Truckers, brokers call for urgent action on container re-export

February 18, 2019 | 10:06 pm

TRUCKERS and customs brokers called on the government to enforce the rules on re-exporting empty containers as an urgent measure to address congestion in the Port of Manila, with stakeholders claiming that port utilization is already at 100%.
The Alliance of Philippine Customs Brokers and Trucking Associations (APBTA) held a news conference on Monday over the proposed joint administrative order (JAO) by the Department of Finance (DoF), Department of Transportation (DoTr), and the Department of Trade and Industry (DTI), which they said may be helpful in the long term but will not immediately address current port congestion issues.
The JAO, due to be issued later this month, is considered a “long term” solution by regulating charges imposed by international shipping lines, the APBTA said, adding that urgent measures are needed to ensure the free movement of trade goods.
“The JAO addresses long-term issues. For the short term what are the solutions? Actually our ports are now 100% utilized… if we wait for the JAO, it will take time,” said Professional Customs Brokers’ Association of the Phils. Inc. (PCBAPI) President Rey T. Soliman, who also chairs the Port Truckers, Customs Brokers Consumers Cooperative (PTCBCC), at the briefing on Monday.
Mr. Soliman said the government should revisit Bureau of Customs (BoC) Customs Administrative Order (CAO) 01-2015, which allows for empty foreign containers to stay in port without being subjected to taxes or duties if they are re-exported within 90 days. This can serve as an immediate solution to port congestion before the government release the JAO.
“We suggest since the rules call for it, we need to re-export empty containers which are in the ports. This should be a priority to decongest the port… until the situation normalizes. Then implement the JAO,” he said.
In an interview with BusinessWorld on Monday, Inland Haulers and Truckers Association (INHTA) President Teddy Gervacio said that according to the draft JAO which the association has seen, some of the provisions are already laws.
“The BoC still has not implemented them. So the question remains, when will this be signed and when will this be implemented correctly,” Mr. Gervacio said.
Abraham G. Rebao, Vice President for Transport at the Aduana Business Club (ABC), said he does not understand why Customs Chief Rey Leonardo B. Guerrero cannot implement CAO 01-2015.
“It’s only Bureau of Customs Commissioner Rey Guerrero who has the authority to implement that. We are amazed on why it is not being implemented. What is behind it? That is the only way to drastically decongest the port and container depot,” Mr. Rebao said.
Mr. Guerrero was unable to comment at deadline time.
Last month, the DTI said in a statement that under the JAO, shipping lines will not be allowed to impose fees in the Philippines but will bring container depot charges in line with international fees in order to deter the abandonment of empty containers in container yards.
The BoC and the Philippine Ports Authority (PPA) are also scheduled to release a Joint Memorandum Circular (JMC)this month that will seek to bring back the utilization rate of container depots in Manila to 70%. — Gillian M. Cortez

ERC reorganization bill hurdles House on second reading

February 18, 2019 | 10:05 pm

A BILL reorganizing the Energy Regulatory Commission and granting it some fiscal autonomy made it past second reading at the House of Representatives.
House Bill No. 9053, or the “Energy Regulatory Commission Act,” which was passed via voice vote, calls for the Commission to be “exclusively responsible for the regulation of the electric power and energy industry.”
The measure will also grant the ERC limited fiscal autonomy, which means the regulatory body may retain 30% of its revenue from its collection of fees, licenses, and fines among other charges.
Of this share, 10% will be used to augment ERC’s capital outlay (CO) budget, 45% for the maintenance and other operating expenses (MOOE) budget and the remaining 45% for the personnel service (PS) budget
The bill also calls for the ERC to allocate 15% of its total annual approved budget for the training and upgrading of the skills of its personnel.
The bill is geared towards “promoting competition in the power and energy sector, and provide better protection to consumers,” as stated in the Committee Report.
Among others, the bill proposed to prescribe additional qualifications of the ERC Chairman and its members, and reorganize the Commission by creating additional offices, six line services and four oversight committees.
Further, the bill will prohibit Commissioners and their relatives from holding any interest, either as investor, stockholder, officer or director, in any company engaged in electricity generation, transmission, or distribution to the fourth civil degree of consanguinity. — Charmaine A. Tadalan

Casino license ban stays pending key PAGCOR meeting

February 18, 2019 | 10:05 pm

MALACAÑANG on Monday said President Rodrigo R. Duterte has not changed his position yet on the moratorium against the licensing of new casinos, pending a meeting with the chief gaming regulator who could seek a relaxation of the ban.
“Until such time as he makes a formal statement on the matter, I think whatever his former position was, subsists,” the President’s Spokesperson Salvador S. Panelo said in a briefing when asked about the planned meeting of Philippine Amusement and Gaming Corp. (PAGCOR) Chairman Andrea D. Domingo with Mr. Duterte.
According to a report by Bloomberg on Jan. 30, Ms. Domingo wanted to meet the President and that she “hoped” that the President could be “persuaded to implement a selective ban” on the issuance of new casino licenses.
Asked for an update, Mr. Panelo said: “What I know is, (Ms. Domingo) wants a meeting. But I have not heard of any such meeting. I have no info.”
Ms. Domingo and PAGCOR President and Chief Operating Officer Alfredo C. Lim were asked to comment but had yet to respond at deadline time.
In a phone message to BusinessWorld, PAGCOR Corporate Communications Assistant Vice- President Carmelita Valdez said: “We are waiting for update from the chairman.”
Also on Monday, Malacañang said it was supportive of the Bureau of Internal Revenue’s (BIR) move to require the registration of Philippine-based Offshore Gaming Operations (POGOs).
“That’s a good measure to determine exactly how many Chinese nationals are here in violation of our laws. I think the BIR has made a good suggestion,” Mr. Panelo said.
Asked if the government is concerned about the number of illegal Chinese workers, he said: “We’re not exactly alarmed, but the BIR wants to determine their numbers because that’s an important issue for the declaration of income, so it can collect the correct amount of corporate tax.”
In its statement Sunday, the Department of Finance quoted BIR Deputy Commissioner Arnel SD. Guballa as saying: “We want to trace these Chinese nationals employed by these gaming operators. They allowed us to join the task force because we are seeking data from (the Bureau of) Immigration and The Department of Labor and Employment on the list of these foreign nationals.” — Arjay L. Balinbin

Price manipulation seen as ‘pitfall’ under new rice regime

February 18, 2019 | 10:04 pm

THE removal of the National Food Authority’s (NFA) ability to intervene in the rice market may encourage further cartelization in the industry to manipulate prices of the key staple, a former Agriculture Secretary said.
“The pitfall (of rice tariffication) is that it removes the government’s ability to intervene to stabilize prices. Either the price of rice is too low (to be attractive to farmers) or the scenario could also be cartelizing to raise (retail) prices,” former Secretary William D. Dar said in a phone interview on Monday.
Mr. Dar is currently the president of the Inang Lupa Movement, Inc and previously a director-general of the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT).
Mr. Dar, however, said that the public’s best hope with the Rice Tariffication Law’s passage is the minimum P10-billion annual allocation to a Rice Competitiveness Enhancement Fund (RCEF), which will be given for six years and which he described as of great help to farmers.
“It is now a law, so let’s make the best out of it. P10 billion is a welcome development to make Filipino farmers very productive, competitive, and I hope by the end of the six-year period, they can compete with other farmers globally,” Mr. Dar said.
Mr. Dar noted that on the other hand, the fund could come under the control of corrupt government officials.
“We should be very vigilant, and hope that the government will be very transparent in implementing the P10 billion a year competitiveness enhancement fund. The pitfall of that is if it is corrupted,” Mr. Dar said.
The law’s passage is expected to diminish the area devoted to rice production, pushing farmers to climb the value chain to higher-value crops, Mr. Dar said.
“Your area for rice production will be decreased, but the other side is that the farmers can be given the right training (to go into) high-value agriculture. The rice production areas that are not suitable for rice are better converted to fruit and vegetable farms that can grow in two to three months, such as watermelon,” Mr. Dar said.
“These are mostly rented upland areas. Those are not suitable for rice production,” Mr. Dar added.
Asked when the impact of the law might be felt, Mr. Dar said, “There will be an initial reading by the end of this year.”
Late Sunday, Agriculture Secretary Emmanuel F. Piñol said that the rice tariffication law is expected to initially depress prices for palay, or unmilled rice, but the market will adjust.
“Initially, there will be a drop in the buying price of palay but the farmers are expected to adjust by increasing productivity with funds coming from tariffication,” Mr. Piñol said in a social media post.
“Properly used, the RCEF could actually increase the productivity of Filipino rice farmers because farm mechanization alone will increase production efficiency and reduce post-harvest losses estimated at 16% of total production,” Mr. Piñol said.
The P10 billion is to be allocated as follows: P5 billion for farm mechanization, P3 billion for high-yielding seed, P1 billion for farm credit and P1 billion for technical skills training.
“The P3 billion intended for high-yielding seed developed by IRRI and PhilRice is also expected to increase average farm yields by at least two metric tons in (each of the) one million hectares (to be planted to hybrid) in the first year of implementation,” according to Mr. Piñol.
“The P1-billion credit facility will also allow farmers to buy fertilizer and farm inputs thus increasing their productivity while the P1 billion for technical skills training is expected to improve their farming technology,” Mr. Piñol added.
Mr. Piñol said that he has reservations about the removal of the NFA’s importation role but remains optimistic about the future of the agriculture sector.
“I have always been an optimist and I look at the advantages which Philippine agriculture could get from these twin measures (removal of quantitative restrictions and rice tariffication) rather than cry over spilled milk. Of course, I have to admit that I had my reservations on the provisions of the law which takes out the regulatory powers of the NFA but these are now settled with the signing of the bill into law,” Mr. Piñol said.
The Department of Finance (DoF) said on Monday that the rice tariffication will be implemented starting March 3, also noting that the NFA Council approved a motion instructing the NFA to submit a restructuring plan within 30 days instead of the initial proposal of 180 days.
“Our objective in liberalizing rice imports is to bring down the cost of the staple. Our (cost) is 50% higher than the others including Singapore which does not produce rice. Will it take us 180 days to effect a reduction in the cost of living of the people?” Finance Secretary Carlos G. Dominguez III said in a statement. — Reicelene Joy N. Ignacio

Road operator NLEx Corp. applies for toll adjustment

February 18, 2019 | 10:03 pm

THE TOLL Regulatory Board (TRB) said Monday that NLEx Corp., operator of the North Luzon Expressway (NLEx), applied to adjust toll rates.
In a bulletin published in a newspaper on Monday, the TRB said NLEx Corp. sought in a Jan. 22 petition to implement an add-on rate for all vehicle types using the toll road. According to the petition, the adjusted rates should have been effective starting Feb. 15. The publication of the petition in a newspaper triggers the start of the 90-day period during which the TRB welcomes any filing from NLEx users to review the concessionaire’s request, after which it can move to ruling on NLEx Corp.’s petition.
“Any interested expressway user shall have the right to file, within a period of ninety (90) days from the date of the publication of this Notice, a petition for review with the TRB,” it said.
The authorized toll rates in NLEx are currently P40.6 for Class 1 vehicles, P101.5 for Class 2 and P121.8 for Class 3. The adjusted toll rates would raise these fees to P47.4 for Class 1 vehicles, P118.6 for Class 2 and P142.3 for Class 3.
“NLEx Corp. most respectfully prays that this Honorable Board immediately issue an order ex parte granting NLEx Corp.’s prayer for provisional relief, i.e. an Order implementing the previously approved adjustment to the Authorized Toll Rates… and authorizing NLEx Corp. to collect the same,” according to the petition.
The concessionaire said the add-on toll is meant to help it recoup investments in Segments 9 and 10 of NLEx of P11.9 billion as of November 2014.
In August 2018, NLEx Corp. said it was willing to drop its arbitration case against the Department of Transportation (DoTr) over the long-overdue toll fee adjustments in the expressway.
NLEx was seeking compensation of P3 billion for adjustments originally due in January 2013 and January 2015. It also included some P877 million in what it claimed was the government’s failure to act on toll hike petitions for the Manila-Cavite Expressway (CAVITEx) in 2012, 2014 and 2015.
Its estimate of he claims as of June 2017 was P7.5 billion.
NLEx Corp. is a unit of Metro Pacific Tollways Corp., the tollways arm 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

Salazar, former DTI, BoI official, dies at 69

February 18, 2019 | 10:02 pm

MELITO S. SALAZAR, JR., a former president of the Management Association of the Philippines (MAP), and former senior government official, educator and board member of various companies and schools, died Saturday at age 69, the association announced.
According to a profile provided by MAP, Mr. Salazar became the 64^th president of the group in 2013.
Mr. Salazar was chair of Inter-Asia Development Bank; columnist and Vice President of the Manila Bulletin; chair of the International Center for Innovation, Transformation and Excellence in Governance, an non-governmental organization founded by former senior government officials; chair and president of Quickminds Corp; vice chair of PVB Card Co.; and Director of the University of St. La Salle Bacolod and PhilsFirst Insurance Corp.
Mr. Salazar served on the Monetary Board of the Bangko Sentral ng Pilipinas (BSP), vice chair and managing head of the Board of Investments, Undersecretary of the Department of Trade and Industry, Director of the University of the Philippines (UP) Institute for Small Scale Industries, and Associate Professor of the UP College of Business Administration.
He held BSBA (Accountancy) and MBA degrees from UP and underwent further training in Harvard Business School, the Massachusetts Institute of Technology, the University of North Carolina, and the Euro-Asia Centre of INSEAD.
Mr. Salazar was also the first Filipino given the Special Honor Award by the World Association of Small and Medium Enterprises, as a pioneer in SME development.
Mr. Salazar’s wake is at Arlington Memorial Chapels & Crematory at Aeternum, Heritage Park, Bonifacio Global City, and will run until Feb. 22. — Janina C. Lim

DICT targets new common tower policy by 2nd quarter

February 18, 2019 | 10:01 pm

THE Department of Information and Communications Technology (DICT) said it is targeting the drafting of a revised common tower policy by the second quarter of this year.
DICT Assistant Secretary Alan A. Silor said in a briefing on Monday that the government continues to develop the draft and may release it soon.
“The policy should be out as soon as possible. We are trying second quarter of this year,” he said.
Last year, Presidential Adviser Ramon P. Jacinto presented a draft common tower policy which restricted the number of cell site builders to two registered tower providers.
Stakeholders objected to Mr. Jacinto’s draft, which led the DICT to put the policy on hold and sign memoranda of understanding (MoUs) with interested common tower companies in the meantime. The MoUs promised the DICT’s aid in obtaining permits for tower construction as the prospective providers solicit business from telecom firms.
On Monday, the DICT called a meeting of incumbent telcos Globe Telecom, Inc., Smart Communications, Inc. and the third player, Mislatel Consortium, together with the eight tower providers that have signed MoUs with the government.
DICT Acting Secretary Eliseo M. Rio, Jr. said the telcos and tower providers support amendments to the common tower policy, with the parties given two weeks to submit their preferred locations for towers and the number of cell sites they would like to be set up to aid in their planning.
“Today (Monday) we had the telcos meet with the tower companies, and there is some synergy coming in,” he said. “We will have 15 days for the telcos and DICT to come up with the number of cell sites or towers that they would like to put up this year.”
Mr. Rio said after the list of preferred locations and cell site numbers is submitted, the telcos may then “come up with their tenders” for the tower providers.
So far, the DICT had signed MoUs with eight tower companies: ISOC Infrastructures, Inc.; ISON ECP Tower Pte. Ltd.; IHS Holding Ltd. (IHS Towers); edotco Group Sdn Bhd; China Energy Equipment Co. Ltd.; RT Telecom Sdn Bhd.; Aboitiz InfraCapital, Inc.; and MGS Construction, Inc.
Today, the DICT is also scheduled to sign agreements with three more tower companies: Frontier Tower Associates Management Pte. Ltd.; GNI-JTower Inc. Consortium; and American Tower Corp. — Denise A. Valdez

The vetoed tax amnesty: Expectations vs reality

February 18, 2019 | 10:00 pm

News of the approval of the Tax Amnesty Act as Republic Act No. 11213 came out early morning on Sunday, February 17. It was signed on Feb. 14. The reports also indicated that the President vetoed the provisions on the general tax amnesty.
I have three scheduled briefings on the tax amnesty and, for these, I prepared a 50-page slide presentation. After hearing the news of the veto of the general tax amnesty provisions, I am now faced with the problem of fulfilling my two-hour commitment with a 25-page presentation on what is left of the tax amnesty. I am pretty sure my audience will no longer be interested in discussing the expectations prior to the veto, while we are now faced with the reality that there is no more general tax amnesty on ongoing assessments and open years. I hope, though, that the approved Continuing Professional Education credits for the module will not be diminished. This, of course, should be the least of our concerns on tax amnesty.
There are companies that are currently under Bureau of Internal Revenue (BIR) audit and have opted to defer preparing reconciliations and retrieving supporting documents to contest the assessment on the expectation of a general tax amnesty. They have confirmed the value of their assets and computed the amount of amnesty tax payable. Not that they are tax cheats or evaders. It is simply because they think the amount is reasonable, considering that it will cover all open years, including possible fraud allegations beyond the three-year prescriptive period for audit. In a BIR audit, preparing tax reconciliations and supporting documents alone takes time and resources. There are also regulations and documentation requirements that taxpayers usually have difficulty complying with. Taxpayers expect that they will end up paying some deficiency taxes to close the assessment. The reality is that taxpayers currently undergoing tax audit should go back to their worksheets and supporting documents to protest the factual and legal bases.
The general tax amnesty provision was vetoed because of the absence of provisions lifting the bank secrecy for applicants, the legal provisions for compliance with international standards on exchange of information, and the safeguards against abuse and erroneous declarations.
What provisions survived in the Tax Amnesty Act of 2019?
The estate tax amnesty survived, but minus the provision that allows payment of one amnesty tax to cover all transfers of property. Hence, if the property is still in the name of your great grandfather, an amnesty tax has to be computed and paid for the transfer to your grandparent, to your parent, and, finally, to you — three amnesty taxes in all. Remember, though, that the value of the property at each transfer should be the fair market value at the time of the death of each transferor. You need to first check if the property can be covered by the exemption under the prevailing laws. Prior to the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the family home is exempt up to P1 million and there is a standard deduction of another P1 million. The valuation of building and improvements, though, will be tricky. We will need to wait for the BIR guidelines.
The provision on the presumption of the correctness of the estate tax amnesty return has also been stricken out. The veto message notes that the valuation of the properties is a technical aspect that cannot be left to a mere self-declaration. An erroneous valuation will not only affect the amnesty amount, but also impact subsequent transfers, whether by sale, donation, or gift. Hence, the expectation is that the implementing regulations will give the BIR an opportunity to evaluate the truthfulness of the declarations related to the application for estate tax amnesty.
The amnesty on delinquent taxes also survived. The amnesty tax is 40% of the delinquent tax, 50% if there is a final decision of the court, 60% if the case involves tax evasion, and 100% in case of unremitted taxes withheld.
With this reality, though, there are still expectations that can only be answered by the implementing regulations.
If the taxpayer has an ongoing assessment for 2017 and the BIR issues, after the enactment of the Tax Amnesty Act, a Final Decision on Disputed Assessment (FDDA) that the taxpayer opts not to further protest or appeal, the assessed tax will be considered a delinquent tax if unprotested after a 30-day period. Will the amnesty on delinquent taxes be applicable? Can the taxpayer apply for amnesty by paying 40% of the basic tax? These expectations will be resolved if the implementing regulations provide for cut-off periods for qualification.
For taxpayers whose applications for compromise settlement are pending BIR approval, the Tax Amnesty Act provides that they can still qualify as delinquent taxes, even if the BIR has denied the application for compromise settlement before the issuance of the implementing regulations for the tax amnesty. Can they credit the 10% or 40% taxes paid under the compromise settlement program and avail of the tax amnesty instead? I understand that paying the 40% amnesty tax will almost automatically vest the amnesty privilege, while an application for compromise settlement takes time while being routed for approval by at least five offices at the regional level and another five at the national office of the BIR.
Cases in court involving 2017 and prior-year assessments can also qualify as delinquent accounts if the court can issue a final decision that will become executory before the issuance of the implementing regulations. Is it at all possible that the BIR and the courts can also agree on a set of guidelines to allow willing taxpayers to request an immediate issuance of an unfavorable decision, so the taxpayer can qualify for the amnesty?
The Tax Amnesty Act requires the issuance of the implementing rules and regulations within 90 days from the effectivity of the law.
In the veto message, the President expressed hope that Congress can pass a separate general tax amnesty bill that would carry with it the necessary safeguards so that both tax administration and revenue expectations can be met. It seems like we can still raise our expectations after all.

Lina P. Figueroa is a partner of the Tax Advisory and Compliance Division of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.
Lina.Figueroa@ph.gt.com
+63(2) 988-2288.

Communication Strategy

February 18, 2019 | 9:56 pm

In a world torn apart, where clashing forces are driven by a singular objective of annihilating one another, superior strategy is the key to victory.
Some think naively that the good side always triumphs. But history and current events refute this. From my viewpoint, the bad forces — authoritarians, fascists, killers, racists, misogynists, plunderers, and the like — at present dominate the world.
But then, the naïve will say the good will inevitably win. But as wise men say, one cannot accurately predict the future; one cannot predetermine the future. Having faith is a virtue, but it in itself does not make the world a better place.
Liberation movements led by communists possess a just cause — the end of exploitation and oppression, the elimination of poverty and the realization of equality, the attainment of democracy and independence.
Some revolutionary movements like neighbors China and Vietnam succeeded, but others like Indonesia and Malaysia failed. The Philippine communist movement, its armed struggle re-launched in 1968, is still struggling, and its victory is nowhere in sight.
Communists of course do not have a monopoly of what is good and just. Think of Nandy Pacheco, the advocate of peace, good governance, and moral politics; the founder of Gunless Society and Ang Kapatiran, a political party that describes itself as an “alliance for the common good.” Nandy Pacheco is pure of heart, but he and his party are marginalized in Philippine politics.
In short, having a just cause or being good is not a predictor of victory.
I have read about how Ho Chi Minh and his band of revolutionaries won their “just war.” How could have a poor country defeated the most powerful force on earth?
An insight from historian Jeffery Record, as cited by journalist James A. Warren (“The Genius of North Vietnam’s War Strategy,” Daily Beast, November 18, 2017), is spot-on: “a superior strategic grasp of the political and social dimensions of the struggle.” Accordingly, “the Americans were not so much outfought in Vietnam as outthought,” said Warren.
There you are, strategy is the key. I attempt to elaborate on this but not in a comprehensive manner. Rather, some facets of strategy are worth retelling.
In my search for strategy, I found a 2007 article written by Richard Halloran titled “Strategic Communication” for Parameters (Autumn 2007), a US Army War College quarterly. Methinks this is essential reading for both the good and the bad guys.
The ten-page article began with a story, again about Vietnam. There was a Colonel Harry Summers who was part of a delegation sent to Hanoi after the war. At the airport, he had a chat with North Vietnamese Colonel Tu. Colonel Summers told Colonel Tu: “You know, you never defeated us on the battlefield.” Colonel Tu took about a minute to respond, but his response was witty. “That may be so. But it is also irrelevant.” Touché!
Another anecdote from the article was about the remark of a Singaporean diplomat and scholar named Koshore Mahbubani, who was asked about “what puzzled him about America’s competition with Osama bin Laden. The diplomat’s answer was a question: “How has one man in a cave managed to out-communicate the world’s greatest communication society?”
Strategy revolves around communication. Strategy is about the struggle of ideas, of “out-thinking,” and “out-communicating” the adversary.
War is but an extension of the political struggle. And the political struggle is about winning the war of ideas. Thus in crafting strategy, communication plays a most essential role.
Communication strategy is the new term for propaganda. One must embrace propaganda, though its original meeting has been lost. Halloran reminds us that the term propaganda is derived from the Latin propagare, which means to spread.
To quote Halloran: “Strategic communication means persuading allies and friends to stand with you. It means persuading neutrals to come over to your side or at least stay neutral. In the best of all worlds, it means persuading adversaries that you have the power and the will to prevail over them.” Note the emphasis on the verb “persuade,” which likewise applies to the relationship with the enemy.
The victorious Vietnamese and Chinese communists are adept at persuasion. They share the common slogan of arousing, organizing and mobilizing the masses, winning over the middle, and neutralizing or isolating the enemies.
Communication strategy is in fact a modern reiteration of what great thinkers and strategies said centuries ago. It’s about Sun Tzu’s “breaking the enemy’s resistance without fighting.” Or Clausewitz’s statements like “war is politics” and “the enemy of a good plan is the dream of a perfect plan.”
Sadly, the forces of the good have not learned these lessons well.
How can the Duterte opposition win over the people when the message being repeated is to blame the Duterte voters for the triumph of evil? The problem with this message is that the support for Duterte is no longer confined to his voters but has covered the majority of the population. Surveys by the Social Weather Stations and Pulse Asia show that Duterte’s trust and performance ratings remain quite high. Like it or not, Duterte’s message resonates across the country, even as we grope for the core values that he represents.
The challenge then is how the opposition can “out-communicate” and “out-think” Duterte. Blaming the Duterte voters and supporters for his rise only intensifies polarization but further isolates the opposition. The unwarranted belligerence shows in other ways: Ferociously attacking an apolitical Lea Salonga, who unfortunately made a politically incorrect though innocent statement. Or accusing a Marvic Leonen, always a champion of progressive if not radical causes, of being an opportunist and a coward for asking his colleague, former Chief Justice Meilou Sereno, to resign. Here, criticism is welcome, but it should be tempered and constructive when directed at a friend or a potential ally.
These actions run counter to persuading, winning over, and uniting the many. To quote Halloran, actions, more than words, are “the better purveyors of strategic communication.”

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.
www.aer.ph

Global Prosperity Rankings: Where is the Philippines?

February 18, 2019 | 9:55 pm

The Legatum Prosperity Index (LPI) offers unique insights into how prosperity is changing across the world. The LPI defines prosperity “as more than just the accumulation of material wealth, but also as the joy of everyday life and the prospect of being able to build an even better life in the future.” The Legatum Institute is a London-based think-tank with a global vision: to see all people lifted out of poverty (https://www.prosperity.com/).

The LPI contains data on 149 countries, for 89 variables, spread across nine dimensions of national well-being: Economic Quality, Business Environment, Governance, Education, Health, Safety & Security, Personal Freedom, Social Capital and Natural Environment.
ASEAN COMPARISONS
Singapore led the major ASEAN countries in the overall prosperity index rankings. It ranked 21^st in the world. It was followed by Malaysia, 44^th, and Indonesia, 49^th. The Philippines, 62^nd, ranked fourth. Thailand, 74^th, was next and finally, Vietnam, 81^st.
Based on the latest rankings, with the exception of outlier Singapore, the Philippines landed 62^nd among the major ASEAN countries. It placed last on economic quality, business environment, health, and safety and security. It rated well on personal freedom and natural environment.
Indonesia did very well on social capital and ranked a distant 2nd (after Singapore) on safety and security.
Malaysia performed best on economic quality and business environment, governance, education, health and natural environment. It scored lowest on the personal freedom pillar.
While Singapore led in many of the pillars. It rated low on personal freedom.
Thailand scored high on health and economic quality, but low on governance and personal freedom.
Vietnam performed best on economic quality and education but scored low on personal freedom and governance.
Since the Index began in 2007, the Philippines has moved up the rankings table by 11 places, Vietnam by seven places, and Indonesia by 28 places. By contrast, Malaysia was down eight places and Thailand, 21 places.
If the Philippines wishes to belong to the upper third (No. 50) of the 149 economies, the country has to improve on six of the nine pillars. Long way to go.
This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

Rolando T. Dy is the Co-Vice Chair of the MAP AgriBusiness Committee and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.
map@map.org.ph
rdyster@gmail.com
http://map.org.ph

Growth and electric cooperatives

February 18, 2019 | 9:53 pm

On the Philippines’ GDP growth rates, the good news is that from 2010 to 2018, the Philippines has been growing above 6% yearly except in 2011. High growth was experienced in 2010 with 7.6% (recovery from 2008-2009 global financial turmoil) and 2013 (election year) with 7.1%.
The bad news is that these growth rates are not enough. The Philippines, with 106 million people, has a GDP size in 2017 of only $314 billion while neighbors with their smaller populations had similar or larger GDP sizes: Malaysia (32M) has $312B, Singapore (5.8M) has $324B, Thailand (69M) has $490B. We need to grow 7-10% per year for many years before we can even catch up with Thailand or Malaysia (Source: IMF, World Economic Outlook [WEO] October 2018).
Among the important factors to have high and sustained growth is to have high and rising supply of cheaper and stable electricity. There are numbers that show a correlation between GDP growth and electricity consumption growth especially for developing countries like the Philippines (see Figure 1).

Among the ASEAN 6, a similar pattern can be observed, also with China and Japan. The Philippines’ low GDP size is reflected in its low electricity consumption in tera-watt hours (TWH) (see figure 2).

There are many factors why our electricity supply and consumption is low compared to our neighbors, like the thick, expansive bureaucracies and permits required before one can explore and develop new power plants.
We focus on the role and “mis-role” of electric cooperatives (ECs). Since they are geographical monopolies granted with congressional franchise to distribute electricity, they can help expand or restrict power demand. If an EC for instance is mismanaged and does not pay the power generation company (genco), even if the genco has big plans to expand power capacity, it cannot do so.
The Department of Energy (DoE) has issued two media releases related to problematic ECs dated February 01 and February 06. It noted that many ECs are failures in expanding rural electrification because of “inefficient management, corruption, unnecessary political interference, institutional conflicts.”
So DoE will conduct a performance review of ECs, especially those that burden their communities with persistent and unresolved brownouts, because they have heavy debts and do not pay their power supply. Underperforming ones will be assisted while non-performing ones will be recommended for cancellation of their franchises.
DOE has identified 17 ECs that are chronic failures to provide satisfactory services to their customers as stipulated in their congressional franchise. Seven are from Regions IV-B and V — ALECO (Albay), CASURECO III (Camarines Sur), FICELCO (Catanduanes), MASELCO (Masbate), OMECO (Occidental Mindoro), ORMECO (Oriental Mindoro), and PALECO (Palawan). Other problematic ECs are PELCO (Pampanga), BASELCO (Basilan), LASURECO (Lanao), SULECO (Sulu), ZAMCELCO (Zamboanga), and DANECO (Davao del Norte).
Then certain islands have rising missionary subsidies — which are then passed on to all electricity consumers nationwide via high universal charges.
In three previous articles in this column, “Unstable power supply due to problematic electric cooperatives” (February 08, 2017), “How the bureaucracy works against cheap and stable electricity (March 08, 2017), and “Corporatization of electric cooperatives can reduce system loss” (September 29, 2017), it is argued that ultimately all ECs should be corporatized and depoliticized, be registered as corporations with SEC, and not with NEA.

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.
minimalgovernment@gmail.com

How Gloria Arroyo’s appointees in the Comelec and Supreme Court debased the Party-List Law

February 18, 2019 | 9:51 pm

President Gloria Arroyo was prohibited by law to run for reelection in 2010. But in her lust for power, even if only a fraction of what she wielded as president, she decided to run for representative of the 2^nd District of Pampanga. Her son Mikey, then the representative of the district, had to give way to his Mom as the candidate for the position.
To prevent the further diminution of the power of the family, Gloria Arroyo wanted her son Mikey to remain a member of the House of Representatives like her other son Dato. So, they inveigled the officers of the party-list Ang Galing Pinoy, which represents tricycle drivers and security guards, to nominate Mikey as the party’s representative in Congress if the party garnered the required number of votes to be represented in Congress.
“A mockery of the principles of the party-list system,” cried leaders of groups from the truly marginalized sectors. They claimed that the intention of the party-list law was to bring them from the parliament of the streets where they had been holding rallies for decades into Congress.
The 1987 Constitution created the party-list system. It mandates that under-represented community sectors or groups, including labor, peasant, urban poor, indigenous, cultural, women, youth, and other such sectors must be represented in the House of Representatives. In 1995, Congress enacted Republic Act No. 7941 or the Party-List System Act.
It mandates that “The State shall promote proportional representation in the election of representatives to the House of Representatives through a party-list system of registered national, regional, and sectoral parties or organizations or coalitions thereof, which will enable Filipino citizens belonging to the marginalized and underrepresented sectors, organizations and parties, and who lack well-defined political constituencies but who could contribute to the formulation and enactment of appropriate legislation that will benefit the nation as a whole, to become members of the house of representatives.”
The leaders of the marginalized groups claimed, and rightly so, that Mikey Arroyo was never a tricycle driver or security guard, or operator of tricycles or owner of a security agency. Not only that, the biggest group of security guards disowned him. And the Comelec had disqualified other would-be party-list candidates for not being from the marginalized sector.
Mikey Arroyo’s net worth of P99 million placed him way above not only the marginalized sector but the middle class of society as well. He was part-owner of a stable which had 20 race horses, some of them worth P1 million each. In his guest appearance in Winnie Monsod’s TV talk show “Unang Hirit” in 2009, he fumbled famously as he tried to explain how his net worth increased from P76.9 million in 2005 to P99 million in 2008 and who the owner of the P63.7-million beachfront property in the United States was.
But President Arroyo’s appointees in the Comelec — Nicodemo Ferrer, Elias Yusoph, Lucenito Tagle, and Armando Velasco — helped to allow Mikey to represent the party-list group of tricycle drivers and security guards. The protesters then filed with the Supreme Court a disqualification complaint against Mikey. The Supreme Court, dominated by Arroyo appointees led by Renato Corona, who was also named chief justice by President Arroyo in contravention of the law, quickly dismissed the disqualification complaint against Mikey on the basis of a bizarre argument.
The Court ruled that it had no jurisdiction to pass upon the eligibility of Mikey Arroyo who was already a member of the House of Representatives. It acknowledged that the House of Representatives Electoral Tribunal had the original jurisdiction over the petition for the declaration of Mikey Arroyo‘s ineligibility. But the complaint was not about his qualification for the House of Representatives. The complaint was about his qualification to represent a group from a marginalized sector – the tricycle drivers and security guards.
In contrast, the Corona Court readily took up Ombudsman Merceditas Gutierrez’s complaint regarding the House of Representatives Justice Committee impeaching her on the basis of two complaints when it had no jurisdiction to pass upon impeachment cases as only the House of Representatives has jurisdiction over such cases.
Also, the Court had ruled in 2001 that only those parties or organizations and their nominees “who belong to the marginalized and underrepresented sectors” were qualified to hold party-list seats. In 2009 the Court excluded the major political parties from party-list elections, since they were already well-represented in the district polls. Using that logic, the Court should have excluded Mikey Arroyo from the 2010 elections on the grounds that one family, the Arroyo family, would be overly represented.
Anyway, in October 2013 the Comelec, then headed by President Benigno Aquino-appointed Sixto Brillantes, Jr., motu proprio (acting on its own initiative) disqualified Ang Galing Pinoy from running in that year’s elections because their nominees were not tricycle drivers and security guards. Comelec First Division Commissioner Rene Sarmiento, who back in 2010 had voted against Mikey Arroyo’s eligibility as nominee of Ang Galing Pinoy, said: “The disqualification of AGP is an example of the party-list system truly serving the marginalized and underrepresented.”
However, in 2013 the Court, still dominated by Arroyo appointees, reversed its 2001 and 2009 rulings. It held that the party-list system is composed of three groups: the national parties, the regional parties, and the sectoral parties or organizations, with the national and regional parties not needing to represent any “marginalized and underrepresented” sector. The Court said it is sufficient that their members advocate common ideologies or governance principles regardless of their economic status.
The Court interpreted the words “marginalized and underrepresented” as the incapacity to win district elections for any reason. That interpretation of the Court enabled multi-millionaires, members of political dynasties, and those well-connected to the powers that be to use the party-list system as the easier and cheaper way of getting elected to the House of Representatives, thus crowding out of Congress the real marginalized folks.
In effect, the Supreme Court modified RA 7941 by discarding its original intent of giving the marginalized and underrepresented sectors who lack well-defined political constituencies but who could contribute to the formulation and enactment of appropriate legislation that will benefit the nation as a whole the opportunity to become members of the House of Representatives. Once again, the Supreme Court justices, who were not elected by the citizenry, usurped the function of Congress, this time to the detriment of the marginalized and underrepresented citizens that RA 7941 meant to benefit.

Oscar P. Lagman, Jr. is a member of Manindigan! a cause-oriented group of businessmen, professionals, and academics.
oplagman@yahoo.com

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