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Holcim Philippines profit falls 5% in 2018

EARNINGS of Holcim Philippines, Inc. went down by five percent in 2018, as its improved performance in the fourth quarter failed to offset the higher interest expenses from loans for its expansion program.
In a statement issued Thursday, the listed cement manufacturer said net profit stood at P2.55 billion in 2018, lower than the P2.69 billion it posted in 2017. This came amid a three percent increase in net sales to P35.62 billion.
Operating EBITDA, or earnings before interest, taxation, depreciation, and amortization, slipped by 10% to P4.89 billion.
The company attributed the profit decline to “higher interest expenses from short-term loans to fund its expansion projects.”
In the fourth quarter, Holcim Philippines more than doubled its net profit to P804.56 million, 107% higher than the P389.31 million it generated in the last quarter of 2017. Net sales were also higher by three percent to P8.36 billion. Operating EBITDA also jumped 48% to P1.49 billion for the October to December period.
“In 2018, we faced higher production and financing expenses, but we successfully contained their impact on our financial performance through initiatives that emphasized operational excellence and cost prudence,” Holcim Philippines President and Chief Executive Officer John Stull said in a statement.
Mr. Stull noted that amid the challenging business environment last year, they were able to strengthen the ground work for their company.
“Our commercial initiatives were key to growing our business and allowed us to take full benefit from the robust construction sector which was one of the economy’s drivers last year and over the medium term,” he said.
Holcim Philippines completed the expansion of its La Union plant in January, hiking production in the facility by 80% to 1.8 million metric tons (MT). This forms part of a $54-million investment in its plants in La Union and Davao to increase the company’s capacity to 12 million MT.
The company will also invest $300 million for the upgrade of its cement operations in Misamis Oriental and Bulacan, which will bring its total capacity to 13 million MT by the end of 2020.
The expansion aims to take advantage of the higher demand for construction materials due to the government’s massive infrastructure program, as well as reduce expensive imports.
Holcim Philippines is part of the global building solutions firm LafargeHolcim Group, which has operations in about 80 countries.
Shares in Holcim Philippines went down by 1.27% or 12 centavos to close at P9.32 each at the stock exchange on February. — Arra B. Francia

Exxon hires more veteran oil traders

NEW YORK — Exxon Mobil Corp has hired veteran crude traders Mitch Rubinstein and Michael Paradise in Houston, to further boost its trading capabilities, sources familiar with the matter told Reuters on Wednesday.
In a break from its past, Exxon has been building a global cadre of experienced traders and beefing up risk management systems to lift profit.
Exxon, the largest U.S. oil company by market capitalization, has historically stood apart from rivals by limiting trading activity out of concerns it would be accused of market manipulation.
The oil major has lagged behind rivals BP Plc, Chevron Corp and Royal Dutch Shell Plc, which have created trading units that occasionally generate more profit than their refining businesses.
Both Rubinstein and Paradise, both of whom will be based in Houston, left commodity trader Noble Group Ltd in 2017.
Rubinstein was managing director and global head of crude oil at Noble until 2017, when rival Vitol SA agreed to buy Noble Americas Corp. Noble was once Asia’s biggest commodity trader, and has restructured after facing insolvency last year.
Before Noble, Paradise was Citigroup Inc’s director of oil trading in Houston.
Exxon also recently hired Gary Pace, a senior gasoline trader, sources familiar with his move said. Pace was most recently at investment bank Macquarie in Houston and previously worked for Shell’s U.S. trading arm, according to his LinkedIn profile.
Last year, Exxon hired at least four gasoline market specialists from refiner Phillips 66. In 2018, it also hired former BHP Billiton Plc trader Nelson Lee as an international crude trader.
A spokeswoman for Exxon declined to comment. Pace and Rubinstein did not immediately respond to requests for comment.
Rubinstein updated his LinkedIn profile to reflect his move to Exxon, but his exact title is not clear. A source familiar with the matter said he has already started at the company.
Exxon has been aiming to expand trading and marketing around more of its growing energy assets to get the best prices for its products and increase earnings.
“That is the style of the guys they are hiring,” one industry source said.
This week, Exxon said its oil and gas reserves rose nearly 23 percent last year, driven mainly by increases from holdings in U.S. shale, offshore Guyana and Brazil. — Reuters

What to see this week

7 films to see on the week of March 1 — March 7, 2019

Kursk


THIS English-language French-Belgian biopic on the 2000 K-141 Kursk submarine disaster. During a naval exercise, there were explosions within the submarine that killed over a hundred Russian sailors. Directed by Thomas Vinterberg, the film stars Colin Firth, Lea Seydoux, August Diehl, Peter Simonischek, Max von Sydow, Matthias Schweighöfer, and Michael Nyqvist. “A competent, by-the-numbers action melodrama…,” writes Hollywood Reporter’s Keith Uhlich.
MTRCB Rating: PG

Escape Room


THIS psychological thriller follows six strangers who go to a mysterious building to play the escape room — a game where players need to solve a series of puzzles to win $10,000. The game turns into a nightmare as the four men and two women discover that each room is a trap that may lead to their deaths. Directed by Adam Robitel, the film stars Taylor Russell, Logan Miller, Deborah Ann Woll, Jay Ellis, Tyler Labine, and Nik Dodani. Empire’s Ian Freer writes, “It’s a handy crutch on which to support a scary, suspenseful flick in the vein of The Game, Cube or Saw, but unfortunately, playing for thrills rather than torture porn, Adam Robitel’s film gets about halfway in terms of delivering on the promise.” Rotten Tomatoes — the review aggregate site — gave the film a score of 47%.
MTRCB Rating: R-13

Second Coming

A STEPMOTHER finds that the family she has married into is rather mysterious — especially since her stepdaughter seems to keep ties with her deceased mother. Directed by Jet Leyco, the film stars Jodi Sta. Maria and Marvin Agustin.
MTRCB Rating: R-13

Familia Blondina

CINDY is the Pinay mother of three blonde Fil-Am children. When her American soldier husband dies, she returns to the Philippines together with her children and tries to make ends meet. Things take a different turn when she meets Tony Boy, a widower with two blonde children of his own. Directed by Jerry Lopez Sineneng, the film stars Karla Estrada, Jobert Austria, Kira Balinger, and Marco Gallo.
MTRCB Rating: PG

Monstrum

WHEN rumors of a vicious beast roaming Mount Inwangsan called Monstrum by the terrified masses begin to spread, fear turns into panic. Directed by Heo Jong-ho, the film stars Kim Myung-min, Kim In-kwon, and Hye-ri Lee. “Huh’s impatience to unveil his CG creation squanders any opportunity to build tension or palpable fear over the beast’s existence,” writes James Marsh of the South China Morning Post.
MTRCB Rating: R-16

Stan & Ollie

TRYING to reconnect with their fans, Laurel & Hardy, one of the world’s great comedy teams, set out on a variety hall tour of Britain in 1953 which becomes a hit, but as the duo become aware that they may be approaching their swan song, they try to rediscover just how much they mean to each other. Directed by Jon S. Baird, the film stars John C. Reilly and Steve Coogan. Sandra Hall of the Sydney Morning Herald writes: “It’s a film made with an enormous amount of care and affection. And Coogan and O’Reilly don’t just perform. They resurrect.” Rotten Tomatoes — the review aggregate site — gives the film a high score of 93%.
MTRCB Rating: PG

I Love You, LC!

DIRECTED by Dave Aguila and Dave Cecilio (who also wrote the script), and starring Jef Gaitan, Tommy Peñaflor, and Marlon Marcia, the film chronicles Patty’s journey through weight-loss and love.
MTRCB Rating: PG

PayMaya says digital payments available at Panagbenga Festival

PAYMAYA Philippines, Inc. is partnering with the Baguio Flower Festival Foundation, Inc. (BFFFI), to allow quick response (QR) payments during the annual Panagbenga Festival in Baguio City.
In a statement on Thursday, the mobile wallet arm of PLDT, Inc. said QR-based transactions through PayMaya may now be used during the Panagbenga Festival which starts on Mar. 4.
“During the most anticipated Panagbenga Festival, Session Road, Baguio’s best-known thoroughfare, is transformed into a sloping fair ground with stalls of local merchants, all powered with PayMaya QR,” it said.
The local government of Baguio City said it expects this partnership will help reduce theft cases during the Panagbenga Festival, specially as the event leads tourists to flock to the town.
“The city government of Baguio and its people welcome PayMaya QR in our city…. Problems pertaining to handling of cash such as consumers being a victim of criminal activities will be minimized if not eradicated. Business owners will also be able to closely monitor all the payment transactions in his or her business,” Baguio City Mayor Mauricio G. Domogan said in the statement.
For his part, Rolando “Butch” C. Conejos, Jr., the channel head for domestic business of PayMaya, said the partnership with BFFFI is “part of our overall initiative to accelerate cashless ecosystems nationwide.”
“The end goal is to empower both merchants and consumers all over Baguio with digital payment solutions…. Soon, more establishments, micro-merchants, and transportation providers in Baguio will begin accepting payments via PayMaya QR, making it a full-fledged cashless community,” he added.
PayMaya is managed by Voyager Innovations, Inc., the digital solutions arm of PLDT. 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

Employee engagement

EMPLOYEE ENGAGEMENT has become a mainstream concept throughout organizations, including corporate boardrooms. The rise of digital transformation as a strategy and the emergence of the millennial generations gave it much prominence in the recent years.
But the first use of the term occurred in a 1990 Academy of Management Journal article of William A. Kahn about the psychological conditions of personal engagement and disengagement at work which examined the conditions at work that contribute to engagement and disengagement. His finding showed that the individual and contextual sources of meaningfulness, safety, and availability had a significant impact on engagement.
It garnered speed and awareness during the internet growth of the 2000’s which facilitated employee communications through email and mobile phones. This era of employee mobility and virtual work necessitated the need for organizations to engage employees better. After a decade, tons of research had established the business case evidence on employee engagement with the business benefits of performance, safety, profits, retention, and wellbeing, among others.
In recent years with technological advances, many human resource practitioners thought that they can determine employee engagement by just conducting SurveyMonkey surveys across the organization. Everyone seemed to have a new survey and a new definition of engagement.
Until now, practitioners and researches seem to have no common definition of what employee engagement is.
The best definition we can get is that of The Institute of Employment Studies which describes employee engagement as the “belief in the organization, desire to improve the company, understanding of the business context, respect and helpfulness towards colleagues, willingness to go the extra mile, and keeping up to date with developments in the field”.
This all-encompassing definition gives rise to several theories on what drives employee engagement in organizations. Pay, working hours and condition, learning and development, leadership, and various other factors make employees feel valued and involved.
But a simple framework emerged from the study of Ateneo Center for Organization Research and Development (CORD) on employee engagement in Philippine organizations. The researchers discovered that organization pride is primarily what drives Filipino employee engagement, along with job engagement and organizational values. “Collectivism and the concept of ‘hiya’ [or shame] seem to influence Filipinos preference to be employed in an organization they can be proud of”, the study avers. Moreover, there is “tendency to belong in groups that take care of them in exchange for loyalty” and “people’s self-image is defined in terms of We”.
With the collectivist culture of Filipinos, we can surmise that employee engagement levels in local organizations is high. In fact, a survey of Aon revealed that employee engagement levels in the Philippines rose by six points to 71%; and is higher than key Asia Pacific economies including China (69%), Thailand (64%), Malaysia (63%), Australia (60%), and Singapore (59%). Furthermore, the top engagement drivers in the Philippines are talent and staffing, empowerment and autonomy, rewards and recognition, career and development, and senior leadership.
With high employee engagement among Philippine companies, we think they deliver superior customer service. On the contrary, not quite.
In our study, CEOs of many medium to large organization in the country lament at the fact that despite high employee engagement scores, processes across and between departments remain broken, resulting in poor customer and employee service. This is much evident in services sector such as financial services and utility firms.
We call this silo mentality, a mindset present when certain departments or sectors do not wish to share information with others in the same company. It reduces efficiency in the overall operation, reduce morale, and may contribute to the demise of a productive company culture. It is something that employee engagement surveys cannot detect.
The same collectivist culture of the Filipinos promote silo mentality across organizations. The seemingly benign practices of Philippine-based companies such as holding Christmas party group performances and departmental team-building activities, build camaraderie within a group but promote and strengthen silos.
To break down silos and make employee engagement more beneficial to the organization, the chief executive should lead the changes. The CEO together with his or her lieutenants should display collaborative behavior and cross-functional communication. They should mandate their employees to institutionalize interdepartmental meetings to jointly solve problems and come up with new ideas. There should be task force, sponsored by the CEO and headed by a senior executive, charged with breaking up the silos and develop practices that require collaboration and communication. Instead of departmental competition during Christmas parties, why not promote cross-functional group performances? Apart from departmental team buildings, why not promote other interdepartmental activities?
Technology can also breakdown silos and enhance employee engagement. There are several software application tools available now that allow employees to communicate to management and other employees, and management to give feedback to employees. Gamification, the application of typical elements of game playing (e.g. point scoring, competition with others, rules of play) which is embedded in software tools, is particularly effective in engaging millennials.
Lastly, reconfiguring office spaces can do wonders by breaking down office walls and laying out open work spaces. This will facilitate better and open communication and collaboration.
Indeed, organization pride is a key driver of employee engagement among Philippine companies. That’s why we see companies investing in branding, social responsibility initiatives, and other artefacts such as logos, company songs, and image.
But organization pride can be wasted if silo mentality creeps within the company.
 
Reynaldo C. Lugtu, Jr. is President & CEO of Hungry Workhorse Consulting, a digital and culture transformation firm. He is the Chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com

What’s wrong with the perfect attendance award?

We have an absenteeism rate of 21% and a tardiness rate of 7% across all departments covering more than 650 workers. This puts a lot of stress on the workers who must take up the slack and be paid overtime premium. To correct this problem, we’re planning to offer a perfect attendance award that allows qualified workers to join the monthly raffle for home appliances worth about P15,000, which is a small amount compared to what we’re losing due to the poor attendance of our employees. What’s your view on this proposal? — Vietnam Rose.
These days, going to church doesn’t make one a religious person. It’s the same thing when you take a wheelbarrow into a garage. The wheelbarrow doesn’t convert into a car.
Looking at a parallel situation, I’m asking the same thing: How to change the ways of habitually absent workers so they achieve perfect attendance? How do you attract an employee to a monthly raffle where he will try his luck with 649 workers? At best, the perfect attendance award may only end up benefiting the same employees who already have unblemished attendance.
Therefore, a cursory examination of why some workers persist with bad attendance is necessary. It could be due to force of habit related to their extra-curricular activities like alcoholism, gambling, and to some extent, the use of illegal drugs. On the other hand, habitually-absent employees do it because they have no other recourse but to take care of an ailing or aging family member, among other related personal concerns.
Sometimes, people absent themselves because they don’t like their toxic bosses or their working environment. If not, some are not motivated to work with their colleagues due to bullying, sexual harassment, or other unsavory reasons.
However, the important question you should answer is this: First and foremost, why reward people who are required to come on time and report daily for work? Sure, we can always agree that the perfect attendance award is a positive approach that could go hand-in-hand with the negative approach of instilling progressive discipline, ranging from oral reprimand to termination.
Fine, but how long can you sustain the award? Perhaps you can improve everyone’s attendance record and reduce the absenteeism and tardiness rate to a manageable level within six months. Again, how can you sustain it beyond six months? Where will you get the funding to sustain the monthly raffle that costs the company P180,000 a year, assuming that you’ve reduced the absenteeism rate of all workers.
How would you solve a complex problem like this? The best approach is no other than one-on-one counseling of workers by their line supervisors and managers. It’s like eating an elephant. You can only eat an elephant in small, manageable pieces. For this, the line executives are best line of defense of management.
The following tools and techniques are necessary:
One, Human Resources should release a monthly attendance report. This report must contain the list of departments with major issues on absenteeism and tardiness, classified according to an “honor” list and a “horror” list and its adverse effect on employee morale, work-life balance, and a calculation of the excessive amounts paid to overtime work.
This puts on notice all line executives to counsel their problem workers, starting with those with the worst attendance records. It may not be easy at the start considering the personalities of some people. But there’s no other way. You need to start somewhere. And the way is to show to those concerned how this supposed to be minor issue can balloon into a complex problem, if left unchecked.
Two, counsel the line executives on how to conduct employee counseling. This could be unnecessary for some supervisors and managers, but you will be surprised that many of them may refuse to perform this task to avoid being branded as a difficult boss. The best approach therefore is to remain positive and diplomatic with people.
This can be done by offering assistance to employees by exploring the following questions: How can I help you minimize, if not eliminate your excessive absences (or tardiness)? How many paid leaves do you still have? Would you like to be transferred to a branch near your residence? How about a job in the field where you will be measured by actual sales results, and not by your physical presence in the office?
Three, crack down on people who abuse their “emergency” paid leaves. Insist that employees contact by mobile phone their line executives in case of an unscheduled absence due to illness or emergency. This allows supervisors and managers to have the opportunity of asking questions like: “Will you be in tomorrow?” or “Would you like us to send you our company doctor?” These may be followed with a statement: “Get well soon!”
With these questions alone, you can readily understand if a worker is malingering or feigning an illness. The inevitability of a personal talk with a boss is more than enough for some malingerers or those with Monday or Friday “illnesses” to avoid a similar situation in the future.
Last, cross-train all employees so everyone can readily pitch in. Educate people on what to do in case of an unscheduled absence. That way, you can have workers ready and able to fill in adequately with minimal disruption to the business. This approach also enhances the skills of all workers so they can take up more challenging tasks in the future.
Not only that, it brings peer pressure from the workers themselves when one or two workers take “emergency” leave or feigns illness that could unsettle the daily operations of the business. While line managers would consider see most cases as abuse of employee leave privileges, the co-workers themselves are even more adept at finding out who among them is guilty.
ELBONOMICS: Employee absences make the boss’s blood boil.
 
Send anonymous workplace questions to elbonomics@gmail.com or via https://reyelbo.consulting

How PSEi member stocks performed — February 28, 2019

Here’s a quick glance at how PSEi stocks fared on Thursday, February 28, 2019.

 
Philippine Stock Exchange’s most active stocks by value turnover — February 28, 2019.

New tax amnesty bill addressing vetoed items filed in House

A BILL addressing parts of the general tax amnesty law vetoed by Malacañang was filed at the House of Representatives, one of the original bill’s authors said.
“President (Rodrigo R.) Duterte’s position is clear. He will support a general tax amnesty as long as it is accompanied by a relaxation of the bank secrecy laws and the introduction of automatic exchange of information. I took the same position when I filed a bill on tax amnesty in 2018,” Quirino Rep. Dakila Carlo E. Cua, vice chair of the ways and means committee, said in a statement Thursday.
House Bill No. 9153, or the General Tax Amnesty Act, proposes to grant amnesty on all unpaid taxes in 2017 and prior years. The bill contains provisions that remedy the President’s veto.
Congress is currently on break from Feb. 9 to May 19 to make way for the midterm polls on May 13. Session will resume on May 20 and will officially close on June 7, which means Congress has three weeks to work on remaining legislative matters.
The measure proposes to grant immunity from prosecution to any person, natural or juridical, that pays an amnesty tax rate of 2% based on total assets as of Dec. 31, 2017, or an amnesty rate of 5% of net worth or P75,000, whichever is higher, based on the Statement of Assets, Liabilities and Net Worth as of Dec. 31, 2017.
The bill proposes to charge corporations 5% of their total net worth or P1 million for corporations with a subscribed capital of more than P50 million; 5% or P500,000 for those with a subscribed capital of P20 million to P50 million; 5% or P250,000 for those with a subscribed capital of P5 million to P20 million; and 5% or P100,000 for those with subscribed capital of below P5 million.
“I hope that my colleagues in the House of Representatives and Senate can reconsider their position on the relaxation of bank secrecy laws and introduction of automatic exchange of information. The public has been patiently waiting for the general tax amnesty so that they can transition to the new tax regime with a clean slate,” Mr. Cua also said.
Sought for comment, Majority Leader Fredenil H. Castro of the 2nd district of Capiz told BusinessWorld in a phone message Thursday, “It will have to start on the Committee Level. From there, it will be uphill because we only have few session days left, we have to surmount the problem on quorum… before the House Reps can approve it on 3rd Reading. But, with the cooperation and support of the majority members, we can try.” — Charmaine A. Tadalan

Veto halves expected take from tax amnesty bill, DoF says

By Melissa Luz T. Lopez
Senior Reporter
THE DEPARTMENT of Finance (DoF) expects to generate around P27 billion from the tax amnesty measures that were not vetoed, or less than half of its earlier projections, with the implementing rules for the law to be released soon.
DoF Undersecretary Mark Dennis Y.C. Joven of the Revenue Operations Group said the government still expects P27.541 billion in fresh revenue from the remaining amnesty measures provided by the Republic Act 11213, which was signed but partly vetoed by President Rodrigo R. Duterte.
This is well below the P63.5-billion tax take under the original projections, as well as the P34.341-billion estimate for the bill approved by Congress, he told members of the Tax Management Association of the Philippines during their membership meeting yesterday.
The tax amnesty program looked to impose an amnesty charge equivalent to a portion of the taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal and administrative penalties.
From a five-pronged tax amnesty bill, the bill signed by Mr. Duterte retained only the provisions for estate tax amnesty, seen to generate P6.28 billion, and for tax delinquencies worth P21.26 billion.
The Chief Executive removed the provision for a general tax amnesty — which could have raised P13.63 billion if implemented. Mr. Duterte said he was forced to remove the measure in the absence of powers for the state to better run after tax evaders, namely the relaxation of the deposit secrecy law and the automatic exchange of information with foreign tax authorities.
The estate tax amnesty will impose a flat rate of 6% for all unsettled estates at a minimum of P5,000, against the old practice of levying 5-20%. The new law also provides for rates for delinquency of 40%, 50%, or 60% of the basic tax depending on the charge. Meanwhile, unremitted withholding taxes will still have to be settled in full.
Mr. Joven said the “truncated” Tax Amnesty Act still provides a fresh start for taxpayers, as they seek to unlock value from property that cannot be disposed of due to unpaid estate taxes and clearing up the backlog of cases handled by the Bureau of Internal Revenue (BIR).
Mr. Joven said work has started in drafting separate revenue regulations for the two amnesty schemes, and will be published “in the next two months” in keeping with the 90-day window provided under the law.
Finance Secretary Carlos G. Dominguez III has said that the department will ask Congress to pass measures covering the unsigned provisions of the amnesty bill to help raise even more revenue, in the hope that the measures can be tackled during the last session days from May to June or early in the 18th Congress which opens June 30.
DoF Director Euvimil Nina R. Asuncion added that while the remaining tax packages may not clear Congress, they are gunning for the approval of the “Package Two Plus” which will raise the excise duties on alcohol and cigarettes. This, in turn, should plug the funding needs of the Universal Health Care Law also signed by Mr. Duterte in February.
In a separate report, Moody’s Investors Service said it expects tax collections to rise further this year supported by the Tax Reform for Acceleration and Inclusion (TRAIN) law.
“We expect a continued increase in revenue generation this year because the TRAIN law codified gradual increases in excise tax rates that took effect at the beginning of this year,” Moody’s said, noting that it continues to project fiscal stability in the Philippines.
“[W]e expect the fiscal deficit to slightly narrow this year in light of the government’s outlooks for revenue and expenditure.”

Voluntary regularization deal up in the air

THE VOLUNTARY regularization plan put forward by the Employers Confederation of the Philippines (ECoP) has not been signed, with ECoP and the Department of Labor and Employment (DoLE) citing various reasons for the plan’s sidetracking, which include a threat by labor groups to prosecute to Secretary of Labor for dereliction of duty.
In a briefing, Labor Secretary Silvestre H. Bello III said that the signing of a memorandum of understanding (MoU) with ECoP for the National Voluntary Regularization Program has been cancelled. The regularization plan was supposed to start this month, in the process granting ECoP a three-year moratorium from labor inspections.
Mr. Bello said that the cancellation was due to the opposition of labor groups, who claim the regularization program will further delay the implementation of the Security of Tenure (SoT) Bill, which is currently awaiting second reading at the Senate. The SoT Bill was certified as urgent by President Rodrigo R. Duterte.
“We are supposed to sign an MoU with ECoP. We are supposed to regularize not less than 200,000. They mistook that agreement (as being in lieu of) the SOT Bill,” Mr. Bello said.
ECoP President Sergio R. Ortiz-Luis Jr. told BusinessWorld on Wednesday that he was unaware of Mr. Bello’s reasons for saying the MoU was cancelled.
“There is no official word that they are calling it off. As far as I’m concerned, it is just postponed,” he said in a phone interview.
Mr. Ortiz-Luis said on the day of signing, it was DoLE that cancelled the ceremony because of scheduling conflicts.
He added that DoLE pledged to reschedule the MoU signing, suggesting a delay rather than cancellation.
“They said they’re rescheduling it and I didn’t get news that they’re holding it off. As of now, we’re waiting for the reschedule,” Mr. Ortiz-Luis stressed, adding “I have a feeling it will go ahead.”
Mr. Bello said that if the National Voluntary Regularization program goes ahead, he could be subject to legal action from labor groups.
“I was warned that they will file charges if I go ahead with it,” he said.
Nagkaisa Labor Coalition (NAGKAISA) and Kilusang Mayo Uno (KMU) said earlier this month that they are considering filing a corruption complaint against Mr. Bello. They claim the DoLE-ECoP agreement will violate Republic Act No. 301 or the Anti-Graft and Corrupt Practices Act.
They also said that granting a three-year moratorium on labor inspections constitutes dereliction of duty by a public official.
They cited the Revised Penal Code’s Article 208 which calls for the imprisonment of officials that “maliciously refrain from instituting prosecution for the punishment of violators of the law, or shall tolerate the commission of offenses.” — Gillian M. Cortez

NEDA rules out rice self-sufficiency policy on eve of tariffication

THE NATIONAL Economic and Development Authority (NEDA) ruled out the future pursuit of rice self-sufficiency by casting doubt on arguments for maintaining the policy as the government prepares to embark on a rice tariffication regime featuring more liberal imports by the private sector.
In a briefing Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia cited the cost argument for importing more rice, noting that the pursuit of rice self-sufficiency made rice costly for the poor.
”Over the years, domestic rice prices have been persistently high with Filipinos paying as much as twice (the price for) rice compared to other countries. The poor, including farmers themselves get hurt the most… Rice tariffication is pro-farmer as much as it is pro-consumer, and pro-poor. It is the big millers and traders who have been benefiting more than small rice farmers,” Mr. Pernia said.
Rice tariffication under Republic Act (RA) 11203 removes the rice importing function of the National Food Authority (NFA) and allows the expansion of the private sector’s role in the import market. Shipments from within the Association of Southeast Asian Nations are to be charged tariffs of 35%. NEDA has calculated that such shipments will help bring down the cost of rice and inflation.
The high inflation levels of 2018 provided the impetus for RA 11203 to make it through Congress as the government embarked on a concerted effort to remove food supply bottlenecks.
The alternative policy of rice self-sufficiency, advocated mainly by the Department of Agriculture (DA), involves supplying farmers with hybrid seed and innovative irrigation systems. Farmers have argued that increased imports will depress prices and affect their livelihoods, while the NFA restructuring will also render it unable to offer a support price in the process of procuring palay, or unmilled rice.
RA 11203 provides for a Rice Competitiveness Enhancement Fund (RCEF) of P10 billion a year for six years, to help fund greater farm mechanization and access to crop financing, among others. RCEF will be funded by the rice tariffs.
NEDA Undersecretary Rosemarie G. Edillon told reporters that the government is now poised to abandon rice self-sufficiency plans altogether, and not postpone it.
“Yes,” Ms. Edillon replied when asked in a chance encounter with reporters if the rice self-sufficiency program has been abolished.
“It is something where we do not have a comparative advantage… Number one, we are an archipelago. Number two, we are a big country in terms of population… The 13 million hectares of land is divided in 7,600 islands… (For rice land) our computation is around four million hectares. In Thailand, they have about 10 million hectares of land, and their rice farms are contiguous. They only have less than 70 million people. We get frequented by about 20 typhoons a year, Thailand has one every 10 years. Geophysical characteristics are the defining constraints,” Ms. Edillon said.
“The only way you can have 100% rice self-sufficiency is you really have to contend with higher prices… There will always be equilibrium but it would be at the expense of higher consumer prices,” Ms. Edillon added.
NEDA also took the trouble to counter one of Agriculture Secretary Emmanuel F. Piñol’s arguments for maintaining a degree of self-sufficiency. Mr. Piñol had argued that many of the Philippines’ rice suppliers could someday be affected by climate change while growing rice demand in China could persuade suppliers to ship their rice there.
“China can be both an exporter and importer of rice depending on how it positions itself. There are times it exports rice, there are times it imports rice, but it will never be a country that should be seen as a threat to the rice market,” Mercedita A. Sombilla, NEDA Assistant Secretary, told BusinessWorld in an interview on the sidelines of NEDA briefing.
Ms. Sombilla added: “The ones that are showing very-very fast increase in demand in rice are the African countries because they are transitioning from the lower staple which are cassava, root crops, to higher quality staple which are wheat, bread, rice. But for the Asian countries, the only slightly high rice consuming country is Myanmar but Myanmar has much potential in increasing its rice for export. It’s just that we don’t feel it because its exports go to its border which is China. That’s why there is no threat from China because it has its own sources. Even Cambodia’s exports directly go to China.”
In August, Mr. Piñol said that in 2019, the Philippines will be in a “very tight rice situation because China is importing about 5% of its requirement” and “that’s 15 million metric tons (MT).”
Mr. Pernia said that the Philippines should not fear climate change hitting Vietnam and Thailand and putting pressure on the rice supply.
“That’s what [Mr. Piñol has] been saying, [that] we need to have rice self-sufficiency in anticipation of climate change hitting Thailand and Vietnam. It does not hold water,” Mr. Pernia said.
“It is not a good explanation,” Mr. Pernia said, noting that the Philippines is more likely to be affected by climate change than Thailand and Vietnam.
Mr. Pernia also said that the lifting of the quantitative restrictions (QR) on rice importation to the Philippines, a concession from the World Trade Organization (WTO) to give farmers time to become more competitive, is a long-overdue reform.
“We have suspended rice tariffication for 24 years… Japan opened its rice import market through tariffication in 1999 and South Korea did the same in 2015,” Mr. Pernia said.
“Apart from fulfilling our commitment to WTO, rice tariffication has been a priority agricultural policy reform in the past administrations, not just the Duterte administration,” Mr. Pernia said.
According to Mr. Pernia, with RA 11203, rice prices could fall as much as 50%. Ms. Sombilla meanwhile added that rice prices could even fall below the P27 per kilogram selling price of the NFA.
Ms. Edillon said that the NFA procures less than 2% of its stock from domestic sources. NFA
Addressing fears of layoffs at the NFA, Ms. Edillon said many of its workers can be absorbed by the Philippine Rice Research Institute (PhilRice) and Philippine Center for Postharvest Development and Mechanization (PHilMech), which have larger budgets supplemented by RCEF funding.
“We need to come up with an inventory of the competencies of the existing personnel and do a retooling if necessary…Let’s say PHilMech needs to upsize its manpower complement, PhilRice as well, and we also have other agencies in government as well that need to be filled up…For those who rather would not working anymore, I’m sure there will be a retirement package as well,” Ms. Edillon said. — Reicelene Joy N. Ignacio

NLEX breaks ground on connector road, opens Harbor Link Segment 10

NLEX Corp. began on Thursday the construction of the connector road linking the North Luzon Expressway (NLEx) to the South Luzon Expressway (SLEx) as it opened the NLEx Harbor Link Segment 10 to the public.
The groundbreaking for the NLEx-SLEx Connector Road was two months ahead of its original May 2019 target, with a scheduled appearance by President Rodrigo R. Duterte, accompanied by officials from the Department of Public Works and Highways (DPWH) and other government agencies. As of deadline time, they were also due to attend inaugural program for the Harbor Link expressway at C3, Caloocan City.
“Identification of right-of-way requirement and most of acquisition activities were completed hence the earlier-as-planned start of construction activities for the NLEx-SLEx Connector Road Project,” DPWH Secretary Mark A. Villar said in a statement.
The P23.3-billion NLEx-SLEx Connector Road is an 8-kilometer elevated highway that will link the end of Harbor Link in C3, Caloocan City to the Polytechnic University of the Philippines in Sta. Mesa, Manila. Once operational in 2021, it is expected to benefit 35,000 motorists by cutting travel time from NLEx to SLEx to 20 minutes from the usual two hours.
The NLEx Harbor Link Segment 10, on the other hand, is a P15.55-billion project also by NLEX Corp. consisting of a 5.65-kilometer elevated highway connecting Karuhatan, Valenzuela City to C3 in Caloocan City. It also includes a 2.6-kilometer spur road to Radial Road 10 (R10) in Navotas City that is expected to open by year’s end.
“We are glad that this traffic decongestion project is now open to our motorists. (It) validates the Duterte administration’s promise to bring real change by providing travel convenience… to the Filipino people,” Mr. Villar was quoted as saying.
NLEX Corp. President Luigi L. Bautista said the two projects are proof of the “political will of the government and the solid partnership between public and private sectors.”
NLEX Corp. is part of the Metro Pacific Tollways Corp., the tollways unit of Metro Pacific Investments Corp. (MPIC).
MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc. 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

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