfolio and petroleum presence across the country. The acquisition will provide the buyer with cross-selling opportunities in fuel and LPG to consumers and corporates.
Finally, we highlight the following top sectors in which potential investors can participate: CONSUMER GOODS/RETAIL
• Filipino middle-class households are on course to enjoy an enhanced capacity for discretionary spending, as the median disposable income in the country is set to reach $11,400 (at constant 2014 prices) per household in 2030, representing a significant 70.0% real gain from 2014.
• The Philippines has entered its demographic window with a growing and youthful population, allowing a transition towards greater productive participants and higher consumption due to increasing GDP per capita. ENERGY
• The energy sector continues to be on an upward trajectory as it has registered an average of 5% expansion in production since 2010. The government is currently investing in petroleum, coal, and renewables to meet the growing energy demand. As of 2017, the country is one of the largest geothermal producers in the world.
• The number of players in the oil and gas sector is expected to increase as more activity is taking place in the upstream and downstream business. CONSTRUCTION/INFRASTRUCTURE
• The Philippines is about to enter a “golden age” of infrastructure with the current administration’s Build, Build, Build program. Public spending on infrastructure projects is estimated to reach P8 trillion to P9 trillion from 2017 to 2022.
• The construction industry is projected to steadily expand at an average real rate of 9.8% between 2017 to 2026, underpinned by the country’s accommodative development plan from 2017 to 2022, continuous population growth, rapid urbanization and favorable government policies towards public-private partnerships. LOGISTICS/TRANSPORTATION
• Industry growth hinges on greater trade activity resulting from stronger international cooperation, an improving business environment as well as the positive global economic and trade outlook.
• Air freight will outpace all other freight modes with a projected 7.7% average growth rate in terms of tonnage over the medium-term. Several high-value deals centered on the logistics industry were initiated in 2017 and are expected to be consummated in 2018. BANKING AND FINANCIAL SERVICES
• The banking and financial services sectors are expected to exhibit robust growth in the next five years as justified by sustained economic growth, a growing middle class and stable banking sector.
• Banking penetration rates remain low by global standards, signifying significant customer potential from the middle class. More opportunities are likewise seen for asset management services due to the economy’s favorable growth trajectory.
As the Philippines’ economic outlook remains positive, it is poised to continue as one of Southeast Asia’s top growth performers. The burgeoning middle class, rising consumer confidence, and higher government outlays are foreseen to become the major stimulants of the wider economy leading to increased M&A activities in the years to come. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
Miguel Carlo S. Rancap is a Transaction Advisory Services Director of SGV & Co.
(First of two parts)
In this time of uncertainty resulting from the unnecessary provocation of our Christian community, political killings, and rumors of martial law, its important that we put perspective on things by taking into consideration the true state of the economy.
How solid is the country’s economic fundamentals? How competitive is the Philippines as compared to our regional neighbors? Are our economic managers doing enough? Is there a place for the Philippines in the world of tomorrow? These are questions we need to answer as we plan forward in these turbulent times.
There are two ways in which to assess the fundamental strength of the economy.
The first is by comparing where it stands against our neighbors in various competitiveness indices. The second is by comparing historical data, or its state today as compared to three years ago, before President Duterte took over.
The piece dwells on the Philippine’s competitive position in the region. THE PHILIPPINES’ REGIONAL POSITION
There are numerous indices that measure an economy’s efficiency and sophistication. However, four indices, taken collectively, give us a fairly good idea where the country stands.
The first is the World Economic Forum’s Global Competitive Report.
This report assesses how efficient an economy is in using the resources available to it, its level of productivity and its ability to sustain economic growth. In particular, it looks into the state of a country’s infrastructure, the strength of its government institutions, its macroeconomic conditions, the quality of its primary and higher education, the efficiency of its work force and the sophistication of its financial markets, among others.
In this index, the Philippines rose from a lowly 85th position in 2010 (out of 139 countries ranked) to a high of 47th position in 2015. It slipped to 56th position in 2017.
Within ASEAN, the Philippines is in the lower rung competitive nations, better only than Laos, Cambodia, and Myanmar.
The second index is International Finance Corp.’s Ease in Doing Business Report. This index provides a snapshot of how easy it is to do business in a country. It is the index often referred to by potential investors.
Among the indicators it measures are the number of hours and steps it takes to register a business, obtain government permits, install electricity, apply for credit, pay taxes, and trade across borders, among others.
The Philippines rose from 148th position in 2010 (out 183 countries evaluated), to 99th position in 2016. Again, it slipped to 113th position in 2017.
Within ASEAN, we are only better than Laos, Cambodia, and Myanmar again.
The third index is the Transparency International’s Corruption Perception Index. This index shows how corrupt a nation is perceived by the international community. It is also an indicator of good governance.
The Philippines was deemed the 134th least corrupt country out of a lot of 178 nations back in 2010. It improved to 85th position in 2014, but dropped to 111th position in 2017. Again, the country lags against its neighbors as it is perceived to be the 7th least corrupt in ASEAN.
Finally, the Global Innovation Index provides an assessment of the innovation performance of 128 countries. It takes into consideration a nation’s policies on innovation, its ability to innovate products and processes, the level of education of its populace, the state of its infrastructure and level of business sophistication, among others.
The Philippines ranks 73rd out of 128 nations, an improvement from 91st position in 2010. Again, we are in the lower rung of ASEAN. GOVERNMENT EFFORTS TO IMPROVE COMPETITIVENESS
Institutions like the World Economic Forum and World Bank have been ranking the competitiveness of nations since the early 90s. However, the Philippines only began to pay attention to it in the mid 2000’s.
In 2006, former President Arroyo signed Executive Order 571 creating a Public-Private Task Force to improve Philippine competitiveness. Its contribution, however, was dismal.
In 2011, President Aquino gave more teeth to the task force by making it a legitimate government agency with powers to influence policies across various government agencies and local governments. It was named the National Competitiveness Council (NCC) and was chaired by the Secretary of Trade and Industry himself. Its co-chair was mandated to act as the moving force of the council, responsible for its strategic direction and day-to-day operations. Guillermo “Bill” Luz, a highly respected executive from the private sector, was tapped to lead the charge.
As the numbers show, the big leaps in our competitiveness standings took place between 2010 and 2015. This was due to the dramatic improvement in the economy’s fiscal position, Malacañang’s dedication to good governance and Luz’ numerous efficiency programs that made it easier to navigate the bureaucracy.
Luz playbook at the NCC is what any private sector executive would normally employ. He created working groups composed of representatives from the national government, the local government units, and the private sector to address inefficiencies in government processes. These groups sought to cut the steps and slash the hours needed to get things done. They also served as an advisory council to economic planners as they formulated policies that affected the economy, labor, infrastructure, and education. Each working group was given legitimacy by being recognized by Malacañang as an official government functionary.
So successful was Luz’ playbook that other countries in the region adapted it.
Why did our competitiveness standings decline in 2016 and 2017?
Two reasons. First, the change of administration disrupted the reforms.
With new personalities installed in various positions of the bureaucracy, both national and local, implementation of reforms took a back seat as the new executives acclimatized themselves to their positions.
Second, reforms of other nations, particularly those from ASEAN, accelerated in the last two years.
In global rankings, to stand still is to regress. The competition never sleeps and most rallied forward during this time while the Philippines remained static. AN END OF AN ERA
Last May, President Duterte signed Republic Act 11032 which created the Anti-Red Tape Authority (ARTA), a new government agency directly under the purview of the President.
With the establishment of ARTA, the National Competitiveness Council has been dissolved and its moving force, Bill Luz, had bowed out of government service.
We cannot let this piece pass without extending our gratitude to Luz for his service to the nation. He dedicated seven years of his career serving the NCC and succeeded in a multitude of ways. His playbook shows his successors how to effectively institute reforms in an otherwise unwieldy and lethargic bureaucracy.
Bill will be moving on to other pursuits, among them is to focus on his work at the ASEAN Business Advisory Council and the Philippine Disaster Resilience Foundation. We wish him all the best.
ARTA will be structured in the same way the NCC was. It will be chaired by the Secretary of Trade and Industry and its Co-Chair will be a presidential appointee from the private sector. Let us hope the President appoints someone based on their credentials and body of work, and not on political favor. This position is critical to our future and we simply cannot afford to have a lightweight at the helm of ARTA. MOVING FORWARD
ASEAN is progressing at lightning speed in almost all competitive indices. So dynamic is the region that the Philippines must leapfrog on all fronts to compete. Luz offers some advise to achieve this.
In Ease in Doing Business, a complete paradigm shift is required for us to keep in step with our progressive neighbors. We must approximate the systems put in place by Singapore and Malaysia, both of which have fully automated their processes. Key to success is the ability register a business, obtain business permits and pay taxes through a smartphone. Everything must be automated with data shared across various government agencies to avoid redundancies in procedures. Transacting with government agencies should be as efficient as booking a hotel in expedia.com. To remain analog (and paper-driven) is to regress.
In terms of global competitiveness, the name of the game is soft skills. Having strong government institutions and appropriate infrastructure are now givens for rapidly progressing economies like those in ASEAN. What will set apart the good from the great is the quality of its work force — their skills, their adoption to new technologies, their aptitude in the sciences, and culture of innovation.
To this, government must focus on making the next generation of Filipinos more astute, competent, creative and skilled. It must also create an environment that is conducive to invention and innovation.
We operate in a very competitive region and the Philippines needs to step up its game in no less than revolutionary ways to secure a place in tomorrow’s world. ARTA has big shoes to fill.
Next week, I compare the state of the economy today against what it was is 2015.
A good friend of mine gave me a copy of the book from the National Democratic Front of the Philippines (NDFP) titled Draft Comprehensive Agreement on Social and Economic Reforms (January 2018). This document is also known in its abbreviated form: CASER.
Sol and his wife Doods actually came all the way from Naga City not exactly to give me CASER but to pay their last respects to a dear cousin.
Sol perhaps suspects that I won’t read it, and I surmise that he himself gave me a copy to dispose one of the many publications in his library. Doods is happy for every unwanted book removed from their cozy home. But Sol did ask me to share my thoughts on the NDFP’s economic program.
To those in the know, the NDFP is the united front of the Communist Party of the Philippines (CPP). Hence, the document is essentially the program of the CPP submitted to the Philippine government as a starting point towards forging a peace agreement.
The book makes interesting reading, for it gives the scholars and analysts, the peace advocates, and other stakeholders a handle or a marker towards determining whether the peace talks will prosper. Having a realistic reform agenda, by eschewing ideological rigidity and political sloganeering, is one good indicator that the CPP is serious in forging the peace.
To quote Jose Maria Sison, the NDFP’s chief political consultant otherwise known as the CPP’s ideological fount: “This book is highly significant and useful in demonstrating the readiness of the NDFP to negotiate with the Government of the Republic of the Philippines (GRP) and make a substantive agreement on social and economic reforms despite tremendous obstacles ….”
The document also says that the CASER “is realistic within current political and legal processes and can be implemented by the current administration as well by any succeeding non-revolutionary governments.”
For this essay, I do not intend to come out with a thorough annotation or critique of the CASER. I select a few points, which albeit limited will be sufficient to make a case that the CPP or the NDFP is seriously attempting to have a realistic CASER.
On agrarian reform, CASER says that the goal is “free land distribution as a means of achieving social justice.” Further, CASER acknowledges that the “policy of expropriation with compensation shall be adopted to encourage landlords to invest in industrial and other productive enterprises.” These points are consistent with the Philippine Constitution and with the law on the Comprehensive Agrarian Reform Program.
Current statutes can address the CASER position of subjecting to confiscation “sullied landholdings or lands proven to have been acquired through illegal and fraudulent means…and through the use of violence”
A revelation is the CASER position to allow the “sale, mortgage, or any other encumbrance or mode of transfer of lands,” after a period of 10 years from distribution. The restrictions to this (like the land not being converted to nonagricultural use or land not being sold or mortgaged to former owners, money lenders and local officials) are well-intentioned.
On national industrialization, the general provisions are abstractions and hence not quarrelsome. Take for instance: “National industrialization aims to achieve full employment, improve real wages, continuously improve the standard of living, reduce inequality, and eliminate poverty. It raises the level of science and technology, expands domestic demand, and integrates regional production and markets into one national production system.”
The devil is in the details, and so let a thousand thoughts contend once the peace is forged. A stumbling block is the CASER’s position “to amend, suspend or terminate, as applicable and necessary, all bilateral investment treaties, and agreements bilateral and regional free trade arrangements (FTAs), and agreements under the multilateral World Trade Organization (WTO) that prevent national industrialization.”
A shrewd government negotiator can just tell the CPP or NDFP to just drop this position, for it will not be enforceable. The government can always invoke the conditional phrase “as applicable and necessary” to have the status quo.
My unsolicited piece of advice to the Red comrades: Learn from Cuba and North Korea; the last bastions of “actually existing socialism” are opening up to the world and liberalizing their economies.
The last example is on macroeconomic policies.
Again, the principles are fine, like fiscal policy being “in line with overall economic planning and strategic measures to develop the economy: or monetary policy serving the “goals of rural development, national industrialization, and improving the people’s welfare.”
As expected, some specific proposals can be messy. Some, I have to say, do not even make economic sense.
To cite one, CASER demands that “the value-added tax (VAT) and excise taxes on basic goods and services consumed by the working people shall be abolished.” The question is: How do we define “basic goods and services?” In truth, the most essential items consumed by the poor, like food in its raw state, are already exempted from VAT.
The radical activists, however, claim that goods like petroleum, electricity, and processed food are basic goods, despite the fact that the main consumers of such items are the rich and middle classes. Still, abolishing VAT will result in a drastic drop in revenue. The deficiency in taxes will endanger the financing of the Left’s desired goals of achieving rural development and national industrialization.
It is foolish to think that increasing income taxes and taxes on luxurious consumption will compensate for the losses from abolishing the VAT on many items. The rich can avoid paying ludicrously high marginal tax rates on income by moving out of the country.
A sound tax system is one that balances direct taxation (mainly income taxation) and indirect taxation (including VAT). Progressive fiscal policy is not limited to progressive taxes. (Oil excise taxes and some VAT taxes, by the way, contrary to popular opinion, are mildly progressive.) It is also critical to raise enough revenue from both direct and indirect taxes to finance programs that are pro-poor and pro-equity.
From the examples discussed above, I can say that the CPP and the NDFP are negotiating a CASER that attempts to be reasonable. The general principles and provisions are acceptable. The specifics of some economic policies are disputable. But then, compromises are necessary to achieve the peace.
Perhaps, part of the problem is that the CPP and the NDFP do not have trained or full-fledged economists in their panel. Or if they do, the ideology of the comrades gets in the way.
On Karl Marx’s bicentenary, the CPP can perhaps rethink Marx, to help shape a new agenda. After all, Marx ideas have been interpreted in many ways. Even the neoclassical economists have gained insights from Marx.
An honest rethinking is most apt at a time that the CPP has recognized reason and compromise to move the peace talks forward.
Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms. www.aer.ph
Among the big topics that dominated last week’s global and national reports are (a) US-China ‘trade war’ which technically means equalized high tariff (EHT), and the hard push for Charter change towards federalism by the Duterte-appointed Constitutional Commission (ConCom).
The US-China EHT or ‘trade war’ officially started last Friday, July 6. The US slapped 25% tariffs on imports from China worth $34 billion and the latter immediately slapped a higher tariff on equivalent value of imports from the US. There will be a follow up EHT from the US up to $550 billion worth of imports from China and the latter is expected to have its counterpart.
Meanwhile, funds have fled stock markets of countries that are expected to be net losers of this trade spat. China’s Shenzhen and Shanghai are the worst-performing stock markets in the world this year, having suffered a -19.1% and -16.9% drop in index values year to date (Ytd) or from January 02 to July 06, 2018, largely because of this EHT spat.
In comparison, the US’ DJIA experienced only a -1.5% decline year to date.
It is worth noting that the Philippine Stock Exchange (PSEi) is the 2nd worst-performing stock market in the world after China.
Several business uncertainties in the Philippines this year helped pull down the PSEi: (a) sharp rise in inflation rate after TRAIN 1 law, (2) changes in fiscal incentives and corporate income tax under TRAIN 2 bill, (3) wholesale closure of Boracay island for six months, (4) political uncertainties due to rabid federalism and Charter change hard sell by the government, (5) “Iglesia ni Duterte” vs “idiotic God” pronouncements, among others.
The PSEi level is also -1.2% compared to past three years, indicating that the gains under the previous administration have been wiped out under the Duterte government. This further shows that the federalism hard sell is misguided for at least three reasons.
One, a big and bureaucratic national government on the top will have another layer of big and bureaucratic state governments in the middle, aside from expanding municipal/city and provincial governments.
Two, federalism is no guarantee for economic prosperity nor political maturity.
While several developed economies have federal structures, the same can be said about some failing economies.
And three, the current Congress that will finalize the contents of the revised Constitution is too handicapped by clear lack of independence from the Duterte presidency. Thus, potential desires by this administration for continued stay in power beyond 2022 can easily be granted by Congress.
Trade protectionism is wrong as it penalizes the consumers while fattening the protected local players. “Trump protectionism” is similarly ill-intentioned but “Xi/China protectionism” is even worse. A move towards equalized low or zero tariff is needed.
The hard sell for Federalism is wrong as it will penalize local businesses and entrepreneurs with more national and local/state taxation and regulations while fattening many national and local/state agencies and bureaucracies. A move towards shrinking national taxes and agencies should have been done before federalism is pushed.
Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia. minimalgovernment@gmail.com.
How can President Rodrigo Duterte announce to his country and his people (and to world investors and creditors) that, “Now. The economy is in the doldrums. Actually — now.” (Philippine Daily Inquirer [PDI] June 24, 2018) He then rants on his version of economic dynamics: “Interest rates are picking up, are getting high so it destroys the present (economic gains)…you raise your (interest rate), our (peso value) goes down, theoretically…” Mr. Duterte said at a speech at the SMX Center Communications Summit 2018 (Ibid.).
Of course academicians immediately pounced on the President for illegal practice as economist — University of the Philippines professor JC Punongbayan said that “Duterte knows little to nothing about economics” (http://politics.com.ph June 26, 2018). He just had to correct Duterte’s “stab at economic theory” when Duterte incongruously said, “when you raise your [interest rate], our [peso value] goes down, theoretically.” Prof. Punongbayan said, “Basic economics tells us exactly the opposite is what happens. Higher interest rates spur capital inflows, and as investors haul their money into the country they exchange their dollars for pesos. This extra supply of dollars raises the relative value of the peso, thus strengthening (not weakening) our currency. The peso, at P53+ per US dollar, is not just the weakest in 12 years but also the weakest in ASEAN” Rappler, June 28, 2018).
Why didn’t his economic team and the Bangko Sentral ng Pilipinas (BSP) tell the President that? The peso started to drop in late 2016 because of the steady strengthening of the US dollar, as interest rates were raised in phases by the Fed. With the Philippines being a net importer rather than exporter of goods, costs were multiplied in more expensive foreign currency. Notwithstanding the foreign remittances of overseas Filipino workers (OFWs) and foreign exchange-paid business process outsourcing (BPOs), the increase in global oil prices caused rapid inflation, oil being a major input in most economies.
Academics would call it cost-push inflation, as costs of production in economic activities shot up, and thus the need to increase prices to maintain profit margins. Add to that the net increased taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) law which lowered the tax-exempt income to P250,000/year but increased the excise taxes on various products like fuel, sugar, coal, and automobiles, while it expanded coverage on products which were previously exempted from the value-added tax (VAT). Note that prior to the TRAIN law, up to 40% of the country’s total number of families were already exempt from paying income taxes, while all have to pay the new excise taxes and VAT (cebudailynews.inquirer.net July 2, 2018).
Yet the Duterte economic managers said in a joint statement at the July 6 pre-state of the nation (SONA) forum: “While we acknowledge the public sentiment on rising prices, let us remind ourselves that the Train Law raised the take-home pay of 99% of income tax payers by an average of 15%, much higher than inflation. The additional revenues that we generated from the Train Law will also allow us to provide free education in state colleges and universities, free irrigation for farmers, conditional cash transfers to poor families and senior citizens, and higher salaries to government employees including uniformed men. Without doubt, these should help in coping with the rising prices of goods.” (Rappler, July 6, 2018).
Where did the “15% higher-than-inflation increase in take-home pay of 99% of income tax payers” come from? And this was just as the Philippine Statistics Authority announced that inflation hit 5.2% in June, the highest in five years (BusinessWorld July 6-7, 2018). “It is not something to worry about. It’s within historical amounts,” Presidential Spokesman Harry Roque said during a Palace news conference (Manila Bulletin, July 5, 2018).
When there was palpable public anticipation that inflation would soar further, BSP finally raised interest rates to 3.5% from 3.25% to tighten money supply and help bring down inflation. It last raised rates in May to 3% from 2.75%, which was the first increase since September 2014 (CNN Philippines, June 20, 2018). “There may have been a little bit of a slip in [the] timing of increasing policy rates….[The issue] is best addressed to BSP,” Socioeconomic Planning Secretary Ernesto Pernia chided (Rappler, July 5, 2018). Meaning: the BSP should have done this sooner?
BSP Governor Nestor Espenilla, Jr. accepted that “the higher-than-expected June inflation outcome is a setback. We will review and update our situational assessment and forecast inflation path. This will shape the strength and timing of our next monetary policy response to firmly anchor inflation expectations.” He reaffirmed commitment to the target inflation of 2% to 4% (Ibid.). In May, the BSP had expected 2018 inflation to average 4.6%, versus the 3.9% forecast given last March. Price increases are expected to ease next year to average 3.4%, back within the government’s target although higher than the previous 3% estimate (BusinessWorld May 11. 2018).
UP School of Economics professor Dr. Emmanuel de Dios criticized government economic managers’ non-coordinated economic moves. “They are pointing fingers, but they are all guilty (for what is happening),” he said. They cannot say TRAIN is only responsible for 0.4% of the [inflation]. But who is in charge of the economy? ’Di ba silang lahat (Isn’t it all of them)?” De Dios said last week in a forum on democracy and governance (Rappler, July 5, 2018).
De Dios shot down the ready boast of government that the country’s economy is among the growth leaders in the region, registering 6.8% in gross domestic product (GDP) in 2017. “Which countries are we comparing ourselves with?” he asked. “Reports said we are 3rd in ASEAN, but if we include Nepal, Bangladesh, Laos, China, Cambodia, and Vietnam, we are actually just 7th…and a 6-point-something percent of GDP is still not good enough…considering that Laos and Cambodia reached 7% in 2011,” De Dios said (Rappler, July 6, 2018). Our country dipped 9 notches to the 50th spot out of 63 economies in this year’s World Competitiveness Yearbook rankings of the International Institute of Management Development; the Philippines’ ranking in the ease of doing business also slipped to 113th this year from 99th last year across the 190 countries covered by an annual World Bank Group report (Ibid.)
At President Duterte’s landmark “we are in the doldrums” speech, he probably realized midway that he had babbled and blundered. To promote economic activity and boost tax revenues in the provinces, where “the doldrums” was most noticeable, he suggested, “Now if there’s jueteng…at least money goes around. Some people will get hungry, others will be able to eat, [but] there’s commercial activity.” (Rappler, June 28, 2018). Prof. Punongbayan (earlier quoted) reacted, |“But jueteng is illegal and not taxable. It can also hardly be considered the prime mover of economic activity in the provinces (no matter how big an industry it may seem).” (politics.com.ph June 26, 2018).
God help our country!
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines. ahcylagan@yahoo.com
By Camille A. Aguinaldo andCharmaine A. Tadalan The proposed Bangsamoro Basic Law was transmitted to Congress on Aug. 14, 2017. — WWW.BANGSAMOROONLINE.COM
THE House and Senate panels are poised to push for their respective versions of the proposed Bangsamoro Basic Law (BBL) when they meet for a bicameral conference on Monday, July 9, to July 13.
But lawmakers from both chambers of Congress agree that the final outcome of the proposed measure should be in accordance with the Constitution and will help bring peace in Mindanao. JUDICIAL REVIEW
Senate Majority Leader Juan Miguel F. Zubiri, sponsor of the Senate version of the draft BBL, said the Senate Subcommittee on BBL will make sure its version will prevail in the bicameral conference committee, especially with regards to provisions in the bill that are consistent with the 1987 Constitution.
The subcommittee, which is under the Senate Committee on Local Government, is the counterpart at the bicameral level of the House Committee on Muslim Affairs, Local Government, and Peace, Reconciliation, and Unity.
Mr. Zubiri said the bill, once enacted into law, needs to withstand judicial review to prevent what happened to the Memorandum of Agreement on Ancestral Domain (MoA-AD) during the Arroyo administration.
The MoA-AD once sought to establish the Bangsamoro Juridical Entity but was stalled during the administration of then President Gloria Macapagal-Arroyo after it was met with strong opposition. Peace talks collapsed between the government and the Moro Islamic Liberation Front (MILF) after the Supreme Court in 2008 issued a temporary restraining order on the draft peace agreement and later declared it unconstitutional. Some members of the MILF then staged attacks in villages in the provinces of Lanao del Norte and North Cotabato (officially, Cotabato).
It was in the succeeding administration of Benigno S.C. Aquino III that the MILF returned to negotiating with the Philippine government and in 2014, both sides came up with a Comprehensive Agreement on the Bangsamoro. Mr. Zubiri said the proposed BBL is the final stage of the peace process before the MILF finally surrenders its arms.
The senator from Bukidnon province also recognized the need for the involvement of security officials and President Rodrigo R. Duterte in a possible deadlock during the bicameral hearings. He stressed that whatever Congress members decide on the bill has security implications in the region.
“If we don’t comply or if the final version is flawed and gets struck down by the Supreme Court, definitely, it will endanger peace in Mindanao,” Mr. Zubiri said.
House panel member and ABC Rep. Eugene Michael B. de Vera agrees with Mr. Zubiri. “The first thing that we have to do is look at the constitutionality of every provision, then we have to check it out with the corresponding jurisprudence as promulgated by the Supreme Court. Iyan ang guide namin (That is our guide),” Mr. de Vera said.
He noted the House leadership has been strict in addressing “all possible constitutional breach.”
Also sought for comment, Zamboanga City Representative Celso L. Lobregat said in a phone interview: “I cannot speak for the whole panel. But, of course, we will push for the provisions of the House. We will try to convince the Senate concerning (the) position of the House, since most of us… are closer to the ground.”
Mr. Lobregat is one of 18 members of the House Committee on Muslim Affairs, Local Government, and Peace, Reconciliation, and Unity.
“We’ll now have to sit down, rationalize, (and) convince each other which is best in each and every disagreeing provision. (It is) very important that we pass the law, but again, the Constitution is more or less the prime parameter,” he said. VIEW OF MILF, MNLF
MILF chief negotiator Mohagher Q. Iqbal, who was also sought for comment on this story, expressed optimism in the outcome of the bicameral conference.
“It’s the job of the bicameral conference (to reconcile the versions), and all those lawmakers are professionals. They’ve been with their job for (such a) long time,” Mr. Iqbal said.
He added: “Maybe as part of the process, there is difficulty, but at the end of the day, they have to do it and produce the final BBL.”
A representative of the Moro National Liberation Front (MNLF) was also sought for comment. The MILF broke away from the MNLF in the late 1970s, soon after the mother organization led by Nur Misuari entered into a peace agreement with the Marcos regime in 1976. Exactly two decades later, the Ramos administration entered into a final peace agreement with Mr. Misuari that led to his administration of the Autonomous Region in Muslim Mindanao (ARMM).
But Mr. Misuari’s tenure in government became mired in controversy as his standing in the officialdom deteriorated, leading to the MNLF’s siege of Zamboanga City in 2013. Meanwhile, the MILF began negotiating peace with the government, culminating in a draft charter that proposes a Bangsamoro region to replace the ARMM.
Randolph C. Parcasio, a lawyer and spokesperson of Mr. Misuari, said when asked about the MNLF leader’s position on the BBL, “As of this time, I haven’t heard him say he would support it.”
Mr. Parcasio also said, “I will be briefing him (Mr. Misuari) on July 7, so I don’t have yet any idea on how he would respond to the BBL.”
Mr. Iqbal, when asked about the House and Senate versions of the BBL, said, “I cannot set a preferred version because we are hoping for the final version to be met by the bicameral conference.”
He added that “we’re hoping (that) the best part of the version of the Senate and the best part of the House version would be the one that will be assembled to make up the version of the BBL.” KEY PROVISIONS
If approved at the bicameral, enacted into law and approved in a plebiscite, the consolidated version of House Bill No. 6475 and Senate Bill No. 171 will establish the Bangsamoro Autonomous Region. The authority of the Bangsamoro government presiding over this region will be vested in the Bangsamoro Parliament to be headed by the Chief Minister. The Bangsamoro government will also have a “Wali,” who serves as the ceremonial head of the Bangsamoro.
The versions of both chambers of Congress differ on several key provisions, such as the powers of the Bangsamoro government, the share in national government revenues, and the amount for this region’s special development fund (SDF).
The Senate removed the provisions on the reserved, concurrent and exclusive powers of the Bangsamoro government and the provisions on its power to conduct inquiries in aid of legislation and subpoena powers. This was retained in the House version.
The territorial jurisdiction for the region, once the BBL is enacted into law, will also be determined through a plebiscite. The proposed region will have an expanded territory, to include portions of Lanao del Norte and Cotabato provinces. Whereas the Senate retained 39 barangays (villages) in six municipalities in Cotabato as part of the territorial jurisdiction of the Bangsamoro region, the House removed these villages in its version of the BBL.
The Bangsamoro government will enjoy fiscal autonomy in order to attain economic self-sufficiency and genuine autonomy. The Senate changed the share in the national government taxes collected in the region to 50-50, while the House proposed a 75-25 share in favor of the Bangsamoro region.
The House set the annual block grant to 6% while the Senate set it at 5% of net collections of the Bureau of Internal Revenue and the Bureau of Customs.
The House set the SDF at P10 billion annually for a period of 10 years. The Senate version reduced the SDF to P5 billion annually for 10 years.
The proposed region will also be given the authority to create economic zones, industrial estates, and free ports. The Bangsamoro economic zone authority will also be created and will have jurisdiction over any corporation, firm, or entity established within the region, which will continue to enjoy benefits granted by the Philippine Economic Zone Authority (PEZA).
On the proposed Bangsamoro police, the Senate version provided that the Chief Minister will select the police regional director. In the House version, the Interior Secretary will appoint the regional director.
The justice system in the region will follow the Shari’ah law, but this will apply to Muslims only. The Bangsamoro Parliament will be mandated to enact laws to promote and support traditional or tribal justice systems for indigenous peoples. Regular courts in the region will continue to exercise their judicial functions. FALLBACK
Sought for comment, lawyer and veteran observer on Mindanao affairs Michael O. Mastura sees that the House and Senate versions are “very hard to reconcile.”
“We cannot expect that it will be better than ARMM,” said Mr. Mastura, who was also a delegate in the 1971 Constitutional Convention. “(And) because I see that it is short of the ARMM, I would rather have the ARMM that was the status quo.”
According to Mr. Mastura, there are powers already granted to the ARMM that have been withdrawn in the BBL. “You know what the House did was ‘yung mga enumeration of exclusive powers for that parliament, nilagay sa concurrent (You know, what the House did was that the enumerated exclusive powers for that parliament were put under concurrent powers [or powers shared with the national government]),” he said.
A review of the proposed BBL by the Bangsamoro Transition Commission (BTC) showed exclusive powers on budgeting, the banking system, power and energy, and health, among others, placed under the provision on Concurrent Powers in the approved House Bill 6475.
The Organic Act of the ARMM, Republic Act 6734, did not specify shared or exclusive powers of the ARMM, but stated reserved powers of the government, which did not include any of those stated above.
On questions of constitutionality, Mr. Mastura said, “If the premise is if it runs counter to the Constitution, why will you pass the BBL? If the BBL does not comply with the demand and desire of the MILF, then why should we push it?”
He said the BTC has two functions — create the draft BBL and propose amendments to the Constitution.
“There is a fallback in case the BBL is not passed, or (if) something goes wrong, then we have a proposal for a constitutional amendment,” Mr. Mastura said.
He also pointed out that the BBL, which will operate under the 1987 Constitution, is more suited to a federal system.
“This BBL is for the 1987 Constitution, and, yes, it is full of questions about constitutionality. Hindi makalusot dahil (It can’t get through because) it falls into a picture of a federal system,” Mr. Mastura said.
To address this, Mr. Mastura led the All Moro Convention, a group of Mindanao stakeholders of which he is president, in drafting the Bangsamoro State Constitution, which proposes a parliament that will fit in a federal-presidential system.
A copy of the draft was submitted to Mr. Duterte on June 16, during the celebration of Eid’l Fitr on June 15. ‘DIFFICULT PART OVER’
Mr. Iqbal noted the significance of both chambers of Congress having already passed their respective versions of the bill. “It had already been passed by both houses. I think at this point, (that was the) difficult part (that) had been overcome already. Passing their respective (bills) — that’s the most difficult part of the process,” he said.
Also sought for comment on the BBL, Philippine Chamber of Commerce and Industry, Inc. (PCCI) chairman George T. Barcelon said in a phone interview, “If it satisfied some sector of our community where their authority to run the area is expanded (and) if it’s good, I think we should support it.”
Guenter Taus, president of the European Chamber of Commerce of the Philippines (ECCP), said via e-mail when also asked for comment: “ECCP fully supports the peace process as peace in Mindanao is the basic prerequisite in attracting investments and creating inclusive growth in large parts of Mindanao.”
He added: “Should the BBL not push through, we strongly urge the Philippine government to continue pushing for peace and stability in the region in order to sustain and continue to increase investor interest in Mindanao.”
American Chamber of Commerce of the Philippines, Inc. (AmCham) Senior Advisor John D. Forbes said via text when asked for comment, “AmCham has not taken a position on the actual BBL this year but follows and supports the peace process that we hope will improve security and enable needed and overdue economic development in the conflicted regions of Mindanao.”
Mr. Forbes also cited the potential in Mindanao for agribusiness, mining, and tourism.
Mr. Zubiri, for his part, said, “What is important (for businessmen) is peace. What is important is that they are not being kidnapped. What is important is that when they place establishments in the area, especially malls and restaurants, they are protected.”
He said the region may look into tourism in developing its economy, citing the potential of beaches in Sulu, Tawi-Tawi, and Basilan — the island province that has been frequently cited in incidents of terrorism and kidnapping, but which used to be a tourist destination until the late 1960s.
Mr. de Vera, for his part, said, “If the BBL would be the very reason why peace would be established in the region, it would be for the benefit of everybody, including the businessmen.”
But he also flagged “atrocities in Mindanao, between warring factions with the Muslim people.”
“(There’s) MNLF (Moro National Liberation Front), MILF, (there are) breakaway groups and, of course, we have to consider the Christians living there, the lumads living there,” Mr. de Vera said.
Mr. Lobregat said the consolidated bill, if enacted into law, will not guarantee immediate results.
“There’s no guarantee because you cannot legislate peace, but it’s closer to giving peace a chance,” he said.
