For some businessmen: Duterte’s leadership style remains a concern

January 25, 2019 | 12:03 am

By Arra B. Francia and
Arjay L. Balinbin Reporters
MOST BUSINESS LEADERS agree that President Rodrigo R. Duterte has fared well when it comes to things that matter — continued economic growth and higher foreign direct investments (FDIs).
However, certain aspects of his leadership style have been doing more harm than good, particularly in government operations and the growth of local businesses.

Mr. Duterte is known for his strongman approach and making outrageous remarks in his rambling, often profanity-laden speeches. A study released last June by London-based economic research firm Capital Economics noted that Mr. Duterte’s “erratic and crass” behavior was raising concern among some investors.
“The President plays a critical role in establishing the ‘rules of the game,’ which affects the way the private sector conducts its business. Clear policies and regulations allow the private sector to better plan and execute its investments,” DMCI Holdings, Inc. chairman and president Isidro A. Consunji said in an e-mail interview.
“With less ambiguity and uncertainty, we can deploy our resources more efficiently, and help respond to changing social needs more effectively.”
Aboitiz Equity Ventures, Inc. (AEV) President and Chief Executive Officer Erramon I. Aboitiz emphasized the President’s hand in steering the country toward the right direction, noting that his policies will help the private sector determine investment opportunities that will further push economic growth.
Mr. Aboitiz cited the President’s “Build, Build, Build” (BBB)program, which gave companies like AEV a chance to collaborate with the government to improve the country’s infrastructure.
“Where there’s better infrastructure, the economy can grow, movement is easier, commerce can be a little bit more seamless, etc., which by itself is already a big benefit for business. But more than that, it becomes now investment opportunities for the private sector,” Mr. Aboitiz told BusinessWorld in a Dec. 21 interview.
To take advantage of the government’s infrastructure program, AEV created a new unit — Aboitiz InfraCapital, Inc. to focus on what it sees as the conglomerate’s fifth core business.
“We have foreseen that infrastructure is something that the government will be focusing on moving forward… so this is why we’ve set up Aboitiz InfraCapital to be able to focus in these areas and support the nation building program of President Duterte,” Mr. Aboitiz said.
Aboitiz InfraCapital received original proponent status (OPS) for the operation, maintenance and expansion of the New Bohol (Panglao) International Airport. It is also part of the consortium seeking to rehabilitate the Ninoy Aquino International Airport (NAIA), together with AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; JG Summit Holdings, Inc. and Metro Pacific Investments Corp.
PERCEPTION OF DOING BUSINESS
For Employers Confederation of the Philippines (ECoP) acting president Sergio R. Ortiz-Luis, Jr., Mr. Duterte has so far done well on important economic measures.
“Where it counts, I think the President is doing well. GDP (gross domestic product) is a good measure, increase in foreign direct investments and in spite of the fact that there’s a lot of criticism about our foreign relations with other countries, but we’re doing better than before,” Mr. Ortiz-Luis said in a phone interview.
The Philippines remains a growth leader in the Asia-Pacific region, despite economic expansion slowing to 6.3% in the first nine months of 2018, missing the government’s target of 6.5-6.9% last year. Accelerating inflation was blamed for the slower growth as higher prices served to discourage household spending, a key factor in driving GDP growth.
Even then, a study by S&P Global Ratings expects the local economy to pick up to 6.4% this year from its 6.2% forecast for 2018 due to election spending and strong domestic demand.
Meanwhile, FDI net inflows stood at $8.038 billion during the first nine months of 2018, 24.2% higher than the $6.472 billion in net inflows posted in the same period a year ago. This was seen as an indicator that foreign investors remained upbeat on the Philippines’ growth, despite criticism against the President’s war on drugs and the toll from extrajudicial killings.
Apart from the positive measures of growth during Mr. Duterte’s midterm, Mr. Ortiz-Luis said the President could have done better in appointing more competent people into his Cabinet.
“Unfortunately we also see that the universe of selection is very limited…. People in the military, people he knew in school, so medyo limited ‘yun (that’s quite limited). I have nothing against him, but the people from the military don’t really have the experience, and that can also be hazardous to the economy,” the business leader said.
Mr. Duterte has appointed several military men to his Cabinet, including Environment Secretary Roy A. Cimatu, acting Information and Communications Secretary Eliseo M. Rio, Jr. and Social Welfare and Development Secretary Rolando Bautista.
For the Bureau of Customs post, Mr. Duterte initially appointed former soldier Nicanor E. Faeldon, who was then replaced by former police officer Isidro S. Lapeña. The current Customs chief is former Armed Forces chief Rey Leonardo B. Guerrero.
“If he can find other competent people, I think the progress would be better. Like sa Customs natin, wala pang masyadong maliwanag na direksyon (Like in Customs, there’s no clear direction). And in agriculture, I think there are some people who would have been more competent. Kita naman ‘yung nangyari sa rice (We have seen what happened with regards to rice [supply]),” Mr. Ortiz-Luis said.
Also sought for comment, president George T. Barcelon of the Philippine Chamber of Commerce, Inc. (PCCI) said in a phone interview on Nov. 16, “He (Mr. Duterte) wants to fast-track a lot of things. But there is a limited number of managerial talents that he can rely on.”
“Yes, he relies on the military, and he is comfortable with them. There’s nothing wrong with that. On our side, we just look forward — that many of these military men are disciplined and that they follow orders. But like in any endeavor, for them to fast-track things may not (turn out) that fast. We hope that the private sector would be consulted in lieu with this Bureau of Customs, all of these things,” he added.
Mr. Barcelon said there must be an order from the President “as to the timeline of accomplishment goals of each agency, so that he can measure its success or behaviors.”
“Each agency can have its targets, like for the DTI (Department of Trade and Industry), it can have its targets on how (much) more percent(age) of foreign direct investments we can get, and of course targeting what country, what sectors,” Mr. Barcelon said.
Mr. Ortiz-Luis cited the President’s tough stance against corruption has helped improve bureaucracy.
“The perception of doing business in the Philippines has become more legitimate. Hindi pwede ang ayusan. Malaking bagay ‘yun. (No fixing allowed. That’s a big [improvement].) Now, even those na malakas (who are influential) have to follow the procedure,” Mr. Ortiz-Luis said.
Mr. Aboitiz called the President’s leadership “refreshing,” saying this helped the government push through with much needed reforms, such as the rehabilitation of top tourist destination Boracay from April to October 2018.
“This ‘action’ style of the President is really something that for me is refreshing rather than people talking, saying they are worried about certain effects and what people will say, it’s action right away. To my mind, it’s effective,” Mr. Aboitiz said.
OTHER AREAS OF GROWTH
Federation of Philippine Industries Chairman Jesus L. Arranza emphasized the need to address the perceived extra-judicial killings in the country so as not to scare off potential investors.
“Who the perpetrators of these (crimes) are should be looked into by the police seriously because it might affect the influx of investors in the country, for who would like to come to the Philippines, establish a business, and only to be killed after,” Mr. Arranza said in a phone interview.
In November, United Auctioneers, Inc. CEO and Foton Philippines Chairman Dominic L. Sytin was shot dead in front of a hotel in Subic.
Mr. Arranza also said there is much to be done in improving ease of doing business in the country.
“In the ease of doing business, kulang pa (it’s still lacking). There is much duplication even in the seeking of business permit, construction permit. Because you have to pass from the homeowners’ association, to the barangay, and to the municipality, and to whatever place. It’s too cumbersome,” he explained.
For the remaining term of Mr. Duterte, DMCI’s Mr. Consunji said the government should consider the implementation of policies that would “facilitate and incentivize the entry of better technologies and private sector investments in the agriculture sector.”
“The contribution of the agriculture sector to the local economy has been gradually declining over the years. Our farmers need help in making their operations more efficient, competitive and sustainable,” Mr. Consunji said.
The head of the listed engineering conglomerate also recommended that the government consider pursuing joint ventures with the private sector to develop idle land assets.
“This way, they unlock the value of the properties and create structures that could benefit government employees, military personnel and law enforcement officers. We did something similar with Bonifacio Heights, the first condominium off-base housing project of the Armed Forces of the Philippines,” Mr. Consunji said.
Meanwhile, Mr. Aboitiz held out hope that the president will be able to restore peace in Mindanao through the implementation of the Bangsamoro Organic Law, which is currently scrutinized by government officials and the Moro Islamic Liberation Front.
“That’s why he’s pushed the Bangsamoro Law and I think the implementation in that is very crucial. When he was elected president I said from the beginning, if there’s one president who could bring peace to Mindanao, it’s President Duterte,” Mr. Aboitiz said.
The rest of the policies would have to be the continuation of infrastructure projects, as well as additional investments on education. For Mr. Aboitiz, the government focusing on these two aspects will help businesses improve their services in the long run.
“If government focuses on infrastructure and possibly education, they don’t have to worry about everything else. Let private sector worry about everything else. And things are going to work out very, very well.”
RANKINGS, PPP
Also sought for comment, John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines, Inc. (AmCham), said his organization is “concerned that the country is slipping in several global competitive rankings,” and calls on the administration to “increase its efforts to return to the upward momentum in these rankings that was taking place previously.”
“Perhaps the decision to disband the National Competitiveness Council, which President Macapagal-Arroyo initiated in 2007, could be reconsidered,” Mr. Forbes said in an e-mail on Nov. 22 in reply to questions. “We would appreciate learning more about how the administration plans to raise the rankings in these global indices.”
“The new director-general for the Anti-Red Tape Authority, when appointed, should move quickly to implement the new Ease of Doing Business Act, the rapid implementation of which can raise the country’s ranking in the World Bank Doing Business rating.”
On infrastructure, Mr. Forbes suggested that “solicited PPPs (Public-Private Partnership projects) have a place in the menu of different models for PPPs, along with unsolicited and hybrid.”
Then there are ROW (right of way) issues which are “slowing the start and completion of several projects,” and this needs to be addressed.
Mr. Forbes said his group “believes the private sector, with proper oversight from government regulatory agencies (CAAP or an eventual Philippine Airport Authority) can manage airports more efficiently than the government.”
AmCham “looks forward to the successful privatization” of the Ninoy Aquino International Airport (NAIA), as well as the Clark, Davao, Panglao, and other airports, Mr. Forbes said.
He also cited delays in approvals by the Energy Regulatory Commission (ERC) of new generation facilities.
“More plants need to commence construction in 2019 to avoid brownouts in Luzon in 2022 and 2023. Construction of the interconnection of the Mindanao grid to the rest of the country, which has recently started, has long been needed and was recommended in Arangkada in 2010,” Mr. Forbes said.
On the other hand, “the example of the government’s firmness in the Boracay cleanup should cascade across the country,” Mr. Forbes said. This is one takeoff point for the government to set a direction in the remainder of Mr. Duterte’s term.
European Chamber of Commerce of the Philippines (ECCP) president Guenter Taus, in a phone interview on Nov. 19, said the “President is certainly choosing to get a handle on criminality to a certain extent.”
But he also pointed out, “We do find it increasingly more difficult to sell the Philippines in Europe because we create a lot of uncertainties (with)… the current policies….”
He attributed this sentiment “to a number of (Mr. Duterte’s) rhetoric like, ‘We don’t need Europe. We don’t need this. We don’t need that.’ So, that certainly leaves us with uncertainties.”
“Are we now entitled to incentives? Are incentives being withdrawn? Or what are you looking at?…”
With regards to BBB projects, “I don’t think it is doable,” Mr. Taus said. “For the last three years, we haven’t seen much of the progress in the speed that it’s supposed to be. So certainly, they will not be able to finish that in the next three years. Therefore, it remains to be seen what happens in the next administration whether they will continue this program or not.”
He added: “If all of these “Build, Build, Build” projects would materialize, certainly we will run out of our capacity because, again, up to this point in time, we are still pushing for the liberalization of the construction industry. Still, it hasn’t happened, even though we have been working on this for the last six years. Despite all the assurances, still it hasn’t happened.”
In a phone interview on Nov. 17, British Chamber of Commerce Philippines (BCCP) chairman Chris Nelson said, “We want to see the Foreign Investment Negative List even more relaxed.” He also looks forward to the “promulgation of the implementing rules” on such recent legislation as the Ease of Doing Business and Efficient Government Service Delivery Act or Republic Act No. 11032.
“We understand the challenges, but we want to see the quicker implementation of these projects,” he also said, referring to Mr. Duterte’s “Build, Build, Build” infrastructure program.

BPI seals IT services agreement with IBM

January 25, 2019 | 12:03 am

BANK of the Philippine Islands inked a $260-million agreement with IBM. — *BW FILE PHOTO*

BANK OF THE Philippine Islands (BPI) signed a $260-million services agreement with IBM, providing the lender information technology (IT) infrastructure services in line with its digital transformation agenda.
In a statement on Thursday, the multinational IT firm said it tied up with the Ayala-led bank through the $260-million multi-year services agreement.
The extended partnership deal will enable BPI to leverage on the IT infrastructure and hybrid cloud management services provided by IBM to “maintain an agile and compliant IT environment.”
“The agreement will help to achieve some of the bank’s digital transformation goals which include the continual upgrades for bank branches with new technology as well as other financial services apps for customers,” the statement read.
In particular, the provided services of IBM will have a “born in the cloud experiences” in support of BPI’s hybrid cloud strategy, including Infrastructure as Code and an open consumption of application programming interface.
The hybrid cloud model is a computing environment that uses an in-house private cloud in tandem with a third-party public cloud, which can be used for non-sensitive operations.
IBM and BPI also designed an IT environment that uses the bank’s data to “create compelling customer applications and services.”
“The rapidly changing business environment requires us to accelerate the pace of our digital transformation. We need to continue to be responsive to an ever-changing market,” BPI President and Chief Executive Officer Cezar P. Consing was quoted as saying in the statement.
“Our extended agreement with IBM will help us become more agile in introducing innovations and transforming how we do things in BPI.”
Last year, BPI raised P50 billion from a stock rights offer, listing 599.7 million new common shares at the local bourse priced at P89.50 apiece. The raised funds will be used to support the bank’s digitalization push among others.
Meanwhile, IBM Global Technology Services Senior Vice-President Martin Jetter said lenders like BPI are transforming their businesses with advanced services as a response to the growing needs of its connected consumers.
“We are excited about helping one of the leading banks in South East Asia power its core IT infrastructure and bring new digital experiences with IBM Cloud in a secure and open environment to help prepare BPI for the future of banking,” Mr. Jetter said.
BPI partnered with IBM in 2013 for the bank’s IT operations.
BPI shares closed at P92.80 apiece on Thursday, gaining P1.90 or 2.09%. — Karl Angelo N. Vidal

China Railway unit tapped to build $3.7-billion Makati City subway

January 25, 2019 | 12:03 am

PHILIPPINE Infradev Holdings, Inc. (formerly IRC Properties, Inc.) has inked a deal with China Civil Engineering Construction Corp. (CCECC) for its $3.7-billion Makati City Subway Project.
In a disclosure to the stock exchange on Thursday, the Antonio L. Tiu-led firm said it entered a memorandum of agreement (MoA) with the Chinese firm. The two companies target to complete the due diligence process by May 31 before its execution of the investment agreement.
“The Company… has executed a binding MoA with CCECC, a 100% owned subsidiary of China Railway Construction Corp., in connection with the Makati City Subway PPP (public-private partnership) Project of the Company,” it said.
The MoA indicated CCECC will invest $300 million to $350 million in Philippine Infradev or its subsidiary; and undertake the engineering, procurement and construction works for the Makati Subway Project.
It will also “provide completion performance guarantee for the completion of the Makati Subway Project… subject to, among others, the completion of a financial, legal and technical due diligence.”
Last December, Philippine Infradev started preparatory works on the Makati Subway Project, which aims to build a 10-kilometer intracity railway system in the business district.
The Makati City government awarded the project to the consortium of Philippine Infradev and Chinese firms Greenland Holdings Group, Jiangsu Provincial Construction Group Co. Ltd., Holdings Ltd. and China Harbour Engineering Company Ltd. The 30-year concession agreement is scheduled to be signed this year.
The railway is targeted to open by 2025, and will connect Ayala Avenue to Ospital ng Makati through an underground mass transport system. It is expected to benefit around 700,000 passengers every day.
Shares in Philippine Infradev jumped 8% or 18 centavos to close at P2.42 each. — Denise A. Valdez

Mining jobs slumping amid tax uncertainty

January 25, 2019 | 12:03 am

By Reicelene Joy N. Ignacio
EMPLOYMENT in the mining and quarrying sector bounced back slightly in 2018 to 206,000 but remains below its 2015 levels, the Department of Labor and Employment (DoLE) said.
DoLE’s Bureau of Labor and Employment (BLE) Director Dominique R. Tutay said that the mining and quarrying sector employed 235,000 in 2015, which dropped to 219,000 in 2016. In 2017, the total declined to 203,000.
“Employment used to gain 50,000 a year on a net basis,” Ms. Tutay told BusinessWorld of the employment slowdown in the sector, in an interview in early January.
The Chamber of Mines of the Philippines (CoMP) said that it hopes the national government will address key issues that are weighing down the industry, including proposals for higher mining taxes as well as the ban on open-pit mining, to increase job opportunities in the sector.
“It is clear that this development is brought about mainly by the policy issues confronting the industry, including the moratorium on new mining permits and the ban on open pit mining,” Rocky G. Dimaculangan, Vice President for Communications of CoMP, told BusinessWorld in an e-mail.
“The sooner these issues are resolved, the better are the chances for the industry to recover so that it can generate more employment opportunities and contribute further to the socio-economic development of our nation,” Mr. Dimaculangan added.
According to Mr. Dimaculangan, “the bigger cause for concern for the Philippine mining industry is the ongoing moratorium on mining permits under Executive Order (EO) 79 and the ban on open pit mining under DENR (Department of Environment and Natural Resources) Administrative Order 2018-19. EO 79 states that the moratorium will not be lifted until a new mining tax regime is legislated, but despite the doubling of mining excise tax from 2% to 4% of gross output, the moratorium remains in place.”
The Department of Mining, Metallurgical, and Materials Engineering (DMMME) of the University of the Philippines Diliman said it has been a decline in the number of enrollees, though it added that some outside factors like the K to 12 program may have also been a factor.
“Employment has gone down but for our graduates from 2012 to 2016, local employment is maybe 60% with 5% continuing to graduate school and the rest going abroad. Where previous data show our graduates staying in the mining industry, now some have gone on to related areas such as construction, etc,” Eligia D. Clemente, DMMME Assistant Chair and Professor, said in an e-mail.
“The decline in student population for 2016 and 2017 was also affected by the shift to K to 12. All courses had low enrollment so the industry effect was probably masked,” Ms. Clemente said.
The Commission on Higher Education (CHED) said that despite the decline in employment opportunities in the Philippines for mining program graduates, universities should continue offering such degrees as there is still global demand for these professionals.
“There is a global demand so there is no reason to stop these programs,” CHED Commissioner Prospero E. De Vera III said in a chat message.
Mr. De Vera pointed out that “the problem is not the oversupply of mining and metallurgical engineers but oversupply from other programs.”
Mr. De Vera also said that “mining and metallurgical engineering are not very glamorous programs” as compared with industrial engineering, civil engineering, and electrical and electronics engineering (EEE).
“The enrollment is low and there are fewer HEIs (higher education institutes) offering these programs because you need geology courses in these programs and very few universities have good geology programs outside of UP,” Mr. De Vera said.
“As far as I know, the supply side for mining and metallurgical engineering has always been low compared to the demand side. That is the reason PNOC EC (Philippine National Oil Company Exploration Corporation) in 2017 gave P250 million to UP to produce more engineers and geologists because of this problem,” Mr. De Vera said.
Mr. De Vera is the former Vice President for Public Affairs of the UP System, prior to his designation as CHED Commissioner.
Ms. Clemente, meanwhile, said, that it is still UP’s aim to produce graduates that will work for the nation, and hopes that the mining sector’s problems will be resolved.
“We are working with the industry to address issues on social and environmental impacts and we have a very straight-thinking DENR Secretary now,” Ms. Clemente said.
Ms. Clemente also noted that some of the graduates proceed to take up Master in Environmental Engineering which lead them to have concerns on rehabilitation inherent in mining operations.
“Our primary target is to produce graduates for the Industry as well as federal for our graduate programs,” Ms. Clemente said.
St. Louis University (SLU), in Baguio, also a producer of mining graduates, saw a decline in their number of enrollees for the program.
“We started graduating mining students in 2013. Statistically, we have graduated 317 students with 284 passing the licensure exam from 2013 to date,” SLU Mining Engineering Department Head and Professor Romeo M. Santos said in an e-mail.
“Most of our graduates are working locally with about 75% employed either in mining companies, academe, and government agencies (Environmental Management Bureau, Mines and Geosciences Bureau, DENR, Department of Energy). About 3% are employed abroad in the mining industry. Our enrollees have declined 50% since the crackdown on illegal and irresponsible mining companies,” Mr. Santos added.
Mr. Santos said that mining industry is not dying due to stable demand for mining products.
Mapua University also reported a decline in the number of graduates related to mining in the last few years.
According to data provided by the Mapua University Registrar through e-mail, the institution produced 15 graduates in geology, geological science and engineering, as well as geological engineering and geology courses in 2013.
This number dropped to eight graduates in 2014, but rebounded to 14 in 2015; 27 in 2016; and 47 in 2017. There were 10 graduates in the first quarter of 2018.
“There is room in the Philippines for mining courses. It is not a dying industry. For as long as people need metals, cement, cosmetics, cars, cellphones, etc, mining will always be active,” Mr. Santos said.
Meanwhile, the BLE’s Ms. Tutay said that mining graduates can venture into various engineering careers.
“You will always find a niche in the other related sectors. So for instance, you can go into manufacturing, shipbuilding, construction,” Ms. Tutay said.
“Mining skills have an overlap in metallurgy and other industries,” Ms. Tutay added.

Initiatives for labor begun on Duterte’s watch but more reforms needed

January 25, 2019 | 12:02 am

By Gillian M. Cortez
HALFWAY into President Rodrigo R. Duterte’s administration, there have been notable measures in behalf of labor that have been signed into law. Perhaps in no other administration have there been such significant developments for the benefit of the work force.
Yet for all that, it is Mr. Duterte’s election-campaign promise to enforce laws against “endo” (end of contractualization) that remains to be resolved to the satisfaction of all stakeholders.
MONITORING ESTABLISHMENTS
On May 1 last year, Mr. Duterte issued Executive Order (EO) No. 51, prohibiting job contracting and subcontracting, in accordance with Article 106 of the Labor Code of the Philippines. Section 2 of the EO states that contracting or subcontracting activities that “circumvent the workers’ right to security of tenure, self-organization and collective bargaining” are strictly banned.
This was promptly followed by the Department of Labor and Employment’s monitoring of establishments and flagging those that continued job contracting.
But labor groups and other observers say Mr. Duterte needs to go further than his EO, while business leaders caution against a sweeping “endo” campaign that may affect small enterprises as well as the demand for skills that are transitory in character.
Sought for comment, professor Domingo T. Añonuevo of De la Salle University’s College of Law said, “Labor contracting continues to hurt almost 2 million workers in the private sector and over 600,000 in the public sector, who generally suffer from low wages, poor working conditions, and lack of job security. Beyond the Duterte administration’s rhetoric, nothing has changed as far as the legal framework and the government policy regarding contractualization.”
Alan A. Tanjusay, spokesperson of the Associated Labor Unions-Trade Union Congress of the Philippines, said for his part, “We still believe Mr. Duterte can do more for workers and we see no obstruction for him in doing what is right for workers.”
On the other hand, president Leody de Guzman of the Bukluran ng Manggagawang Pilipino said, “We are not expecting a drastic change. We do not expect a delivery of the promise that contractualization must stop.”
President George T. Barcelon of the Philippine Chamber of Commerce and Industry (PCCI), when sought for comment, qualified that “‘Endo’ (that is, job contracting and subcontracting) is really illegal, but he (Mr. Duterte) mistook ‘endo’ for contractualization as a whole.”
After Mr. Duterte’s EO 51, the measure widely anticipated now is Senate Bill No. 1826 or the Security of Tenure bill, the House version of which was approved in January last year.
Last October, PCCI issued a position paper on the Senate bill, together with the Philippine Exporters Confederation Inc. and the Employers Confederation of the Philippines (ECoP). Among the key points of the paper are the impracticality of abolishing legitimate contractualization, saying “It is costly for the enterprise to maintain workers beyond what it needs.” It also had a say in project-based and seasonal employment being outlawed, adding that this will hurt Micro, Small, and Medium Enterprises (MSMEs) the most. The position paper points that current labor laws are “MSME-friendly.” This was a sector Mr. Duterte expressed support for during recent meetings with the ASEAN and in his State of the Nation Address (SONA) last year.
COMPLIANCE
Apart from that bill currently under deliberation, “(o)n the side of the employers, there has been a spike in the desire to ensure full and strict compliance with the provisions of the Labor Code,” observed professor Teresa S. Villanueva-Tiansay of the Ateneo de Manila, “more particularly on the proper computation of statutory benefits and (on) legitimate contracting arrangements, when applicable.”
Also noteworthy is the enactment of new labor laws on occupational safety, expanded maternity leave, and the introduction of bereavement leave, among other measures that some analysts regard with some concern as being “progressive” or “welfarist.”
“The passage into law of the Occupational Safety and Health bill is another case in point that Mr. Duterte can do more for workers,” Mr. Tanjusay said. (But ECoP acting president Sergio R. Ortiz-Lewis Jr. noted that “MSMEs will be affected by the penalty” in that law).
Yet despite these accomplishments, spokesperson Renato B. Magtubo of the Nagkaisa labor coalition said, “It’s hard to say that it’s the Executive department (that) pushed for those changes….His (Mr. Duterte’s) main promises were to address contractualization and regional minimum wage fixing, so in that sense, he hasn’t really accomplished both of those.”
But still, “Mr. Duterte’s executive ratification of ILO (International Labour Organization) Convention No. 151 (on the right of workers to organize) was a concrete signal for labor organizations, both public and private, to take Mr. Duterte seriously and engage him in social dialogue,” Mr. Tanjusay said.
Also sought for comment, professor Melisa R. Serrano of the University of the Philippines-School of Labor and Industrial Relations said, “In fairness to him (Mr. Duterte), he listens to the labor sector. There’s a lot of criticism as you can see, but he’s open to dialogue.”
She also noted that, “You have a very strong trade union movement that is organizing and pressuring the government to provide more regulations on the issues of contractualization.”
Ms. Tiansay also observed, “More and more employees find the courage to lodge formal complaints against erring employers, even when the employers involved are the larger and influential companies in the country.”
AREAS FOR IMPROVEMENT
Overall, analysts are optimistic about the country’s labor prospects while also citing areas for improvement. In last year’s Global Competitiveness Index by the World Economic Forum, the Philippines highlighted its advantages in terms of market size, financial systems, and, notably, business dynamism and the labor market.
Executive director Francisco Alcuaz Jr. of the Makati Business Club said his group supports government policies “that will boost productivity and job creation amid an increasingly global economy, and our readiness for the economy and jobs of the future.”
In terms of further strengthening the work force, “(t)here should be investment in human skills so more jobs can be created and given. Underemployment is still high so there should be programs to train people,” Mr. Ortiz-Luis said.
“There is a lack of managerial talent and this is something that should be looked into.”
Ms. Tiansay believes the Duterte administration can help forge a stronger partnership between business and labor. “By the end of this administration, you have an empowered work force, on the one hand, and compliant-conscious business owners and managers, on the other, which would hopefully create a stronger and more harmonious employer-employee relationship in the country.”

The economic agenda beyond tax reform

January 25, 2019 | 12:02 am

THE COMPREHENSIVE tax reform program is arguably most contentious economic policy of the Duterte administration.
With the biggest tax reform package already implemented, and with more advancing through the legislative mill, the question is: what’s next?
The tax reform program is the single largest measure that the economic managers, with the Department of Finance (DoF) at the forefront, are pushing for. It aims to make the tax system more equitable and shore up funds to fuel the administration’s key policies such as infrastructure, regional development, and human capital development. The program consists of five tranches, which have all been proposed to Congress as of July 2018.
We saw the first package — the Tax Reform for Acceleration and Inclusion (TRAIN) law — implemented at the start of 2018, with significant revenues already being generated from this measure.
The government’s tax effort, or the overall tax revenues relative to the economy, stood at 15.2% in the first nine months of the 2018 — the highest nine-month tax effort ever recorded — from 14.5% in the same period the prior year. The DoF said 0.4 percentage point of the improvement was due to TRAIN, while 0.3 percentage points was attributable to tax administration improvements.
However, the TRAIN law is still regarded a pain for Filipinos despite lowering income taxes for salary workers as its accompanying social mitigating measures weren’t implemented satisfactorily, or so critics have said.
The second package, known as the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO), has also seen resistance. Although the bills are seen to ease the corproate tax burden on 90,000 small and medium enterprises, over a hundred thousand micro businesses, and even a thousand more large corporations, there is still strong opposition to the change in the fiscal incentives structure, especially from economic zone locators.
President Rodrigo R. Duterte asked Congress to fast-track the bill in the hopes it would be enacted before the end of 2018. However, it fell short of its target as Congress prioritized the 2019 budget that faced delays in the House. The Senate and the Finance department already conceded and said they would try to push the bill again early this year.
There is also the tax amnesty program, an attached follow-up measure to TRAIN, that seeks to clean up the tax base. The bill is currently undergoing bicameral conference committee discussions as of this writing, and will be prioritized by Congress so it can be implemented this year.
Other tax reform packages include higher excise taxes for mining, alcohol, and tobacco; a universal property valuation system; and the rationalization in capital income and financial taxes. All have hurdled the lower chamber of Congress as of December and are now up for Senate committee-level talks.
The DoF initially set an end-2018 target to have all of the remaining tax packages out of the legislative mill, or ahead of the campaign period for the 2019 mid-term polls. Even with the tight schedule in Congress as they push for their other legislative priorities, the DoF remains optimistic that the tax packages after the TRABAHO bill can be approved before the start of the 18^th Congress, noting that the remaining bills are relatively easier to discuss.
But the tax measures still face some risk as such initiatives are usually unpopular during the election season, with legislators focused on campaigning. This leaves them a small window to approve all measures before the 17^th Congress concludes mid-year.
WHAT’S NEXT?
Still, when the government eventually gets its tax reform program in place, what’s next for the administration’s economic agenda?
The economic team has been going around the country to consult with micro, small and medium enterprises (MSMEs) on their concerns and recommendations through their annual Sulong Pilipinas workshop. Tax reform, infrastructure, a national identification system, and the ease of doing business were among the top recommendations by businesses that were delivered by the Duterte administration since the Sulong began in 2016.
In 2018, it was the first time that the Sulong Pilipinas went outside Metro Manila to places such as Cebu, La Union, Clark, and Davao. The top recommendation across all of them was improving agricultural productivity through the use of new technology, raising farmers’ incomes, improving access to finance, tax incentives, and better farm education.
“The priority areas coming out of the Sulong process is a clear message from the SMEs in the regions that they want agriculture productivity to be a high priority for the EDC (Economic Development Cluster),” Finance Assistant Secretary Antonio G. Lambino II said in an interview.
The DoF chairs the EDC, with members including the Agriculture, Trade, Budget, Public Works, Transportation, Science, and Tourism departments, as well as the Department of Interior and Local Government and the National Economic and Development Authority.
“So we’re going to present outputs of the Sulong to the Cabinet, and start brainstorming among the agencies kung anong puwedeng gawing agenda,” he added. “But I think the next possible frontier is land use and titling.”
“Kasi ‘yung titling, may problema ‘yung sistema natin in the sense that the collective titles given in the land reform program, they do not incentivize productivity. So the one of the recommendations is to individualize those land titles so there’s an incentive to be more productive and be more profitable,” Mr. Lambino said.
Aside from having collective land titles, the land reform program also chopped up farms into smaller pieces of agricultural land, which disabled them to have economies of scale. This means the cost of operating and maintaining the land outweighs the gains.
SUPPORT FOR AGRICULTURE
Agriculture has long been a drag to the economy.
From a 1.5% growth rate in the first quarter of 2018, it slowed to a measly 0.2% in the April-May period and then contracted by 0.4% in the third quarter. The sector accounts for about 10% of the country’s gross domestic product (GDP). It also employs about 10 million, or 25% of the working population.
The sector’s weak performance was largely blamed by the government for the economy’s consequent lackluster growth as it caused food shortages and, in turn, pushed up prices. Headline inflation had continuously accelerated since January 2018 until it reached a peak of 6.7% in September and October, which was the fastest pace in nine years. It has since moderated to 6% in November and 5.1% in December.
“I think really if you look at the GDP numbers, manufacturing, there’s momentum there. Services has had momentum for quite a while. It’s really agriculture — how to get the fishing industry to adopt more sustainable practices, how to get the rice imports and local production balances, how to get it right to support farmers who want to move to higher value crops or to diversify cropping. It’s how to get them where they want to go,” Mr. Lambino said.
“After decades of doing something over and over again year in, year out, it’s very hard to shift and to do things differently so we have to work with a lot of agencies — not just the agriculture, but also technology and training-related agencies, and the whole support ecology around those shifts that need to happen,” he added.
A 2018 study from think tank Philippine Institute for Development Studies (PIDS) also pointed out that the country’s uncompetitiveness in agriculture is due to the lack of mechanization, technical skills, financial literacy, and access to cheap credit, which hinders farmers to diversify their crops to those of higher value. It said the availability and accessibility of irrigation is also a challenge, as well as the lack of postproduction facilities and related infrastructure.
Mr. Lambino said the government is working to promote agribusiness through the TRABAHO bill, which gives the sector an additional two years of fiscal incentives.
Another initiative to help the agriculture industry is the rice tariffication bill, which is already up for signing by President Rodrigo R. Duterte. The bill mainly imposes tariffs on imported rice, doing away with an import quota. It also features a P10-billion rice fund to finance farmers’ mechanical equipment, propagate and promote inbred rice seeds, establish a credit facility, and implement further skill development.
“I guess we look at ways by which producers can capture a little more of the value chain, because they are being left out. After the farmgate — when they no longer control the product — they no longer earn. So how do we get them to capture more of that value chain?” Mr. Lambino said, partly in Filipino.
Mr. Duterte has also clamped down on agriculture choke points by issuing administrative orders and memorandum orders to facilitate and boost the importation of agricultural products, remove non-tariff barriers, liberalize permits of food traders, close the gap between farmgate and retail prices, and have a close watch on market prices.
“The DoF pushes for reforms that are evidence-based and anchored on AmBisyon Natin 2040 — the collective long-term vision, and aspirations of Filipinos for themselves and for the country in the next 22 years,” Mr. Lambino said.
BOOSTING SPENDING
While the economic team, led by the DoF, will push for the development of the agriculture sector, the Department of Budget and Management (DBM) said it targets to ensure that delivering projects, from allotments to actual completion, will be efficient and transparent.
The 2019 budget marks the first time the government will use a cash-based budgeting system following years of using obligation-based spending plans. This mandates that the awarding of contracts, implementation, and disbursement, should occur in one fiscal year.
“Under the old system, agencies may obligate their budget for up to two years. So it was common practice for agencies to select a contractor up to the end of year two; the implementation of the project will be done in year three, and with payment only being disbursed in year four,” Budget Secretary Benjamin E. Diokno said in an e-mailed response to questions.
“Clearly, this old system led to a slowdown in public service delivery. Worse, the ‘good’ contractors who have better alternatives are discouraged from doing business with the government,” he added.
A common misconception about new spending plan is that allotments for projects are reduced and multi-year projects are not allowed. But under the system, allotments and disbursements are simply staggered for multiple years, depending on the project, which seeks to address how in the past, some line agencies got their programmed budgets every year but only spent a portion of the amount — causing underspending.
Under the cash-based system, government agencies can only ask for funds that they are capable of disbursing in a given year. Tracking of agencies’ spending performance is also easier with the new setup.
“Cash-based budgeting is our best response to the slow, inefficient, and opaque budgeting system that has hindered the government for decades. The problems of our budgeting system are encapsulated with recent experiences of underspending, defined as the deviation of actual spending from program spending, leading to a slowdown in the delivery of public services and implementation and completion of projects,” Mr. Diokno said.
About three-fourths of the 36 Organization for Economic Co-operation and Development high-income member countries already use cash-based budgets.
The DBM seeks to institutionalize the budget through the Budget Reform Bill to have it in effect in every administration.
INFRASTRUCTURE
The government also remains focused on bridging the infrastructure gap and fast-tracking projects further to complete as much during Mr. Duterte’s term, Mr. Diokno said.
Among large-scale projects that the government will begin construction in 2019 include: the Metro Manila Subway Project Phase 1 (Quirino Highway-North Avenue), the Philippine National Railways (PNR) North 2 (Malolos-Clark); PNR South Commuter Line (Tutuban-Calamba); PNR South Long Haul (Manila-Bicol); the Cavite Industrial Area Flood Management Project; Subic-Clark Railway Project; Ambal-Sinuay River and Rio Grande de Mindanao River Flood Control Projects, and the Mindanao Rail Project Phase 1 (Tagum Davao Digos Segment).
“Infrastructure projects follow an ‘S curve.’ There is some gestation period with the feasibility studies, detailed engineering design, and the other stages of project preparation. Progress accelerates afterwards with construction until the said projects are completed. Finally, the pace of implementation tapers off once it reaches its maximum pace,” said Mr. Diokno. — Elijah Joseph C. Tubayan

What to see this week

January 25, 2019 | 12:02 am

6 films to see on the week of January 25 – January 31, 2019

The Kid Who Would be King

AFTER Alex comes across a mythical sword in a stone, he is tasked to unite his friends and enemies to form a band of knights, and together with Merlin the wizard, they take on the wicked enchantress Morgana. Directed by Joe Cornish, the film stars Louis Ashbourne Serkis, Tom Taylor, Patrick Stewart, Rebecca Ferguson, and Rhianna Dorris. The Wrap’s Monica Castillo writes, “At times, it can feel like the movie doesn’t trust its younger audiences’ ability to follow the story: The script dumbs down the lines of dialogue, explaining everything even as it happens onscreen. The violence is tame and likely crafted with a PG rating in mind. Rarely do any of the battle sequences featuring large broadswords feel very dangerous at all, yet the film’s offenses are never so egregious as to wear down the viewer completely.” Rotten Tomatoes gives it an 88% rating.
MTRCB Rating: PG

The Possession of Hannah Grace

WHEN Megan Reed delivers a disfigured cadaver to the morgue during her graveyard shift, she begins to experience terrifying visions and suspects that the corpse may be possessed by a demon. Directed by Diederick Van Rooijen, the film stars Stana Katic, Shay Mitchell, Grey Damon, Louis Herthum, and James A. Watson, Jr. Hollywood Reporter’s Frank Scheck writes, “Mitchell delivers a strong turn as the spunky heroine, effectively conveying both her character’s physical strength and emotional vulnerability. And comedian Nick Thune has some good moments as a friendly ambulance driver who can relate to Megan’s addiction issues. But their efforts are not enough to make this hopelessly derivative horror film anything other than forgettable.” Rotten Tomatoes gives it a 17% rating.
MTRCB Rating: R-13

The Upside

INSPIRED by a true story, the movie follows an ex-convict who develops a friendship with a paralyzed billionaire. Directed by Neil Burger, the film stars Kevin Hart, Bryan Cranston, and Nicole Kidman. Rolling Stone’s David Fear writes, “And even though you know The Upside is not the kind of movie that will untangle stuff as complicated as class and race despite the storyline, it’s still a disappointment to see the movie treat those elements with such superficiality.” Rotten Tomatoes gives it a 39% rating.
MTRCB Rating: PG

BTS World Tour — Love Yourself in Seoul

THE documentary takes place during the pop group BTS’s concerts on Aug. 25 and 26, 2018 at Seoul Olympic Stadium in Seoul, South Korea, during the group’s Love Yourself Tour.
MTRCB Rating: PG

Tag Along: The Devil Fish

UNAWARE that two students are documenting the process, a medium performs an exorcism on a possessed man. But then the students accidentally release the devil fish demon possessing the man into the world and it is up to them and the medium to send the demon back to where it came from. Directed by David Chuang, the film stars Joe Shu-Wei Chang, Jen-Shuo Cheng, and Vivian Hsu.
MTRCB Rating: R-13

Born Beautiful

AFTER the death of her best friend and yet another friend, Barbs decides to live a new life as a straight man named Bobby. Her new life leads her to meet Trisha’s ex-boyfriend Michaelangelo, then her ex-boyfriend Greg, then to a woman who claims that she is pregnant with Bobby’s child. Directed by Perci Italan, this spin-off from the 2016 comedy-drama Die Beautiful stars Paolo Ballesteros, Martin Del Rosario, Akihiro Blanco, Kiko Matos, and Chai Fonacier.
MTRCB Rating: R-16

IC allows Nat Re to continue operations for two years

January 25, 2019 | 12:02 am

THE NATIONAL Reinsurance Corp. of the Philippines (Nat Re) was allowed by the Insurance Commission (IC) to continue its operations for another two years.
In a disclosure to the local bourse on Thursday, Nat Re said that the commission has renewed its certificate of authority, which will be valid until 2021.
“The renewed certificate…reaffirms the financial stability of the country’s authorized professional reinsurance company and its stability to continue to serve and pay claims to its client companies,” Nat Re said.
Earlier this month, Nat Re was given a financial strength rating of “PRS A” by the Philippine Rating Services Corp. (PhilRatings), two notches below the highest grade.
A PRS A rating means that the country’s sole domestic reinsurer has a “strong” financial security characteristics. However, it is “somewhat more likely” to be affected by unfavorable market conditions compared with higher-rated insurers.
Despite this, PhilRatings said Nat Re’s profitability remains to be volatile given the “inconstant growth across business lines and higher-than-expected loss and expense ratios.”
As of the third quarter of last year, Nat Re said its net worth was already well beyond the P3-billion minimum regulatory requirement for end-2022.
Nat Re was incorporated on June 7, 1978 as a professional reinsurance firm providing life and non-life reinsurance to the Philippines as well as in neighboring countries.
Nat Re shares stood at P1.03 apiece yesterday, up eight centavos or 8.42% from the previous close. — K.A.N. Vidal

PSE to create IT subsidiary

January 25, 2019 | 12:02 am

THE Philippine Stock Exchange, Inc. (PSE) plans to incorporate a firm that will offer information technology (IT) services and develop software solutions.
In a disclosure posted on Wednesday, the bourse operator said its board of directors has approved the incorporation of the IT firm. It will have an authorized capital stock of P100 million, half of which will be subscribed and paid-up.
The PSE did not provide further details when asked for comment.
The company last year also established a new subsidiary that will handle its real estate assets called PSE Realty, Inc. PSE’s real estate assets include the office spaces in Ayala Tower One in Makati. The company moved out of Makati in 2018 to the new PSE tower along Bonifacio High Street in Bonifacio Global City.
Prior to the move, the PSE sold its old offices in the PSE Tektite Building in Ortigas Center to its developer, Philippine Realty Holdings Corp. for P257.16 million.
PSE’s net income attributable to the parent dropped by 49% to P256.62 million in the first nine months of 2018, due to higher expenses incurred during the period.
Shares in PSE jumped 3.68% or P6.60 to close at P186 each at the stock exchange on Thursday. — Arra B. Francia

A vote for peace

January 25, 2019 | 12:01 am

PASS the Bangsamoro law: Check.
Next on the government’s to-do list: Ensure ratification.
“The establishment of the Bangsamoro Autonomous Region and the determination of its territorial jurisdiction shall take effect upon ratification of this Organic Law by majority of the votes cast in a plebiscite…,” reads Section 1, Article 15 of the Bangsamoro Organic Law (BOL) that is marked as signed by President Rodrigo R. Duterte on July 27, 2018.
There is no categorical provision in the 109-page BOL as to an alternative plan should a ‘No’ vote win in the plebiscite, which is scheduled on two dates: Jan. 21 within the Autonomous Region in Muslim Mindanao (ARMM), Cotabato City, and Isabela City; and Feb. 6 for Lanao del Norte and Cotabato, including towns and barangays with approved petitions to join the Bangsamoro ARMM (BARMM).
“Mag-ampo lang ta nga makalusot. Og dili, laing problema na pud na. (Let’s just pray that it will manage to get passed. If not, then that will be another problem),” Mr. Duterte said in a speech last Sept. 21 as he visited landslide victims in Naga City, Cebu.
The government is not exactly relying on divine intervention as a strategy, with representatives of the Office of the Presidential Adviser on the Peace Process (OPAPP), along with the Bangsamoro Transition Commission (BTC) and the Moro Islamic Liberation Front (MILF), having been busy holding forums in different areas to explain the BOL — and ensure that it gets the people’s approval.
Various non-government organizations as well as the Moro National Liberation Front (MNLF), which was the first to sign a peace deal with the government that paved the way for the creation of the Autonomous Region in Muslim Mindanao (ARMM), have also been making the rounds to explain and rally support for the BOL.
“It is very important for us to know the intricacies of the law to reach better understanding,” said Undersecretary Nabil A. Tan, chair of the government Implementing Peace Panel for Bangsamoro Peace Accords, during one of the forums held in Sulu, Jolo on Nov. 18.
Amina Rasul-Bernardo, president of the nonprofit policy and advocacy organization Philippine Center for Islam and Democracy (PCID), said the prevailing concern is not so much failing a ratification, but facing another stumbling block in the goal of strengthening and expanding the Bangsamoro region.
“While we are now looking at a plebiscite to expand the current region, and to have a stronger region of autonomy, what we worry about is that the national climate might negatively impact the voters who are outside the ARMM,” said Ms. Rasul in a Nov. 19 interview with BusinessWorld in Davao City, referring to economic issues such as inflation and the continued martial law imposition in the entire Mindanao.
“In the ARMM, we are also hearing that there are some governors who are not in favor, for example the Sulu governor who filed a case in the Supreme Court. I am confident that there is nothing unconstitutional about the BOL and that this petition will not prosper. However, internally, a campaign has to be mounted to make sure that the current ARMM remains together, that there is no diminution,” she added.
At the OPAPP forum in Sulu, Nestor Ukkoh, municipal council secretary of Jolo who represented Mayor Kerkhar Tan, expressed their appreciation of the government’s campaign.
“In order for us to have sound judgment of the BOL, there’s a need for us to understand the law, to increase the awareness and address misconceptions about the law,” he said.
ARMM Gov. Mujiv S. Hataman, meanwhile, lambasted the legal move by Sulu Gov. Abdusakar A. Tan II as politically-motivated.
“It is such a shame that it is a Moro who seeks to spoil this process all over again. We cannot allow the personal interests or anyone—especially not a Moro—to again sow discord where we so clearly need peace. We cannot allow the short-sightedness that is the politics of patronage to again wreck the progress we have made on the road to a lasting peace,” Mr. Hataman said in an Oct. 31 statement.
“We are confident that the Bangsamoro Organic Law will stand well under scrutiny and it will become the strong foundation of the peace we have been building for so long. Moros are people of peace and peace will win in the end,” he added.
The case, which questions the constitutionality of the BOL and seeks a temporary restraining order on its implementation, is pending before the country’s highest court.
TURNOVER
Meanwhile, the ARMM government, confident of the BOL’s approval, is prepared for the turnover to the Bangsamoro Transition Authority (BTA), which will be composed of 80 multi-sector representatives to be appointed by the President.
Under Article 16 of the BOL, the elected ARMM officials “shall automatically become members” of the BTC until June 30, 2019.
“ARMM has made a remarkable turnaround to become a responsive, efficient, and effective government,” said ARMM Vice- Governor Haroun Al-Rashid Lucman during the region’s 29^th, and what they celebrated as the last, anniversary event last Nov. 19.
Mr. Lucman said this year’s festivities were about “standing proud in leaving behind an ARMM” that has been “previously stigmatized as a failed experiment.”
Mr. Hataman, who is running in the May 2019 midterm elections as representative of the lone district of his hometown Basilan, is preparing for what he tags as his “last” state of the region report on Dec. 18.
ECONOMIC OPPORTUNITIES
ARMM Regional Board of Investments (BoI) chair Ishak V. Mastura said the BOL, which provides broader political and economic autonomy as well as a larger territory, will open more opportunities, particularly towards agro-industrial development.
“This is the thrust of the (ARMM) economy. What we really need is to upgrade the production as well as processing, and to go into other businesses like manufacturing and garments trading,” Mr. Mastura said in an interview with BusinessWorld in Davao City on the sidelines of a PCID forum on Transparency and Accountability in the Extractive Sector Under the Bangsamoro Organic Law.
He noted that the ARMM government and the Philippine Business for Social Progress (PBSP) has completed a guidebook on investing in ARMM, entitled Brokering Business and Investments in the Bangsamoro.
The guidebook, he said, uses the business sustainability framework with focus on community engagement.
He cited the success story of Unifrutti Philippines, which now has around 3,000 hectares of plantations within the ARMM, including former rebel strongholds.
“It’s not just the plantation workers, but the community surrounding it were given the benefit of the investment that was put up there,” Mr. Mastura said.
The ARMM-BoI head also pointed out the need to establish economic zones, such as in the island province of Tawi-Tawi, where government procedures and public services can be more easily streamlined for investors.
“I hope they (Tawi-Tawi) can comply and we can declare it and maybe they can already build their own infrastructure and attract investors in the area for their ecozone,” he said.
ISLAMIC BANKING
Another key factor in attracting external investors into what would become the Bangsamoro ARMM (BARMM), along with supporting the growth of local entrepreneurs, is the passage of the Islamic banking law.
Mindanao Development Authority (MinDA) Deputy Executive Director Romeo M. Montenegro said institutionalizing Islamic funding mechanisms will provide new financial windows, especially in conflict-affected areas not just in the BARMM but in Mindanao as a whole.
“MinDA has been sounding this off many times, as conventional banking system is risk averse to Mindanao, particularly in funding big ticket projects in Muslim areas,” Mr. Montenegro told BusinessWorld.
He noted the government’s plan to include Sukuk bonds, or bonds that comply with Islamic rules, in the banking system.
Islamic banking does not allow the imposition of interests, but lenders and borrowers can enter into joint venture mechanisms that would give the former an opportunity to earn from the financial outlay.
These bonds, Mr. Montenegro said, will provide a window for the entry of funding from key Middle East countries like Saudi Arabia, Qatar and the United Arab Emirates.
Budget and Management Secretary Benjamin E. Diokno announced in mid-Nov. that the government plans to float Shari’ah-compliant securities next year if a legal framework is established by Congress.
The House of Representatives has approved on final reading Bill 8281, An Act Providing for the Regulation and Organization of Islamic Banks, while the counterpart Senate Bill No. 668, the Philippine Islamic Financing Act , is pending. Senator Sherwin T. Gatchalian also filed on Nov. 21 Senate Bill No. 2105, which seeks to establish a regulatory framework for the development of Islamic banks in the country.
“I see no problem with HB 8281 getting merged with SB 668. The two bills complement each other and can be merged with ease,” Leyte 2^nd District Rep. Henry C. Ong, chair of the House committee on banks and financial intermediaries, said in a statement on Nov. 22.
“Parallel to that (passage of the law) is the laying of more groundwork for a Philippines’ Islamic banking roadshow in Malaysia, Indonesia, Singapore, Saudi Arabia, United Arab Emirates, Qatar, and Morocco, to name a few prospects,” Mr. Ong said.
Section 32 of the BOL’s Article 13, covering Regional Economy and Patrimony, provides that the “Bangsamoro Government and the Bangko Sentral ng Pilipinas (BSP), the Department of Finance, and the National Commission on Muslim Filipinos shall jointly promote the development of an Islamic banking and finance system, to include, among others, the establishment of a Shari’ah-compliant financial institutions.”
The BSP is tasked with determining the “type of organizational structure to be created and its composition.”
EXTREMISM
Lawyer Benedicto R. Bacani, executive director of the Cotabato City-based Institute for Autonomy and Governance, said the peace processes with both the MNLF and the MILF have “raised national consciousness on the history of Mindanao and the Moro people and the loss of sovereignty, land and identity due to colonization.”
In a speech on the “Dynamics Of Poverty, Politics And Peace: Mindanao And Beyond” delivered at the 4^th Mindanao Peace Studies Conference on November 21 in Butuan City, Mr. Bacani further said that the peace process with the MILF, the cornerstone for the BOL, “is indeed more comprehensive in recognizing the root causes” of poverty and unrest in Mindanao along with the “contemporary modes of addressing them.”
He warned, however, that “structural violence that breeds conflicts and unpeace can only be addressed in an environment where the work for social justice is thriving and social justice is being pursued at all costs.”
Ms. Rasul also said that “violent extremism” remains one of the biggest dangers confronting the region, which the BOL could help nip with the institutional changes that its provisions will establish.
“All these can only happen if the Duterte administration remains firm in its support of the new region of autonomy and the plebiscite,” she said.
MARAWI
One of the most crucial points where that support needs to be delivered is in war-torn Marawi City.
The Conflict Alert 2018 report by International Alert Philippines opens by describing 2017 as “a turning point in the magnitude of violent conflict in the Bangsamoro, amplified by the astonishing increase in conflict deaths due to the war in Marawi City and other places in Mindanao.”
“Fewer incidents produced deadlier results in contrast to previous years. The question is whether this sort of outcome will persist in the future,” it said.
At the Marawi stop of the OPAPP series of BOL forums on Nov. 24, which was undertaken in partnership with the MNLF, Commissioner Datu Omar Yasser C. Sema of the BTC stressed that participating in the BOL plebiscite will serve as the Bangsamoro people’s “new weapon” for their aspirations towards peace and self-determination. — Marifi S. Jara with Carmelito Q. Francisco and Maya M. Padillo

Where will the Bangsamoro plebiscite be held?

Autonomous Region in Muslim Mindanao
Provinces of Sulu, Tawi-Tawi, Basilan (except Isabela City), Maguindanao, and Lanao del Norte
Lanao del Norte province
The municipalities of Baloi, Munai, Nunungan, Panta, Tagoloan and Tangkal
Cotabato province:
The 39 barangays in the towns of Aleosan (3 barangays), Carmen (2), Kabacan (3), Midsayap (12), Pigkawayan (28), and Pikit (11) that voted for inclusion in the ARMM during the 2001 plebiscite.
Cotabato City, an independent component city currently under the SOCCSKSARGEN (South Cotabato-Cotabato-Sultan Kudarat-Sarangani-General Santos City) Region
Isabela City in Basilan
The Commission on Elections said that as of Nov. 27, it is reviewing more than 50 petitions filed for inclusion. The approved list is targeted for release before the end of 2018.

One-over-one line management approval

January 25, 2019 | 12:01 am

We’re thinking of raising the empowerment level of our people managers to decongest and simplify our administrative work processes and improve our labor productivity at the same time. One department manager suggests that we consider the “one-over-one” approval of employee leaves, work schedules, and other related matters. What do you think? What are the things that we should consider to make such change successful? — Yellow Submarine.
A long time ago, there was a church that patterned its religious practices after those in the early years of America. For one, the pastor was dressed in long coat and knickerbockers and the congregation was divided by gender. Men were seated on the left side of the aisle, while the women sat on the right.
One Sunday, the pastor announced a new collection system taking effect immediately. He asked the “heads of the household” to come forward and place their contributions on the altar. The men rose instantly and to the amusement of the pastor and his entire congregation, more than half of them crossed the aisle to get money from their wives.
In many organizations, there is a clear line of responsibility that separates between the minion boss and the “real boss.” The minion boss gives specific instructions and monitors how certain tasks are being done to their workers without being allowed to disburse any money. One the other hand, the “real boss” holds the purse and controls budget flow, and will not release any money without his signature, no matter how insignificant is the amount.
This takes more than a sizeable chunk of time for the “real boss” who is trapped in many administrative details and may not be able to perform important strategic functions. He can bask in self-importance using the power of the purse, without realizing that it also contributes to a lot of waste, including unnecessary waiting time for all concerned.
More than that, the minion boss is reduced to a mere paper supervisor or manager who has no authority to approve even the most insignificant task, like approving vacation or sick leave of their workers or signing for P500 in petty cash for emergency purchases.
This happens most of the time because of excessive control that has been perpetuated with no one challenging it as an obstacle to efficient people management. Probably, that is one reason why Peter Drucker (1909-2005), known as the Father of Modern Management came up with the maxim: “Most of what we call management consists of making it difficult for people to get their work done.”
Many organizations are often seen practicing excessive command-and-control that mean even trivial tasks and insignificant amounts of money must pass through several layers of management approval. This happens because of incorrect interpretations of what a management job entails. To correct this common issue, top management must empower people supervisors and managers through the implementation of a one-over-one approval.
But, what exactly is one-over-one approval? It means that a supervisor or manager must be primarily responsible in supervising his workers. Nothing more than that. However, he must be given “almost” complete authority to act as an empowered line executive as he is the only one tasked to manage, monitor, guide and evaluate the work performance of his workers.
This includes coaching the workers on how to perform better at work, train them and discipline them, when necessary. Correlated to this, the line supervisor or manager must determine the right work schedule to meet the exigencies of service and produce the best quality work, according to the company’s standards, budget and timeline.
The line supervisor or manager need not elevate matters to his boss, unless the former is on leave, on official business elsewhere or incapacitated. Another exception to this general rule is when a situation calls for a double or multiple approval like in the case of an employee seeking an extended vacation leave without pay to visit an ailing family member somewhere or to complete his graduate studies or to review for the bar examination.
If the supervisor or manager is responsible for the output of his workers, then it follows that the same supervisor or manager must be given the right authority to perform his task which includes the signing of the workers’ attendance record, approving their leave applications, processing training needs, among other related administrative concerns.
This is called “decentralization” or giving exclusive authority to a line supervisor or manager so that he can perform his task in accordance with his knowledge, ability, and independent judgment. By “independent judgment,” I mean, he’s not required to secure further approval. This approach is necessary to ensure proper training of people who are second-in-command.
Such a decentralization strategy may be limited depending on industry practice and practical application where line executives are allowed to sign each transaction in accordance with certain budgetary limits.
Increasing labor productivity and simplifying work processes are a lot easier to do if all line executives are given one-over-one responsibility. Seeing them perform such tasks as a matter of policy and practice creates a dynamic system for any organization.
ELBONOMICS: If you’re not stressed out, you’re not carrying your share of the load.

Send feedback or any workplace questions to elbonomics@gmail.com or via https://reyelbo.consulting.
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Your Weekend Guide (January 25, 2019)

January 25, 2019 | 12:01 am

A Rach Concert

PIANIST Raul Sunico, together with the Philippine Philharmonic Orchestra, will perform four piano concertos — No. 1 in F-sharp minor, op. 1, No. 2 in C minor, op. 18, No. 3 in D minor, op. 30, and No. 4 in G minor, op. 40 — by Russian composer Sergei Rachmaninoff in A Rach Concert on Jan. 26, 8 p.m., at the Main Theater of the Cultural Center of the Philippines. The concert is for the benefit of the Sunico Foundation for Arts and Technology. For tickets, contact TicketWorld (www.ticketworld.com.ph, 891-9999).

SmartKids fair

EDUCATION technology has recently made great strides in increasing students’ enthusiasm and elevating their learning experience. To have more Filipino families experience some of these technological advances, Diwa Learning Systems is bringing the 2019 Diwa Innovation Lab to this year’s SmartKids Asia Philippines. SmartKids Asia Philippines will be held from Jan. 26 to 27 at Halls 1 and 2 of the SMX Convention Center Manila. Families attending the fair can visit the Diwa booth for a chance to learn more about these technologies, one of which is robotics. To learn more about Diwa’s offerings, visit www.diwa.ph. Visit the SmartKids Asia Philippines Facebook page for more event details and updates (www.facebook.com/smartkidsasiaphilippines).

Gendered Bodies at the Met

THE Metropolitan Museum of Manila launches the exhibit Gendered Bodies in Southeast Asia, a study of aesthetics with a transgenerational approach by artists from the Southeast Asia region, on Jan. 26, 2 p.m. Participating artists are the Philippines’ Brenda Fajardo, Singapore’s Amanda Heng, and Taiwan’s Wu Mali. For details on the exhibit, contact 708-7829.

Chinese New Year at Shangri-la Plaza mall

THE Kim Hwa Chinese Ensemble will be performing at the Shangri-La Plaza mall on Jan. 27.

SHANGRI-LA Plaza welcomes the Chinese New Year with a lineup of events and activities including a performance by the Kim Hwa Chinese Ensemble. The group will be playing its contemporary repertoire on traditional Chinese musical instruments on Jan. 27, 7 p.m., at the Grand Atrium. The celebration will continue with the Chinese Spring Film Festival from Jan. 30 to Feb. 5 at the new Red Carpet Cinemas; the Chinese New Year Fireworks Show on Feb. 2, 8 p.m.; a Chinese Painting Workshop on Feb. 3, 2-4 p.m. at the Grand Atrium; a Dragon & Lion Dance Exhibition by the Philippine Ling Nam Athletic Federation on Feb. 10, 2 p.m., at the Grand Atrium; and a Chinese Bazaar from Feb. 1 to 10 at the Grand Atrium. For inquiries, call 370-2597/98 or visit www.facebook.com/shangrilaplazaofficial.

Films on fashion

THE Museum of Contemporary Art and Design (MCAD) of the De La Salle-College of Saint Benilde (DLS-CSB) presents a selection of films about fashion on weekends this January. On Jan. 25 and 26, Learn about China’s fashion and clothing industry with Useless. This documentary revolves around textile workers who are considered useless, as well as the contrasting relationship between people and their clothing according to their status in the society. Screenings are at noon at The Loop, 12/F DLS-CSB Campus, and are free and open to the public. For inquiries and reservation, call 230-5100 local 3897 or e-mail at mcad@benilde.edu.ph.

Rep’s Rapunzel

REPERTORY’s Theater for Young Audiences presents Rapunzel: A Very Hairy Fairy Tale until Jan. 27 at Onstage Theater in Greenbelt 1, Makati. For tickets and schedules, contact TicketWorld (www.ticketworld.com.ph, 891-9999).

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