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Cebu to host 2 major air-travel conferences in 2019

CEBU will host two major aviation-industry events next year which officials said will help promote its status as a international gateway.
In a forum Friday, Tourism Secretary Bernadette Romulo-Puyat said Cebu will be hosting Routes Asia, an international air travel convention.
“We are excited to inform you that Cebu will be hosting Routes Asia,” she said, calling it the biggest aviation and route development event in Asia.
“We expect 800 delegates, 100 airlines, 200 airports, 30 tourism authorities, and 20 speakers at the event,” she added.
She added that when the Philippines hosted Routes Asia in 2016, it provided an opportunity to promote the country’s destinations to route planners and network developers in Asia.
In the year after the conference — 2017 — the Philippine market grew by nearly 1.5 million international air seats, she said.
The Department of Tourism (DoT) also announced that Cebu will host a Centre for Asia-Pacific Aviation (CAPA) conference in June.
“In addition to this, Cebu will also be hosting CAPA Low-Cost Carrier Summit from June 10 to 11 in 2019,” Ms. Romulo-Puyat said.
CAPA is a Australia-based aviation industry think tank.
Ms. Romulo-Puyat added Routes Asia and the CAPA Summit offer opportunities for industry networking.
“Our hosting of two major aviation events in a single year is a milestone and part of our route development efforts under the national tourism development plan. These events are opportunities for the Philippines to promote its international gateways to industry decision makers from major tourist source markets around the world,” she said. — Gillian M. Cortez

Mandaluyong local revenue declines 25% in 2017 — BLGF

MANDALUYONG CITY’S locally-generated revenue — a measure of its fiscal independence — declined 25.25% in 2017 to P3.90 billion, the sharpest fall among the Metro Manila’s municipalities, the Bureau of Local Government Finance (BLGF) said.
In its preliminary Statement of Receipts and Expenditures for 2017, the BLGF said Mandaluyong’s business tax collections declined sharply to P2.20 billion in 2017 from P3.6 billion, which offset a 6.22% gain in real property tax collections to P1.12 billion and a 15% rise in other taxes to P263 million.
The BLGF monitors the financial health of local governments by measuring their ability to generate their own revenue. By law, all local governments are guaranteed a share of national government revenue, providing them a baseline income, though the BLGF, an agency of the Department of Finance, prefers that they maximize their own independent funding capability.
Parañaque City posted the highest growth in locally-generated revenue in 2017 of 33.14% to P4.2 billion. Taguig City posted the biggest increase in total tax revenue at 54.70% while Navotas City, non-tax revenue rose 105.74%.
In terms of locally-generated revenue, the top incomes were posted by Quezon City (P15.2 billion), Makati City (P13.7 billion) and Manila City (P10.4 billion).
The data, which do not have results the cities of Muntinlupa and San Juan, showed a 3.53% gain in locally-generated revenue for the National Capital Region to P77.10 billion. — Vince Angelo C. Ferreras
How much revenues did metro manila LGUs collect in 2017?

On filing prior applications for VAT zero-rating of sales

The Bureau of Internal Revenue (BIR) recently issued an advisory informing taxpayers that the Large Taxpayers Service and Assessment Service will continue to receive and process applications for Value Added Tax (VAT) zero rating on the sales of goods and services by suppliers of Registered Business Entities (RBEs), who were granted incentives by Investment Promotion Agencies (IPAs) under special laws. The said advisory also informed the taxpaying public that they need to follow the existing guidelines and procedures for these applications to be processed, which refer to Revenue Memorandum Order (RMO) No.7-2006 issued in 2006.
The Tax Incentives Management and Transparency Act (otherwise known as the Republic Act No. 10708, or the TIMTA Law) defines RBEs as any individual, partnership, corporation, Philippine branch of a foreign corporation, or other entity incorporated and/or organized and existing under Philippine laws, and is registered with an IPA. IPAs include the Board of Investments (BoI), the Philippine Economic Zone Authority (PEZA), the Bases Conversion and Development Authority, and the Subic Bay Metropolitan Authority (SBMA), among others.
The Philippines adheres to the destination principle for VAT. Under this principle, goods and services are taxed only in the country where these are consumed. Therefore, exports are zero-rated, but imports are taxed.
Various court rulings have explained that applying the destination principle to the exportation of goods means that the automatic zero-rating would be a primary benefit for the seller/exporter, who is directly and legally liable for the VAT. Such practice makes the seller internationally competitive by allowing the refund or credit of input taxes that are attributable to export sales. On the contrary, effective zero-rating is intended to benefit the purchaser/supplier of the exporter who, not being directly and legally liable for the payment of the VAT, would ultimately bear the burden of the tax shifted by the suppliers.
RBEs are given full relief from VAT, with the goal of making the Philippines a prime location of internationally competitive economic zones. This is in line with our country’s goal to be an exporting nation under Republic Act (RA) No. 8944 (Export Development Act of 1994).
Looking back, RA No. 9337 or the Reformed Valued Added Tax Law, amended portions of the 1997 Tax Code, but maintained that sales to export-oriented enterprises, and export sales under Executive Order (EO) No. 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws are still subject to zero percent VAT. Subsequently, the BIR issued RR No. 16-2005 dated Sept. 1, 2005, or more commonly known as the Consolidated VAT Regulations of 2005, which require that, except for Export Sale under Sec. 4.106-5(a) and Foreign Currency Denominated Sale under Sec. 4.106-5(b), other cases of zero-rated sales need prior application with the appropriate BIR office for effective zero-rating.
Thereafter, the Commissioner of Internal Revenue at that time issued Revenue Memorandum Order (RMO) No. 7-2006, prescribing the regulations to implement the processing of applications for effective zero-rating. Thus, without an approved application for effective zero-rating, the transaction otherwise entitled to zero-rating shall be considered exempt.
Hence, it is important to understand that approval for VAT zero-rating is required only for effectively zero-rated transactions based on RMO No. 7-2006.
At that time, effectively zero-rated transactions include:

1. Sale of raw materials or packaging materials to export-oriented enterprises, whose export sales exceed 70% of total annual production;

2. Export sales under Executive Order No. 226 and other special laws;

3. Sale of goods, supplies, equipment, and fuel to persons engaged in international shipping, or international air transport operations;

4. Sales to persons or entities whose exemption under special laws or international agreements, to which the Philippines is a signatory, effectively subjects such sales to zero-rate;

5. Services rendered to persons or entities whose exemption under special laws or international agreements effectively subjects the supply of such services to 0% rate;

6. Services rendered to persons engaged in international shipping, or international air transport operations, including leases of property for use, and;

7. Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70% of total annual production.

For the first, second, and seventh items, these transactions are still subject to 0% VAT under the RA No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act, but will be subject to 12% VAT upon the satisfaction of the conditions, which include the establishment of an enhanced VAT refund system.
In 2007, the Secretary of Finance issued RR No. 4-2007 which considered as constructive exports all sales to export processing zones pursuant to RA No. 7916 (Special Economic Zone Act), as amended by 7903 (Zamboanga City Special Economic Act), 7922 (Cagayan Special Economic Zone Act) and other similar export processing zones; and sales to enterprises duly registered with SBMA pursuant to RA No. 7227. Thus, RR No. 4-2007 changed the classification of sales to enterprises registered with SBMA, PEZA, the Clark Development Authority, and other export processing zones under the said provision, from effectively zero-rated sales to automatic zero-rated sales, giving the same treatment to sales made to BoI-registered enterprises. To note, sales made to BoI-registered enterprises were already treated as subject to automatic zero-rating, hence no prior application was needed.
Moreover, RR 4-2007 also deleted the entire provision on the requirement of prior application for VAT zero-rating for all transactions. Others insisted that deleting the provision was an oversight in the drafting of the said regulations. What they perhaps failed to notice was that a change in the nature of the zero-rating of the sales to export processing zones from being effectively zero-rated, to automatic zero-rating, would actually mean that no prior application would be needed, since automatic zero-rating does not require prior application, unlike an effective zero-rating.
Given the landscape, could tax advisories have the same effect as BIR revenue regulations, which overturn RR 4-2007? Could it be treated like a Memorandum Circular issued merely for the internal administration of the BIR?
It also bears noting that as early as 2005, the Supreme Court held that BIR regulations additionally requiring an approved prior application for effective zero-rating cannot prevail over the clear VAT nature of transactions as can be perused from the supporting documents. It emphasizes that, other than the general registration of a taxpayer as a VAT taxpayer, the law does not require an additional application to be made for such taxpayer’s transactions to be considered effectively zero-rated.
The Supreme Court also held that the additional requirement grants unfettered discretion to officials or agents who, without fluid consideration, are bent on denying a valid application; and that administrative convenience cannot thwart legislative mandate.
It would be beneficial then for the BIR to consider revisiting this tax advisory, if only to further support the ease of doing business which is one of the main thrusts of the current administration’s 11-point Economic Plan for the Philippines.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
 
Cherry Liez O. Rafal-Roble is a Tax Senior Director of SGV & Co.

Bring down electricity prices and the inflation rate will go down

A sure way to bring down prices in any market is to replace monopoly with open competition. And if that market supplies a good that almost everyone relies on, then the cascading impact of lower prices will surely pull the inflation rate down.
Open competition does not mean a few big suppliers. It can include a few big suppliers, but it should also be open to more medium-sized suppliers and many smaller suppliers.
The retail electricity market, which is a kilowatt-hour (kWh) market, is now ready for open competition, thanks to rapid technological developments and price declines in distributed generation.
Leading the pack is the solar industry, which has been enjoying open competition for sometime. This is why rooftop solar prices continue to decline, from P100,000/kW a few years ago to lower than P80,000/kW today. This has brought down its levelized cost (cost averaged over a power facility’s lifetime) below P6/kWh, lower than any utility rate anywhere in the country.
If given legal protection by Congress from harassment by powerful distribution utilities and electric coops (DUs/ECs), distributed generation today can bring open competition in the electricity sector through neighborhood grids. These “microgrids” will not only pull down electricity prices and the inflation rate. They can also energize faster the remaining 11% of Filipinos who have been left behind by unresponsive DUs/ECs.
The unique advantages of the solar industry, combined, suit open retail competition:

• It is the most openly competitive industry in the electricity sector, with some big players, more medium-sized players, and many small players, giving consumers a wider choice in prices and quality.

• Since electricity from rooftops go straight to the consumer, it avoids transmission and distribution costs, high system losses and various other charges, making it the cheapest daytime source of electricity today. Declining solar prices will also insulate us from the impacts of volatile oil and coal prices.

• Solar facilities can be built in weeks or months a few days in emergency situations like responding to typhoon aftermath. Thermal power plants take years.

• Solar expansion can be done in kilowatt steps, with capital expenses below P80,000/kW. Other technologies expand in megawatt steps, with capital expenses above P100M/MW. The low incremental expansion costs reduce capital and project risks. This also enables quick adjustments to deal with unexpected changes in demand.

• Solar produces clean power with no local toxic or greenhouse gas emissions.

• Unlike other power sources, rooftop solar reduces demand on the grid. The lower grid demand reduces grid system losses and the need for grid expansion. These also benefit DUs/ECs and other consumers.

• Households do not even need to buy solar panels. It is now possible for solar providers to install solar panels on rooftops, yards and other private space and sell the kilowatt-hours directly to consumers and their neighbors. DUs/ECs treat these microgrids as encroachments on their exclusive franchises. This is why solar industry players need protection from DU/EC harassment, so that open competition can flourish.

Of course, the competition in the kWh market should be opened not only to solar players but to other big, medium and small players that can sell kWh directly to consumers.
Once many players are allowed to compete in direct kWh sales, DUs/ECs will need to do better, or they will lose their market to new players. This is what market competition is all about. This is what will pull down prices and, eventually, the inflation rate.
The government has created small windows, like the qualified third-party (QTP) mechanism or the green energy options (GEO) for this to happen, but the bureaucratic maze, strict requirements, and extra impositions can only be hurdled by a few players.
plug
How can new players be protected from harassment?
First, existing barriers should be removed. Because they see generation embedded within existing DU/EC franchises), microgrids, and rooftop solar as serious threats to their business model, DUs/ECs have put up barriers to the spread of such technologies. They have turned net metering into a net billing system that benefits them and disadvantages solar rooftop owners. Some have refused to implement or pretended ignorance of this provision of the Renewable Energy Act. Others have imposed unnecessary and onerous requirements and fees like distribution impact studies, distribution asset studies, meter reading charges, LGU permitting requirements, and so on. They have installed unidirectional meters, which can double-charge grid-tied solar owners. Congress should declare these barriers to entry anti-competitive and prohibit them.
Second, new players should be allowed to set up rooftop or small ground-mounted solar or other facilities anywhere in the Philippines and to sell the electricity to the rooftop owner and the neighborhood. A 10-kW system (around P800,000) is more than enough to start selling to neighbors. It should not need a congressional franchise. Given the continually declining solar and storage prices, such open competition will keep pulling down electricity prices. It will give even the poorest households access to cheaper electricity.
To be fair, even small electric utilities and coops are hobbled by stifling government regulations and interference in price-setting or production targets. Because of regulatory capture, the biggest DUs can easily deal with government agencies through their vast political connections and sheer market power.
The small DUs/ECs suffer most from the byzantine regulations, which require government approval for the slightest move that might remotely affect prices. This creates opportunities for graft and corruption among government energy officials, even leading a few to suicides. Because of the huge burden of regulations on their backs, small DUs/ECs find it hard to move quickly and efficiently, further adding to the invisible costs of doing business at the expense of consumers. Thus, they cannot compete effectively against highly efficient and technologically-enabled new players, which are increasingly able to offer much better services at lower cost to consumers.
Once open competition is in place, market forces can take care of prices and quantities without need for a government approval process, as big, medium and small microgrid players compete with existing DUs/ECs.
The government’s role is still badly needed in keeping out substandard equipment and components; ensuring technical interconnectivity of equipment and non-discriminatory peer-to-peer interconnectivity between grids; accrediting third-party certifying bodies; and encouraging easier-to-access and lower-cost financing.
House Bill 8179 is now pending in Congress, giving a big solar player a non-exclusive national franchise to sell kWh directly to consumers. The proponent needs the franchise to protect it from harassment by DUs/ECs.
Congress should use the debate around H.B. 8179 to craft and pass legislation introducing open competition in the retail electricity sector and extending the protection that H.B. 8179 provides not just to one big player but to all distributed energy providers.
It is open competition that will bring down retail electricity prices and pull down the country’s inflation rate.
 
Roberto Verzola is a Senior Fellow of Action for Economic Reforms. The German foundation Friedrich Ebert Stiftung published in 2017 his book Crossing Over: The Energy Transition to Renewable Electricity (second edition, PDF is online). He is currently president of the nonprofit Center for Renewable Energy and Sustainable Technology (CREST).

PPP, tunnels and mining

Two weeks ago, I traveled from Manila to North Luzon by bus. Going up via NLEx, SCTEx, Tarlac, Pangasinan, La Union, Ilocos Sur, Ilocos Norte, finally to Gonzaga, Cagayan. I went there to visit a friend, also gave a talk on TRAIN law and inflation at Cagayan State University (CSU) Gonzaga campus. Going back I took the Cagayan Valley route, passed Isabela, Nueva Vizcaya, Nueva Ecija, SCTEx, NLEx.
Among my observations in that nearly 1,500 kilometers trip are (1) too many motorcycles and tricycles now in the highway except tollways, and (2) lots of palay or corn are still dried on the highway especially in Cagayan-Isabela, these slow down overall speed of regular vehicles and may cause accidents. There is a need for more tollways around North Luzon and by extension, down to South Luzon, big provinces in Visayas and Mindanao.
The subject of private tollways and Public Private Partnership (PPP) was discussed in a roundtable forum on “Unsolicited PPP Proposals” jointly organized by the Stratbase-ADRi and the PPP Center last Oct. 15, 2018. Among the speakers and reactors were Mr. Ferdinand Pecson, current Executive Director of the Center, Ms. Cosette Canilao, former Executive Director of the Center, Dr. Epictetus Patalinghug, Prof. Emeritus of UP College of Business Administration, Mr. Romulo Neri, former NEDA chief, and Mr. Jimbo Reverente of NAIA Consortium.
Dr. Patalinghug expressed reservations on unsolicited PPP because of lack of competition, lack of transparency, and this leaves room for corruption. The original proponent can match the best offer, which may discourage further participation in the Swiss challenge.
I still support unsolicited PPP for at least two reasons. One, government officials especially in DPWH, DoTr and OP are constrained by their six-years term so the solicited PPP projects they will identify will likely be aligned with their business partners before or after their term which is a long-term engagement. And two, there are too many potential projects nationwide that many investors with long-term exposure on certain provinces and regions can think of.
Among the PPP projects that I think should be prioritized is the construction of long and elaborate tunnels under the mountains going up to Baguio City (via Kennon Road is 33.5 kms., via Aspiras–Palispis Highway or Marcos Highway is 47.2 kms). Then the mountainous Dalton Pass connecting Nueva Vizcaya and Ecija provinces. Buses and cars are crawling on those roads (especially in Dalton Pass) as there are many big, long and heavy trucks, sometimes tricycles, negotiating the climbs and curves.
It will be a partnership between mining firms and tollway firms. The cost of construction and, hence, the future toll rates will significantly decline because mining firms will get all the rocks and minerals, metals and non-metals and, hence, will contribute big money for such extraction and tunnel boring.
The advantages of these projects are (1) safety: accidents and deaths due to landslides, cars and buses falling off deep cliffs and mountains will be eradicated; (2) faster travel time: there will be no intermittent landslides blocking roads, tricycles and bicycles on the roads; and (3) huge employment generation in mining and construction.
Anti-open pit mining environmentalists who love to travel across the country can support this as this is tunnel mining, not open pit, and it will quicken their travels.
For mining companies, this is an opportunity for them to join big PPP infrastructure projects while retaining their core business. Many metallic products retain their high prices compared to a decade ago, like gold, silver and lead (see table).
Mining
For toll road companies, this is a good exposure to the engineering skills and machineries of miners in boring deep, long distances.
Meanwhile, the newly proposed mining tax bills in Congress tend to be more extortionary. TRAIN law has raised the mining excise tax from 2% to 4%, the new bills will impose variable royalties on mining margins of 1-5% for firms outside designated mineral reservations.
These policies do not recognize the job creation, community development, high taxes paid, and soon toll road-tunnel development functions of mining. Government should step back from more taxation.
 
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers
minimalgovernment@gmail.com

Capitalism and inclusion under weak institutions

One could not have thought of a better title for the latest book of UP Economics Professor, former Dean and National Scientist Raul Fabella, a deceptively slim volume (120 pages) but a real heavyweight. It has amazing sweep and depth on what ails our economy, and provides possible solutions, cogently pulling together literature and research on what has worked here and elsewhere.
There is a reason why we have only one National Scientist in Economics (possibly all the social sciences). Professor Fabella is without peer in profundity and originality of thought. And in the elegant and compelling way he explains these ideas.
I have been a fan of Raul’s writing since we, then strangers, met as fellow travelers and Pinoy graduate students at a bus station in DC in 1976. He would write long letters to his friends (in paper and ink, pre-internet) on his observations of US society and academic life at Yale University. It was a correspondence I could not sustain, being more inclined to be lateral than literary. (The best I could do was send him postcards of Williams College I sent everyone. )
Fast forward to 1998, my learning from Raul would resume as our paths crossed again in lively social dinner discussions with like minded academics, former public officials and private professionals united in advocating good governance and market-oriented reform. This would later metamorphose into the Foundation for Economic Freedom (fef.org.ph). Its founding members included, among others, Mahar Mangahas, Philip Medalla, Calixto Chikiamco, Alex Magno, Simon Paterno, Cayetano Paderanga (+) and Francis Varela (+).
In honor of Dondon and Francis and their life’s work in doing public good and advancing our common advocacies, our current President, Toti Chikiamco and Chairman, Bobby de Ocampo, initiated the Paderanga-Varela Memorial Lecture, now on its third year. The last two lectures featured FEF Fellows Dr. Vicente Paqueo (“Does Ending ENDO Contribute to Inclusive Economic Growth”) and Dr. Art Corpuz, (“On a National Land Policy in the Philippines”).
Later this month, Professor Raul Fabella will present his book’s findings and recommendations. Just a sample of my favorite takeaways:
1) Crisis of Inclusion in Capitalism: Poverty Incidence vs. Income Inequality. The overarching problem of the Philippines is poverty, not the income inequality of Piketty that has become banner of the Trump and Brexit nativists and their counterparts in other rich countries. The two are not the same, nor are their solutions. This is well illustrated in the case of China under the leadership of Deng Xiaoping where, thanks to market-oriented reforms, “poverty incidence has been reduced from 64 percent in 1990 to 4 percent in 2015, even while income inequality (measured by the Gini ratio ) rose from 31 percent to 42 percent.”
2) Taming Overreach: “The genius and heresy of Deng Xiaoping was in recognizing that there are spheres of provision other than the state and that these can do better than the state in many domains. The state, however strong, may be overreaching, that is operating beyond its domain of competence.” Professor Fabella’s (and my) favorite case in point of how private sector can do better in social provision and inclusion is the highly acclaimed MWSS Public Private Partnership. He wrote a chapter on this in the Asia Foundation book Built on Dreams, Grounded in Reality (downloadable for free in this link — http://regulationbodyofknowledge.org/wpcontent/uploads/2016/08/BuiltonDreamsGroundedinReality_AsiaFoundation_2011.pdf).
3) The Impulse for Size: “One very salient feature of current Philippine economy is the unmistakable presence of conglomerates competing in many markets….The vent for size is more urgent in weak governance environments (such as the Philippines’).” I have had direct learning of the built in advantage of bigness when my late father left me a few hectares of land not too far from what has become Metro Manila, which would have been ideal for mass housing. My enthusiasm for developing it was quickly doused from step one by the difficulty of enforcing my ownership rights against illegal settlers. I happily sold to a major developer, part of a conglomerate, which has the knowhow and connections to solve this, navigate government permitting labyrinth and dealing with “revolutionary tax collectors.”
4) Conglomerates and Inclusion: “Do conglomerates contribute in a positive way to inclusion in its normal profit-motivated way? The answer is ‘Yes.’” Professor Fabella then proceeds to illustrate how conglomerates have done this in various fields, from telecom, water provision, tertiary education, not to mention through their Corporate Social Responsibility (CSR) Initiatives.
5) The Way Forward: “Rather than threaten to shackle the conglomerates in our midst, we should re-channel them to the Tradeable goods sector, such as food production, or towards the segment of the Non-traded goods that is ancillary to the Traded goods sector-power generation.” And I may add, create more room in Public-Private Partnerships in other infrastructure needed to support our global competitiveness — airports, seaports, mass transport and telecommunications.
Picking up on the last item, from what I know of the sector as a Board Director of Globe Telecom, the controversial proposal to limit the number of telecom tower operators to only two is a case of overreach. It is also anti-competitive. Quoting below the blog of Peter Wallace on the subject.
DON’T LIMIT TOWERS
Why would we limit the building of cell site towers to two companies? A tower is not exactly a highly technical thing to build. The equipment that goes on it is, but that’s provided separately by the cellphone companies who lease space on the tower.
Get specific specifications that must be met, then leave it to companies to bid for construction at the various sites. Sites identified by the cellphone companies who know where to locate to provide the best signal. This includes areas that are not considered as densely populated but nevertheless need connectivity and mobile services. With the backlog of 50,000 towers we are currently facing, the more companies who are willing and able to build according to agreed specifications should be allowed to build. This should include incumbent telcos and whoever is the chosen 3rd player because this is part of their mandate.
NFA MONOPOLY
Another live instance of government overreach is the NFA monopoly. With our rice prices double or higher than our neighbors’, this 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 Introspective column last week —
“Abolish the NFA rice importation monopoly and fully liberalise 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.”
As a wise guy said: “ Let’s not 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 administrations of Corazon C. Aquino and Fidel V. Ramos.
romeo.lopez.bernardo@gmail.com

The best of times, the worst of times

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity…some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

A Tale of Two Cities (1859)
by Charles Dickens

It is a story of rabid hate — of the suppressed and hungry poor against the unfeeling French monarchy at the break of the 18th century. In the insanity of blind revenge the poor hunt down and guillotine every one of the royals in those years of the fearsome Reign of Terror. The superlatives of right and wrong, good and bad are claimed only by those in reversed power.
Zoom to today, and to us: the Philippines is in the best of times, according to the present political governance. Budget Secretary Ben Diokno said so, at the Euromoney Philippine Investment Forum last week, as he has always affirmed on many occasions.
In June, the confluence of rising inflation and depreciating peso alarmed even the ever-confident President Rodrigo Duterte. “The economy is in the doldrums,” he said (CNN Philippines, June 22, 2018). Incredible, how his own Budget Secretary Diokno immediately reacted. “You look at the facts, not impressions, not perceptions, but the hard facts and you’ll be convinced that it’s not the case,” he told a press conference (philstar.com, June 27, 2018). Short of calling Duterte clueless, Diokno had to stand his ground, and root himself in the insistence that the country is in the best of times.
Presidential spokesman Harry Roque most loyally stepped in to save Duterte’s credibility. The “doldrums” statement was taken out of context, Roque said. The President was just emphasizing the need to fast-track the implementation of the “Build, Build, Build” infrastructure program (philstar.com, June 25, 2018). Provinces are lagging behind in terms of progress and projects and the President is calling for charter change towards federalism because it will really provide the solution to the uneven distribution of growth, he added (Ibid.).
The Build, Build, Build and its tandem Tax Reform Program are the foundation for the so-called “Dutertenomics” for economic growth in the insistently-proposed federalist system of government. But even with Duterte’s admitted incapacity neither for deep economic analysis nor for instinctive gut-feel for doability of programs without coercion, his very academically prepared stable of economic managers, and in fact his whole Cabinet, should be able to fearlessly tell him what’s what in our country. Are we in the best of times, or the worst of times to do all these draconian changes?
All the propaganda for how well the country is doing, and how great is our President will have to be made effective only if there will be those needed participants and cooperators who will buy into the concepts and plans proposed. At the Euromoney Investment Forum last week, the speeches extolled the government projects, while the panel discussions seemed to cautiously avoid the elephant in the room — are we in the worst of times for investments in the Philippines?
“The much bigger concern for the economy over the long term…is a string of inflammatory comments and policy changes by Duterte that have raised concerns in the minds of investors over the President’s judgment and commitment to the rule of law,” Gareth Leather, senior economist at Capital Economics, said in its latest emerging Asia economics focus titled “Philippines: A two-year progress report on President Duterte” (The Philippine Star, June 27, 2018). Other silent analysts might agree that poor leadership and political uncertainty can hold back an economy.
“The biggest risk for the Philippines is that history now repeats itself. There are already signs that things are taking a turn for the worse. Since Duterte came to power, the stock market has underperformed, inflows into the country’s equity market have dropped, while pledges of foreign direct investment have fallen,” Leather said (Ibid.).
Might we listen to Dr. Gerardo Sicat, eminent economist and revered professor (program director) of economics at the University of the Philippines (author of the basic university textbook Economics), first Director-General of the National Economic and Development Authority (NEDA) under then-martial law president Ferdinand Marcos until 1981.
The overwhelming reality is high and continually rising inflation (6.7% in September), Dr. Sicat says. What worries him is that rising prices generally across sectors of the economy accelerate the problems of the most vulnerable, the poor and those whose incomes are not catching up with inflation (Gerardo P. Sicat: “Toward Philippine Economic and Social Progress,” The Philippine Star, Sept. 12, 2018). As we were taught in Economics 101, inflation occurs when an economy grows due to increased spending whereupon prices rise because of increased demand from more available funds. This makes the currency worth less than it was before, meaning more pesos will buy less goods and services, and the exchange rate weakens when compared to other currencies.
Dr. Sicat names certain factors that fueled the current inflationary situation: first, is the natural catalyst of high aggregate demand, specifically high consumption demand, funded by overseas Filipino workers (OFW) remittances and business process outsourcing (BPO) foreign earnings. These remittances are, ironically, enhanced by the falling exchange rate (more peso equivalent).
The second factor, perhaps equal to the remittances effect, is “the rise of overall demand (from) the growth of public spending, especially the rise in public infrastructure spending by the Duterte administration through its Build, Build, Build program” (Ibid.). Dr. Sicat pointed out what even unschooled intuitive economists know, that the funding borrowed for the ambitious, expensive government infrastructure programs will bring in even more inflationary effects. “The rise in government spending has signaled further a tolerance for a higher level of fiscal deficit which is targeted to rise to three percent of gross domestic product,” Dr. Sicat said (Ibid.).
The peso depreciation (third factor) will widen the trade deficit, as external uncertainties (fourth factor) like US President Donald Trump’s (self-inflicted?) trade wars and the global price increase, as well as rising US interest rates (fifth factor) will affect the Philippine economy, according to Dr. Sicat. But first, what must be controlled is the rising inflation burdening the people.
One wonders why the government does not seem to see that perhaps these are not the best of times to push for programs and projects like the Build, Build, Build and Tax Reform, and for political overhaul like the Charter change towards federalism. The brinksmanship of neglecting the urgent short term problems while lusting for long-term growth (for political legacy?) might not be tolerable for the queasy inclinations of the Filipino, an overwhelmingly middle-class to poor (about 70%) population of 105-plus million, in a country lagging in regional development.
Are we in the best of times, or in the worst of times?
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

Massacre of Negros sugar workers condemned

ACTIVIST and labor groups on Sunday condemned the reported massacre on Saturday night of nine sugar workers at a farm in Sagay City, Negros Occidental.
According to a report by the Philippine Star, the nine fatalities included three women and two minors who were strafed at around 9:30 p.m. by armed men at a hacienda in Purok Firetree, Barangay Bologna.
The fatalities belonged to the National Federation of Sugar Workers (NFSW), said the Star report, which also cited the provincial police director, Senior Supt. Rodolfo Castil, as saying that about 40 armed men were involved in the attack.
In their joint statement, the NFSW and the Unyon ng mga Manggagawa sa Agrikultura (UMA) said they “hold the Duterte administration including the Armed Forces of the Philippines responsible for this reprehensible act of violence towards our farmers.”
The groups attributed to an Army official the claim that “the land cultivation areas (LCAs) being maintained by agricultural sugar workers and farmers in Negros Island are in fact New People’s Army (NPA) rebels communal farms.”
“The NFSW, on the other hand has time and again stated, that the goal of setting up land cultivation areas is to ward off the inevitable hunger brought by the Tiempo Muerto (dead season in the sugar industry) on properties covered by agrarian reform but which remain undistributed and idle, planting these with vegetables, banana, corn, and root crops to feed their families.”
“The 9 together with 4 others were resting in a farm hut when they were reportedly strafed by 40 armed men. They, together with others had just begun their LCA in the 75 hectare hacienda that morning. The names of the victims are still being ascertained and a Fact Finding Mission is still ongoing in the area.”
NFSW also said in a separate statement, “Land cultivation area or Bungkalan is our response to resonate our campaign for genuine agrarian reform and free land distribution. Farmers militantly occupy idle lands and collectively cultivate these lands in order to make it productive. Bungkalan reflects the failure of the government’s land reform program and the landlords’ refusal to distribute land to the tillers.”
“It is morally right and just for the sugar workers and peasants in Negros Occidental to undertake their Land Cultivation Areas especially with a regime that has no land reform program to offer. Instead it red baits those who assert their rights to the land,” NFSW also said in its statement with UMA.
For his part, Makabayan senatorial candidate and former Bayan Muna Rep. Neri Colmenares said in a statement, “This is an attempt of the Duterte gov’t to quell any form of protest by criminalizing legitimate demands. As NFSW have repeatedly pointed out the goal of setting up land cultivation areas is to ward off the inevitable hunger brought by the Tiempo Muerto (dead season in the sugar industry) by planting on properties vegetable, corn and root crips on undistributed and idle lands to feed their families.”

International body to look into ‘persecution’ of two PHL senators


By Camille A. Aguinaldo, Reporter
THE INTER-PARLIAMENTARY Union (IPU) wants to send an official mission to the Philippines to look into the alleged “political persecution” of Senators Leila M. De Lima and Antonio F. Trillanes IV.
The requests were raised in separate resolutions adopted at the 139th IPU assembly in Geneva, Switzerland, on Oct. 18. The international body noted that the situation of the two senators warranted an “urgent visit” by the Committee on Human Rights of Parliamentarians.
With regards to Mr. Trillanes, the IPU expressed deep concerns that the senator “may soon be arrested” over charges which ran “counter to the legal principle that no one shall be tried twice for the same offense.”
It also pointed out the “exclusive preoccupation” of the presidential proclamation that voided Mr. Trillanes’s 2011 amnesty and gave “serious weight to the allegation that this is a targeted attempt to silence Senator Trillanes.”
IPU also decided to send a trial observer to close monitor the legal proceedings if this complied with international fair trial guarantees.
With regards to Ms. De Lima, IPU reiterated its call for the senator’s release and for the government to abandon the legal proceedings against her, “given that no serious evidence appears to be forthcoming.”
The international body also urged the Senate, under the new leadership of Senate President Vicente C. Sotto III, to act in solidarity with Ms. De Lima.
“(IPU) reaffirms that the Senate has a special responsibility to help ensure that its colleagues participate in its deliberations and speak out when they face reprisals for their work,” the resolution stated.
It also urged the Supreme Court to grant her occasional “legislative furlough.”
Both resolutions also pointed out that Filipino legislative authorities have not responded to IPU’s requests for information on the respective situation of the two senators.
Mr. Trillanes is still awaiting the decision of the Makati Regional Trial Court (RTC) Branch 150 regarding the Department of Justice’s (DoJ) motion for arrest against the senator in connection with his rebellion case.
Ms. De Lima was detained in February 2017 for what the government said was her involvement in the illegal drug trading at the National Bilibid Prison (NBP) when she was justice secretary.

Lawmaker to ASEAN: Don’t trust China

MAGDALO REP. Gary C. Alejano warned that China might not adhere to the air encounter code agreed upon by members of the ASEAN (Association of Southeast Asian Nations).
“China, one of the ASEAN partners, does not even honor the existing international guidelines and rulings,” the party-list lawmaker said in a statement, Saturday.
“While we can expect ASEAN states to abide, it might be a different story for China,” he also said.
ASEAN Defense ministers in Singapore signed on Friday a joint declaration to strengthen cooperation and secure peace in the region, particularly in navigating the South China Sea.
Mr. Alejano also cited a maritime agreement that did not keep China from increasing its military presence in the South China Sea.
“Just last year, ASEAN with its international partners such as China adopted a similar code relating to sea encounters. Despite this, China’s aggression in our waters continued,” he said.
“The old and existing guidelines proved insufficient to contain tensions in the West Philippine Sea with China constantly challenging the rules and norms. We need an agreement that would specifically address cases of aggression especially amid territorial disputes,” he added. — Charmaine A. Tadalan

Meralco keeps slim playoff hopes alive with ROS win

By Michael Angelo S. Murillo
Senior Reporter
THE late resurgence of the Meralco Bolts in the Philippine Basketball Association Governors’ Cup continued on Sunday after beating the (ROS) Rain or Shine Elasto Painters, 91-82, in league action at the Smart Araneta Coliseum.
Engaged in a virtual slugfest, the Bolts delivered accordingly, delivering the blows needed in the end against the Elasto Painters to book their third straight win in the season-ending PBA tournament to improve to 4-6 and keep their slim playoff hopes alive.
The contest got off to a slow pace as the two teams struggled early to get their offense going.
The count stood at 6-all midway into the opening quarter and stayed tight at 19-19 after first-period play.
The nip-and-tuck nature of the match continued at the start of the second frame until Rain or Shine created some separation, 37-31 at the halfway point behind Rey Nambatac and Ed Daquioag.
Meralco though would pick up its game after, led by Chris Newsome, to overhaul the Elasto Painters’ lead, 44-43, by the halftime break.
Rain or Shine had more fluidity on offense as the third frame commenced.
The Elasto Painters raced to a 55-49 advantage with just four minutes lapsing.
Meralco, however, no sooner made the adjustment and came back to level things at 59-all at the 3:12 mark.
More jostling ensued after with the two teams eventually knotted at 65-all at the end of three quarters.
With the outcome of the match very much open, the two teams fight it off, looking to establish control in the payoff canto.
The Bolts held a two-point lead, 76-74, with 7:46 to go, padding it to five, 79-74, two minutes later after an and-one play by import Allen Durham.
Meralco did not stop there as it stepped on the gas pedal thereafter to speed to an 88-77 advantage with 2:31 left on the clock.
Rain or Shine attempted to make its way back but the Bolts did not allow them to, hanging on to park the victory and send the Elasto Painters (2-6) to back-to-back losses.
Mr. Durham led Meralco with 19 points, 20 rebounds and six assists with Mike Tolomia coming off the bench to score 17.
Norbert Torres paced Rain or Shine with 16 points while import Terrence Watson had 14 points and 13 boards.
“It’s another solid defensive showing for us. Everybody rotated well and played as a group. On the other end we had balanced scoring and Allen (Durham) did not have to do a lot,” said Meralco coach Norman Black as he made his assessment of their win after the game.
“But we are not out of the woods yet. We have a 12-days break before we next play and hopefully we don’t miss a lot of momentum,” added Mr. Black, whose wards play their last game of the eliminations on Nov. 4 versus the San Miguel Beermen.
The Meralco Bolts are hoping to sweep their remaining games to at least get a shot at a tie and playoff for the last quarterfinal spot.

World Series: Dodgers vs Red Sox

MILWAUKEE — The Los Angeles Dodgers booked a return trip to the World Series behind steady power and sturdy pitching on Saturday, defeating the Milwaukee Brewers 5-1 in Game 7 of the National League Championship Series (NLCS).
Cody Bellinger and Yasiel Puig hit home runs to back a strong effort from rookie right-hander Walker Buehler and four relievers, sending the Dodgers to the Fall Classic in consecutive years for the first time since 1977-78. Game 1 of the World Series against the Red Sox is set for Tuesday night at Fenway Park in Boston.
Bellinger was recognized as NLCS MVP. Though he hit .200 in the series, his home run on Saturday accounted for the go-ahead run, and he had the game-winning hit in the 13th inning of Game 4.
Puig had three of the Dodgers’ 10 hits, none bigger than a three-run home run in the sixth inning that gave Los Angeles a 5-1 lead. Buehler helped set the tone for the pitching staff with a strong start, limiting the Brewers to one run and six hits in 4 2/3 innings while striking out seven.
Brewers right fielder Christian Yelich opened the scoring with one out in the first inning, delighting the sellout crowd of 44,097 by smacking a solo home run to right field. The ball narrowly escaped Puig’s leaping attempt at the wall.
The Dodgers responded in the top of the second, however, as Bellinger hit a two-run homer into the second deck in right to give Los Angeles a 2-1 lead. Shortstop Manny Machado started the rally by bunting down the third base line on a 3-2 count to beat a defensive shift.
Brewers right-hander Jhoulys Chacin worked out of further trouble to end the inning, which proved to be his final action of the game. Manager Craig Counsell pinch-hit for Chacin with two on and two out in the bottom of the second, but Jonathan Schoop grounded out to end the threat.
Chacin (1-1) allowed two runs on three hits in two innings, walking one. A fully rested Josh Hader followed and kept the Brewers afloat by continuing a dominant postseason.
Pitching for the first time since Game 4, Hader struck out four, walked one and allowed one hit in three innings of scoreless relief. The All-Star left-hander fanned 16 of the 35 batters he faced in 10 shutout innings over seven playoff appearances. He allowed five hits and walked one.
Hader entered the on-deck circle to potentially hit in the bottom of the fifth, but was removed for a pinch hitter after Orlando Arcia grounded out to start the inning.
Largely reliable throughout the regular season stretch run and into October, the Brewers’ bullpen stumbled one inning later as Puig lined a three-run home run to left field against Jeremy Jeffress with two outs. Puig pumped his arms exuberantly as he rounded the bases.
Los Angeles’ rally came on the heels of Dodgers left fielder Chris Taylor’s dazzling defensive play to end a prime Milwaukee scoring chance in the fifth. With two out and the potential tying run on second base, Yelich drilled an opposite-field line drive to the left field gap against Julio Urias.
Taylor ranged toward the ball to make a sliding, over-the-shoulder catch on the warning track.
Urias, Ryan Madson, Kenley Jansen, and Clayton Kershaw combined for 4 1/3 innings of scoreless relief. Madson (1-0) earned the victory, scattering one hit and two strikeouts in 1 2/3 innings.
The Dodgers stood at 16-26 on May 16 and did not climb over .500 until June 10. They took sole possession of the National League West lead for the first time on July 13 but battled with the Colorado Rockies for the division crown through the end of the regular season.
Los Angeles clinched its sixth successive division title with a home victory against the Rockies in the NL West tiebreaker game.
The Brewers also needed a 163rd regular-season game to outlast the Chicago Cubs for the NL Central title, earning the club’s third postseason berth since moving to the National League in 1998. The Brewers were seeking their first World Series berth since 1982. — Reuters

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