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Senators ask: Why did Kuwait ban take this long?

SENATORS ON Wednesday grilled officials of the Department of Foreign Affairs (DFA) and the Department of Labor and Employment (DoLE) over why the government did not issue a deployment ban on Kuwait earlier despite the red flags on the Arab country’s labor policies.

At the hearing on overseas Filipino worker (OFW) deaths and the deployment ban to Kuwait, Senator Emmanual Joel J. Villanueva noted that Kuwait is not a signatory to several international agreements regarding the protection of migrant workers.

Mr. Villanueva, chair of the committee on labor, employment and human resources development, added that Kuwait’s laws are silent on penalties imposed to cases of OFW physical and sexual abuses.

“This is really baffling. Why the POEA (Philippine Overseas Employment Administration) did not impose the ban sooner? Considering the increasing number of deaths, 2016: 82 deaths, 2017: 103 deaths. Not to mention the thousands of reported cases of abuse,” he said.

DoLE Secretary Sivestre H. Bello III, who chairs the POEA governing board, said they have lowered the number of OFW deployment to Kuwait prior to President Rodrigo R. Duterte’s orders on the deployment ban in response to the increasing incidents of deaths and abuse.

Mr. Bello also attributed the dire situation of OFWs abroad to illegal recruiters.

“That is why we imposed stricter rules (on illegal recruitment),” he said.

POEA Administrator Bernard P. Olalia said there must be a certification issued by the DFA indicating that a country is labor-compliant before POEA allows the deployment of workers.

DFA Undersecretary for Strategic Communications Ernesto C. Abella, for his part, said Kuwait is “partially compliant” since the country has acted on cases the Philippine government has raised. This despite the increasing number of reported deaths as well as cases of physical and sexual abuse.

Mr. Olalia said the “partially compliant” tag on the country allows the POEA to deploy workers.

The legislative inquiry was prompted by the death of OFW domestic helper Joanna Demafelis, whose body was found in a freezer in Kuwait.

Mr. Bello reiterated that the President would lift the total deployment ban to Kuwait once a memorandum of agreement on migrant workers’ protection has been signed between the two countries.

KUWAIT VISIT
Meanwhile, Philippine officials are headed to Kuwait on Thursday to seek greater protection for migrant workers after a diplomatic row over the alleged mistreatment of Filipinos in the Gulf state.

Mr. Bello III told reporters Wednesday one of his deputies would lead the delegation, which is also due to stop in Saudi Arabia and Qatar to urge reforms.

Topping the list are demands that Filipino workers be allowed to keep their cellphones and passports, which can be confiscated by employers.

The trip comes after Mr. Duterte last week announced a departure ban for Filipinos planning to work in Kuwait. The ban sparked a diplomatic flap between the Philippines and the Gulf state as he alleged that Arab employers routinely raped their Filipina workers, forced them to work 21 hours a day and fed them scraps.

Kuwait has invited Mr. Duterte for a visit but he has yet to respond.

“We are going to Kuwait tomorrow, Saudi Arabia and then on to Qatar to ensure that our overseas Filipino workers have sufficient protection,” said Labor Undersecretary Ciriaco A. Lagunzad III, who will helm the delegation.

Mr. Lagunzad also said Mr. Duterte had ordered the team to ensure that passports of Filipino workers are deposited with the Philippine embassy.

Another team of labor officials said on Wednesday they would conduct negotiations with Kuwait next week on a deal to protect Filipino workers.

“Hopefully we can finalize the memorandum of agreement and by first or second week of March, we will have the signing by the Kuwaiti and Philippine governments,” said Claro Arellano, another labor undersecretary. — Camille A. Aguinaldo and AFP

Sereno’s appointment as CJ questioned at OSG

By Minde Nyl R. Dela Cruz

SUSPENDED lawyer Eligio P. Mallari of the Volunteers Against Crime and Corruption (VACC) submitted to the Office of the Solicitor-General (OSG) a letter requesting to initiate a “quo warranto proceeding in the name of the Republic of the Philippines” to challenge the validity of the appointment of Chief Justice Maria Lourdes P.A. Sereno.

“Any lawyer worth his salt would tell you that Sereno’s title to the office could be tried in a quo warranto proceeding,” Mr. Mallari said in his letter addressed to Solicitor-General Jose C. Calida on Wednesday, Feb. 21.

“Right now, Sereno’s competence and integrity are under intense public scrutiny. Having scored very low or flunked the psychological test and in view of non-submission of all her SALNs (statement of assets, liabilities, and net worth) prior to appointment, Sereno’s claim to the position is tenuous, and must be challenged in a quo warranto proceeding by the Solicitor General,” Mr. Mallari added.

The Supreme Court early this month suspended Mr. Mallari as lawyer for two years following his failure to pay P34,000 worth of loans from the Government Service and Insurance System.

At the recent impeachment proceedings by the House committee on justice, Associate Justices Diosdado M. Peralta and Teresita J. Leonardo-De Castro questioned Ms. Sereno’s appointment in 2012.

For her part, Judicial and Bar Council Executive Director Annaliza S. Ty-Capacite testified before the House panel, chaired by Oriental Mindoro Rep. Reynaldo V. Umali, that Ms. Sereno submitted only three SALNs, which fall short of the 10 required when she applied for the top position in the high court.

Likewise, committee senior vice-chair Rep. Vicente S. Veloso said Ms. Sereno’s appointment was “void from the beginning.”

Lawyer Lorenzo G. Gadon in his impeachment complaint accused Ms. Sereno of culpable violation of the Constitution, corruption, betrayal of public trust, and other high crimes.

The Umali committee is nearing the conclusion of its proceedings as it plans to draft the articles of impeachment by March.

DoJ files petition to formally tag CPP-NPA as terrorists

THE DEPARTMENT of Justice (DoJ) on Wednesday, Feb. 21, filed a petition to formally declare the Communist Party of the Philippines (CPP) and its armed wing, the New People’s Army (NPA), as terrorists. The petition was filed before the Manila Regional Trial Court by Senior Assistant State Prosecutor Peter L. Ong in behalf of the DoJ following President Rodrigo R. Duterte’s order in December to tag the rebel groups as terrorists. In January, Mr. Ong said his office is focusing on incidents that transpired “after (Mr. Duterte) assumed (the) presidency on July 1, 2016,” noting that the President at that point showed “good faith and sincerity for a just and lasting peace”, but the NPA carried on with “tactical offensives.” Prior to the terrorist declaration, the President also terminated the peace talks with the Reds through Proclamation No. 360 signed Nov. 23, 2017, which cited that the National Democratic Front and CPP-NPA “engaged in acts of violence and hostilities, endangering the lives and properties of innocent people” amid the efforts of the administration to reach a peace deal. — Minde Nyl R. dela Cruz

Three cities make it as finalists to WWF’s One Planet City Challenge

THE CITIES of Makati and Pasig in the National Capital Region, and San Carlos in Negros Occidental have been selected as national finalists of the 2017-2018 One Planet City Challenge (OPCC) of the World Wide Fund for Nature (WWF). The OPCC is a biennial global challenge that recognizes cities for developing infrastructure, housing, transport, and mobility solutions to power the global transition to a low-carbon, climate-resilient future. Launched in 2011 as the Earth Hour City Challenge, the OPCC highlights the crucial role that cities play in the transition toward a more environment-friendly future. WWF, in a statement, said this edition of the OPCC is anchored on sustainable transport and mobility, which is a major environmental challenge for cities around the globe. “Cities must cultivate their potential to directly improve the quality of life of their citizens while simultaneously reducing environmental impact. Offering smarter alternatives for energy, transportation, and building standards that affect a significant number of people is key in ensuring that we all thrive without pushing the limits of our shared home,” WWF-Philippines President and CEO Joel Palma said. The national and global winners will be announced in June or July.

People Power anniversary preparations to affect EDSA traffic on Friday

THE NORTHBOUND lanes of EDSA, particularly the stretch along the People Power monument, will be partly closed on Friday, Feb. 23 beginning 8 a.m., the Metropolitan Manila Development Authority announced yesterday. The closure is intended to give way to rehearsals by the military honor guards, in preparation for the 32nd People Power anniversary on Sunday.

Floirendo says he is ready to clear his name in court

FACING ARREST over a graft case filed against him by Speaker Pantaleon D. Alvarez, Davao del Norte 2nd District Representative Antonio R. Floirendo, Jr. on Wednesday said he would clear his name in court. He also appealed to his accuser, his erstwhile buddy, not to exert “undue influence” over the court and claimed that Mr. Alvarez, who represents the 1st district of Davao del Norte, was after him because of the Speaker’s alleged personal interest in the banana business. “The hasty filing of graft charges against me before the Sandiganbayan and the subsequent issuance of the warrant of arrest in connection with the Bucor-Tadeco deal is a clear sign of the existence of abuse of power and arrogance on the part of the Speaker,” Mr. Floirendo said in a statement. — interaksyon.com

See full story on https://goo.gl/sQsV88

Drug rehab facility in Davao ready by May

THE 300-BED drug rehabilitation facility located in Barangay Malagos, Davao City is targeted to be operational by May this year, according to Health Undersecretary Roger P. Tong-An. Speaking to the media on Tuesday, Mr. Tong-An said the facility will cater to those from the entire Davao Region who will be screened as “severe.” The Department of Health, which will run the center, is now preparing for the needed manpower. Mr. Tong-An said the Malagos rehab center is part of a grant covering 10 facilities around the country, including two others in Mindanao — in General Santos City, and Bukidnon. Drug users who voluntarily surrender and are screened as “mild” or “moderate” will be treated and managed through the smaller community-based centers. Mr. Tong-An said in between the community-based and the “severe” rehab center, they will also be piloting recovery clinics or halfway houses wherein drug dependents will be given livelihood training programs. Dangerous Drugs Board Chair Catalino S. Cuy said, “Re-integraton and rehabilitation should go together. In rehabilitation they are being prepared for their re-integration into society.” — Maya M. Padillo

DENR to inspect island resorts in Central Visayas

RESORTS IN popular island destinations in the Central Visayas Region, such as Mactan and Bantayan in Cebu, and Panglao in Bohol, will be inspected by the Department of Environment and Natural Resources (DENR) following the ongoing crackdown in Boracay Island in Malay, Aklan. DENR Secretary Roy A. Cimatu said during an event in Cebu City on Tuesday that he was invited to check these islands in particular for possible violations. Mr. Cimatu has directed 12 teams composed of about 100 personnel from different DENR regional offices to inspect the sewer facilities of all business establishments in Boracay following reports that many are discharging untreated wastewater directly into the sea. Mr. Cimatu said personnel from the DENR Central Visayas regional office can plan and manage their visits to these islands, and they may also seek assistance from neighboring offices if necessary. The DENR chief said the resort-to-resort inspection in Boracay should serve as wake-up call to all local government units (LGUs) to act on existing problems in their respective jurisdictions. “On their own, they (local officials) will also be doing their job properly because I understand the secretary of DILG (Department of the Interior and Local Government) is really contemplating on filing necessary charges on (inept) LGUs,” he said. — The Freeman

Congestion and corruption

Four years ago, I raised a question in this column: “Where do we lose most: from corruption in government, from tax evasion, or from traffic?” This was in relation to potential low-hanging fruits that could be prioritized by any president with only a few good men to deploy, and limited resources to use, in seeking quick but long-term solutions with optimum results.

At the time, I cited a 2011 study that estimated the economic losses from Metro Manila traffic jams at P140 billion yearly or about P390 million daily. Losses were attributed to wasted gasoline and electricity, lost labor hours, cost of traffic aides, withdrawal of potential foreign investments, missed business opportunities, and reduced capital inflow, among others.

As for taxes evaded, revenue losses were estimated at around 4% of the economy’s total output. At that time, this was placed at roughly P400 billion a year, mainly from nonpayment of income and consumption taxes (value-added tax) and under-declaration of income.

As for corruption, the average loss was estimated at 20% of the government’s national budget. In 2014, the national budget was around P2.2 trillion. One-fifth of the amount or 20% is roughly P440 billion. And all things as they are, any increase in the budget also results in an increase in losses from corruption.

Four years ago, based on the above figures, one can be left with the impression that corruption was the biggest problem. And, corruption losses may or may not include those resulting from government inefficiency, or the wasteful use of public resources. Note also that tax evasion — and traffic congestion — may also be resulting partly due to corruption.

To date, this may no longer be the case.

In 2016, traffic losses were estimated at a higher P2.4 billion daily, or 10 times the average just five years before, and these daily economic losses are estimated to hit P6 billion by 2030. Using the 2016 figure, we are reportedly losing an estimated P800 billion yearly from traffic congestion.

Meanwhile, the 2018 national budget is P3.8 trillion. Assuming, for the sake of discussion, that the estimated losses from corruption is still at 20% of the budget, then this puts it possibly at P760 billion this year. Couple that with traffic losses, then you are presumed to be losing an amount equivalent to about 40% of the national budget every year.

I make mention of these two items, traffic congestion and corruption, primarily in light of what is happening now to the Metro Rail Transit or MRT-3 system on EDSA. MRT was supposed to be one of the solutions to traffic congestion. Having more efficient public transport is seen as crucial to growing the economy. But, for the system to work efficiently, is should also be free from corruption.

To date, however, the MRT is reportedly down to maybe about five trains running to serve hundreds of thousands of commuters daily. This is from a maximum of 20 trains on the revenue line at any given time. Simply put, the system is operating at 25% of capacity. Why and how this happened is anybody’s guess. But, it seems like things have gotten worse after the government decided to change the maintenance provider yet again.

One can only wonder if MRT’s woes to date result more from faulty policy, poor planning and design, operation mismanagement, inefficiency, or corruption, or a combination of these woes.

MRT

In fact, the system has been problematic for two administrations now, and it remains uncertain if anyone is up to the challenge of initiating long-term solutions. Are we capable of solving this problem, ever?

The older Light Rail Transit or LRT-1 system on Taft Avenue is the oldest light rail system in Southeast Asia at over 33 years old. It started in December 1984, running initially from Baclaran to Central Terminal in Manila. Nearly as old is the Singapore MRT system that opened in 1987. LRT-1 was followed by the EDSA-MRT or MRT-3, which opened in 2000, now almost 18 years old.

These three lines, despite their age, are still in operation — but not without their problems. Singapore, in fact, had to bring in new trains, rehabilitate the lines, and add new lines just to cope with the growing demand from commuters. Not too long ago, it had to deal with stoppages as well as flooding in underground rail tunnels.

In the case of LRT-1 and MRT-3, the two oldest light rail systems in the country, we continue to operate their aging fleets — almost always beyond rated capacity — primarily out of necessity, given the high demand for their service. MRT-3, for instance, carries about 500,000 passengers daily when it is rated for just roughly 350,000. That is, if it has 20 trains running at any given time.

But, with just around five trains in service now, the MRT-3 is a mess. Why this happened is a wonder considering that the older LRT-1 doesn’t seem to be as problematic — or a controversial when it comes to maintenance providers. I can only hope that corruption is not the issue here.

With aging systems, maintenance is a crucial factor.

For efficiency and safety, the maintenance provider must overhaul cars, regrind tracks, and upgrade signaling systems, and continuously improve on daily maintenance.

At some point maybe in late 2016 or early 2017, I believe the MRT-3 actually had 20 trains on the revenue line, was running at rated capacity, and even with a few spare trains on standby in case of breakdown. But, the maintenance group responsible for achieving that has since been booted out. And since they got the boot, it seems the trains have been in bad shape.

There are reports as well that new trains bought in 2015 or 2016 can actually run on the lines with some adjustments in signaling systems, contrary to the claim that they cannot be used at all. Why they have not put to service is a wonder to me, or why no one seems to be looking for solutions beyond appointing a new maintenance provider, considering the urgency of the matter. Pity the poor souls who rely on the MRT-3 to get to work or top go home.

Admittedly, to completely overhaul the train system and to replace everything with new rails and rolling stock and signals will take a lot of money. But, even if the government is not in the position to foot the bill, I am sure there are groups in the private sector that will be willing to fund and do the project. Whatever option is chosen, it should be implemented now.

And, if this means raising fares significantly, then so be it. The riding public will just have to adjust and afford it, as opposed to waiting on the train platforms for nothing. Without higher fares, the government will just keep negotiating for lower costs for overhaul, repair, and maintenance. We have all seen what that has gotten us so far.

 

Marvin A. Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com

Nation at a Glance — (02/22/18)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

TRAIN, inflation, and the stock market

At first there were bureaucracies, endless subsidies, and new taxes; second were price hikes due to the new taxes; third, monetary control measures to minimize price hikes; and fourth, investment funds react to these monetary controls, especially regarding the exchange and interest rates.

That in a sense, is how a nonfinance researcher like me would attempt to connect the dots. The first and third actions are government interventions while second and fourth are market reactions to these interventions.

Since I am not a stock market analyst, I chose to attend the BusinessWorld Stockmarket Roundtable held Tuesday at Makati Shangri-La Hotel. After all, it was a good opportunity for researchers and investors to know more about the stock market.

There were four speakers that afternoon. Augusto “Gus” Cosio, Jr., president of First Metro Asset Management, Inc.; April Lynn Tan, vice-president and head of Research of COL Financial Group, Inc.; Justino “Jun” Calaycay, Jr., head of Research and Engagement Department of Philstocks Financial, Inc.; and Michael “Mike” Gerard Enriquez, chief Investment officer of Sunlife Financial.

Gus Cosio argued the following points, among others: (1) the TRAIN’s personal income tax cut will put more cash in the pockets of salaried people, good for current account, savings account (CASA); (2) rise in short-term interest rates are good for net interest margin (NIM) expansion; (3) rise in prices will raise demand for working capital; (4) decline in required reserves will reduce intermediation cost; (5) better macro growth means fewer troublesome loans; (6) never put all your hopes on one or two stocks and invest in a basket of stocks.

Mike Gerard Enriquez started being less optimistic and enumerated sources of potential disruptors in the stock markets: (1) faster hikes in US Federal rates and balance sheet reduction, (2) faster pace of peso depreciation, the worst-performing Asian currency at the moment, (3) higher inflation due to new taxes, (4) worsening current account deficit, and (5) risk in government implementation of reforms. Overall though he is optimistic and expressed the need to expand the number of listed companies at the PSE.

April Tan highlighted the following points, among others: (1) market correction in January was expected due to hike in US bond rates, (2) the correction was a good opportunity to accumulate stocks at more attractive valuations, (3) weaker peso and higher taxes are inflationary and can adversely affect consumer spending, (4) but inflation is not a long-term but a short-term issue, (5) historically, equity markets have gone up with higher rates, and (6) long-term economic prospects remain positive with favorable demographics, high remittances from OFWs and growing BPO sector.

Jun Calaycay discussed these considerations, among others: (1) the Bangko Sentral ng Pilipinas is expected to raise interest rates 1-2 times this year, (2) higher inflation from TRAIN is felt more by people on the ground, (3) despite these, Philippine economy will continue to expand, (4) good prospects this year are construction and allied services, power and energy sectors.

I learned several lessons, especially for a nonfinance guy like me. My concerns and research work are focused on government policies that distort the normal incentives system if markets are left more freely.

Encouraging more portfolio investments and foreign direct investments (FDI), more big infrastructure projects via integrated PPP and not “hybrid” PPP and without tax hikes à la TRAIN — all these took place during the past administration.

For instance, there was a big increase in the Philippine stock market capitalization in one decade, 3.5 times expansion in 2015 or 2016 level as against the 2006 level while other neighbors managed to expand less than 2 times. And the Philippines’ market capitalization was at the median level of 80+% of GDP, comparable to South Korea level (see table).

Market Capitalization

Inflationary pressures coming from tax hikes while retaining high tax rates elsewhere (VAT, corporate income tax/CIT, withholding tax, etc.) can adversely affect consumer spending, which, in turn can affect overall macroeconomic performance.

That is why the coming TRAIN 2 should aim for significant tax cuts in CIT and VAT while reducing the number of exemptions and tax holidays. A nontax-hungry TRAIN can tame inflation, stabilize the credit markets and expand the stock markets.

 

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

minimalgovernment@gmail.com.

Developing the next generation of ‘Filipinnovators’

Based on a recent study by Shikhar Ghosh of the Harvard Business School, “75% of all start-ups fail” because launching a new enterprise has always been a “hit-or-miss” proposition. Steve Blank of Stanford University further states that the decades-old formula of “writing a business plan, pitching it to investors, assembling a team, introducing a product, and start selling as hard as one can” is risky because setbacks are expected and the odds are always against the entrepreneur.

Thus, a methodology known as “lean start-up” has been introduced that favors “experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional big design up front development,” and has proven to be a quicker, better, and more efficient alternative when starting a business.

It is with this scenario that a variety of organizations worked together to provide lean start-up techniques to ten groups from all over the Philippines that already have ideas but need to level up to bring their products and services. These groups — the Department of Science and Technology’s Philippine Council for Industry, Energy, and Emerging Technology Research and Development (DoST-PCIEERD), De La Salle University Manila (DLSU), Research Triangle Institute (RTI International), and the George Washington University (GWU) — launched a four-week, part-time experiential program on Feb. 19, at DLSU for DoST-funded researchers.

Based on the Lean Start-up Model of Stanford University, the Filipinnovation Entrepreneurship Corps Lean Start-up Training Program is an iterative process that aims “to obtain real-world learnings and insights that validate key components of the business model of a research project or product.”

According to Dr. Richard Abendan of RTI International, “it will also enable teams to determine the commercial readiness of their research, decide on whether the innovation warrants further efforts to bring to market, and develop a transition plan to bring it to market.”

In this program, teams of academic researchers, graduate students, and industry mentors learn through active outreach to customers in validating their assumptions of market needs for their products or technology.

Each team has four members: an Industry Mentor, a Principal Investigator, an Entrepreneurial Lead, and a Technology Transfer Officer. The entire team will engage with industry and will spend time learning from customers, partners, and even competitors.

The kickoff started on Feb. 19 and ended on Feb. 21, and focused on value proposition design, business model canvas, customer development, interview techniques, interview assessment, customer ecosystems, storytelling, and minimum viable product and prototypes.

Following this event, teams will have three five-day interview periods to conduct customer development interviews with potential customers.

The participants will be trained to use Launchpad Central (a “complete toolset for lean innovation”) to develop their Business Model Canvas, develop their hypotheses, and record customer development interview notes. Teams will receive online feedback from the instructors during two weekly online reviews, and individual feedback during office hours.

At a two-day virtual final event, the groups will gather in one place in the Philippines, and the instructors will deliver content remotely from the United States, and together they will discuss the lessons learned, the revenues and the costs, and market sizing.

Of course, a lot of work remains to be done since a business, whether big or small, needs time to grow, mature, and incubate, and a confluence of both human and nonhuman factors, from technical skills to entrepreneurial acumen as well as technology, equipment, machinery, and logistics.

The lean start-up method aims to reduce these constraints and develop more “Filipinnovators” who will create business both for inclusive growth and the common good.

 

Brian C. Gozun is Dean of the Ramon V. Del Rosario College of Business of De La Salle University.

brian.gozun@dlsu.edu.ph

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