Djokovic woes

January 25, 2018 | 12:01 am

A dejected Novak Djokovic faced members of the media in the aftermath of his fourth-round exit from the Australian Open the other day. That he wasn’t even sure of his fitness heading into the year’s first major tournament became irrelevant in light of his straight-sets defeat at the hands of Chung Hyeon. He arrived Down Under with relatively modest expectations; along with his entourage that included Hall of Famer Andre Agassi, he said he looked forward to reaching the second week of the Grand Slam event. And he did, but barely, and when it looked like he was rounding into form, he wound up being exposed as woefully unprepared.

To be fair, Djokovic did try his best. From the outset, even his diehard followers understood the difficulties he faced: he was out of circulation for the last six months due to injury, and it would have been foolhardy to believe he would simply pick up from where he left off. Which, in truth, was, well, underwhelming; prior to shutting down for the remainder of 2017, he appeared to be in a free fall that he attributed to physical, mental, and emotional challenges, on the court and off. Taken in this context, it’s fair to assess his performance over the last week with no small measure of optimism. He is, after all, who he is, and he will improve.

On the other hand, Djokovic did possess the pedigree to go far in the Australian Open, his prolonged absence from the circuit notwithstanding. First, it’s where he has met with success the most. Second, Roger Federer’s astounding showing en route to the title last year proved that the right combine of talent, resolve, and luck of the draw can lead to glory. And he seemed to have all three at the palm of his hands; after his supposed cakewalk against Chung, he looked primed to take advantage of a seemingly softer schedule. Instead, he couldn’t even take care of the task at hand.

True, upsets happen all the time. Then again, the manner in which Djokovic bowed to Chung could not have been anything but troubling; he was behind in every set, and had to rally just to make the numbers close. And though he did have his chances, he wasn’t the better in the big moments; that distinction belonged to his opponent, who was fazed neither by circumstance nor by the gravity of the challenge.

In his presser, Djokovic said he will be reviewing his status, elbow injury and all. Given his advancing age and focus-requiring style, however, his most pressing problem may well be what’s inside his head. And for that, only time will have the answer.

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.

Google introduces audiobooks as rivalry with Amazon heats up

January 25, 2018 | 12:01 am

SAN FRANCISCO — Alphabet, Inc’s Google introduced audiobooks to its online store on Tuesday, making its smart speakers and virtual assistant more competitive with Amazon.com, Inc’s Echo devices and Alexa voice assistant.

Listening to audiobooks is among the most popular nighttime uses for smart speakers, a burgeoning type of home appliance that provides audio streams of music, news and other data based on user commands to an embedded virtual assistant.

But Google’s Home speakers have lagged Amazon Echo in terms of audiobook features. Amazon-owned Audible, the top provider of audiobooks, has not been supported on Home and other speakers with Google Assistant.

Google launching an audiobooks store widens the battle, which has also seen Google’s YouTube unit stop supporting an Amazon product.

Greg Hartrell, head of product management for Google Play Books, listed subscription-less buying as the top selling point for the new audiobooks store.

“You can buy a single audiobook at an affordable price, with no commitments,” he said in a blog post on Tuesday.

Audible offers one-off purchases, but promotes a $14.95 monthly subscription that includes one free download and 30% off further purchases. Amazon and Audible did not respond to requests to comment.

Google began selling ebooks in 2010. Mr. Hartrell told Reuters in a statement that audiobooks are being added because “our users are asking for them.”

About 16% of US adults own a smart speaker, according to an Edison Research survey conducted in late 2017. The firm in conjunction with Triton Digital also found last spring that 30% of frequent audiobook listeners had used a smart speaker to take in an audiobook in the previous 12 months.

Audiobook sales surged nearly 20% annually for three consecutive years, reaching $2.1 billion in 2016, according to the latest Audio Publishers Association data.

Thad McIlroy, an online book industry consultant, said audiobooks represent the only publishing category with “strong growth” so it makes sense for Google to challenge Amazon despite having a weak ebooks business.

Google-purchased audiobooks can be accessed through Google Play Books on the Web, apps for Android and iOS devices or through Google Assistant in speakers, Android smartphones and “soon” cars with Android Auto, Mr. Hartrell wrote. — Reuters

Bourse pulls back from record high on profit taking

January 25, 2018 | 12:01 am

SHARES on Wednesday ended a three-day rally that had seen the main index closing short of 9,000 the day before to mark the year’s sixth peak, as investors pocketed gains.

The Philippine Stock Exchange index (PSEi) closed 78.79 points or 0.87% down at 8,920.23, while the all-shares index shed 8.92 points or 0.17% to 5,205.69.

“After nearly touching 9,000, investors finally resorted to profit taking as investment managers still digest the impact of the underwhelming fourth-quarter 2017 GDP results,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message, referring to a 6.6% gross domestic product (GDP) pace that fell short of the market’s 6.7% expectation for those three months.

Socioeconomic Planning Secretary Ernesto M. Pernia on Tuesday had noted, however, that the 6.7% full-year clip that fell within the government’s 6.5-7.5% target for 2017 was “strong,” considering it was achieved after an election year — hence saw weaker household consumption — and still kept the country among Asia’s fastest-growing economies after China (6.9%) and Vietnam (6.8%).

Wednesday saw the list of the 20 most active stocks equally divided between those that gained and those that declined, with the former led by the likes of Ayala Land, Inc.; Bloomberry Resorts Corp. and Metropolitan Bank & Trust Co. that increased by 1.43% to P46.25 apiece, 5.33% to P11.86 and 1.90% to P102 each, respectively, while the latter were led by BDO Unibank, Inc.; SM Investments Corp.; Ayala Corp.; Bank of the Philippine Islands; SM Prime Holdings, Inc.; LT Group, Inc.; and GT Capital Holdings’ Inc. that fell by 1.003% to P157.90 apiece; 0.64% to P1,088; 0.96% to P1,035; 2.40% to P118.10; 1.52% to P38.90; 4.26% to P22.50 and 2.41% to 1,338 per share.

“It’s just profit taking off the recent high… But if anything, pullbacks are welcome at this point and we would take it as an opportunity to buy,” RCBC Securities, Inc. equity analyst Jeffrey Lucero said in a text message.

Four of the six sectoral indices closed lower, with holding firms falling by 154.74 points or 1.66% to 9,136.44; followed by mining and oil that dropped 157.56 points or 1.31% to 11,810.82; financials which shed 13.27 points or 0.58% to 2,263.75 and industrials that slipped by 3.05 points or 0.02% to 11,936.35.

Services and property gained, by 9.68 points or 0.58% to 1,675.49 and by 4.51 points or 0.11% to 4,077.26, respectively.

Trading thinned slightly to 896.77 million stocks worth P8.46 billion from Tuesday’s 1.19 billion issues worth P8.54 billion. Stocks that declined outnumbered those that gained by 115 to 103, while 40 names were flat. Foreigners ended eight days of net buying, with Wednesday seeing P47.284-million net sales instead. — Arra B. Francia

Holding the citizenry hostage

January 25, 2018 | 12:01 am

As I write this, President Donald Trump has just signed a bill representing a continuing resolution that would end the shutdown of the US federal government and allow the Senate and the House of Representatives up to Feb. 8 to craft legislation that will fund the government’s discretionary programs, containing provisions that will relatively satisfy the demands of the Republicans and the Democrats.

The two parties reached an impasse last Friday that triggered a shutdown of the government over the weekend and into Monday.

The principal bone of contention, according to the Democrats was DACA or Deferred Action for Childhood Arrivals, a policy instituted by President Barack Obama and scuttled by Trump. The policy provided for a renewable two-year period of deferred action from deportation benefiting individuals who entered the US as minors and who remained in the country illegally over the years. These individuals called “the Dreamers” estimated to be over 800,000, have known no other country but the US and have been raised as Americans, except for their legal status.

The Democrats have insisted that DACA should be reinstated and a bill should subsequently be passed based on the DREAM Act (Development, Relief, and Education for Alien Minors) which provides for a multi-phase process for qualifying Dreamers for conditional residency and, upon meeting further conditions, permanent residency, en route to citizenship.

DACA has bipartisan support, as well as the support of the majority of Americans because of humane considerations. But anti-immigrant hardliners in the Trump White House blocked approval of a bill crafted by a group of Republicans and Democrats and presented to Trump.

Trump, whose initials, DT, are also said to mean Double Talk, lived true to this pejorative by flip-flopping on earlier assurances of approval. He also upset the entire process by asking why it was necessary to allow “people from shithole countries” like Haiti and those in Africa into the US.

The tsunami of rage that came in the wake of that vulgarity left the US legislators scrambling to pick up the pieces. They tried to arrive at some kind of bill that would satisfy both parties as well as the confusing and constantly shifting Trump position (which Democratic Senator Chuck Schumer characterized as negotiating with Jello, a description that GOP leaders privately concede). But they failed to meet the deadline of Friday midnight, thus the shutdown.

Finger-pointing has inevitably followed, with both sides laying the blame on each other and on Trump (Schumer called it the Trump Shutdown while the White House described it as the Schumer Shutdown). In fact, it was THE AMERICAN SHUTDOWN, with the people of the United States being the principal victims “the primary hostages “of the partisan wrangling.

While both sides have sounded self-righteous, the fact is that the reason for the impasse was “and continues to be “the fact that the Republicans and Democrats do not trust each other and the leaders of both parties do not trust Trump.

It is a sad day when the citizens of the US are held hostage by a double-talking president but that has happened and could happen again if no bipartisan deal is arrived at after February and if that deal is not approved by Trump.

Meanwhile, the Philippine House of Representatives, is also threatening its own version of hostage-taking, initiated by Speaker Pantaleon Alvarez . This time, the bone of contention is President Rodrigo Duterte’s vow to institute a change in the country’s form of government “from unitary to federalism.

The broad objectives of federalism are generally positive. Conceptually, it would change the Manila-centric system to one that would provide equal opportunities for governance, along with corresponding economic benefits, to the various regions of the country.

The devil is in the details.

The US has a federal system of government that, in effect, allows autonomy to each of its 50 states.

To this day, debates continue over the interpretation of the concept of power sharing between the federal government and the state governments, with some insisting on more expansive powers for the former and others insisting on greater autonomy and powers for the states.

Fortunately a strong judicial branch, executive branch, and legislative branch, with the states represented in the last, have kept the US on an even keel. Checks and balances ingrained in the Constitution generally work and abuses are exposed by a militant citizenry and a militant press, as well as a militant justice system.

But it has taken America almost 250 years to arrive at this equilibrium. And only after undergoing a bloody civil war in 1861, just 85 years after the Declaration of Independence, where the United States nearly broke up.

Depending on when the pragmatist or the idealistic nationalist reckons the attainment of independence “June 12, 1898 or July 4, 1946” the Philippines is really a young nation and, to this day, it still has not gained full equilibrium. Its leaders are still scrambling to gain or consolidate power in their own respective turfs. The three branches of government, patterned after that of the US, are coequal for all intents and purposes, except when a power-drunk president or power-drunk leaders of the legislature fancy themselves more equal than the other branches. Or when timid leaders of the judicial branch allow themselves to be intimidated.

It may be said that the Philippines is still at that stage described by the late president Manuel Quezon as a government run like hell by Filipinos (which he preferred over one run like heaven by the Americans).

Like the Republicans and the Democrats in the US, the political leaders in the Philippines do not trust each other. They may pretend to, but each one has his or her own selfish agenda, with an eye on political and economic power.

The resistance to any change of governmental system, which will require amendments to or an overhaul of the Philippine Constitution, is based on the suspicion that each proponent of one kind of system over another, or one scheme over another, has a devious agenda. And the prevailing attitude is, “Why them, why not me?”

Thus there is conflict, which the Speaker Pantaleon Alvarez, thinking he has more power than the other branches of government or anybody else for that matter, proposes to resolve by threatening to withhold budgets from leaders, regions, or provinces that do not go along with the proposed change to federalism. That is plain and simple hostage-taking.

So who are the hostages? The poor citizens of the provinces or regions that do not cooperate.

Of course this is nothing new.

Over the years, in Philippine politics, the mantra has been, “What are in power for?”

Did someone say that power is really in the hands of the citizenry? Ideally, yes. But not in a country of over 100 million cowards… or cows, being led along by the nose.

Greg B. Macabenta is an advertising and communications man shuttling between San Francisco and Manila and providing unique insights on issues from both perspectives.

gregmacabenta@hotmail.com

Davos elite tout ‘blended finance’

January 25, 2018 | 12:01 am

LONDON — An additional $1 trillion could be found for the UN’s Sustainable Development Goals if development banks focus on making investments digestible for private pools of capital.

That’s according to a report by the Blended Finance Taskforce released Tuesday at the annual World Economic Forum conference in Davos, Switzerland.

The mix of public and private capital is dubbed “blended finance.”

“Action is needed end-to-end across the whole investment system to scale up the use of blended finance if we are serious about closing the funding gap for the Sustainable Development Goals,” said Mark Malloch-Brown, chair of the Business & Sustainable Development Commission, one of the authors of the report.

The Sustainable Development Goals are 17 objectives outlined in 2015 by the United Nations. They span a wide range of issues from clean energy and climate change to hunger to health and are meant to collectively reduce poverty and protect the environment.

There is currently a funding gap estimated to be about $2 trillion to $3 trillion for these goals. It has been estimated that public sources could provide half, but the remainder would have to be raised from the private investors.

Blended finance already exists and is estimated to be a $50 billion market, according to the report. Development banks already work with private investors in the renewable energy industry.

One recent example was when institutions such as Germany’s KfW and Inter-American Development Bank loaned money with a group of commercial banks including Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Banking Corp to finance two wind farms in Chile.

This kind of collaboration needs to be significantly increased, according to Jeremy Oppenheim, program director of the Business & Sustainable Development Commission and founder of SYSTEMIQ, an impact-investment firm.

“The multi-lateral development banks currently mobilize less than $1 of private capital for every dollar they invest,” he said.

“This ratio would need to more than double to get anywhere close to the trillion-dollar financing target.”

Measures that can be taken include structuring an investment so the development bank is paid after the institutional investor is compensated, reducing the risk, and pooling assets to create portfolios of a size that pension funds and insurers can work with.

The World Bank also provides insurance against political risk through its Multilateral Investment Guarantee Agency.

The Blended Finance Taskforce is advocating for development banks to all set ambitious targets for private capital mobilization, which is believes could significantly contribute to narrowing the funding gap. — Bloomberg

MPIC eyes local partner for Indonesian water deal

January 25, 2018 | 12:00 am

METRO PACIFIC Investments Corp. (MPIC) is hoping to have an agreement within the year with an Indonesian company for its water venture into Indonesia.

“We’d like to, we’re aiming to do that,” MPIC Chairman Manuel V. Pangilinan told reporters on the sidelines of a Philippine Business for Social Progress event on Jan. 23, asked whether they plan to sign a deal within the year.

“But there are parties on the other side who may or may not be as cooperative,” he said.

MPIC plans to expand its business in Indonesia to include water, energy and telecommunication after unit Metro Pacific Tollways Corp. (MPTC) increased its stake in Indonesian company, PT Nusantara Infrastructure Tbk in November.

He said it is “most likely” that they will be signing with PT Nusantara.

“It’s still good to have a local partner, they know the local conditions much better,” Mr. Pangilinan said.

Mr. Pangilinan said they are looking at two or three countries in the Association of Southeast Asian Nations (ASEAN) region, but nothing has been finalized.

For the long term, MPIC is looking to develop a pan-ASEAN water company, Mr. Pangilinan said last year.

MPIC last November entered the Vietnamese water market through a P615-million deal that gave it a 45% stake in a contractor at one of Vietnam’s economic zones. MetroPac Water Investments Corp. bought into Vietnamese water company BOO Phu Ninh Water Treatment Plant Joint Stock Company (PNW).

Locally, MetroPac Water President Laurence R. Rogero said last year the company eyes 26 projects in partnership with local water districts.

MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd. Its other units are Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo

HB 6908 seen clarifying labor-only contracting

January 25, 2018 | 12:00 am

THE HOUSE COMMITTEE on labor and employment said that while House Bill (HB) 6908 or the Security of Tenure bill does not seek to abolish contractualization completely, it clarified the distinction between job contracting and labor-only contracting to prevent future abuses by companies.

Committee chair and Cagayan Rep. Randolph S. Ting noted that among the 26 bills consolidated under HB 6908, only HB 4444 by Trade Union Congress of the Philippines (TUCP) party-list Rep. Raymond Democrito C. Mendoza proposed the complete abolition of contractualization but said that this is not allowed under the Constitution.

“The game-changer in this bill really is just one word: we changed ‘and’ to ‘or.’ Meaning… the presence of any of the [elements] will [be sufficient to define] labor-only contracting,” Akbayan party-list Rep. Tomasito S. Villarin explained in a briefing.

Under the proposed amendments, a contractor is considered labor-only if the “person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; or has no control over the workers’ methods and means of accomplishing their work; or the workers recruited and placed by such persons are performing activities which are directly related and necessary to the principal business of such employer.”

Likewise, HB 6908 inserted a provision defining which businesses qualify as job contractors, such as:

• an independent business, separate and distinct from the principal employer;

• paid-up capital or capitalization of at least P5 million;

• an undertaking of financial capacity, and compliance with all labor laws and regulations;

• sufficient knowledge, experience, skills, or competence in the field of contracted job, work or service;

• employment or regular employees, and possession of equipment, machineries or tools necessary to perform or complete the job, work, or service contracted out;

• control over the performance and completion of the contracted job, work, or service; and

• payment of license fee of P100,000.

Absence of any one of these seven elements will indicate labor-only contracting, Mr. Villarin said.

The bill proposed sanctions on employers who will engage in fixed-term employment except for overseas Filipino workers (OFWs), workers on probation, relievers, project employees, and seasonal employees.

“Relievers, project employees, and seasonal employees shall enjoy the rights of regular employees for the duration of the engagement, project, or season, respectively,” HB 6908 further read.

Leyte Rep. Vicente S.E. Veloso said this provision under Article 296 of the proposed HB 6908 would fix 5-5-5 or sub-contracting.

To secure the tenure of workers, HB 6908 provided that workers cannot be terminated or dismissed without “just cause” and without due process.

The bill calls for employees who are illegally dismissed to be reinstated without losing their seniority and benefits. They shall also receive back wages without interest and penalties for late remittance.

Probationary workers, on the other hand, are to have the same benefits as regular employees and those who serve for more than a month and are terminated without just cause are to be “entitled to a termination pay of one-half month salary,” according to HB 6908.

Mr. Villarin noted that the passage of this bill will benefit around two million workers.

HB 6908, which seeks to further amend the Presidential Decree 442 or the Labor Code of the Philippines, hurdled second reading on Jan. 23. It is one of the bills listed under the Common Legislative Agenda of the 17^th Congress. — Minde Nyl R. dela Cruz

Philippine crop production

January 25, 2018 | 12:00 am

Of alphabets and alphalists

January 25, 2018 | 12:00 am

Once in a while, especially in moments of stress, we find ourselves looking back to our childhoods. Back then, life was simple, and one of the few things we worried about was learning the alphabet.

Life gets more complicated as you grow old, when you have to worry about things the Bureau of Internal Revenue (BIR) might punish you for if you fail to comply. One of them is the alphabetical list of employees/payees that accompanies the Annual Information Return.

Under existing regulations, withholding agents should withhold and remit tax to the BIR by filing the required remittance returns (BIR Form 1601E, 1601F, and 1601C). In addition to the withholding tax/remittance returns, withholding agents are also required to submit to the BIR an Annual Information Return (BIR Form 1604E and 1604CF) together with an Alphabetical List of Payees/Employees (Alphalist).

Since the forms are considered “no payment” returns, more often than not, taxpayers tend to overlook their submission.

In December, the BIR issued a reminder in the form of Revenue Memorandum Circular (RMC) No. 100-2017, “Clarifying the Sanctions for the Non-Submission of Alphabetical list of Employees/Payees of Income Payments.” For small or newly established entities with or without an organized system in place, the policy may appear burdensome to comply with, or may seem superfluous.

However, the RMC reiterated the penalties under Revenue Memorandum Order No. 7-2015, i.e., non-filing of alphalist or failure to submit the complete or corrected one would subject the taxpayer to a compromise penalty of P1,000 for each failure to make, file or submit the return, with the aggregate amount to be imposed on such failures not exceeding P25,000 during the calendar year.

Inadvertent failure to file the alphalist does not only entail payment of monetary/compromise penalties, but likewise translates to an “open case” with the BIR. The term open case refers to a pending action against a taxpayer for failure to file a return, or filing a return that was not captured by the BIR’s system. In practice, taxpayers who wish to settle their open cases are directed to comply with their deficiencies, which may consist of filing the corresponding returns and payment of tax due, if any, plus penalty and interest.

Having an open case isn’t as easily resolved by paying penalties and filing returns. The entire process could take weeks, months, or even years if you’re out of luck. Unlike some returns which are closed automatically, open cases involving non-filing of annual information returns are manually reviewed, approved, and inputted in the BIR system. The process is called data-fixing and takes considerable time to sort out. This is also why an open case is one of the factors behind unreasonable delays in processing applications. You wouldn’t want to be caught with an open case for failure to file a return while securing a tax clearance for eligibility to join a public bidding, or renewing your importer accreditation, since the timing would be critical.

This is also a concern for those who fail to close their businesses properly, under the impression that the obligation to file annual returns has expired because operations have shut down. They will be in for a big surprise when they discover a list of open cases against them.

Another important point that deserves attention is the deductibility of expenses for failure to submit or file the alphalist. In the past, RMC 5-2014, specifically Item No. 15, provides that a taxpayer cannot claim the expenses for income tax purposes due to failure to file the prescribed alphalist or failure to re-submit the complete and corrected alphalist after the validation process conducted by the BIR. The policy is onerous and defies logic.

To set the record straight, the BIR issued the current RMC, clarifying that failure to file or re-submit the alphabetical list shall not result in the non-deductibility of the expenses given that taxes were already withheld and remitted.

The correction hinges on the rationale that the preconditions for claiming the deduction for expenses were satisfied upon the proper withholding of tax, filing of the withholding tax/remittance returns and payment/remittance of the taxes withheld.

Alphalists, much like alphabets, are meant to be basic and straightforward. Yet, the similarities end there. In the context of taxation, alphalists are more complex in light of the problem situations they present.

In a world of deadlines, multiple tasks, and a deluge of information, we are bound to forget, neglect or err more often than expected. After all, we are only human, and oversights happen. There is consolation, however, in the thought that we can get by if we focus, systematize, and learn to prioritize concerns that really matter. One of these is filing alphalists on time.

The views or opinions in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Reynaldo Q. Marquez, Jr. is an assistant manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

reynaldo.q.marquez.jr@ph.pwc.com