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Bill adding farmers to PCA board hurdles House panel

A BILL including coconut farmer representatives to the Philippine Coconut Authority (PCA) board was approved at committee level at the House of Representatives.
The House Committee on Government Enterprises and Privatization on Wednesday passed a consolidated bill deriving from House Bills 8079 and 8052, intended to serve as a companion bill of the Coconut Farmers and Industry Development Trust Fund Act, which regulates the disposal of coconut levy funds.“I always thought it should be the farmers that should decide on how to dispose of or what projects to invest in,” Deputy Speaker Sharon S. Garin said at the committee meeting.
Without the overhaul of the PCA board, Ms. Garin said coconut farmers will not have the power to decide on fund allocations. The PCA Board currently does not include members representing farmers.
She added that the more important concern was the procedure to be adopted for selecting qualified farmer representatives.
The committee settled one key discrepancy in the two source bills — which is the number of farmer representatives on the board, settling on six instead of seven.
The bill authored by Agriculture and Food Committee chair Jose T. Panganiban Jr., HB 8079, proposed two representatives each from Luzon, the Visayas and Mindanao.
HB 8052, authored by Representative Ramon V.A. Rocamora, proposed seven representatives, with two each from Luzon and the Visayas and three from Mindanao.
Lanao del Norte Rep. Mohamad Khalid Q. Dimaporo argued there should be more representatives in Mindanao, considering it is “producing 60% of coconut production.”
“If we look at the other bill (HB 8052), 2 for Luzon, 2 for Visayas, and 2 for Mindanao plus the ARMM (Autonomous Region in Muslim Mindanao) roughly, we have a better figure of 42%,” Mr. Dimaporo explained.
This, however, was not adopted by the committee, citing a need to be consistent with the Coconut Farmers and Industry Development Trust Fund Act.
In addition to the farmer representatives, the PCA Board will also include among its members the Administrator of the PCA, and the Secretaries of Agriculture, Finance, and Trade and Industry. A representative from the coconut industry sector shall also be included.
Its counterpart measure, Senate Bill 1913, authored by Senator Cynthia A. Villar, remains pending at the Committee level. — Charmaine A. Tadalan

FAO convenes emergency meeting on Asian Swine Flu

THE United Nations Food and Agriculture Organization (FAO) has called an emergency meeting of specialists from nine Asian countries, including the Philippines, to discuss measures in the event African Swine Fever spreads from China.
The meeting, taking place in Thailand and scheduled to conclude on Friday, hopes to establish a regional stakeholder network which will organize measures to control the disease if it makes its way to other countries.
Representing the Philippines were Bureau of Animal Industry (BAI) officer-in-charge and director Ronnie D. Domingo and BAI Animal Disease Control Section officer-in-charge Anthony C. Bucad.
Other countries sending specialists were Cambodia, China, Japan, Laos, Mongolia, Myanmar, South Korea, and Vietnam.
“It’s critical that this region be ready for the very real possibility that ASF could jump the border into other countries. That’s why this emergency meeting has been convened — to assess where we are now — and to determine how we can work together in a coordinated, regional response to this serious situation,” FAO Emergency Center for Transboundary Animal Diseases in Asia Regional Manager Wantanee Kalpravidh said in a statement.
FAO Chief Veterinary Officer Juan Lubroth added: “It’s very important to understand how this virus has spread, historically, within the pig and wild boar populations in other regions of the world, so we can adapt and tailor appropriate responses and determine the correct course of action needed here in this region.”
European countries affected now by ASF are Latvia, Poland, Romania, Russia, and Ukraine.
In a text message on Wednesday, Agriculture Secretary Emmanuel F. Piñol said that there is “no immediate risk thus far” of ASF affecting the hog industry.
According to the Center for Food Security and Public Health of Iowa State University, “ASF is often introduced into a herd by the feeding of uncooked or undercooked garbage (swill) containing contaminated pork products. Once infected, the virus is easily spread between pigs by direct contact or indirectly from contact with contaminated objects, such as vehicles, equipment, footwear, or clothing.”
ASF was first detected at a pig farm in Siberia in March 2017, and was detected in northeast China northeast at the beginning of August 2018, the FAO noted. — Reicelene Joy N. Ignacio

No demand, no pay

“No demand, no delay.” This rule is spelled out by Article 1169 of the Civil Code, where those obliged to deliver or to do something incur a delay from the time the obligee (or the person to whom an obligation is owed) judicially or extrajudicially demands fulfillment of the obligation.
In a situation where a debtor defaults on his payment of a loan, the law requires that a demand has to be made by the creditor before the debtor can be considered delayed on his payments, except if the contract itself provided that no demand is necessary for delay to exist. If no demand was made, then the loan has not yet become due and demandable, and any foreclosure of property used as collateral for the loan would be considered premature.
When it comes to tax assessments, however, there is a twist to the rule. In the case of assessment notices, if there is no demand for payment, not only is there no delay on the part of the taxpayer, but there is actually no valid assessment to speak of.
This position was reiterated in a recent decision of the Court of Tax Appeals (CTA Case No. 8694 dated June 28, 2018) where the deficiency tax assessment was set aside and cancelled because the Final Assessment Notice (FAN) did not contain a specific date or period within which the alleged tax liabilities must be paid. In that decision, the court emphasized that the due date for payment of the tax liabilities is indispensable in an assessment as it dictates the time when the penalties, surcharge and interest begin to accrue. If the date of payment is uncertain, then there is no definite demand on the taxpayer to immediately pay the assessed tax liabilities.
The due process requirements in the issuance of deficiency taxes are laid down in Revenue Regulations (RR) No. 12-1999, as amended by RR Nos. 18-2013 and 7-2018. The regulations provide that a formal letter of demand (FLD) and FAN calling for the payment of deficiency taxes shall state the facts, laws, rules and regulations or jurisprudence on which the assessment is based; otherwise, the notices shall be void. The taxpayer shall have 30 days from receipt of the FLD and FAN to file an administrative protest.
Significantly, the Supreme Court in earlier rulings categorically pronounced that an assessment should contain not only the detailed computation of tax liabilities, but also a demand for payment within a prescribed period. It further mentioned that an assessment, in the context of the National Internal Revenue Code, is “a written notice and demand made by the Bureau of Internal Revenue (BIR) to the taxpayer for the settlement of the due tax liability that is there: definitely set and fixed.”
Applying the decision of the Supreme Court, merely notifying the taxpayer of his tax liabilities is not enough. The FLD/FAN should not only show a computation of tax liabilities and the details of the assessment, but it should also contain a clear unequivocal demand for payment by indicating the definite date or period for payment of the assessed taxes. The Supreme Court, in effect, provided an additional requirement for an assessment to be considered valid, apart from those laid down under the regulations.
Referring back to the recent CTA case, the deficiency tax assessment was cancelled because it did not comply with the additional requirement that there should be sufficient demand for payment by the BIR. In this case, there was an undated FAN assessing the taxpayer for deficiency taxes and this was deemed null and void because the due dates on the assessment notices for all assessment items were left blank or unspecified.
What can be gathered from this case is that taxpayers can raise a defense against an assessment if there is no demand for payment made. Failure to comply with the additional requirement of demand proves fatal to the assessment. Thus, even if the issues raised in the assessments have merit, taxpayers can still check if the FLD/FAN contains a specific due date for the payment of the deficiency taxes. If there is none, they can protest that the assessed amount is not collectible because payment was not actually demanded by the BIR. Applying the decisions of the courts, in such cases, taxpayers can firmly say, “No demand, no pay.”
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
 
Maria Jonas Yap is a Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
+63 (2) 845-2728
maria.jonas.s.yap@ph.pwc.com

Peso declines on inflation data

THE PESO weakened against the dollar to a fresh 12-year low on Wednesday following the faster-than-expected August inflation print.
The local currency ended Wednesday’s session at P53.55 versus the greenback, a centavo and a half weaker than the P53.535-per-dollar finish on Tuesday.
This was a fresh low for the peso in more than 12 years since it closed at P53.575 against the dollar on June 28, 2006.
The peso traded sideways the whole day, opening the session at P53.535 against the dollar. It slid to as low as P53.56, while its best showing for the day stood at P53.51 versus the greenback.
Dollars traded soared to $1.38 billion on Wednesday from the $440.75 million that exchanged hands the previous day.
A foreign exchange trader said the peso weakened as it continued to move within a very tight range.
“There’s a lot of trading today, but still the exchange rate continued to be pegged at around P53.55,” the trader said in a phone interview on Wednesday.
The trader added that the August inflation print “was a big surprise,” boosting investors’ speculation of another rate hike from the Bangko Sentral ng Pilipinas (BSP).
Inflation accelerated to a fresh nine-year high of 6.4% in August, the Philippine Statistics Authority reported on Wednesday, coming from July’s 5.7% and from 2.6% in August 2017.
The August print was beyond the upper end of the 5.5-6.2% estimate of BSP’s Department of Economic Research and was faster than the 5.9% median in a BusinessWorld poll of 14 economists.
“The market will probably expect another rate hike this month, although I’m not sure if it’s going to be 25 or 50 basis points,” the trader added.
In a statement, the central bank said it will be “looking more closely” at the latest data to reassess the medium-term inflation path.
“Given that the dollar-peso continues to be pressured to trade [weaker], I think the peso weakness in effect has to be controlled by the BSP to also control its effects on inflation,” the trader added.
Aside from faster August inflation, another trader attributed the peso’s weakness to the “broad safe-haven strengthening of the dollar ahead of the deadline of the US public consultation concerning additional tariffs on Chinese goods.”
Both traders noted that there was a huge intervention from the central bank at the P53.55 level given the large trading volume.
The BSP sometimes conducts “tactical interventions” to temper any sharp swings that may cause the peso to appreciate or depreciate.
For Thursday, the first trader expects the peso to move between P53.30 and P53.55 against the dollar, while the other gave a P53.45-P53.55 range. — Karl Angelo N. Vidal

Shares plunge as inflation hits fresh peak in Aug.

STOCKS suffered a bloodbath during Wednesday’s trading after August inflation figures ended much higher than expected.
The Philippine Stock Exchange index (PSEi) — considered a local barometer for investor confidence — plunged 1.64% or 129.55 points to close at 7,752.27 Wednesday, September 5. The index hit an intraday low of 7,699.02 before paring losses slightly in time for the closing bell.
The broader all-shares index also dropped 1.33% or 63.84 points to finish at 4,732.02.
“The fresh nine-year high inflation figure for August did not sit well with market participants, as [Wednesday]’s trading was marked with selling pressure throughout the day,” Regina Capital Development Corp. Equity Analyst Rens V. Cruz II said in a mobile message.
The Philippine Statistics Authority reported Wednesday, September 5, that headline inflation accelerated to 6.4% last August, faster than July’s 5.7%. This is the highest figure recorded since inflation shot up to 6.6% in March 2009.
The August inflation reading beat all market estimates, including the Bangko Sentral ng Pilipinas’ (BSP) estimate range of 5.5-6.2%, as well as the Department of Finance’s 5.9%.
Year-to-date inflation is now at 4.8%, well beyond the government’s target of 2-4%.
Analysts are now expecting another rate hike from the BSP to curb inflation.
“The surprise inflation print of 6.4% caused investors to cash in, as this will likely force the BSP to raise their policy rates more aggressively from a widely expected 25 basis points to most probably 50 basis points later this month,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said via text on Wednesday.
All sectoral indices were bleeding at the end of trading, with financials recording the biggest loss at 2.81% or 50.76 points to 1,753.84. Property followed with a drop of 1.85% or 73.04 points to 3,856.96; mining and oil shed 1.66% or 167.73 points to 9,907.84; and holding firms gave up 1.41% or 110.35 points to 7,709.23.
Industrials also went down 0.87% or 99.33 points to 11,226.33, while services slipped 0.44% or 6.91 points to 1,536.78.
Trading thinned slightly to P5.89 billion after some 1.69 billion issues switched hands, compared to Tuesday’s P5.94-billion value turnover.
Decliners were almost triple that of advancers, 146 to 51, while 38 issues closed flat.
Foreign investors fled the market, posting net sales of P1.04 billion, significantly higher than the previous session’s P257.56-million net outflow. This is also the highest net foreign outflow in more than two weeks.
“Unfortunately, bearish sentiment is expected to persist at least for the remainder of the week, as investors will still digest the components of the latest CPI (consumer price index) numbers, as well as gradually factor in the implications — including a higher weight on a September rate hike, and the peso’s drop to a fresh 12-year low,” Regina Capital’s Mr. Cruz said. — Arra B. Francia

Duterte expects more terror attacks after Sultan Kudarat bombing

By Arjay L. Balinbin, Reporter
President Rodrigo R. Duterte is expecting more terror attacks after the recent bombing incidents in Isulan, Sultan Kudarat.
“We just had about two explosions in one of the provinces in Mindanao… There [were] these two explosions, and we expect more. And I’m sure that your government, Israel government, would only be willing to help us,” Mr. Duterte said in his remarks on Tuesday at the Magen David Adom (MDA), Israel’s national organization for medical, disaster, ambulance, and blood bank services.
The Presidential Communications Operations Office (PCOO) said the President was accompanied by Philippine Red Cross Chairman Senator Richard J. Gordon, Executive Secretary Salvador C. Medialdea, Defense Secretary Delfin N. Lorenzana, Special Assistant to the President Secretary Christopher Lawrence “Bong” T. Go, Interior and Local Government Officer-In-Charge Eduardo M. Año, and Presidential Adviser for Political Affairs Secretary Francis N. Tolentino.
During the President’s visit. the MDA took the chance to present its disaster response and rehabilitation strategies and equipment.
“I would like to thank MDA and this administration for giving us the demonstration. You got it right. The rescue was punctual and I would say that… the way you handled it, of course it could have been a product of several practices, but it shows that you are very efficient,” Mr. Duterte said.
Also in his speech, the President noted that “there’s a lot of terror attacks going on, not only here but all over the world and my country is no exception.”
Just five days after a bombing incident at a festival in Isulan last Aug. 28, another bomb exploded inside an internet café in the same municipality at around 7:30 p.m. last Sunday, Sept. 2. The attack left one person dead and 15 others injured.
In his meeting with Israeli President Reuven “Ruvi” Rivlin on the same day, Mr. Duterte said: “It behooves Israel and the Philippines to cooperate more than ever to defeat one enemy, which I think could never disappear within the next ten years.”

House bill on PhilHealth coverage for PWDs approved on second reading

By Charmaine A. Tadalan
A bill seeking to provide mandatory Philippine Health Insurance Corporation (PhilHealth) coverage of persons with disability (PWDs) has hurdled second reading at the House of Representatives on Wednesday, Sept. 5.
Voting viva voce, the chamber approved House Bill 8014, which will amend Republic Act 7277, “Magna Carta for Persons with Disability.”
Its counterpart measure, Senate Bill 1391, had been approved on third and final reading on July 30, 2018.
The measure seeks to introduce a new section in the law, which mandates that all PWDs shall be covered by the National Health Insurance Program (NHIP) of the PhilHealth.
The funding will be sourced from the PhilHealth National Health Insurance Fund from the proceeds of Republic Act 10351, “An Act Restructuring the Excise Tax on Alcohol and Tobacco Products.”
Ako Bicol Rep. Rodel M. Batocabe, in his sponsorship speech, cited a report by the National Council on Disability Affairs which showed that there are 15 million Filipinos living with disabilities.
“The provision of accessible healthcare to Persons with Disability manifest the state’s resolve in achieving the development goals enshrined in the development agenda of the present administration,” Mr. Batocabe said, Wednesday.
“For this development goals to be realized there must be additional mechanisms that will ensure that PWDs who have been marginalized are able to access health care facilities and services and are afforded health insurance, which they deeply need,” he added.

AIM hopes to reverse ‘brain drain’ with data science program

By Anna Gabriela A. Mogato, Reporter
The Asian Institute of Management (AIM) is currently developing projects in partnership with the government to further develop digital technology and data science in the country.
AIM President and dean Jikyeong Kang told BusinessWorld that while there are no concrete results she can disclose, they are “working on a couple of projects with the government to see how we can work more closely.”
She noted that out of the three projects they are working on, “[t]he third one is on a much larger scale — and it’s still in a still confidential stage.”
“As soon as we can make it work and no matter how long it takes, we will be persistent,” she added.
The first two projects, which Ms. Kang revealed were expanding the data science curriculum in lower levels of education and bringing back more Filipino scientists amid the country’s attempt to adapt to the fourth industrial revolution.
“As you know, we established the first data science [master’s] program,” she said, referring to AIM’s recently launched Master of Science in Data Science in the early part of 2018.
“We want to trickle it down to university students, we want to trickle it down to high school and [elementary students] to get them excited to work with science, especially data science,” she added.
The master’s program, which brought home some data scientists to fill the faculty’s roster also encouraged the institute to its second mission to bring home more Filipino scientists to reverse brain drain.
“The other project we’re working on is to how we on is how we can actually bring back the talented Filipino scientists and engineers from abroad,” Ms. Kang said.
“We [have to] come up with a proper platform for them to come back.”
Last March, AIM also launched Analytics, Computing, and Complex Systems Laboratory, or ACCeSs@AIM, which would be used for the data science program.
The research and development facility houses one of Southeast Asia’s fastest supercomputers, a 500-terabyte Acer supercomputer with a computing speed of 500 teraflops.
On Tuesday, the AIM also struck a partnership with the Asian Development Bank to improve digital technology programs during the Digital Development Forum 2018. The first of both parties’ collaboration resulted to the Hackathon held last Sept. 3.
“But we have a relationship with ADB in many different ways — they provide scholarship on development management master’s program, we have done the case development together,” Ms Kang said.
Amid the changes across various sectors brought about by digital technology, Ms. Kang noted the importance of collaboration between private and public sectors to adapt as well as prepare the incoming generation through education.
“The relationship is ongoing but it is particular in the area of digital transformation that we have decided to pursue it.W e’re looking, hoping to replicate the collaboration again next year but we’ll have to wait and see how it goes.”

Aston Martin tries to get more women in boardroom and showroom

Aston Martin, maker of sports cars for James Bond, is racing to add a woman to its board ahead of a London IPO.
The nine directors are currently all men. Aston Martin Holdings (U.K.) Ltd. may name women to its board at the same time that it publishes an initial public offering prospectus in the coming weeks, according to people familiar with the matter.
If it doesn’t, the luxury carmaker would become one of about 10 companies within the U.K.’s benchmark FTSE 350 equities gauge to have an all-male boardroom at a time when the government is urging businesses to ensure 33 percent of their directors are female by 2020.
A dearth of women on the board isn’t the only hurdle facing Aston Martin: the 105-year-old company is looking for ways to make its lineup more appealing to both females and younger buyers. 2015’s DBX crossover vehicle, aimed in part at a 30-something woman, was meant to widen its appeal after the maker of the iconic British sports cars found that only 3,500 vehicles — or 5 percent of the cars produced in its history at that time — had been bought by women.
That same year, Aston Martin also brought on Laura Schwab as president of its Americas business, though she isn’t senior enough to rate a spot on the web-page profiling the 12 top executives — all men.
The board of the carmaker, said to be targeting a valuation of about 5 billion pounds ($6.4 billion), is at the moment mainly composed of representatives for its biggest shareholders, including Kuwait’s Investment Dar and Investindustrial Advisors.
In recent years, Aston Martin and other automakers have shifted from advertising vehicles with women perched on the hoods to those with female drivers as they seek to win over new kinds of customers. — Bloomberg

Inflation, energy prices and mini-greed

INFLATION has further jumped to high levels. Only 2.9% in December 2017 (no TRAIN law yet), it became 3.4% by January 2018 (first month of TRAIN law), 3.8% in February, 5.7% in July, and now 6.4% in August 2018.
While high world oil prices and peso depreciation against the US dollar were among the important factors, it was the energy tax hikes in the TRAIN law — oil, LPG, coal, plus coverage of VAT in electricity transmission charge — that triggered and sustained the inflationary pressure.
And talking about inflation and energy prices, the recent Pulse Asia Research’s “Ulat ng Bayan Survey,” June 15-21, 2018 is among the misleading surveys that will indirectly justify higher electricity prices. How?
See two of their three questions, loaded and leading:
1. How satisfied or dissatisfied are you with the price of your electricity?
3. Are you in favor or not in favor of increasing the use of renewable energy in the Philippines such as energy from the sun or solar energy?
On #1, Pulse Asia did not explain to respondents that there are nine different charges in our monthly electricity bill that contribute to higher overall rate: generation charge, transmission charge, distribution charge, supply charge, system loss charge, metering charge, universal charge, feed-in-tariff (FIT) subsidies, taxes. Loaded question with an expected high answer of Dissatisfied.
On #3, another loaded question as it does not clarify that even with more solar energy, the eight different charges will remain and worse, the FIT subsidy for solar will further rise.
So the result of their survey was: Question #1, 64% dissatisfied and only 27% satisfied, 14% undecided. Question #3, 89% in favor, 9% not in favor and 2% volunteered/undecided.
Having more intermittent, unstable and unreliable solar and wind power in the national grid can lead to higher prices because of the higher need for backup power, ancillary services that are mostly oil-based, and huge batteries. This is shown in both Europe and the US where in many cases, countries and states with high reliance on wind + solar also have higher electricity prices.

Then two House bills sprang up out of nowhere. HBs 8013 and 8015 entitled “An Act Granting Solar Para sa Bayan Corporation a Franchise to Construct, Install, Establish, Operate and Maintain Distributable Power Technologies and Minigrid Systems throughout the Philippines to Improve Access to Sustainable Energy” were filed only last month, Aug. 6, and were quickly approved by the House committee on legislative franchise on Aug. 29. The committee report was approved last Sept. 3 and will go to plenary this week or next week.
This is a very anti-EPIRA bill and, hence, an attempt to legalize many illegal provisions. While all players in the generation, distribution and supply sectors comply with specific requirements of the EPIRA law, this newbie, no track record corporation wants to do anything they want — can connect anywhere, can build their own grid anywhere, can carve out to DUs franchise areas, will pay only 3% franchise tax in lieu of all taxes, exemption to universal charges, COC and local taxes.
In a position paper by the Philippine Rural Electric Cooperatives, Inc. (PhilRECA), some parts reported in BusinessWorld last Sept. 4, PhilRECA observed that:
“Solar para sa Bayan Corp. said that it could offer electricity at an equal or much lower cost compared with the ERC approved rates of ECs… Paluan was cited as an example with P8.00 per kWh. However… the company is actually charging more at P10.37 to P15.29 per kWh… such misrepresentation… that corporation could not afford to offer lower rates.”
This newbie corporation whose franchise is all ready for a congressional plenary is owned by a son of a sitting “environmentalist” senator.
To have cheaper and more stable electricity, we need more competition, less government cronyism and favoritism, and less energy taxation.
 
Bienvenido S. Oplas, Jr. is president of Minimal Government Thinkers, a member institute of Economic Freedom Network (EFN) Asia.
minimalgovernment@gmail.com

Food security

THE issue, to me, is food security. And, in the Philippine context, this means sufficiency particularly in rice supply. In this line, lawmakers and policy makers as well as those implementing policy should be reviewing and revising policies, agencies, functions, and officials with respect to how they have been contributing to achieving this important objective.
Keep and improve what works, but quickly remove obstructions as well. If, for instance, an agency like the National Food Authority is aggravating rather than improving the situation, and is failing in its objective of promoting and ensuring national food security, then perhaps it has outlived its usefulness and thus must go. The same standard of measure must apply to any policy or official that impacts on food supply.
Allowing the importation of food is a stop-gap measure, not a long-term solution, to ensuring national food security. Moreover, a policy that relies heavily on free trade in food remains highly susceptible to risks: foreign exchange supply and rate fluctuations; trade disputes; regime changes; and supply disruptions caused by adverse weather conditions or war, famine, or plague, among others.
Data indicate that since the late 1960s, local rice farm yields have actually increased substantially as a result of the cultivation of high-yielding rice varieties, with average productivity reportedly increasing from 1.23 metric tons per hectare in 1961 to 3.59 metric tons per hectare in 2009. The area under irrigation also grew from under 500,000 hectares in the mid-1960s to about 1.5 million hectares in 2009.
But self-sufficiency particularly in rice production is no longer likely, given the rate that we have been losing land to development, seemingly stagnating yields, and given that farmers are now a dying breed. Data from the Philippine Statistical Authority indicate that in second quarter 2018, the harvested area for rice fell to 939,790 hectares, from 947,190 hectares in the quarter in 2017. Yields have also reportedly remained flat in the second quarter at 4.38 tons per hectare.
A more important factor, to me, is that population is about 105 million people now, and it seems that consumption growth has been outpacing harvest growth, resulting in a supply gap. This is where importation plays a more crucial role, and right timing in importation and distribution is key to ensuring supply and price stability.
But, considering the rate of development and the rate of population growth, it is not likely for the trend of supply gaps to disappear or to reverse any time soon. I believe it will remain with us for years to come and may in fact worsen in the future. In 1960, there were only 27 million of us. Today, we are more than 100 million. The rate of population growth from the 1960s to the 1980s was about one million per year, but since the 1990s it has been about 1.6 million annually.
And while in 2013-2017, according to NFA, rice production averaged 12.019 million metric tons annually, consumption averaged at a higher rate of 12.850 million metric tons. The resulting supply gap made it necessary for us to import rice. In this line, should we now abandon rice self-sufficiency? I don’t think so. Should we continue to improve and modernize? Yes, we should. And should we continue to import? I believe we don’t have much choice on this.
Importation is not necessarily bad, or even the lack of self-sufficiency. As noted by economist Gerry Sicat in a column in the Philippine Star, Singapore and Hong Kong do not have rice agriculture, but they have not had serious food price crises, either. They buy their need in food from the world, including all the rice needs of their residents. But, as I noted above, relying more on imports also puts food security at risk.
Weather is the most unpredictable factor in all this, and adverse weather affects not only local harvest but global supply and prices as well. Loss of land to development — with farmlands becoming cities and residences and commercial areas — also significantly affects supply. This is especially true if productivity or yields do not go up. And then, there is the declining number of farmers.
Agriculture expert Rolando Dy believes in the value of farm tourism, quoting Senator Cynthia Villar in his published commentary: “Senator Villar is right: that increasing food production and farm productivity alone cannot move the rural poor out of poverty. Stringing clusters of destinations plus food tours can make farm tourism a success.”
In this line, Dy notes that Tourism Secretary Berna Puyat’s advocacy for “farm tourism as a flagship strategy” is a “sound direction.” Dy also notes that “farm tourism has endless possibilities” locally, given the “varied agro-climatic conditions and food menus in the Philippines.” As an example, he points to an exotic fruit trees farm in Rizal, the carabao center in Nueva Ecija, the crocodile farm in Palawan, and farm resorts and organic farms in Davao.
I second Professor Dy on this, as well as Secretary Puyat and Senator Villar. But I also believe in strengthening agriculture education and convincing more people to get into backyard or even commercial farming, and more conglomerates to match their appetite for real estate development and infrastructure projects with more industries related to food production.
I can understand that many if not most farmers will not wish the same farming life on their children. They want their children to be educated, become professionals, and get out of farming. But the fact of the matter is, farmers’ hands are the hands that feed the nation. Without them, there would be no food. The way to intervene is to help make farming a sustainable and profitable source of income, to convince more people to get into it, not only in retirement but as a way of life.
But fewer people are now studying Agriculture. In Mindanao, for instance, one private school noted that five of their seven colleges “registered decreases in enrollment” this year. All these colleges offer programs which compete with state schools in the region that offer free tuition. Among the programs that suffered from a big decline in enrollees are Agriculture (down 32%) and Education (down 57%). This, I believe, is a trend that should be reversed. Or else, we will really be in trouble.
One database on world population rankings places us at no. 12, with an estimated population of about 115 million people as of 2018. It also ranks us as no. 2 in Southeast Asia, second only to Indonesia’s 262 million. With these many mouths to feed, we need to significantly boost agricultural production. Otherwise, supply gaps and price hikes will always be a problem and can even worsen.
We cannot always expect the rest of the world to have food to sell to us, or that we will always have money to buy food from abroad. In times of bad weather, war, famine, or even trade disputes, global food can be in short supply. We should be able to fend for ourselves. But how can we do that if we continue to lose farms and farmers?
Technology can do only so much in improving farm productivity and efficiency. Food production will always need farmlands and farmers. To ensure food security, we need long-term solutions that focus on having more farms and farmers producing more food in line with sustainable development.
 
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council
matort@yahoo.com

Tourism: The new leg of the economy

OUR Balance of Payment (BoP) deficit is a ticking bomb. In the first semester of the year, the country’s BoP deficit ballooned to US$3.26 billion, nearly five times more than the US$706-million deficit recorded for the same period last year.
The spike in the deficit is due to the toxic combination of declining merchandise exports, a decelerating BPO industry and the downward trend in OFW remittances occurring in step with a sharp rise in imports. Imports have been growing at accelerated rates due to our ravenous need for iron, steel and cement used for government’s infrastructure projects. We have also been importing massive amounts of machinery and consumer goods.
There are two likely scenarios should the BoP deficit worsen. Either we eat into our treasury reserves or fall deeper into debt. As it stands, gross international reserves (GIR) have already plunged from a high of US$86.12 billion in 2016 to just US$77.68 billion last May, the lowest in three years. Meanwhile, public debt increased from US$115.6 billion in 2015, to US$129.16 billion as of end-2017. Mind you, this does not even include the US$16.75 billion government is borrowing this year.
For nearly a decade, the economy was kept afloat by the electronics industry, the BPO industry and OFW remittances, all of which brought in enough foreign exchange to cover our import bill and maturing debts. This is no longer the case. Our imports have grown so much that we now need new sources of income to cover the imbalance.
This is where the tourism industry comes in. Up until 2010, tourism was not considered a major contributor to the economy. Back then, the country welcomed a modest 3.5 million foreign visitors generating less than US$3 billion in revenues.
In 2017, revenues topped US$8.630 billion on the back of 6.62 million foreign visitors. Tourism is now the country’s fourth-largest dollar earner, comprising 2.7% of GDP. (Note: Domestic tourism is actually six times greater, revenue-wise, but does not infuse new money into the system.)
For context, OFW remittances amounted to US$28.1 billion and the BPO industry raked in US$23 billion last year, representing 8.9% and 7.3% of GDP, respectively.
TOURISM IN 2010-2016
Credit must be given where it is due. Under the baton of then Tourism Secretary Mon Jimenez, foreign arrivals increased by 11% per annum, outpacing ASEAN’s average growth of 7.5% and the global average of 4.5%. By the end of 2016, foreign arrivals was a hairline shy of the six-million mark, raking in US$6.2 billion in revenues. It was in this period that tourism became a strong leg of the economy.
At the heart of Jimenez’s success was a strategic and methodical approach to tourism development. This is embodied in the first National Tourism Development Plan (NTDP) — a plan Jimenez and his team authored.
The NTDP consisted of four components:
The first component involved improving air access to the country and widening domestic connectivity. Unlike most of our ASEAN neighbors who benefit from interconnected highways and railways, the Philippines is only accessible by air and sea. But given the state of our sea ports, as much as 98% of our visitors arrive by air. Hence, it was imperative that government establish direct connections to and from our major markets. It was also vital that flights between Manila and domestic destinations increase in scope and frequency.
To improve connectivity, the Department of Tourism (DoT) established an internal route development team that served as initiator and mediator between air carriers and the CAAP, MIAA, and DFA. Simultaneously, the DoT secured a seat in the decision-making panel of the CAAP where it is able to influence civil aviation policies.
The move proved to be a game changer. Not only was the DoT able to scrap the common carriers tax levied upon airlines (which made landing in the Philippines an unviable venture), it also paved the way for new carriers to begin calling on Philippine ports. As a result, Turkish Airlines, Air New Zealand, Ethiopian Air, China Eastern, China Southern, XiamenAir, Juju Air, Scoot, Vanilla Air, and more began serving the Philippines.
Legacy airlines like Singapore Airlines, QATAR, Emirates, and Etihad, all of whom have operated in the Philippines for many years, have increased their frequencies to and from their central hubs. Direct connections have also been established between select provincial airports and cities like Taipei, Shanghai, Hong Kong, Chongqing, Xiamen, Seoul, Macau, Singapore, and Dubai.
For its part, local carriers PAL, Cebu Pacific, Air Asia, have widened their domestic networks.
Visa requirements have been relaxed for citizens of 150 countries while visas-on-arrival are now issued for certain nationalities, provided they have valid visas from either the EU, US, Canada, Japan, or Australia.
The second component involved the development of world-class tourism destinations and products. Between 2010 and 2016, destinations like Puerto Princesa’s Underground River, Coron, El Nido, La Union, Iloilo, and Batanes burst into the scene as tourist hotspots. It was also in this era that medical tourism, educational tourism, gastronomy (through Madrid Fusion) were developed into niche products. In 2014, the Laoag, Manila, Cebu, Boracay, and Palawan corridor became destinations for cruise liners.
The classification of lodging facilities according to quality and amenities was also part of this initiative. Unfortunately, the project was still-born as hotel operators protested their lower-than-expected ratings.
The third component was to create a culture of tourism among local governments and tourism practitioners. Some 90,000 tour guides, front liners and local government officials have since been trained by the DoT.
The final component was a strong branding and promotional offensive. Without doubt, the “It’s More Fun in the Philippines” campaign is still the most effective marketing campaign we have had so far. Its effectiveness lies in the fact that the slogan reads with clarity whilst speaking the truth. The veracity of the slogan causes us to deliver on our brand promise every time. This is the genius behind the campaign.
Further contributing to the campaign’s success was the strategic ad placements in global television networks such as CNN, BBC, Discovery Channel, ESPN, and the Food Network. Through billboards and roving ads, the Philippine brand had presence in Times Square NY, Piccadilly Square, Ginza, Orchard Road, Central Square Sydney, Alexanderplatz Berlin, and Central Hong Kong, among others.
In the editorial space, the Philippines gained recognition as a preferred tourist destination in such publications as Conde Nast, Travel & Leisure, Paris Match, Esquire, and Backpacker. This had never happened before.
The DoT’s limited advertising funds went a long way, the inertia of which was still felt in 2016 and 2017 when advertising efforts were practically muted. Former tourism secretary Wanda Teo can boast of no significant marketing initiative outside hosting the ridiculously expensive and outdated Miss Universe pageant.
The National Tourism Development Plan of 2010-2016 was designed to enable the country to attract 10 million visitors by 2016. Unfortunately, infrastructure bottlenecks stood in the way of achieving that target.
The good news is that the impediments that weigh down the industry are now being addressed. Wanda Teo is out and replaced by Secretary Berna Romulo-Puyat, an honest and able professional with 12 years of government experience behind her; new airports in Panglao, Puerto Princesa, Bacolod, Davao, Iloilo, and Lagundian will soon follow Mactan as a privately operated airport; a new airport terminal in Clark is being constructed to decongest NAIA; hotel rooms are being constructed by the thousands.
The only missing link is a proper national gateway. We are banking on San Miguel’s Bulacan aerotropolis to fill this void and hope that the DoTr can get the Swiss challenge done so construction of the airport can finally begin.
Secretary Berna Romulo-Puyat stands on a strong foundation built by Mon Jimenez and his team. This should give the incumbent Secretary the leverage she needs to reach her target of generating US$17.7 billion in revenues on the back of 12 million foreign visitors by 2022. By then, tourism receipts should be enough to cover our balance of payments deficit.
Watch out for my next column where I talk about the DoT’s plans and programs from 2017 to 2022.
 
Andrew J. Masigan is an economist

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