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Davide to speak on farmer-scientist training program

NATIONAL SCIENTIST Romulo G. Davide will be the guest speaker at a scientific conference, “Couldn’t AGRI More: Harvesting S&T Knowledge” on Nov. 23 at the University of the Philippines Open University (UPOU) in Los Baños, Laguna.
“We are honored to have Dr. Davide in this scientific conference where he will talk about the Farmer-Scientist Training Program or FSTP, an initiative that he carried out since 1994 to help farmers gain productive and sustainable yield,” said Alnard Pagulayan, class coordinator or DEVC 263 Class (Scientific and Technical Communication), which is organizing the event in partnership with San Miguel Corp.
The conference will have 20 slots open to the public.
Mr. Davide, a Ramon Magsaysay awardee in 2012, was named “Outstanding Agricultural Scientist” in 1994. He used his award money to launch the FSTP in his hometown of Colawin, Argao, Cebu.
Mr. Davide is the brother of former Chief Justice Hilario Davide Jr. — Mindanao News Bureau

PSEi may rise on bullish growth, earnings outlook

By Arra B. Francia
Reporter
SHARES MAY move upward in the week ahead as sentiment improves in anticipation of better economic growth figures and earnings results in the last quarter of 2018.
The 30-member Philippine Stock Exchange index (PSEi) dropped 0.95% or 66.89 points to close at 6,968.82 on Friday, pulling the main index 2.4% or 171 points lower on a weekly basis. The services and mining and oil counter declined the most, slipping 5.4% and 4.7%, respectively.
Turnover for the week reached P90.17 billion, with a foreign net buying position of P30.78 billion, as foreigners flocked the P39-billion follow-on offering of San Miguel Food and Beverage, Inc.
Eagle Equities, Inc. Research Head Christopher John Mangun said analysts are optimistic that economic data will improve in the coming months, despite the slower gross domestic product (GDP) figures seen in the third quarter at 6.1%. This is lower than the previous quarter’s revised 6.2%.
He noted that inflation seems to have plateaued, oil prices are dropping, while the peso is now getting stronger.
“Coinciding with the index being at a strong support level, there is a strong possibility that investors will start getting back into this market and begin picking up issues that have been heavily battered this year,” Mr. Mangun said in a weekly market report.
Online brokerage 2TradeAsia.com explained the same, saying in a market note that while the view might still be hazy, at least the peso has started to strengthen and crude futures have been on a downtrend.
“Markets should eventually let demand and supply work over time,” 2TradeAsia.com said.
Meanwhile, the online brokerage noted that measuring 29 stocks that have reported their nine-month earnings reports, the year-on-year weighted growth is now at 2.9% for the first nine months of the year, and 4.3% for the third quarter alone. This is better than the first half’s 1.43% growth and 2.03% in the second quarter.
The 29 stocks measure account for 57% of the PSEi basket, and 42% to the all-shares index.
“Looking solely on conglomerates, expansion initiatives remain intact despite immediate challenges of higher interest rates. We hold the view of improved 4Q results, which will be aided mainly by hastened investment initiatives,” 2TradeAsia.com said.
The companies set to release their third-quarter performances for the week are LT Group, Inc., San Miguel Corp. and its subsidiaries, Ayala Corp., Alliance Global Group, Inc., GT Capital Holdings, Inc., and Puregold Price Club, Inc., among others.
Together, these firms contribute 14% to the PSEi and 19% to the all-shares index.
Mr. Mangun placed the main index’s resistance at 7,200 to 7,500, while support is at 6,800 to 7,000.

Tory Burch’s Rockwell branch biggest in PHL

TORY BURCH opened its fourth boutique in the Philippines in August, but was only officially launched late last month. The Rockwell branch is the biggest Tory Burch store in the country to date, surpassing its other locations in Greenbelt 5, Rustan’s Makati, and Rustan’s Shangri-La.
The brand was founded in 2004 by society figure Tory Burch and now has over 250 stores worldwide.
The store’s opening also coincided with the brand’s launch of its Fall/Winter 2018 collection. The collection includes a line called Happy Times, inspired by a memoir written by Lee Radziwill. Radziwill, the younger sister of the late US First Lady Jacqueline Kennedy Onassis, was a shining society figure across continents during her sister’s tenure. She took on many careers, including actress, public relations personality, and even as an interior designer, which would explain the floral wallpaper-like prints of the collection, featured on scarves and dresses. A bag also named after Radziwill is also present in the collection, featuring a ladylike trapezoid shape reminiscent of the socialite’s own bags. — JLG

ISM Communications Corp.

INVESTORS loaded up on Dennis A. Uy-led ISM Communications Corp. last week after the consortium formed by China Telecommunications Corp. and Mr. Uy’s companies Udenna Corp. and Chelsea Logistics Holding Corp. was named as provisional winner in the government’s search for the country’s third major telecommunications service provider.
ISM was the most actively traded stock last week after it logged in P3.985 billion worth of 693.36 million shares on Nov. 5-9, based on data from the Philippine Stock Exchange (PSE).
Shares of ISM jumped to P6.80 apiece last Friday, up by 112.5% from its closing price on Oct. 31 of P3.20 apiece. The stock is also up 382.27% year to date.
“Traders jumped on board ISM after Chelsea Logistics Holdings Corp. (CLC) disclosed before market open on November 7, 2018 [Wednesday] that it and its parent, Udenna Corp., partnered with China Telecommunications Corp. to formally bid as a consortium for the New Major Player in the Philippines’ telecommunications market,” said Fiorenzo D. De Jesus, research analyst at RCBC Securities, Inc.
ISM had been the top traded stock in terms of value turnover since then, from Wednesday until Friday last week.
“What added more to the large trading volume of ISM is the disqualification of [Sear Telecommunications consortium] and PT&T (Philippine Telegraph and Telephone Corp.) as well as the last minute decision of Now Corp. and [Converge ICT Solutions, Inc.] to back out. These fueled the stock price of ISM to rocket from [the] P2.30s to P7.88,” Timson Securities, Inc. equity trader Jervin de Celis said.
Since last year, President Rodrigo R. Duterte pushed for the selection of a third telco player to break the duopoly of PLDT, Inc. and Globe Telecom, Inc.
The consortium of China Telecom, Udenna and CLC, under the name of franchise holder Mindanao Islamic Telephone Company, Inc. (Mislatel), emerged as the provisional winner for the third slot as a Philippine telco provider in the bidding last Wednesday.
Disqualified bidders — PT&T and the consortium of Sear, TierOne Communications International, Inc. and LCS Group of Companies — have filed motions for reconsideration with the National Telecommunications Commission.
In August, Mr. Uy acquired 888.73 million unissued common shares of ISM at P1.45 apiece, equivalent to 45.13% of the company’s outstanding total stock. The acquisition was valued at P1.28 billion.
ISM has also disclosed last month that its board has approved the change in the company’s name to Udenna Holdings Corp. as well as an increase in the capital stock to P75 billion from P2.8 billion, making it Mr. Uy’s holding company via backdoor listing.
Meanwhile, telco incumbents Globe and PLDT saw their respective share prices go down by 17.32% and 12.23% on a week-on-week basis.
“PLDT and Globe have dropped sharply since Nov. 7 as investors price in this negative news for the duo since there’s a new market player that will challenge their dominance,” Mr. de Celis said.
When asked about the outlook, analysts were cautious about ISM’s growth prospects.
“I think traders will try to speculate on the price action of ISM’s stock price as they wait for the finalization of the backdoor listing. ISM will also have to bare their plans to challenge the dominance of Globe and PLDT and that may fuel the stock price to swing in the short run,” Mr. de Celis said.
“For the long term, the company will have to shell out a big amount of money to service consumers… but since this venture is capital intensive, ISM might incur more expenses in the first 5 to 10 years before we see them earn a decent amount of revenue,” he added.
Mr. de Celis sees ISM playing P7 in the resistance level while support at P5.80-6.00 levels for this week.
ISM posted a net income attributable to the parent of P991,862 in the third quarter of 2018, after posting no attributable profit in the same period a year ago. Year-to-date, ISM’s net loss attributable to the parent was P13.05 million compared to nothing in last year’s comparable nine months.
In the nine months to September, its net loss after taxes stood at P26.7 million versus last year’s P54.37 million net loss. Gross revenues reached P180,000 so far this year. — Marissa Mae M. Ramos

Bond traders seek revival of local repo market

By Melissa Luz T. Lopez
Senior Reporter
BOND TRADERS are looking to revive the local repurchase market at a time of tighter liquidity, as the platform has seen little action in recent months with banks still reluctant to lend cash.
Christopher Ma. Carmelo Y. Salazar, president of the Money Market Association of the Philippines, Inc., said industry players want to revive the repo market to deepen local debt markets further as it failed to gain traction one year into its opening.
“I think for the repo, we’re looking at reviving that because the market has sort of dried up. It had a lot of promise and potential last year, but in the recent months volume has been zero,” Mr. Salazar said during a roundtable session last week.
The Bangko Sentral ng Pilipinas, the Bureau of the Treasury and the Securities and Exchange Commission set up the repo market in November 2017 to allow banks to buy and sell securities.
Under a repo agreement, one party trades peso-denominated debt papers such as Treasury bills and bonds to another dealer with the promise to buy these back at a specified price and a future date. In the process, the seller gets hold of short-term cash to hand out fresh loans and service client withdrawals, among other uses.
This allows them to do away with raising fresh funds by issuing new debt notes or credit lines, as these would often fetch higher interest rates.
“Given the generally tight liquidity in the market, a lot of the participants tend to be on the same side — you’re borrowing pesos. If you’re all on the same side, no one really wants to lend so you can’t execute a deal,” Mr. Salazar added.
MART vice president Steven Michael T. Reyes added that a major constraint for repo transactions is the tedious process of striking a deal between two banks, as captured by a global master repurchase agreement (GMRA). Firms have to execute separate deals for each bank they want to do a repo with, noting that a standard document for all agreements has not prospered.
“Basically, it’s my institution looking at your institution from a credit perspective. If you’re the biggest bank and I’m dealing with another which is a below-top 10 bank, it’s different,” Mr. Reyes said, noting that all repo arrangements are “bilateral.”
Mr. Salazar also noted some confusion in terms of short-selling securities, which may have discouraged banks from entering into contracts.

How PSEi member stocks performed — November 9, 2018

Here’s a quick glance at how PSEi stocks fared on Friday, November 9, 2018.
psei111218
Philippine Stock Exchange’s most active stocks by value turnover — November 9, 2018.
pseiactive111218

‘Never waste a good crisis’

There has been much hand-washing among our legislators on TRAIN 1. The unfortunate part about this is they were responding to fake news.
Much of this is likely limbic (also referred to as lizard and “fight or flight”) thinking which has sadly characterized much of discourse lately, fanned by social media and live news. Tweets, live feeds, and text messages or phone calls for instant reactions. They discourage deliberate thought grounded on evidence and serious research, which at the same time educate the public.
Though often together, this shouldn’t be confused with the kind of more calculated political moves that pander to voters, short-term fixes at the expense of more long-term public good. The classic case of this is wasteful spending that leads to unsustainable fiscal deficits, macro instability, hyperinflation, ultimately immiseration of the people, especially the poor. We have seen such a sorry tale unfold in Chavez’s Venezuela and Mugabe’s Zimbabwe.
Serious analysts observed this may have been at play here with the passage of the costly P50 billion-a-year “free tertiary education” in the SUCs bill. Despite fact-based research by government’s think tank, the Philippine Institute for Development Studies, and the forceful well-argued opposition by the Secretaries of Finance, Economic Planning, and Budget, and the head of CHED, this populist bill passed.
Evidence was disregarded that this badly targeted, hugely costly bill is faulty use of public resources for educating the young for future jobs, especially the poorest. This may also corrode the quality of education and training systems as students and teachers move away from private institutions to quality-challenged SUCs, some no more than diploma mills (see the PIDS study and the economic managers’ statements.).
The folly of a bill costing so much and so narrowly focused on free tuition in SUCs became even clearer to me upon listening to a panel on “Technology and Inclusion in Asia” during the recent Annual Conference of the Federation of ASEAN Economics Associations. The panel consisted of PCC Chair Arsenio Balisacan, ADB Chief Economist Yasuyuki Sawada, Professors Emmanuel Esguerra (UP), Erika Legara (AIM), Euston Quah (Nanyang Technological University) and Ayala Corporation Chairman Jaime Augusto Zobel de Ayala.
My key takeaway from them is that to meet the challenges of technological disruption on our economy (especially BPO and manufacturing ) and to find future jobs for our youth, “it will be important for the private sector (industry and academia) to work hand in hand with the government to plan out a roadmap to create both a national upskilling program and to create a longer term educational reform program to design education and training for a technologically enabled and digitally-led economy.”
Similar observations as that bill have been made of other inadequately studied and targeted programs, e.g. free irrigation, increasing the pensions of SSS retirees, VAT exemptions for senior citizens, more so-called pro-labor legislation that lead to rigidity in labor markets, less investments and jobs. Contrast these to the Conditional Cash Transfers program, started four administrations ago, which was well studied, carefully piloted, and now showing good results in reducing poverty and keeping children in school.
Election season is upon us, however, and perhaps we should be more understanding of populist knee-jerk moves. An appeal to our politicians: please study the premises; thrash the fake news.
FAKE NEWS ON TRAIN
Fake News 1: TRAIN caused inflation
In September 2018, the top 10 contributors to inflation, largely raw food items, accounted for 5.5 percentage points (ppt) of the 6.7 percent inflation (see Figures 1 and 2). Of these products, the DOF estimates that TRAIN contributed around 25% of personal transport inflation, 5% of utilities inflation, 100% of non-alcoholic beverages inflation, and 20% of tobacco inflation.
figure1figure2
Overall, TRAIN’s contribution to inflation is around 0.4 to 0.7 ppt. The Department of Finance (DOF), National Economic and Development Authority (NEDA), and Bangko Sentral ng Pilipinas (BS) all arrived at comparable estimates using different methods to model the legislated tax increases.
In comparison, rice prices alone accounted for 1.03 ppt of the 6.7% inflation rate.
Fake News 2: TRAIN has not yielded collections as targeted.
“Falsehood flies, and the Truth comes limping after it,” Jonathan Swift once wrote. It was hyperbole three centuries ago. But it is a factual description of the post-truth society we live in today, so much so that even conscientious media consumers can be taken in by false information.
For example, in her column last week, our much-loved favorite Prof. Winnie Monsod cited from some news source that “revenues collected from TRAIN were 74.1 percent short of target.” This is in stark contrast to a report given by DOF saying that in the first half of 2018, where complete data is available, TRAIN revenue collection is on the dot.
The target for the first half is set at P30.1 billion. This is around 48 percent of the P63.3 billion target for the full year. This is lower than the P89.9 billion reported in the budget as the revenue from e-invoice (P6.6 billion) and fuel marking (P20 billion) were moved to succeeding years given that both projects needed more time to prepare.
TRAIN revenue collection is estimated at around PHP 33.7 billion or 12 percent above target.
HOW TO LICK RICE INFLATION — END NFA MONOPOLYThere have been an abundance of learned articles and studies over decades on why Quantitative Restrictions/NFA monopoly on rice importation needs to go, and for importation to be left to the private sector, subject to a tariff. And with tariff collections to be used for investments in agri diversification, raising productivity, and safety nets for affected marginal farmers. Most recently, the following articles made the case blindingly clear, and recommended the way forward.

1. FEF Statement on Rice Policy, Foundation for Economic Freedom, 12 April 2017

2. Red flags in rice tariffication, Ramon L. Clarete, Introspective, BusinessWorld, 8 October 2018

3. Rice policies and fallacies, Cielito Habito, Philippine Daily Inquirer, 2 October 2018

4. Wanted: A new rice industry road map after lifting of quantitative restrictions, Emil Q. Javier, Manila Bulletin, 28 July 2018

5. NFA needs major role change to remain relevant — PIDS, Philppine Daily Inquirer, 22 October 2018

The Department of Finance has also issued an excellent summary in favor of passing this bill. It can be read in this link.
As I said in my last column: With our rice prices double or higher than our neighbors, this monopoly has profoundly aggravated poverty, dampened manufacturing investments and job creation through wage uncompetitiveness, and periodically inflation shocks our macroeconomy, like now. The FEF’s position on this is well articulated in various statements and columns over the years, most recently by Toti Chikiamco, in his most recent Introspective column. “Abolish the NFA rice importation monopoly and fully liberalize rice importation. The bill passed by the House is defective: it allows the NFA to continue licensing and regulating traders. The Senate should completely abolish the NFA’s rice import monopoly and remove its regulatory and licensing functions”.
This bill has been in Congress for over a year now. Legislators have an opportunity to do something about inflation in the last few months of this session, and not just for now, but for decades to come. And stop the corruption and accumulation in government-guaranteed NFA debt and lift millions of our people out of poverty.
Dear legislators, please act. “Never waste a good crisis”
 
Romeo L. Bernardo is a Fellow of the Foundation for Economic Freedom and a Governor of the Management Association of the Philippines. He was Finance Undersecretary during the Corazon Aquino and Fidel Ramos administrations.
romeo.lopez.bernardo@gmail.com

Rankings, ratings and rantings

“We demand that the World Bank (WB) review the Philippines’ rating, and make a correction immediately given our country’s increases in the Ease of Doing Business (EODB) scores, which was, unfortunately, offset by the grossly inaccurate and understated findings in the Getting Credit indicator of the Report.
This correction should be done soon as the Report could unduly compromise the Philippines’ standing among the investment community and negatively impact the country’s development, considering that this document is widely used as a reference by investors and survey organizations. As a highly respected institution, the World Bank has a responsibility to ensure that an economy is not unduly disadvantaged and that its report reflect the realities on the ground.”

— DTI-DoF Joint Statement
(dti.gov.ph)

Strong words, “We demand…that (you, WB), make a correction immediately…” How can the WB correct what has already been released to the world — that the Philippines is now 124th out of the 190 economies tracked for “ease of doing business,” down 11 places from 113th last year? It is akin to the irreverence and temerity of asking a professor to change one’s grades in university. It is just not done.
With the yearly WB-DB rankings on 190 economies, global competition is created and self-regulated, while locally, “job creation is one of the transformational gains that countries and communities can achieve when the private sector is allowed to flourish. Fair, efficient and transparent rules, which Doing Business promotes, improve governance and tackle corruption,” Kristalina Georgieva, WB Chief Executive Officer professed (worldbank.org. Oct. 31, 2017).
Yet it is not the first time the Philippines has questioned the WB-DB report. In November 2015, the Finance department wrote the World Bank to express “grave concerns” on the 2016 report’s “glaring flaws and inconsistencies” as the country’s rank fell to 103rd spot from an adjusted 97th place. This, the department had argued, did not reflect improvements in terms of business facilitation (BusinessWorld, Oct. 31, 2018). Then-National Competitiveness Council (NCC) Chairman Guillermo Luz pointed out that the report failed to accurately reflect some of the ongoing changes due to reforms in business regulations announced earlier that year (Rappler, Oct. 28, 2015).
“The WB-DB only aims to show how easy or difficult it is for a local entrepreneur to open and run small to medium enterprises (SMEs) when complying with relevant regulations. It does not measure all aspects of the business environment including macroeconomic stability, proximity to markets and regulations specific to foreign investment or financial markets,” stressed Roberto Galang, then-operations officer at IFC (Ibid.).
Ok, WB, you are saying it’s only micro, but there are macro effects that drag down the perception about the economy, the DTI- DoF complained in their joint statement about the 2019 DB Report. Only last October, the WB, in its biannual Philippines Economic Update, said it expects Philippine gross domestic product (GDP) to grow 6.5% this year, down from a 6.7% April projection and 2017’s actual 6.7%; 2019 and 2020 forecasts are at 6.7% and 6.6%, respectively (BusinessWorld, Oct. 5, 2018). WB forecasts match the International Monetary Fund’s 6.5% and 6.7% for 2018 and 2019, respectively. The Asian Development Bank has a slightly lower estimate of 6.4% for this year, but has the same 2019 projection of 6.7% (Ibid.).
The government’s original annual GDP growth target until 2022 was at 7-8%, revised to 6.5%, 6.7% and 6.6% updated forecasts for 2018, 2019 and 2020 (Ibid.). The economy has to be looking good to foreign investors, but more than that, and first of all, it has to be good for, and by local businesses, especially the micro, small and medium enterprises, which are 99.57% (911,768) of the 915,726 total business enterprises operating in the Philippines as of 2016 (dti.gov.ph, Nov. 11, 2018).
And so it was salt to the wounds of government when the Doing Business Report 2019 showed the plight of Philippine businesses in the present environment. Why, DTI Secretary and National Competitiveness Council (NCC) chair Ramon Lopez had just boasted in June last year that the country aims to move up within the top 20 global rankings in the WB Doing Business by 2020 (The Philippine Star, June 28, 2017). “The vision is to be one of the best, not only for ranking purposes but to really make it easy for both local and foreign businesses, especially micro, small and medium enterprises to register their businesses and get necessary permits,” Lopez said (Ibid.).
Whether or not the WB-DB Report is flawed as the DTI-DoF angrily complains is not the point. Sec. Lopez himself said that the ranking is only secondary to actually creating the environment here that will attract both local and foreign businesses. How can we then make a tantrum about technicalities on scope and methodology, and about cut-offs on recognition and inclusion of efforts already made on improving ourselves? Will Republic Act No. 11032, or The Ease of Doing Business and Efficient Government Service Delivery Act of 2018, amending the Anti-Red Tape Act (ARTA) of 2007, ease doing business in the country? (BusinessWorld, July 3, 2018). Is it implemented and working?
It is not yet felt. Or will efforts ever be felt, before opportunistic bureaucrats and some crafty lawyers find ways around it? We have good laws, but the implementation is the problem. And peculiarly, we find some technicalities to slap “guilty” on what may be innocent mistakes, or wash “not guilty” on blatant wrongdoing, depending on whether he/she would be friend or foe. And in character, we are protesting some technicalities on the WB Doing Business 2019 Ranking.
Have we protested that the Philippines is number 111, or 64th most corrupt among 175 countries, according to the 2017 Corruption Perceptions Index (CPI) reported by Transparency International? We were ranked 101 in 2016 after improving (being less corrupt) by 3 points in 2015, before Pres. Rodrigo Duterte’s term commenced.
In the 2018 World Competitiveness Rankings, the Philippines fell by nine places to 50th among 63 countries in a survey report by the Switzerland-based business school International Institute for Management Development (IMD, and the Asian Institute of Management (CNN Philippines, May 25, 2018).
Enough of ranting against rankings and ratings. Isn’t it clear something positive must be done about improving our business environment — like seriously implementing beautifully crafted but inutile reforms?
Just do it.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

Evils of political dynasties

When does a political family become a political dynasty? A political dynasty is established in two instances. First, when an elected government official is succeeded by a member of his household up to the first degree of consanguinity or affinity. Second, when several members of a family occupy various positions in government simultaneously.
There are 250 political families who control the country, 56% of whom come from old political elites like the Osmeñas, Roxases and Magsaysays and 44% emerged after the 1986 Edsa Revolution.
In the Senate, 16 out of the 24 members belong to political dynasties as are 70% of the members of Congress. An audit of their statements of assets and liabilities reveal that lawmakers who belong to political dynasties increase their net worth by an average of 39% after every term while those who do not belong to dynastic families increase their wealth by less than 10%.
Among local governments, 73 out of 80 provinces are controlled by political dynasties. Statistics show that the average incidence of poverty in provinces controlled by political dynasties is a staggering 29.15% while those not under dynastic control stands at only 18.91%. Abject poverty is at 2.31% in dynastic bailiwicks and only 1.96% in non dynastic localities.
The numbers suggest that political dynasties exacerbate the incidences of poverty rather than improve them. This assertion is further supported by the inherent consequences of political dynasties as described below.
INHERENT CONSEQUENCES OF DYNASTIES
On Governance: When members of the same family occupy multiple positions within a city or municipality, most are likely to consolidate power in a pseudo monarchial manner. In such a setup, the preservation of power becomes the priority, even more important than social and economic development itself. Painful reforms and unpopular but necessary decisions are avoided as they erode political equity. Adoption of populist policies become the norm at the cost of stunted development.
Political dynasties are more likely to utilize their budgets doling out scholarships, funeral aid and basketball courts rather than investing in social development programs, economic initiatives and infrastructure.
These dynastic families are easily recognized — they operate in areas where “tarpaulin politics” is prevalent. Politicians who grab credit by posting their names and faces on every corner via tarpaulin banners is a tell tale sign of a poorly managed dynastic territory.
On Fair Elections: It is just as easy for a dynasty’s family member to win an election as it is difficult for new talent to penetrate.
Within the disposal of dynasties are formidable political machines, funds and the many advantages of being the incumbent. The playing field is skewed to the dynasty’s favor. This unfair advantage dissuades aspiring public servants from throwing their hat in the proverbial ring. In effect, it decrease the level of political participation among the populace. Dynasties monopolize power by depriving others from a fair opportunity to serve.
This is why we have 21-year-old scions becoming mayors and governors while the man with a doctorate degree in public governance is edged out. Political dynasties cause a brain drain of talent among elected officials.
On Competence: Capabilities, values and work ethic rarely improve from generation to generation, especially within powerful families enjoying comfort and positions of influence. More often than not, the second generation simply emulates the habits of the first. New ideas are stifled due to inbreeding of management practices while bad habits are magnified. That said, it can be argued that the quality of governance deteriorates over time in dynastic bailiwicks.
On Generation of Wealth: By virtue of their elected positions, political dynasties are able to wield influence, consolidate economic resources and use their political machineries to take advantage of business opportunities. These opportunities may come in the form of lucrative government contracts or power brokering deals. Whether over or under the table, political dynasties enjoy an undue advantage in generating wealth.
On Check and Balance: Most developed nations like South Korea have two sets of elite — the political elite composed of high level civil servants and technocrats and the economic elite composed of captains of industries and business owners. Their interests are never made to intersect as doing so causes conflicts of interests. These nations have strong institutions capable of disciplining one or the other should their actions go against national interest.
In the Philippines, the political and economic elite are one and the same (most of the time). This is why policies and decisions are often laced with self-interest.
On Economic Inequality: Political dynasties are of the elite class, if not by stature then by virtue of their net worth. Their continued persistence in our political system strengthens the sway of the elite over the poor. The disenfranchised continue to be the subjects while the elite consolidate their supremacy.
Culture of Dependence: The concentration of political and economic power among a few families benefits a minute segment of society while leaving out the greater majority. It institutionalizes economic inequalities and perpetuates a culture of dependency between the elite and the poor. It comes as no surprise that the provinces with the most established political dynasties are also poorest.
THE 1987 CONSTITUTION
Article II, Sec. 26 of the 1987 Constitution is very clear in its intent. It says, “the state shall guarantee equal access to opportunities for public service and prohibit political dynasties as may be defined by law.”
In theory, the constitution prohibits political dynasties. However, it still lacks an enabling law that defines what a dynasty is and its repercussions.
Congress has had the duty to enact an enabling anti-dynasty law since 1987 but failed to do so for self-serving reasons. There have been 32 attempts but not one has passed the committee level of the House.
The public has waited 31 years for an enabling law, an unreasonable time to wait. Legislators, past and present, have conspired to betray the Constitution for self-interest.
After 31 years, political dynasties have entrenched themselves deeply in our political system. As a result, our institutions have become weaker, reforms are slow to implement, corruption is rife, incompetence is tolerated and partisan politics is the name of the game in the halls of power.
As citizens, there is not much we can do but resist political dynasties. The power is still in our hands, as voters. Resist the dynasties and vote for the aspiring, qualified candidate. Its about time we change our cast of leaders. Its about time we infuse new talent.
 
Andrew J. Masigan is an economist.

The fight to raise tobacco taxes is a fight against breast cancer

INUTILE.
That’s how I felt at my beautiful sister Mae’s bedside when she died in 1995, barely a year since arriving back home from her chemotherapy in Michigan. She had two daughters — Ynna Belen and Angela Jed, just as beautiful as her. She had beautiful dreams …
I LIED.
A broad coalition that includes doctors is advocating higher tobacco taxes. To drum up support for this campaign, everyone is encouraged to tell a personal story about the harmful effects of smoking.
I told friends that my story would not be about me. But as I started writing, I realized it is too. It’s about the me that I have become after cancer reared its ugly head yet again.
IT IS PERSONAL.
Because pain is personal. Because suffering is personal. Because cancer is personal. I did not know how I could fight for my sister anymore. She would scream in pain, while my survivor guilt was gnawing away at my very being. It still does.
So I FIGHT. We FIGHT.
Mae used to smoke occasionally, not heavily but I am certain she was exposed to tobacco smoke at work. The link between tobacco exposure and breast cancer may not be as clear as it is with lung cancer and other chronic lung diseases. But the link is there, as it is with 18 other cancers and even low birth weight.
What does recent evidence show?
Jones, ME and co-authors in 2017 reported their 2013 findings from following-up 102,927 women recruited back in 2003. In this prospective Generations Study cohort in the United Kingdom, they asked the women to answer serial questionnaires over that 10- year period with an average of 7.7 years of follow-up. Of the recruited women, 1,815 developed invasive breast cancer. They corrected for confounding factors like concomitant alcohol intake (an aggravating factor) and duration of breastfeeding (a mitigating or protective factor). After adjusting for these confounding factors, the evidence showed that women who reported “ever smoking” compared to those who reported that they “never smoked” were, on the average, 14% more likely to develop breast cancer (hazards ratio HR 1.14, 95% confidence interval CI 1.03 — 1.25).
Those who started smoking before the age of 17 were, on the average, 24% more likely to develop invasive breast cancer (HR 1.24 95% CI 1.08-1.43). If they started very early, i.e. 1-4 years after they first had their menses, they were, on the average 23% more likely to develop invasive breast cancer than if they had never smoked (HR 1.23 95% CI 1.07-1.41). Women with a family history of breast cancer had a significantly higher risk (ever smoker vs. never smoker HR 1.35; 95% CI 1.12 — 1.62) in relation to ever smokers than women without a family history (ever smoker vs. never smoker HR 1.07; 95% CI 0.96 — 1.20; not significant). (Reference: Jones ME, Schoemaker MJ, Wright LB et al. Smoking and risk of breast cancer in the Generations Study cohort. Breast Cancer Research. 19 (118). 2017).
The evidence is solid.
So I will continue to FIGHT, we will continue to FIGHT. And we will continue to fight that good fight, with means we know will work, that of raising taxes on tobacco products so that Filipinos, especially our youth, cannot afford to start this deadly addiction.
Dear legislators, do not deny our people this good fight! Increase tobacco taxes now!
Dear Senator Sonny Angara, I am glad that you will resume the hearings to have new legislation on the tobacco tax. My hope is that, ultimately, a law that will effectively deter smoking will be in place soon.
 
Dr. Maria Asuncion Silvestre was a practicing neonatologist and associate professor at the University of the Philippines College of Medicine before she shifted gears to development work. She now works in maternal and child health as founder of the nonstock, not-for-profit organization Kalusugan ng Mag-Ina (KMI; Health of Mother and Child) and as faculty member of the Asia Pacific Center for Evidence Based Healthcare. Both are member organizations of the Sin Tax Coalition. Dr Mianne survived her own two battles with invasive breast cancer, almost 20 years apart, because of early detection.

DoF: TRABAHO opponents playing up job loss fears

THE DEPARTMENT of Finance (DoF) said there is “no basis” for claims that the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill will result in job losses.
“Some industry players claim that the TRABAHO bill will result in hundreds of thousands of job losses. These statements are meant to sway public opinion against the reform, but do not have sound basis,” Finance Secretary Carlos G. Dominguez III said in a statement over the weekend.
The DoF also quoted Labor Secretary Silvestre H. Bello as saying that the reform measure will actually boost employment, especially outside Metro Manila.
“As a result of the significant reduction in the corporate income tax (CIT) rate that will free up more capital for firms to invest and, in turn, create jobs, the DoLE expects this tax reform to spur employment opportunities especially in the countryside,” Mr. Bello said.
The DoF previously estimated that the bill would generate about 1.4 million jobs in 10 years.
The Philippine Ecozones Association and Confederation of Wearables Exporters of the Philippines, among other group of firms, have said that the TRABAHO bill will force them to lay off workers to deal with their loss of incentives.
The Philippine Economic Zone Authority (PEZA) has likewise warned of potential job losses and that their locators could pull out of the country, as export-oriented firms factor in expected tax savings in their decisions about where to locate operations. The DoF has argued that the adaptability of the Philippine work force is an incentive to stay.
The TRABAHO bill was approved by the House of Representatives in final reading in September, while it remains at the Senate ways and means committee, which has conducted only one hearing so far to deliberate the measure.
The committee’s chairperson, Senator Juan Edgardo M. Angara, has said that the panel will focus on reviewing the bill’s job impact before going forward with the legislative process.
The TRABAHO bill was also not part of the Senate’s priority bills to be tackled before the close of the 17th Congress in mid-2019. President Rodrigo R. Duterte in his previous State of the Nation Address said that he wanted the bill to be out of Congress before year’s end.
The bill, the second tax reform package after the Tax Reform for Acceleration and Inclusion (TRAIN) law, seeks to cut the corporate income tax rate gradually to 20% by 2029 via a two-percentage-point reductions every other year starting 2021.
Fiscal incentives will be limited to industries identified in the Strategic Investments Priority Plan (SIPP) and will make them subject to performance benchmarks. Incentives will be harmonized into a single menu, including: a three-year income tax holiday, after which, a special net income tax rate of 17% will be charged starting 2021; deductions for labor, research and development, training, and infrastructure development expenses; and some customs duty exemptions for up to five years. Following this, companies will be taxed at the prevailing corporate tax scheme.
Currently, income tax holidays can be as long as nine years, with locators enjoying a 5% tax on gross income earned in lieu of all other taxes in perpetuity.
“The reality is that the current incentives regime protects the interests of a select few highly profitable and large enterprises to preserve the special treatment they have been enjoying for decades without limits. The current system of granting incentives breeds unfairness and lack of accountability,” Mr. Dominguez said in the statement.
“Package 2 is a positive impact on the economy that will make smaller firms more competitive and will allow them to expand faster,” he added.
The DoF said that 90,000 active small and medium enterprises (SMEs) and more than a hundred thousand micro enterprises pay the regular 30% corporate income tax rate, which is the highest in the region, while the top 1,000 corporations enjoy fiscal incentives.
Mr. Bello added that the Department of Labor and Employment is still ready to assist workers transitioning between jobs through several labor market programs such as labor market information services, referral and placement services, and employment guidance and counseling services.
“With the proposed appropriated funds under Package 2, the DoLE can expand these programs to extend assistance and interventions that will further enhance employability and competitiveness through skills upgrading of those who will be transitioning between jobs,” Mr. Bello said. — Elijah Joseph C. Tubayan

DTI still hopes TRABAHO will pass this year

THE Department of Trade and Industry (DTI) continues to hope that the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill will be passed within the year after legislators signalled their unwillingness to pass it with elections looming.
“We hope to pass it in December, of course, with the provisions that we want,” Trade Secretary Ramon M. Lopez told reporters last week in Pasay City.
Key legislators have said TRABAHO is not a priority bill for the 17th Congress before it concludes in mid-2019.
The House of Representatives approved the bill, in the form of House Bill No. 8083, on third and final reading in September. The Senate has suspended its deliberations pending official government estimates on the bill’s impact on jobs.
The TRABAHO bill mainly seeks to reduce the corporate income tax (CIT) rate gradually from 30% currently to 20% by 2029 while repealing redundant incentives and limiting entitlements to a maximum of five years for industries included in the Strategic Investments Priority Plan.
Asked how later passage will affect the timetable for reducing the CIT, Mr. Lopez said: “Obviously, it will be delayed, so for out part we want the matter settled as soon as possible with the passage of the correct version of the bill.”
“New investors just want to know what the final structure will be,” he added, noting that discussions with businesses who have expressed interest to invest in the Philippines are not all that concerned about incentives.
“I don’t think they’re really concerned about the reform in terms of removing the perpetual nature and including a time bound policy. Everybody we talk to is not asking about those things. Even on other concerns, including political, Extra-Judicial Killings (EJK), inflation, these things are not brought up. All of their questions are basically about the state of the economy,” he added.
But while the timetable for the TRABAHO Bill’s passage might have to be adjusted, the DTI is still negotiating with the Department of Finance to tweak certain provision of the bill to unify their positions when they face the Senate.
Among these is the extension of the income tax holiday (ITH) perk to five years instead of the current proposal of three as well as the lengthening of the domestic input expense incentive to five years post-ITH.
Other changes sought by the DTI include the maintenance of value-added zero-rating for indirect and constructive exporters regardless of location; the reduction of the threshold to exempt an exporter from value-added tax to 70% exports from the proposed 90%; and the exemption of ecozone-registered projects from import duty similar to privileges enjoyed in freeports.
Senator Sherwin T. Gatchalian, who chairs the Senate’s Economic Affairs Committee, has said he hopes to continue deliberations on the TRABAHO bill as the Senate resumes session today. — Janina C. Lim

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