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Labor dep’t sees infrastructure as a hurdle to telecommuting law

THE Department of Labor and Employment (DoLE) said weak IT and electronic infrastructure in some areas could pose a barrier to telecommuting work arrangements.
The Bureau of Local Employment (BLE) welcomed the efforts of legislators to enact a law on telecommuting but added that infrastructure in many areas may not be sufficiently developed.
“The infrastructure is a challenge,” said BLE Director Dominique R. Tutay in an interview with BusinessWorld Friday when asked about possible difficulties in implementing the Telecommuting Act.
On Wednesday, the Senate ratified the bicameral conference committee report on the proposal legislation which will allow workers in the private sector the option to adopt work-from-home arrangements.
The BLE Director cited Internet speeds and wireless connectivity in some areas as possible issues.
“First and foremost is our Internet connectivity. It’s not very good at the moment. There are areas where the signal is fluctuating even in the urban areas. That is still a big challenge),” she said.
She added that unreliable power in many areas will also be an issue.
Ms. Tutay said that she hopes other government agencies and even the private sectors can help address these issues when telecommuting work arrangements are allowed by law.
According to Speedtest.net, the Philippines has a global ranking of #81 in the Fixed Broadband Category with a downloading speed of 17.57 megabits per second (mbps) and #98 in the mobile broadband with a downloading speed of 14.07 mbps.
Despite the challenges that the proposed law might face, the labor department still welcomes the measure which will allow employers to offer a telecommuting program for workers based conditions both the employer and employee agree on.
“We’re actually welcoming the initiative of our legislative department in keeping up with the changes in the labor market. Meaning there’s more flexibility for our workers,” Ms. Tutay said.
The House of Representatives and Senate versions of the Telecommuting bill requires DoLE to draft guidelines on telecommuting work arrangements. She added that the department is also required to monitor how companies and industries implement the bill.
“In the bill, we are given three years to do some industry studies.
We will see what the global practices are and whether our labor standards will work,” she said.
The Telecommuting Bills also give DoLE the responsibility to conduct a “Telecommuting Pilot Program” in selected industries. Ms. Tutay said that the labor department is looking at the following industries for the pilot program: wholesale and retail; Information Technology and Business Process Association of the Philippines (IT-BPM); and the engineering and architectural design components of construction. — Gillian M. Cortez

Issues with Dalian trains delaying new MRT-3 maintenance agreement

THE Department of Transportation (DoTr) said issues with Chinese commuter trains ordered from CRRC Dalian Co trains are delaying the signing of maintenance deal with Sumitomo Corp. and Mitsubishi Heavy Industries, Ltd. (Sumitomo-MHI) for Metro Rail Transit Line 3 (MRT-3).
Transportation Secretary Arthur P. Tugade told reporters on Friday that the deal is still expected for signing within the next two months, after the original timetable of an August or September signing lapsed.
“There’s still an issue about the Dalian trains. We’re still discussing it,” he said.
The Dalian trains are 48 Light Rail Vehicles procured under the previous government intended for use on the MRT-3, but the DoTr said they cannot be deployed yet because of issues centered on the measurements and weight of the trains.
“I wanted that signed already…. It’s not that they don’t want to sign. We’re just talking about the timing,” Mr. Tugade added, without providing details.
The DoTr said late last year that it was in high-level discussions with the government of Japan for the comeback of Sumitomo-MHI as the maintenance provider for the MRT-3. The Japanese firms designed the system between 1998 and 2000 and maintained it for 12 years until 2012.
Last month, the DoTr directed the Philippine National Railways (PNR) to conduct simulated runs with the Dalian trains to test their suitability for revenue service.
After the evaluation, PNR must submit a report to Mr. Tugade indicating if the train sets still need further adjustment from CRRC Dalian before deployment. The Chinese firm committed to the DoTr in July to rectify problems with the trains for free.
The DoTr terminated its contract with MRT-3 maintenance provider Busan Universal Rail, Inc. (BURI) late last year, alleging its failure to maintain the train line’s efficiency. — Denise A. Valdez

ASEAN+3 think tank flags financial stress levels in the Philippines

THE PHILIPPINES is among the main sources of “financial stress” within the Association of Southeast Asian Nations (ASEAN), which became elevated in early 2018, although still below historical levels.
According to a working paper from the ASEAN+3 Macroeconomic Research Office (AMRO), “Assessing Financial Stress in China, Japan, Korea and ASEAN-5 Economies” published on Friday, flagged increased the Philippines’ widening current account deficit and a weakening peso.
The working paper created a “financial stress index (FSI),” that determines a period “when the financial system is under strain and its ability to intermediate is impaired,” such as an interruption to the normal functioning of financial markets based on large swings in asset prices, an abrupt increase in risk and/or uncertainty, liquidity droughts, and concerns about the health of the banking system.
The FSI focuses on selected financial-sector indicators such as stock market volatility, foreign exchange volatility, sovereign debt, corporate debt, and interbank lending, in the ASEAN+3 region, plus ASEAN’s core countries, known as ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand).
AMRO said that the stress indicators started to rise in early 2018 in the ASEAN+3 region, “reflecting a confluence of global factors (such as escalation of global trade tensions and US Fed Policy), as well as country-specific vulnerabilities in some emerging markets outside the region (such as growing macroeconomic imbalances in Argentina and Turkey).”
“In ASEAN-4, the pressure on EMPI (Exchange Market Pressure Index) was particularly visible, as currencies have depreciated alongside drawdowns on foreign reserves. Indonesia and the Philippines are the two major contributors to the higher aggregate stress level in ASEAN-4, partly reflecting the structural vulnerabilities (e.g. widening current account deficits),” AMRO said.
“However, so far, the level of financial stress in the region has not been as high as compared to the level experienced during the August 2015 shock, when China announced changes to its central parity exchange rate mechanism,” it added.
In the first half, the Philippine current account matched the $3.1-billion deficit target set by the government amid a widening trade deficit and the peso’s depreciation into 13-year lows past P54 to the dollar.
However, gross international reserves remain at adequate levels, equivalent to 7.5 months’ worth of imports of goods and payments for services, well above the three-month international standard deemed prudent.
The think tank noted that the highest FSI level on record was during the 2008-2009 global financial crisis, with “significant, but limited” impact from the European debt crisis in 2010 and the US Federal Reserve taper tantrum in 2013.
AMRO said that governments can use the FSI as a surveillance tool for preemptive policy measures when financial stress levels are starting to escalate. — Elijah Joseph C. Tubayan

Transco complies with ERC directive on estimating RE capacity

STATE-LED National Transmission Corp. (TransCo) said on Sunday that it has complied with an order issued by the Energy Regulatory Commission (ERC) on how the energy capacities of renewable energy (RE) companies are to be computed, and consequently how much they should be paid.
In a statement, TransCo said the ERC order issued on April 11, 2018 called for the use of the committed capacity of RE developers as reflected in the Department of Energy’s certificate of endorsement (CoE) as basis in the computation of feed-in-tariff (FiT) revenue.
Following the ERC order, TransCo said it started offsetting the overpayments in August after coordination and validation with the concerned developers.
Melvin A. Matibag, TransCo president and chief executive officer, said the company had previously followed the capacities reflected in the ERC’s certificate of compliance (CoC) for payment of FiT revenues as this document is the one that grants final eligibility for FiT to the power generation plants.
Last week, consumer Laban Konsyumer Inc. questioned the basis for the P36.53 million TransCo overpaid to renewable energy companies for the power they produced under the FiT system, and sought a disclosure of an updated figure while pushing for changes in how the amount is computed.
The updated amount at the time of implementation was P47 million, TransCo said.
Mr. Matibag said TransCo shares the consumer group’s concerns on protecting the rights and welfare of electricity consumers.
“I am pleased that this issue has been clarified between the DoE and ERC. But, it is also important to note that TransCo pays only for energy that is actually generated by the RE plants, not projected nor committed,” he said.
TransCo said in February that the ERC wrote DoE Secretary Alfonso G. Cusi requesting clarification and guidance specifically on the application of the plant capacity that should be the basis in the computation of the FiT revenue.
It said Mr. Cusi had answered that the capacity provided in the DoE’s CoE is the capacity committed by the RE developer and should serve as the basis of the computation of the FiT revenue.
A coordination meeting was then held on April 2, 2018 among DoE, ERC and TransCo to discuss the basis of each other’s consideration of FIT capacity, it said.
“We are also at the forefront of efforts to bring down power rates through our petitions with the ERC and representations with DoE and the legislature,” Mr. Matibag said.
The FiT system aims to encourage the development of renewable energy in the country by paying first-mover developers a fixed amount for the power they produce for 20 years. — Victor V. Saulon

NEDA bills tackled by House committee Tuesday

THE House Committee on Economic Affairs will tackle on Tuesday the bills expanding the independence of National Economic Development Authority (NEDA).
House Bills 8124 and 8189, authored by Deputy Speaker Arthur C. Yap of the third district of Bohol and Rep. Weslie T. Gatchalian of the first district of Valenzuela City, seek to institutionalize NEDA as a “new and truly independent department.”
The bills will also “enhance decentralization and strengthen the autonomy of units within the various regions of the country to accelerate their economic and social growth and development,” the legislators stated in the explanatory notes.
At present, NEDA operates under Executive Order 230, series of 1987, implemented by President Corazon C. Aquino.
The proposed measures will reorganize the National Economic Development Board (NEDB) to include the President, the secretaries of NEDA, Finance, Budget and Management, Interior and Local Government, Trade and Industry, Public Works and Highways and the Governor of the Bangko Sentral ng Pilipinas.
The Board, as reconstituted by Administrative Order No. 8, series of 2017, currently also includes as members the Executive Secretary, Cabinet Secretary, Secretaries of Energy, Transportation, and the chair of the Mindanao Development Authority.
Both versions will also constitute new inter-agency committees that will function as the primary advisory bodies to the NEDB.
This shall include the Economic Development Committee (EDC), Science, Technology and Innovation Committee (STIC), Environment and Sustainable Development Committee (ESDC), and Governance Committee (GC).
This is in addition to existing committees under NEDA, such as the Department Budget Coordination Committee (DBCC), Infrastructure Committee (InfraCom), Investment Coordination Committee (ICC), Social Development Committee (SDC), Committee on Tariff and Related Matters (CTRM), Regional Development Committee (RDCom), and National Land Use Committee (NLUC). — Charmaine A. Tadalan

BPO industry may miss job creation goal by 40% if incentives removed

By Janina C. Lim
Reporter
THE information technology and business process outsourcing (IT-BPO) industry said it may fall 40% short of its 2018 job creation target in a high-tax regime.
“There’s a balancing act between job generation and tax revenue creation. There’s an inflection point. You make us more expensive than we are, then our ability to be effective in generating jobs will also be affected,” Information Technology and Business Process Association of the Philippines (IBPAP) President and CEO Rey C. Untal said in an interview on Thursday at the group’s headquarters in Taguig City.
He noted the potential of the latest round of tax reform legislation, known as the TRABAHO bill, to make future BPO projects competitive. However, Mr. Untal said it may have negative effects on existing firms. He cited the impending transition to a corporate income tax (CIT).
“The jump from the 5% GIE (gross income earned) to a 28% CIT, will increase your tax by as much as threefold. That impacts your cost structure. The only way that you can recover that cost structure is to pass it on to your customers. But if you pass on the cost to your customers then your perceived value versus cost becomes higher also. So that’s what we are avoiding,” Mr. Untal said.
“…If we move to a regime where our cost model will increase substantially, then our ability to create jobs will be impacted by 40%,” he added, noting the estimates were produced by a study of the impact of taxes on the BPO industry’s ability to generate employment.
Under its five-year road map, the group aims to create 1.8 million jobs by 2022, against 1.15 million jobs in 2016.
“So instead of growing 100,000 a year, we could grow by 60,000. We could grow by 50,000. I don’t know,” Mr. Untal said.
In terms of online hiring activity, the Monster.com employment index indicates that the IT-BPO sector declined 4% in the second quarter. In June, hiring activity by the sector declined 7%.
“This conversation around the TRABAHO bill and about the bigger context of the BPO industry needs to be put together. This industry’s one critical attribute is the ability to generate jobs,” he added.
Mr. Untal said the industry now employs, directly and indirectly, close to five million Filipinos, which is expected to expand to 7.6 million by 2022.
“This industry is also one of the largest creators of the new middle class,” Mr. Untal said.
“Our growth has to be Philippine-wide,” he added. “That’s why, right now, we are employing an excess of a quarter of a million Filipinos in 21 to 23 provinces,” Mr. Untal said.
By 2022, employment in the provinces is expected to double to 500,000.
In the past decade, the industry has carved out a global market share of about 11% to 12%.
The industry’s calling card over the past few years was always being number two to India, Mr. Untal said, but the 2017 Tholons report showed the Philippines to be third behind China.
Mr. Untal said the industry is cautious of competition with BPO markets behind the Philippines, particularly Vietnam which is becoming a top BPO destination.
“People seem to be fixated with the idea that this industry and other industries will be impacted once TRABAHO is in place. That’s not true. In reality, all of this ambiguity about the rationalization of incentives has already created an impact in terms of uncertainty,” Mr. Untal said.
“Investors when they now look at the Philippines are now aware that the incentive scheme as they have understood it will no longer be there next year,” said Mr. Untal noting that several expansion plans have been deferred due to the pending finalization of the second part of the tax policy overhaul.
IBPAP is batting for a 10-year transition period for the removal of current incentives instead of the currently proposed five-year maximum; inclusion in the strategic investment priorities plan; and the retention of the zero value-added tax rating for locators whose export sales comprise 30% of total sales.

Clarifying the cost of filing an amended tax return

On Dec. 19, 2017, President Rodrigo R. Duterte signed into law Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act. In a speech made after the signing, the President said the TRAIN Act “is the administration’s biggest Christmas gift to the Filipino people, as 99% of the taxpayers will benefit from the simpler, fairer and more effective tax system.”
One of the things that the TRAIN law sought to simplify and update is the imposition of interest on unpaid tax liabilities. Prior to the TRAIN Act, the interest penalty rate was at 20% per annum on any amount of unpaid tax. Now, Section 249 of the National Internal Revenue Code (NIRC), as amended by the TRAIN Act, provides that the interest rate to be assessed and collected on any unpaid amount of tax shall be “double the legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas.” The legal interest rate for loans in the absence of any stipulation as set by the Monetary Board in Circular No. 799, Series of 2013, is 6% per annum. Thus, beginning Jan. 1, 2018 (the effectivity date of the TRAIN Act), the interest penalty for any unpaid amount of tax was 12% per annum calculated from the date prescribed for tax payment until the amount is fully paid.
During the first quarter of 2018, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 21-2018, circularizing Memorandum No. 016-2018 dated March 15, 2018, regarding the imposition of surcharge, interest and compromise penalty for filing an amended tax return. Such an issuance required immediate attention, due to the inconsistent impositions of surcharges and interest by some Revenue District Offices (RDOs). Some RDOs imposed the surcharge and interest following the TRAIN Act, while other RDOs did not. Furthermore, there was an incident involving a taxpayer’s e-mail sent to the Presidential Complaint Center on May 26, 2017 which also contributed to the release of Memorandum Order No. 016-2018. The e-mail raised the issue of inconsistent penalties for filing amended tax returns, which eventually reached the Office of the Deputy Commissioner — Operations Group.
In Memorandum No. 016-2018 dated March 15, 2018, the BIR clarified that in an amendment of return where any additional tax is due, 20% interest and 25% penalty shall be imposed on the additional tax to be paid per amended return. The RMC, although not directly being discussed, does attempt to address the inconsistent impositions of surcharges and penalties by RDOs with respect to the amendment of returns where no additional tax is due. RMC No. 21-2018 also indicates that ONLY the amendment of returns with additional tax being due shall warrant the imposition of surcharges and penalties.
However, this issuance further confused taxpayers as to the proper interest penalty rate to be imposed.
To settle the policy on amended tax returns, the BIR further issued RMC No. 54-2018 on June 21, 2018, stating with finality that beginning Jan. 1, 2018, the interest penalty rate shall be 12% per annum until a new interest rate shall be prescribed by the BSP. Thus, in an amendment of return where an additional tax shall be due, 25% penalty and 12% interest shall be imposed on the additional tax to be paid.
Additionally, the BIR reiterated that compromise penalties per Revenue Memorandum Order (RMO) No. 7-2015 are only amounts suggested by the BIR in the settlement of criminal liability for violations committed by taxpayers and the imposition of the same is consensual in nature. Thus, compromise penalties may not be unilaterally imposed on the taxpayer. In the event that the taxpayer is not amenable to pay the compromise penalty, the violation shall be referred to the appropriate office for criminal action.
Given the strict mandate to RDOs to impose the 25% surcharge, 12% interest, and compromise penalty on amendment of returns where additional tax is due, taxpayers must be even more cautious and vigilant in computing their tax liabilities. It is now even more vital to ensure that all information required by law is accurate and correct before filing a return given the expensive repercussions of non-compliance.
Despite finally settling the issue on the proper interest penalty rate on amended returns where additional tax shall be due, we note that the BIR has yet to clarify whether the 12% interest penalty rate will apply to deficiency taxes that will be assessed within the effectivity period of the TRAIN Act, but covering taxable years prior to 2018.
Certainly the applications and nuances of the TRAIN Act will still require much work and clarification from the BIR. However, taxpayers remain hopeful that the amendments to the Tax Code will bring the much anticipated tax reform that Government has promised.
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 author and do not necessarily represent the views of SGV & Co.
 
Rowena Angela C. Salanga is an Associate Director at SGV — Financial Services Tax.

Inflation king of Asia, world’s second worst stock market

The Philippines’ inflation rate has been rising nonstop ever since the TRAIN law was implemented: 2.9% in December 2017, 3.4% in January 2018 (first month of TRAIN law), 3.8% in February, 5.7% in July, 6.4% in August, and 6.7% in September.
This is the country’s highest inflation rate in nearly a decade, since 7.2% in February 2009. The increase largely came from the food and non-alcoholic beverages index, a big component of the overall consumer price index (CPI), which increased to 9.7% last month.
So the Philippines is now the undisputed inflation king or queen of Asia. Year to date (Ytd, January to September), 2018 inflation is already 5.0%, a lot higher than the government target of 2-4% full year 2018.
Numbers below, those with updated January-September 2018 data are Indonesia, Philippines, S. Korea, Sri Lanka, Thailand and Vietnam. The rest have January-August only (see Table 1).
Table1
In the stock market, the Philippine Stock Exchange (PSEi) as of Oct. 5 closing was the second worst performing in the world. China (Shanghai) has been the #1 worst performing for several months this year but last week, it has recovered while the Philippines and Turkey continued their slide.
Table2
Last 52 weeks, PSEi (-14.8%) is also the second worst in the world after China (Shanghai, -15.8%).
To control high inflation, the most visible action by the government comes from the Bangko Sentral ng Pilipinas (BSP) raising domestic interest rates. I do not think that this will be effective since the current inflation is largely cost-push, starting from TRAIN tax hikes in January and exacerbated by high world oil prices. This is not demand-pull inflation.
Another action is agricultural import liberalization, expanding rice importation to help reduce domestic rice prices, and replacing quantitative restrictions (QR) with tariffs of up to 35%, the bill is being hastened in Congress. The impact so far is not clearly felt as rice prices remain high.
One ‘action’ by government is non-action on fare hike petitions by buses, jeepneys, taxi, and air-con vans or ‘UV Express.’ The government has become terribly insensitive and Machiavellian in pinning down public land transportation operators to endure very high oil prices with no corresponding fare hike, except the P1 increase in jeepneys which is still not sufficient.
Domestic airlines’ petition to have fuel surcharge on ticket prices have been granted and this will have inflationary pressure from October onwards. Another pressure will come from a series of wage hikes.
One single most important measure that government can do to reduce inflation is to cut the VAT rate from 12% to around 8% and significantly reduce the exempted sectors. My best example for suggesting this is Malaysia. It had a gross sales tax (GST) of 6% until May then it was abolished in June. Its average inflation rate three months before (March 1.3%, April 1.4%, May 1.8%) was 1.5%, became 0.3% three months after (June 0.8%, July 0.9%, August 0.2%).
High and multiple taxes are always inflationary. To help reduce high inflation, taxes should be smaller and fewer. The number of politicians, bureaucrats and subsidies forever should be smaller and fewer too.
 
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers and a Fellow of Stratbase-ADRi.
minimalgovernment@gmail.com.

Toxic Bertiz

Public outrage filled all social media platforms last week as footage of party-list Congressman, John Bertiz, went viral showing him belligerently refusing to follow airport security protocols and berating a member of the security staff in the process.
Bertiz’ arrogant behavior was more than it appears at face value — it was, in fact, a lethal blow to the reputations of both the legislature and the Duterte administration. For the former, it was an acerbic reminder of how lawmakers carry themselves with a sense of entitlement. For the latter, it suggests that cronyism is slowly finding its way back in Malacañang.
Let’s talk about our lawmakers first. Bertiz is not the only congressman or senator guilty of demanding special treatment. He is, however, the only one silly enough to be caught on CCTV in the act of indiscretion.
Let’s be honest, many of us have personally witnessed lawmakers demanding special privileges and/or acting as if they are the preferred children of the land. We quietly resent them for their gall and thick faces, yet are unable to do anything about it. Unfortunately, the very institutions meant to guard against abuse are headed by the same cabal of lawmakers who are wont to protect their own. In one fell swoop, Bertiz unearthed our repressed feelings of resentment and scraped the wounds wide open.
Juan de la Cruz is a helpless victim of lawmakers’ abuses every day. On our roads, for example, congressmen and senators have highway patrols pave the way for their passage, demanding that everyone move aside, as if their journeys are more important than ours. They assume that traffic rules do not apply to them and berate traffic enforcers when they are accosted. They refuse to line up in government offices and insist that their needs be attended to first. They demand that airlines wait for them if they are late. In our embassies abroad, they demand to be entertained by our diplomatic staff and help themselves to the cars and facilities of our embassies. They don’t line up at immigration counters and demand exception from customs for their contraband. They expect law enforcers to look the other way for crimes under the radar of media scrutiny. I can go on and on as the litany of abuses are as long as this newspaper.
While I do not suggest that all lawmakers are the same, I dare say that most are of Bertiz’ likeness, perhaps only more discreet. No surprise, the public view lawmakers not as men of esteem, but with disdain and distrust.
Bertiz is the personification of everything we hate about lawmakers. His latest caper only worsened their already tarnished image. Adding insult to injury was his backhanded apology, done while blaming airport officials for being rude. What kind of apology lays blame on others? It was clearly one laced with hubris.
Given the blowback on the reputation of the legislature, it is incumbent on the congressional ethics committee to slap maximum sanctions against Bertiz. The public expects nothing less. To let him get away with a mere slap on the hand will only confirm what most think of lawmakers — that they protect their own. A strong signal must be sent that such behavior will no longer be tolerated, especially under the watch of newly installed Speaker Gloria Arroyo.
Power is intoxicating and Bertiz is inebriated with it. His ilk forget, as elected officials, they are under the payroll of the people. Our taxes pay for their salaries and whatever pork funds they receive. They are at the public’s disposal, not above it. Hence, they are duty and morally bound to uphold the law, however inconvenient it may be.
A DISSERVICE TO THE PRESIDENT
Bertiz is clearly emboldened by his closeness to Bong Go and the President himself.
This begs the question, is it commonplace for friends of Bong Go and the President to enjoy special privileges? If not, why does Bertiz demand it in the most brazen of ways? Is cronyism on the rise in this administration?
The way Bertiz struts around town goes against the very grain of why President Duterte was elected in the first place. It will be recalled that the people voted for the Chief Executive principally because he promised to enforce the law without fear or favor. He committed to stamp out abuse among those in power and restore law and order in the land.
The actions of Bertiz undermined the President’s campaign promise. Unless the President cracks the whip on him, our people can rightfully conclude that cronyism is alive and well in this administration and that the campaign promise was a fluke.
As far as public opinion is concerned, the Bertiz incident could not have come at a worse time. Just as the administration faces criticisms for its inability to tame inflation, control the drop in the peso and arrest the decelerating economy — this incident only added another layer of discontent with the administration.
As for the senatorial bid of Bong Go, his association with Bertiz will make the public think twice before voting for him. He will probably be ruled out altogether. Thus, the further Mr. Go distances himself from Bertiz, the better.
Nearly everything that comes out of Bertiz’ mouth is wrought with political incorrectness — from threatening not to release the licenses of agricultural engineers unless they knew Bong Go, to accusing OFW, Eman Villanueva of being undocumented, to his slur against women’s menstrual cycles. The man is toxic.
RAMIFICATIONS
In a recent press briefing, Manila International Airport Authority (MIAA) General Manager Ed Monreal said that based on the footage alone, it was clear that Bertiz violated security protocol by not removing his shoes at the checkpoint. This was confirmed by Office of Transportation Security (OTS) Administrator Art Evangelista, who said Bertiz not only violated security protocols, he also breached security procedures by forcibly confiscating the ID card of an airport security staff member.
By law, only the President is exempt from security checks, but even he subjects himself to the entire security process.
Aviation safety protocols are governed by international treaties and the International Civil Aviation Organization (ICAO). Failure to adhere to them could give other member countries the right not to accept flights from the Philippines and/or disallow flights from the Philippines from entering their airspace. As one could imagine, this could have serious ramifications to our OFWs, the very people Bertiz represents. It will also cause serious damage to tourism and the economy in general.
The blatant disrespect for security protocols could cause us to fail the next ICAO security audit which will bring about stiffer sanctions.
The stakes are high and to brush this off as some misdemeanor of an entitled lawmaker will be doing the entire nation a disservice. We must show the international community that we are committed to enforce aviation security protocols, no matter who is involved.
In conclusion, Bertiz has shown us how abusive and shameless our lawmakers have become. On civil society’s part, our vile reaction is indicative of how fed up we are.
But the issue now has transcended Bertiz himself. It is now about the reputation of the legislature and the executive branch. We ask ourselves — are they worthy of our respect? Do they have the moral high ground to dictate our laws and tell us what is right or wrong? Should we begin making our displeasure towards them obvious? Has the time come for us to demand a new cast of leaders?
Moving forward, it all depends on how they handle Bertiz. If they treat him with cushioned gloves, then we know they are just as broken as this entitled congressman.
 
Andrew J. Masigan is an economist.

Scare tactics on the young

Never Again! It has been branded in the hearts of those who experienced martial law that never again should Filipinos have to bear the killings, torture, plunder and other transgressions of human rights by a dictator and his politicized military. And the younger generations must know about these, and know all in truth — not in the revisionist telling of inveterate liars, who have benefitted from martial law, changed loyalties to succeeding democratic leaders, and are now changing coats again, back to dictator-type governance.
Revising history by denying the atrocities of past martial law and yet using the very same invented claims of “destabilization” that justified the Marcos dictatorship: that is manifestly the intensified concerted drive of the present leadership. And the targets are the young — those still in university — who are perhaps grandchildren of those in the generation who lived through Marcos’s martial law in the seventies.
Armed Forces Chief of Staff Carlito Galvez, Jr. declared last week that the Communist Party of the Philippines (CPP) was “infiltrating” schools for the “Red October” plot, the “broad coalition” of communists and opposition groups that President Rodrigo Duterte himself had earlier accused of scheming to oust him from office. “Actually, si [CPP founder] Joma (Jose Maria) Sison has conducted a lot of conferences with the University of the Philippines (UP),” he added, saying he was ready to reveal documents related to the ouster plot in an executive session of the Senate (ABS-CBN News, Oct. 3, 2018).
Students were in an uproar. “Those are all are lies, propaganda to trick Filipinos,” University of the Philippines (UP) students protested. Gen. Galvez’ identified ten universities grew to a list of 18 universities as his deputy Chief of Staff, Brigadier General Antonio Parlade, Jr., embellished details, “May ongoing film showing sila about dark years of (Marcos) martial law sa mga class to incite students to rebel against the government,” he told ABS-CBN News (Ibid.).
De La Salle Philippines President Bro. Armin Luistro, Secretary of Education in the term of former President Benigno Simeon Aquino III, was first to speak out. “Sept. 21 (the 46th anniversary of Marcos’s martial law proclamation) was just around the corner. Universities, obviously, because of all the historical revisionism happening, are showing films on the martial law to explain the facts, the past realities that happened to us. There is nothing wrong in a university setting where many ideologies are discussed. Connecting that with an actual plot to overthrow government is an entirely different matter” (ANC Alerts, Oct. 3, 2018).
Bro. Armin said the military should have first talked to university officials before releasing a list to the media. He wondered why an “intelligence report” which should be the highly-classified basis for intelligence operations should be shared with all even before such “secret” operations commenced. UP-Diliman Chancellor Michael Tan said the military must provide evidence for their allegations. “We will not allow this to be a witch hunt. We are still a democracy, although it is a democracy under assault,” he said (ABS-CBN News, Oct. 4 2018).
Fr. Jose Ramon Villarin, S.J., president of the Ateneo de Manila University, said “there is no present evidence to even suggest” that the school is exposed to any grave risk. He reiterated the Ateneo’s support for democratic institutions and said the university “will not shirk from its mission to holistically educate our youth in proper history and ethics, particularly on the matter of Martial Law and its impact on Philippine society” (Ibid.).
For University of Santo Tomas Secretary General Fr. Jesus Miranda, O.P., the burden of proof lies with the military. Lyceum of the Philippines University, University of Makati, Far Eastern University, Emilio Aguinaldo College, among the 18 universities tagged by the military in the alleged CPP recruitment effort, denied knowing of and promoting efforts to destabilize the government (Ibid.).
But the angriest were the students, the real victims in all this: “The UP Diliman University Student Council strongly condemns this blatant act of red-tagging students of these universities. It is a clear threat to the students who bravely criticize the government and the president himself,” the young voices protested (Ibid.).
Note that when Gen. Parlade came out with his “intelligence list” of 18 universities, the Philippine National Police (PNP) candidly declared, “In our intelligence community, we have no information yet of recruitment in schools and universities. But that’s not surprising. They’ve been doing that since its creation, almost 50 years ago,” he said (ABS-CBN News, Oct. 3, 2018). “The CPP (is) having a hard time recruiting students because they (students) cannot be easily manipulated and swayed into committing actions that would be considered rebellious to the established government,” PNP spokesperson Benigno Durana, Jr. said (Ibid.).
Perhaps that was meant to be a paean to the Duterte myth of invulnerable and accepted autocracy. But the PNP spokesman unwittingly acknowledged the invulnerability of the students within themselves — not to blindly embrace the radical ideology of communism as they would not blindly accept and live with the abuses of a democratically elected, yet dictatorial leader. If one is against the establishment, one is not necessarily a communist.
Bro. Armin describes it as “a created fear. They’re creating a scenario that’s not even there by talking about the supposed ‘Red October’ plot. And to me, that’s the scary part. If your official intelligence group talks about that scenario, I think they have a modus that’s out of the usual” (ANC Alerts, Oct. 3, 2018). The educator knows too well the delicate balance between the positive guidance by a parent to a child and the fearsome consequences of scaring the child to self-discerned action that may be good or bad. Will the reaction of the students be that since they are identified with the communists out to depose Duterte, perhaps communism is good since they have coinciding ideals of truth and righteousness with the Reds?
Perceived coinciding objectives with the CPP in the Marcos dictatorship was what brought young students to be the most pitiful statistics in Amnesty International “conservative” estimates in the 1972-1986 Martial Law years: 70,000 were imprisoned, 34,000 were tortured, 3,240 were killed (Tiongson, Lito. Batas Militar: 1997).
Imagine the fear of parents who must now caution their young adults — stop getting involved with national politics, stick to your school work; it is so dangerous for you to be identified as “communist” — we know what happened to student activists in Marcos’s time.
And we know the fear and frustration of educators who have kept to their fundamental vows of teaching truth and integrity in scientific theory and in moral and ethical practice. Echoing statements of tagged educational institutions, Lyceum of the Philippines University President Roberto Laurel said, “As an advocate of nation-building, our institution upholds the principles of democracy and abides by the supreme law of the land — the Constitution” (ABS-CBN News, Oct. 4, 2018).
Scaring and threatening the students is probably the most grievous sin of Duterte in his war for continued autocracy.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

TRABAHO: Setting free an urgent reform

The House of Representatives passed the Tax Reform for Attracting Better and High-Quality Opportunities or TRABAHO Bill in early September. The first major component of TRABAHO is the reduction of the corporate income tax (CIT) rate to 20% over a period of nine years, starting 2021.
The Philippines imposes the highest CIT rate in ASEAN at 30%, compared to an average of 21.5% in the nine other ASEAN countries. The reality of tax competition makes the country less attractive, and the rate reduction under TRABAHO is a welcome move.
Our experience in the past fifteen years shows increasing tax effort in times of increasing rates, e.g. 2005-2008 when CIT was increased from 32% to 35%; and a long lag before tax effort could recover after a rate cut, e.g. four years after CIT was brought down to 32% in 2009. A cut of one percent now means P26 billion in revenue loss.
To cushion the expected revenue loss, the start of the CIT reduction is delayed and its implementation is made on a staggered basis. A further tweak that can be introduced is the requirement of a review of the overall fiscal position before further cuts beyond 25% can be made. This is to check whether tax effort is improving and to ensure that we have the fiscal space to pursue further cuts.
The second major component of TRABAHO is to rationalize and modernize the fiscal incentives granted by government. It expands the menu of incentives, enhances tax administration, and makes the award of incentives contingent on performance and inclusion in a set of strategic priority sectors.
As with the CIT rate reduction, there is wide support for the improved list of incentives, which now includes expanded tax deductibility for research and development, training, incremental labor expenses, and reinvestment allowance for manufacturing, among others.
However, groups representing exporters, foreign chambers, and the IT-BPO (information technology and business process outsourcing) sector and economic zone locators would rather have the fiscal incentive rationalization (FIR) not apply to them. They raise the specter of job losses and investor flight resulting from FIR.
Specifically, they oppose the sunset provision of FIR. With the sunset provision, incentives only the IT-BPO sector and economic zone locators currently enjoy in perpetuity will now have an expiry. They will lose the special tax rate of 5% on gross income earned (GIE) granted to locators in the Philippine Economic Zone Authority (PEZA) and other special economic zones. Together with this comes the fear of PEZA losing its “one-stop shop” authority, which will lengthen transaction time and expose investors to the whims of local government units (LGUs). A related concern is the higher 90% threshold required for exporters to automatically be given value-added tax (VAT) exemption on imports and zero-rating on domestic purchases.
It is possible to address these concerns. There can be a longer transition period for those enjoying the GIE privileges before they graduate to the regular CIT rates, and even a longer maximum period for the enjoyment of the new incentives. If these investors keep on innovating and qualifying in the strategic investments priorities program, it is possible for them to keep on enjoying these new incentives.
As per the current Bill, PEZA does not lose its authority, except for the final approval of the award of incentives. This is in line with harmonizing all incentives laws and centralizing their administration. PEZA may, and in fact should, continue to shield investors by covering and processing all LGU requirements.
The VAT treatment of investors falling below the 90% threshold causes worry because of the tedious and lengthy refund process. Improving the refund process will go a long way, as will cooperation to arrest anomalies in the issuance of tax credit certificates.
With respect to the issue of job losses and investor jitters, the point is that FIR does away with redundant incentives. In other words, firms that are already profitable can perform well without incentives. Further, the reform mandates the appropriation of P45 billion for a five-year Structural Adjustment Fund to cover targeted cash grants and trainings for displaced workers of affected firms, skills upgrading of IT-BPO industry workers, and the development of infrastructure and economic activities in and around special economic zones.
Thus, there are ways to address the most pressing concerns. It is just a matter of stakeholders coming together and finding the sweet spot. At no other time in history have the Department of Finance and the Department of Trade and Industry worked closely together, which should give comfort to industry and fiscal reformers alike.
The TRABAHO Bill is now in the Senate for deliberation, and as expected, the same issues brought up in the House of Representatives are again being raised. Must a needed reform be held hostage on account of a few contentious provisions?
The sooner an agreement is reached on how best to resolve conflicting concerns in the TRABAHO Bill, the better it is for everyone. Aside from setting free a much-needed reform, it will end the creeping uncertainty affecting investment decisions. Investors need to know when and how the reform will take place, so they are able to make proper calculations.
Reform should not be a zero-sum game. It is most stable when supported by a broad consensus. The challenge is striking an acceptable balance among the concerns raised by various stakeholders. If indeed, as everyone claims, the objective is to enhance the country’s competitiveness and promote its development, it should be possible to work out this balance.
 
Jenina Joy Chavez is a trustee of Action for Economic Reforms (www.aer.ph), and heads its industrial policy program.

Blackwater improves to 6-1 with win over ROS

By Michael Angelo S. Murillo
Senior Reporter
THE Blackwater Elite sustained their solid form in the Philippine Basketball Association Governors’ Cup, adding the Rain or Shine Elasto Painters to their list of victims, 99-93, at the Sta. Rosa Multi-Purpose Complex in Laguna on Sunday.
Had it strong in the middle quarters, the Elite were challenged late in the game but were able to extricate themselves to book the win that had them moving up to 6-1 while leaving the Elasto Painters still winless (0-4).
The contest got to a competitive start with the two teams fighting to a 12-all count in the opening four minutes of the first quarter before Rain or Shine went on a 15-5 run to build a 27-17 lead by the 4:47 mark.
Blackwater though would finish strong to narrow the gap, 30-27, at the end of the first 12 minutes.
The Elite picked up from their late run in the first period to begin the second quarter, seizing the lead, 33-32, after five minutes.
Allein Maliksi then waxed hot for Blackwater to help his team build a 44-34 advantage with 1:40 to go.
The Elasto Painters tried to make up for lost ground for the remainder of the half but could only come within eight points, 47-39, by the halftime break.
Rain or Shine began the third canto strong behind import Terrence Watson, coming to within two points, 47-45, after two minutes only to see Blackwater create distance anew, 58-49, in the next three minutes.
Mike DiGregorio exploded for the Elite after, helping his team extend its lead to 16 points, 71-55, with 2:37 left in the quarter.
The count stood at 73-64, and Blackwater on top, three-fourths into the contest.
Rain or Shine began the fourth quarter firing, narrowing the gap to four points, 77-73, at the 9:08 mark.
Paul Zamar, Mac Belo and import Henry Walker though steady things for Blackwater, conspiring to rack up seven straight points to stretch their lead once again to double digits, 84-73, in the next minute and a half.
Blackwater held an 89-79 advantage with four minutes remaining before Rain or Shine made a last-ditch effort to salvage the game.
The Elasto Painters cut the Elite’s lead to three, 90-87, with 2:37 remaining on the clock but four straight points from guard Nards Pinto gave Blackwater more breathing space, 94-87, with 1:14 to go.
A triple by Gabe Norwood and a breakaway basket by Maverick Ahanmisi pushed Rain or Shine to just four points behind, 94-92, with 43 ticks left.
Mr. Pinto though drained a triple with 17 seconds remaining to give Blackwater a fresh five-point lead, 97-92, from which Rain or Shine could not recover from.
Mr. DiGregorio led Blackwater with 17 points with Mr. Pinto adding 16.
Mr. Walker had a triple-double of 14 points, 14 rebounds and 12 assists while Mr. Maliksi had 13 points.
Rain or Shine, meanwhile, was paced by Mr. Ahanmisi with 25 points followed by Mr. Watson with 17 points and 14 boards and Ed Daquioag with 15 points.
“We just moved the ball around. We’re like a wolf pack, strong if we play as a pack,” said Mr. Walker, named co-player of the game with Mr. Pinto, after their win.

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