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Malacañang orders abolition of Philippine Sugar Corp.

MALACAÑANG has ordered the abolition of the Philippine Sugar Corp. (PhilSuCor) because “it no longer performs the objectives and purposes for which it was originally created.”
Executive Secretary Salvador C. Medialdea, on behalf of President Rodrigo R. Duterte, signed the Memorandum Order (MO) No. 30 on Oct. 25, authorizing the abolition of the PhilSuCor.
The Palace noted in the memorandum that the Governance Commission for GOCCs (GCG) “has recommended the abolition of the PhilSuCor.”
The functions and purposes of the company, according to the GCG, “duplicate or unnecessarily overlap with the functions, programs, activities or projects of the Sugar Regulatory Administration (SRA) and government financial institutions.”
It also said that the PhilSuCor “is no longer effectively performing the objectives and purposes for which it was originally created.”
The SRA is authorized by Republic Act (RA) No. 10659, also known as the Sugarcane Industry Development Act of 2015, to extend financial assistance through socialized credit to sugar cane stakeholders.
The memorandum noted as well that much of the financing needs of sugar mills at present “are already being provided by banking and financial institutions in addition to the lending facilities offered by the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LANDBANK).”
To implement this order, the GCG will be assisted by a Technical Working Group composed of representatives from Department of Agriculture (DA), Department of Finance (DoF), Department of Budget and Management (DBM), SRA, and Privatization and Management Office (PMO).
The PhilSuCor, according to its Web site, was established on Nov. 14, 1983 by virtue of Presidential Decree No. 1890.
“Its creation was brought about by the need to support the sugar industry at that time, it being one of the biggest and most reliable sources of foreign exchange earnings of the country. During that time, many of the obligations of the sugar mills, refineries and other sugar facilities acquired after the war at heavy financing cost to rehabilitate the damaged sugar industry remain unpaid and in arrears; it created an onerous burden, not only to their owners, but to the local financing institutions as well. PhilSuCor was thus, created, specially charged and empowered to design and implement a program for sugar mills, refineries and other sugar facilities,” according to the company’s profile. — Arjay L. Balinbin

Death tax amnesty in our lifetime

The topic of death is usually best avoided, except on All Saints’ and All Souls’ Day when we remember our loved ones who have departed from this world. We must accept that however, even during times of death, we still need to pay taxes. The estate tax is often paid late, and sometimes not at all, for various reasons — the emotional unpreparedness of those left behind, insufficient liquid assets, and ignorance of the requirements, among others. As a result, collections from the estate tax are among the government’s weakest sources of revenue.
In February 2017, House Bill No. 4814 or the “Estate Tax Amnesty Law” was approved by the House of Representatives and transmitted to the Senate. After a series of public hearings and consultations, the Senate Committee on Ways and Means reported out Senate Bill No. 2059, the “Tax Amnesty Act of 2018,” which is now pending on second reading. This bill was recommended in substitution to other Senate bills on tax amnesty and was meant to serve as the counterpart to House Bill No. 4814. The Senate bill actually includes a general tax amnesty on all unpaid internal revenue taxes imposed by the national government for the taxable year 2017 and prior years with respect to the estate tax, other internal revenue taxes, and tax on delinquencies, and measures addressing cross-border tax evasion.
Since many people are waiting for the approval of the law, it would be interesting to know the differences between House Bill No. 4814 and Senate Bill No. 2059 with respect to the estate tax amnesty to get an idea of the possible direction taken by the final version.
The House version covers estate taxes only for the taxable year 2016 and prior years, while the Senate version covers the estate of taxpayers who died on or before Dec. 31, 2017. The expanded coverage is beneficial especially for those who died within the taxable year 2017 since their estate may still apply for the estate tax amnesty once legislated. This cut off is most reasonable as it coincides with the implementation of the lower estate tax under the Tax Reform for Acceleration and Inclusion (TRAIN) law and has the effect of retroacting the reduced estate tax rate to all prior years.
The 6% rate for the estate tax amnesty is most likely the final rate that will be approved. Though the rate is the same as the reduced rate under the TRAIN law, the base will be different. While the amnesty base is also net estate, it shall be computed based on the law applicable at the time of death. This means that the deductions would only include the P1 million standard deduction and P1 million maximum for the family home. Under the TRAIN law, these have been increased to P5 million and P10 million, respectively.
As to the manner of computation of estate tax to be paid, under the House version, the computation prescribed is 6% of the decedent’s net estate. However, under the Senate version, the computation prescribed is 6% based on decedent’s 1. total net estate at the time of death, if no estate tax return was filed, or 2. net undeclared estate, if an estate tax return was previously filed with the BIR. The Senate version clearly addresses instances where an estate tax return has already been filed but which is under-declared, either intentionally or because of incomplete information at the time of filing. The Senate version also provides more flexibility when it expressly stated that the provisions of the NIRC on valuation, manner of computation, and other related matters shall apply suppletory, at the time of entitlement.
In the Senate version, the BIR was tasked in coordination with the applicable regulatory agencies to set up a system enabling the transfer of title over properties to heirs and/or beneficiaries, including cash withdrawals of the heirs on the bank account of the decedent, when applicable. Secondary to the settlement of the taxes, the updating of the records of ownership of properties should also be a priority of the government. The backlogs have many unfavorable repercussions including difficulties in the implementation of real property taxes and the failure of sellers to maximize property values because of unsettled title and ownership.
Based on previous rules, the bank account of the deceased is to remain frozen pending the settlement of the estate tax. Currently, however, the TRAIN Law has opened a window where the estate tax return will not be a prerequisite to withdraw funds from the bank account of the deceased. The BIR requisites before the heirs could demand the release of the funds have been clarified in Revenue Memorandum Circular (RMC) No. 62-2018. As such, the establishment of the system will really benefit the families of the deceased.
On another note, the immunities under the former such as the inadmissibility as evidence of the taxpayer’s estate tax amnesty returns in estate settlement and the non-examination of taxpayer’s books of account and other records of the taxpayer, are no longer included in the latter.
As to who may avail of the estate tax amnesty, under the House version, any person may avail of the estate tax amnesty by filing an Estate Tax Amnesty Return, whereas in the Senate version, only the legal heirs, transferees or beneficiaries, or the authorized executor/s, administrator/s may avail. So, if the person is not a legal heir, transferee or beneficiary, or an authorized executor, or administrator, he or she cannot file the estate tax amnesty.
In addition to the two bills, there is a House Bill No. 7105 which also proposes a general tax amnesty covering all internal revenue taxes including estate taxes. This bill requires those individuals who will avail, to pay an amnesty tax of 8% of the net worth or P10,000, whichever is higher. Under this bill, any person who wishes to avail of the amnesty should file to the BIR a notice and Tax Amnesty return accompanied by Audited Financial Statement or a Statement of Assets, Liabilities and Net worth (SALN) as of Dec. 31, 2017. It should be noted though, that the individual’s availment of the general tax amnesty will not cover the unpaid estate tax on the assets, even if the assets from the inheritance are included in the net assets on which the amnesty tax will be imposed.
Finance Undersecretary Karl Kendrick T. Chua has been reported as saying, “Once legislated, there will no longer be any tax amnesty for the next 25 years.” Therefore, both Houses, and the President who is the final approver of the law, should carefully consider all the various factors in approving whichever provisions will result in maximum benefit to both the public and the government. After all, a death tax amnesty can happen only once in a lifetime.
 
Joseph Eric Pocholo Briones is a senior of the Tax Advisory and Compliance Division of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.

US top admiral: Navigation in disputed sea continues

THE US NAVY’S top admiral said at a press conference at the Armed Forces of the Philippines headquarters on Monday that the United States will continue “freedom of navigation operations” in the South China Sea.
Also on Monday, Chinese State Councilor and Foreign Minister Wang Yi was in Davao City to discuss matters of cooperation with his Philippine counterpart, newly appointed Foreign Affairs Secretary Teodoro L. Locsin, Jr.
This is Mr. Wang’s second visit to the Philippines. His first visit last year also included Davao City, hometown of President Rodrigo R. Duterte, in his itinerary.
In Manila, US Chief of Naval Operations Adm. John Richardson said in a press conference with AFP Chief Gen. Carlito G. Galvez: “I would say that we will continue…this program of freedom of navigation operations, and that is a worldwide program. So it’s important to consider, I think, that we did dozens of these operations around the world to indicate our position for sort of illegitimate claims.”
“Just as when we have been present here for the past seven decades we will continue to be present and continue to advocate for freedom of navigation through international waters, this is an important part of the global commons,” Mr. Richardson also said.
For his part, Mr. Galvez said, “I am glad to say that we had fruitful discussion about the AFP and US Navy,…about the modernization of the Philippine Navy, efforts toward continuous regional security, and stability and the future engagement opportunities with the US military.”
In Davao City, the top diplomats of the Philippines and China downplayed a possible non-legally binding Code of Conduct (CoC) on the South China Sea.
“Perhaps we will not be able to arrive at a legally binding CoC, but it will be the standard of how people of ASEAN (Association of Southeast Asian Nations), governments of ASEAN, will behave towards each other. On which we honor: Never in aggression, but always for the mutual profits,” the Philippines’ Foreign Affairs Secretary Teodoro L. Locsin Jr. said at a joint press conference with his Chinese counterpart, Mr. Wang.
Mr. Locsin compared the CoC with the Global Compact on Migration, which he said is an agreement that is not legally binding, “but it is the standard of conduct for how civilized nations treat migrants.”
ASEAN members and China have already settled on a working draft of the CoC for further discussions.
For his part, Mr. Wang, in a translated statement, said, “Any document that we have signed, we will strictly abide by it and implement it.”
“We are very active, we are ready to work with other ASEAN countries to speed up CoC consultations. We also hope to conclude the consultations during the term of the Philippines as a country coordinator to China-ASEAN relations so that we can set up a set of regional norms to ensure peace and stability in the South China Sea,” said the minister from China, which claims most of the strategic waters.
Other claimants besides the Philippines are Brunei, Malaysia, and Vietnam, all ASEAN members.
“My second point about this is we have an open mind. China is open-minded about what specific content will be put into the text,” Mr. Wang added.
Mr. Wang was in town for a two-day visit, leading a Chinese delegation to discuss bilateral economic agreements with top Philippine officials, as well as other matters, including maritime cooperation.
Mr. Locsin said the visit “gives greater momentum to the ongoing engagement between Manila and Beijing,” and that talks on maritime cooperation are moving “in a positive direction.”
“While recognizing our differences and never compromising our respective core interests, we continue to discuss and explore avenues for maritime cooperation,” he said.
“We hold fast to our unwavering commitment to the Declaration of Conduct in the South China Sea. Through respectful dialogue with each other and with our partners in ASEAN, we are moving forward with astonishing amity in the negotiations toward a Code of Conduct,” Mr. Locsin added. — Marifi S. Jara in Davao City and Vince Angelo C. Ferreras in Manila

PAO moves to block Garin’s counter-affidavits

PUBLIC ATTORNEY’S Office (PAO) Chief Persida V. Rueda-Acosta said her office has moved to block the submission of counter-affidavits by former health secretary Janette P. Loreto-Garin on complaints in connection with deaths allegedly linked to the Dengvaxia vaccination.
Ms. Acosta told reporters this is so as not to delay the resolution of the cases. “Second batch na ito. Doon sa first batch of nine deaths, nine na namatay, nakapag-submit siya. So dito bakit kailangan pang hintayin ang sagot niya? So…pinapa-waive na namin ang karapatan niya dahil hindi niya in-appear-an itong hearing na ‘to,” she said of Ms. Garin’s non-appearance on Monday’s preliminary hearing by the Department of Justice (DoJ).
(This is the second batch. In the first batch of nine deaths, she was able to submit [her counter-affidavits]. So why do we have to wait for her answer? So we wanted to waive her right because she did not appear in this hearing).
Ms. Garin and 37 other respondents are supposed to file their counter affidavits on the second batch consisting of eight complaints. Only 23 of the respondents were able to submit their counter-affidavits.
But the others, including Ms. Garin were given by the DoJ panel until Nov. 5 to file their counter-affidavits.
In a text message to reporters, Ms. Garin’s legal counsel Jessie Andres said she has not been served any notice to appear before the DoJ or a copy of the new complaints. “She has not received any notice of hearing so it cannot be said that she was not present in any hearing. But we will immediately file the proper manifestation and ask the DoJ to furnish us a copy of the complaints,” he said.
Currently, the respondents, including Dengvaxia manufacturer Sanofi Pasteur, Inc. and distributor Zeullig Pharma Corporation, are facing a total of 17 complaints for reckless imprudence resulting in homicide and for violations of the Anti-Torture Act and Consumer Act.
PAO is set to file 10 more cases on Oct. 30, when preliminary investigation into the first batch of nine cases is set to be concluded. — Vann Marlo M. Villegas

Learning from Other Tax Systems

The Comprehensive Tax Reform Program seeks to implement a fairer, simpler, and more efficient tax system. Toward this end, it has implemented relatively lower tax rates under Tax Reform for Acceleration and Inclusion (TRAIN) Law and also targeting to lower tax on corporate income under Tax Reform for Attracting Better And High-quality Opportunities (TRABAHO). Unfortunately, this comes at the cost of increasing other tax rates.
This should stop being the default nature for offsetting measures. Lower tax rates do not necessarily mean lower tax revenues.
Across the Asia-Pacific, even developed countries, such as Korea and Japan, have effective tax rates lower than in the Philippines.
In the Revenue Statistics 2017 study of the OECD, the Philippines had a tax-to-GDP ratio of 17%. On a related note, the Doing Business 2018 reported that the Philippines had an effective tax rate of 42.9%.
In the same OECD study, Japan had almost double the tax-to-GDP ratio at 32% while Korea had 25.3%. While Japan had a higher effective tax rate than the Philippines, close to a quarter of it was due to mandatory contributions. Korea had a much lower effective tax rate at 33.1%.
Of course, lower tax rates could still mean lower revenues, as is the case with Singapore. In 2015, they had a tax-to-GDP ratio of 13.6%, almost four points lower than the Philippines. However, their tax rates are also significantly less. According to the Doing Business 2018 report, Singapore has an effective tax rate of 20.3% and of that figure, a significant majority arose from mandatory contributions. The effective tax rate of Corporate Income Tax, for instance, amounted only to 1.48%.
Needless to say, comparing the Philippine economy to the economy of developed countries is hardly a fair comparison. However, their policies in improving tax efficiency should be emulated.
According to the same OECD report, electronic services have increased the tax collection efficiency of these countries.
Japan’s innovations include online filing, online payment, and other website services. Korea’s tax agency provides online filing, online payment, integrated taxpayer accounts, digital mailbox, and other online services. Singapore provided almost the same menu of technological innovations, in addition to an enhanced data capture system.
The Philippines provided more electronic services than any of the three developed countries, yet the performance of electronic services remains dismal.
In Japan, 50% of the returns for personal income tax were filed using electronic services, along with 64% of the returns for corporate income tax, and 63% of VAT returns. In Korea, 91% of the personal income tax returns, 98% of the corporate tax returns, and 83% of the VAT returns were filed electronically.
For Singapore, 97% of personal income tax returns, 69% of corporate income tax returns, and all of the VAT returns were filed electronically.
The Philippines, despite having significantly more features, had close to insignificant numbers. Only 1% of all personal income tax returns, 14% of corporate income tax returns, and 16% of VAT returns were filed electronically.
Recently, the Bureau of Internal Revenue (BIR) has taken steps toward modernizing the tax administration. The eBIRForms platform has already been made mandatory for several industries.
In 2016, there were 924,450 active eFilers using eBIRForms, which increased by 13.5% in 2017. There were also 154,958 eFPS users in 2016, which increased also by 13% in 2017. For comparison, the number of taxpayers in 2016 and 2017 were 29.75 million and 32.72 million, respectively.
Of the 2.97 million increase in taxpayers from 2016 to 2017, only 17,240 Taxpayer Identification Numbers (TINs) were issued through the BIR’s eRegistration system.
As it is, the number of taxpayers using the electronic services of the BIR remains very little. Lack of public awareness about the electronic services is one of the factors cited by OECD.
For 2016, BIR’s Public Awareness Campaign comprised of two infomercials. For 2017, they held the National Tax Campaign Kick-off and a month-long campaign in regional and district campaigns. They also launched a website to promote the use of eBIRForms and electronic modes of payment.
While the 2017 campaign is a step in the right direction, it is still not enough.
One of the goals of Japan’s National Tax Agency is to enhance services for taxpayers and boost tax administration. One aspect of this goal is to provide information to taxpayers. Toward this end, they improved the agency’s website, conducted lectures to improve tax education, held briefings for taxpayers, provided readily available answers to inquiries, and held tax consultations.
Other aspects of their goal are enhancing the online tax system, improving the filing of tax returns, and diversifying the payment methods.
In addition to other countries’ policies, the features of their electronic services can be copied as well.
For instance, one of the key features in Singapore’s electronic services is the usage of pre-filled returns. Through this, the returns of taxpayers are automatically filled out based on third-party transactions, subject only to the taxpayer’s approval.
The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
 
Raymond A. Abrea is one of the 2017 Outstanding Young Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and Founding President of the Asian Consulting Group (ACG) and the Center for Strategic Reforms of the Philippines (CSR Philippines).
consult@acg.ph.
map@map.org.ph
http://map.org.ph

Institutional decline and garbled competition regulations

The Duterte government is known for political environmentalism and recycling — it recycles its heavily tainted officials, sacking them from one post only to be given another post in another government agency. The Bureau of Customs in particular is becoming more known as a “blinded” facilitator of multibillion pesos worth of imported shabu smuggled into the country.
The World Economic Forum (WEF) publishes an annual report, the Global Competitiveness Index (GCI) and GCI 2018 was released two weeks ago. The good news is that the overall rank of the Philippines has stabilized at 56th-57th the past three years.
The bad news is that the country’s rank in Pillar #1, reliability of institutions, obviously the most important out of 12 pillars and components, has been declining and eroding. There is overall decline of the rule of law, decline of reliability of the police and judicial independence, and increase of organized crimes and terrorism over the past four years. I skip the 11 other pillars and focus on some components of pillar #1. The trend can be depressing (see table).
GCI Indicators and PH rank
Where investors are less secure about their own safety and their businesses, we can expect a flatline if not decline in business optimism, which is countered somehow by the Philippines’ most important advantage now — a big and young population, meaning more workers and entrepreneurs, more producers and consumers.
Meanwhile, a garbled competition policy by the Philippine Competition Commission (PCC) penalizing both Uber and Grab for their merger last April will be another uncertainty factor that potential big foreign players will note if they ever think of coming in.
Among the most important factors for real competition to kick in is the existence of a “contestable market,” which is zero or minimal cost of entry and exit. New players entering a sector anytime so long as they have sufficient resources, then exiting it when the projected revenues and profit do not materialize and before they lose more money.
The exit of Uber in the Philippines and other ASEAN countries was a global headquarter decision, not country manager’s decision. When Grab became the surviving entity, it inherited the expectations and combined demand level (about 600,000 bookings a day) but not the combined supply of transport network company (TNC) cars and drivers because LTFRB has not acted on the franchise application of 8,000 cars out of total 19,000 Uber cars before the merger.
So while demand remains the same but supply has declined, the supply curve shifts to the left, the immediate results are (a) longer waiting time for passengers, and (b) higher fares via higher surge pricing as a form of price rationing. Those who are unhappy with the higher price will seek the regular taxi or aircon vans/UV express, P2P buses, regular buses, and so on.
Thus, PCC’s penalty of P16 million vs Grab and Uber is wrong. The decline in supply of TNC cars, the longer waiting time by passengers, was caused by LTFRB, not by the merger. Penalizing players for a problem caused by another government bureaucracy is a policy signal to potential big players and competitors that the same level of penalties and harassment can be applied to them someday once they come here. There is high entry cost, high exit cost, far out from being a contestable market. Bad business signal.
Another garbled transportation policy is the heavy fare control of buses, jeepneys, taxi and UV express imposed by the LTFRB by granting a small fare hike purportedly to “protect the public.” When the operating costs (high oil taxes and prices, etc.) keep rising but the revenues per passenger do not catch up, public transportation companies will either (a) jampack their buses and jeepneys with more passengers, and (b) cut costs somewhere like extending the use of near-bald tires, using cheaper but less reliable spare parts. Either way, passenger convenience and safety is compromised, which defeats the LTFRB’s purported goal.
Government must focus on the rule of law, not rule of incumbent politicians and bureaucracies. More competition favors the consumers and passengers. More regulations and prohibitions only favor bureaucrats and their corrupt ways.
 
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers
minimalgovernment@gmail.com

Arroyo is again acting like she’s the prime minister

On Oct. 17, 2018, House of Representatives Speaker Gloria Arroyo spoke before the delegates to the 139th International Parliamentary Union (IPU) General Assembly at the Centre for International Conference Geneve in Geneva, Switzerland. Mrs. Arroyo was head of the Philippine delegation to the IPU assembly.
Five days later, Mrs. Arroyo said she would ask the Senate to withdraw from the IPU over the latter’s supposed interference in the country’s judicial system. The IPU had expressed an intention to visit the country to determine the “political persecution” of opposition Senators Leila M. de Lima and Antonio F. Trillanes IV.
In reaction to the Speaker’s proposal, Senate Minority Leader Franklin M. Drilon, who was a member of the Philippine delegation to the assembly, released this statement:
“House Speaker Gloria Macapagal-Arroyo should mind her own and we will mind our own.
“I oppose the proposal of Arroyo that we withdraw from the IPU just because this global body of parliamentarians expressed its concern over the political persecution of our fellow Senators Leila de Lima and Sonny Trillanes.
“Arroyo’s proposal is despairing, defeatist and will be seen by the world as a tacit admission that indeed critical lawmakers are being persecuted under the Duterte administration.
“It is folly for Speaker Arroyo to suggest that the IPU should be punished for performing its mandate to protect fellow members of the legislature from abusive and over-reaching tendencies of certain officials of the executive.
“I speak as a former chairman of the IPU Committee on Human Rights of Parliamentarians.
“The respect for human rights, not only of members of Parliament, but of ordinary citizens, is a basic pillar of democracy. We must all do our share to uphold civil and human rights as well as the rule of law, both here and abroad.”
Senator Panfilo Lacson, another member of the Philippine delegation, also expressed opposition to Mrs. Arroyo’s plan. Said he: “First, Speaker Arroyo’s recommendation is based on the wrong premise. The IPU has yet to act on its Human Rights Committee’s recommendation to the IPU Governing Council. Having said that, it is premature, if at all, to denounce the IPU as a whole, much less withdraw membership from the body.
“Second, by withdrawing, it would imply that the Philippine Senate acknowledges the political persecution of opposition senators.
“Contrarily, the recent resolution of Sen. Trillanes’ coup d’etat case by the Makati RTC Branch 148 is proof enough that the judicial process works in our country, and that the separation of powers and the independence of the judiciary from the executive and legislative is evident and clear.
“Third, it is the Senate, not the House of Representatives, that is a member of the IPU, so I’m not sure where Speaker Arroyo is coming from.”
The IPU is a global organization of national parliamentarians from 178 member states. It was established in 1889 by Frederic Passy of France and William Randal Cremer of United Kingdom. Its initial objective was the arbitration of conflicts. It was instrumental in the establishment of the Permanent Court of Arbitration in The Hague.
Its mission has evolved through the years towards the promotion of democracy, equality, human rights, development and peace. Through inter-parliamentary dialogue, the members work together for positive change, both in their own countries and at international level. It was originally for individual parliamentarians but has since transformed into an organization of the parliaments of sovereign states.
It is the duty of the members of the IPU to submit the resolutions of the IPU within their respective parliament, in the most appropriate form; to communicate them to the government; to stimulate their implementation and to inform the IPU Secretariat, as often and fully as possible, particularly in its annual reports, as to the steps taken and the results obtained. The IPU Assembly (formerly known as the Inter-Parliamentary Conference) is the principal statutory body that expresses the views of the Inter-Parliamentary Union on political issues.
When the Philippine Senate applied for membership in the IPU and was accepted, it took cognizance of that mission and agreed to perform the stated duty of a member. It is very clear from the IPU’s mission that it has the prerogative to look into possible violation of the human rights of Senators de Lima and Trillanes who are members of the Philippine Senate which is a member organization of IPU. And the IPU states that it is the duty of the member, in this case the Philippine Senate, to submit the IPU resolution to the government.
It is wrong for Mrs. Arroyo to accuse the IPU of interfering in the judicial system of the country. In the first place, what the IPU wants to look into is the political persecution of Senators De Lima and Trillanes. As our judiciary is supposed to be apolitical, it cannot be the persecutor. Or has Mrs. Arroyo tacitly admitted that our judiciary is much politicized? Pundits say she did politicize the Supreme Court.
Also, she did not consider herself meddling into the internal affairs of member parliaments when in her speech before the general assembly she told the delegates that in order for the world to attain peace and cope in the age of innovation and technology, focus must be set towards encouraging more youth in science and engineering courses. Nobody accused her of meddling into the internal affairs of member parliaments because what she urged is in accordance with the IPU mission of development.
But Mrs. Arroyo did meddle into the affairs of a body of which she is not a member. As Sen. Lacson has said, it is the Senate, not the House of Representatives, that is a member of the IPU. She is Speaker of the House of Representatives. She has no business telling the Senate to withdraw from the IPU. Maybe she thinks as Speaker she is the prime minister.
 
Oscar P. Lagman, Jr. is a member of Manindigan! a cause-oriented group of businessmen, professionals, and academics.
oplagman@yahoo.com

DENR fines 219 establishments on day four of Boracay reopening

THE Department of Environment and Natural Resources (DENR) said on Monday that 219 business establishments in Boracay have been fined a total of P43 million for violating environmental laws after the tourist island was reopened last Friday, Oct. 26, following a six-month rehabilitation.
Violations include not having a permit to operate from the Environment Management Bureau (EMB) and discharging untreated wastewater. Penalties range from P10,000 to millions of pesos depending on the length of time and gravity of offenses.
“The DENR, together with other concerned government agencies, is firm in its resolve to clean not only the waters and air of Boracay and to manage its solid waste. It also wants to clear Boracay of irresponsible and greedy business people who have placed care for the environment their least priority,” DENR Undersecretary Rodolfo C. Garcia said in a statement.
“We will continue to monitor all establishments and impose the necessary penalties should they be found breaking laws,” according to Mr. Garcia. — R.J.N. Ignacio

Duterte vows no martial law in remainder of term

By Arjay L. Balinbin, Reporter
PRESIDENT Rodrigo R. Duterte said he will not declare martial law in the second half of his term, but he will use the “strongest tools” to deal with crimes in the country, especially drug trafficking.
“It’s about halfway of term now exactly….If I cannot do miracles for this country, then I will just say that you know let us just respect each other….Do not force me to do something….” Mr. Duterte said in a televised speech during the birthday and thanksgiving party of former foreign affairs secretary Alan Peter S. Cayetano in Davao City last Sunday night, Oct. 28.
He added: “I will not declare martial law but just like what I’m doing, I will go for the strongest tools, political tools in my hand. Drug problem, it will remain the same especially if you are a drug lord, I would be happy to kill you. My God, I will be happy to kill you. Just don’t f___ with my country.”
The Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP) are set to start their assessment of the implementation of martial law in Mindanao this week to decide whether it should be extended for another year.
Also last Sunday, National Democratic Front of the Philippines (NDFP) chief political consultant Jose Maria Sison said Mr. Duterte will “declare martial law nationwide before the May 2019 mid-term elections.”
“They have decided to make the martial law proclamation as early as January 2019 in order to ensure that they control and determine the results of the elections,” Mr. Sison also said in his statement.
He added that Mr. Duterte and his allies “are mobilizing government agencies to hype the threat of a supposed rolling ouster plot by Reds, yellows and unreliables within the AFP and PNP and to step up the vilification campaigns, intrigues and repressive actions.”
Mr. Duterte, in his remarks in Davao City, also challenged Mr. Sison to give him reasons for the government and the Communist Party of the Philippines (CPP) to go back to the negotiating table.
“Communist, give me — give me a good — Jose Maria Sison give me a good reason to go back to the bargaining table. If there is none or if it’s just a repeat of what we have discussed earlier, then that will not suffice,” he said.

Further imperiling Philippine rice

THE government’s accelerated move to impose rice tariffs and lift quantitative restrictions on rice imports is touted to ease inflation. It comes with a heavy price in the long term, however, as it puts in peril the livelihood of millions of Filipino rice farmers. Amid runaway inflation triggered by its regressive tax reform program, the Duterte administration, in an unprecedented and probably Constitutionally questionable move, issued Administrative Order (AO) 13 ahead of the passage of a Rice Tariffication Bill. The President himself even declared that the country can now import as much rice as it wants.
The country’s economic managers point out that while the Rice Tariffication Bill would open the floodgates for cheaper rice that could kill local farmers, it would nevertheless raise revenues from importation to fund the agriculture sector’s competitiveness and to improve farmers’ incomes. This remains to be seen though, since the Philippine government has historically neglected the sector, allocating a mere 5% of the national budget over the last two decades.
Even the quasi-government institution Phililppine Institute for Development Studies (PIDS) projects a 29% decline in rice farmers’ incomes with a P4-decrease in palay farmgate prices when rice tariffication is implemented. Around 4 million rice farming families will be affected. Even experts attending the recently concluded 5th International Rice Congress are giving fair warning that the Philippine government should strike a balance between short term easing of price increases and long-term impact on farmers’ incomes and eventually again, food prices.
HISTORICAL NEGLECT
Farmers continue to suffer the large non-implementation of land reform and utter lack of government support in terms of capital, subsidies, and facilities.
This neglect is bolstered by the country’s accession to the World Trade Organization — Agreement on Agriculture (AOA), which pushes for the liberalized trade of agriculture products and decreased the State’s role in the sector and even in the staple rice industry.
Among the 7-8 of 10 farmers who lack the means to amortize land that is awarded to them, rice farmers are forced to pay land rent under leasehold agreements. Government reports that 3-4 of 10 farmers are forced to enter loans on usurious terms. They also pay rent for threshers and harvesters, and are usually in a cycle of indebtedness to equipment owners, some of whom are also their palay buyers.
The Philippine government’s agriculture expenditure vis-a-vis total agricultural production has recently fallen below the WTO-allowed percentage of 10% at only 6.3% in 2016 and 7.0% in 2017. Lacking government support for irrigation and palay procurement has also particularly contributed to the sorry state of farmers.
Irrigated lands as of 2017, for instance, cover only 60% of 3.13 million hectares total potentially irrigable areas. Irrigating 100% at the current 4 MT per hectare productivity for at least two harvest seasons can yield palay equivalent to around 25.3 MT, which translates to 16.4 MT of rice based on a 65% recovery rate. This is more than enough to supply the country’s demand for the food staple of roughly 13.1 MT as of 2017.
RUINED MANDATE
The National Food Authority (NFA) has never fulfilled its mandate of procuring 10% of local palay production. From an average 5.4% procurement rate in the 1980s, NFA’s average procurement went down to 1.6% from 2010 to 2017 and even a negligible 0.8% of total local palay production from 2013 to 2017. The P17 per kilo palay procurement price of the NFA is also too low and has not increased in the last 10 years.
As a result of deregulation, government subsidy for the NFA has also not increased. Its 2017 budget of P7 billion for food security stabilization or for palay procurement, for example, that can only last 8 days for rice supply even went down to P5.9 billion for 2018.
The NFA has resorted to importing rice instead of buying from Filipino farmers. It also reached the point that the agency lent its tax exemption subsidy to private importers, using P12 billion government tariff revenues. It also diverted its P5.1 billion Food Security Program funds to pay its debts, contributing further to its low accomplishment rate of 18.6% in 2017, as discovered by the Commission on Audit (COA).
While private importers get to be subsidized by the government to buy rice from foreign farmers, Filipino rice farmers often borrow from rice traders and big landlords for their capital in rice production and other household expenses. Subsequently, they are forced to sell their produce to traders at low prices even if prevailing prices in the market are high.
BOOSTING PRODUCTION
Thailand and also Vietnam, from which the Philippines imports rice, subsidize their farmers beyond the WTO-set ceiling. Vietnam pours around US$400 million to US$1 billion to agricultural support, while Thailand spent US$27.7 billion in subsidies to its farmers from 2011-2014. Also, while Philippine rice farms are more productive than Thailand’s, the latter is still able to produce more rice. This is because Thailand continues to expand its rice harvested area — 11.8 million hectares in 2018 — while Philippine rice farms are diminishing — only 4.8 million hectares in the same period — due to plantation expansion.
The Philippine government can increase the share of agriculture in the national budget in order to realize the full potential of Philippine rice productivity and increase farmers’ incomes and livelihood.
In terms of procurement, the NFA needs roughly P50.56-P126.4 billion to buy 10-25% of local palay production. This would ensure a buffer stock of sufficient rice supply for 51 to 128 days. At P20 buying price, this is also estimated to raise the income of Filipino rice farmers by P12,000 or to P80,000 from the current P68,000 gross income from 80 cavans per hectare bought at P17 per kilo.
Makabayan bloc lawmakers, meanwhile, recommend P185 billion for rice industry development to be implemented within three years or about P61.7 billion annually. The recently filed House Bill (HB) No. 8512 or Rice Industry Development Act allocates P25 billion for subsidies to rice production and socialized credit, P45 billion for irrigation development, P20 billion for irrigation systems repair and rehabilitation, P30 billion for post-harvest facilities development, P50 billion in farm inputs, and P15 billion for research and development of sustainable agricultural technologies. The Genuine Agrarian Reform Bill or HB 555 estimates P313 billion or P62.6 billion annually for five years for land distribution.
Striving to realize the full potential of the Philippine rice industry will not only increase farm productivity and farmers’ incomes. A sufficient, local and government-regulated rice industry means that the country will have no need to import its food staple and can set reasonable and affordable prices. The country may also consider exporting rice again once the revived rice industry begins to reap its gains.
Government’s projected P28 billion in annual import revenues under rice tariffication falls very short of the amount needed to develop the local rice industry. Local farmers are also not hopeful that the tariffication earnings will be utilized for their benefit. For instance, P8.5 billion of the accumulated P13 billion for the Agriculture Competitiveness and Enhancement Fund (ACEF) during the Arroyo administration was reportedly lent to borrowers out of political patronage. Due to run until 2015, the program was suspended in 2010 upon COA reports that its implementation was marred with mismanagement and corruption.
It also is wrong to make farmers’ productivity a precondition to be ready for rice tariffication. Government should have long laid the foundations for Philippine agriculture to be competitive globally.
The underdevelopment of agriculture and the absence of an independent and advanced national industry factor hugely in government’s lack of control over the prices of goods. Instead of strengthening local production and building local industries, government continues neoliberal policies that put the Philippines under foreign dictates and local land monopoly control and domination over land, resources and trade. This counts among other neoliberal policies that allow giant corporations, oligarchs, and cartels to flourish amid landlessness, depressed wages, privatization of services, and unjust taxes on basic commodities.
To cope with worsening inflation, Filipino farmers have no need for rice tariffication. They need government to provide increased and direct budget support in terms of land reform and specifically devoting land for local food production, and free irrigation. Government can also utilize national funds to support price controls. Removing consumption taxes and repealing the regressive TRAIN are also within government’s control. Additionally, government should persecute and hold cartels accountable.
Parliamentary and other platforms offer a wide range of farmers’ proposals: end land monopoly, distribute land for free, support rural development. These compliment rejecting neoliberal policies and agreements that subject Philippine agriculture to heavy blows. Only then can the country be prepared for any global dealings or trade involving agriculture.
 
IBON FEATURES

Another oil price rollback this week

OIL COMPANIES on Monday cut the prices of petroleum products, marking the third straight week of rollback to follow the direction of prices in the international market. Phoenix Petroleum Philippines, Inc. was the first to cut prices on Saturday, with a P1.65-per-liter (/L) cut for gasoline and a P0.60/L reduction for diesel. The other companies followed on Monday, at P1.50/L for gasoline, P0.70/L for diesel and P0.65/L for kerosene.”These reflect movements in the international oil market,” said Petron Corp. Last week, oil companies cut the per liter prices of gasoline by P1.85 to P2.00, diesel and kerosene by P0.90 each. — Victor V. Saulon

NDRRMC on full alert with 2.4M families seen at typhoon’s path

THE OPERATIONS Center (OC) of the National Disaster Risk Reduction and Management Council (NDRRMC) was placed on red alert status on Monday as typhoon Rosita (international name: Yutu) was expected to make landfall in parts of Isabela and Aurora provinces on Tuesday morning, Oct. 30. “We are currently expecting the typhoon to make landfall somewhere in southern Isabela and northern Aurora tomorrow between 5 to 7 in the morning, and, as of now, the NDRRMC Operation Center is on red alert and therefore everybody, all the 44 member agencies, including the uniformed services are on standby,” NDRRMC Spokesperson Edgar L. Posadas said in a press briefing at the Palace. In another briefing, Mr. Posadas warned that “possible landslides may occur in the Cordillera Administrative Region even without acquiring the 100 millimeter average accumulated rainfall.” He added that “290 cities and municipalities are at risk,” and about “12.02 million individuals or 2.40 million families will be affected.” The official also cautioned those travelling for the Nov. 1 long weekend to “please wait for further announcement relevant to the resumption of sea trips.” — Arjay L. Balinbin

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