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Philippines snaps slide, beats Qatar, 92-81

By Michael Angelo S. Murillo
Senior Reporter
THE Philippines halted a two-game losing skid at the FIBA World Cup Asian Qualifiers after hacking out a 92-81 victory over Qatar in their Group F encounter played behind closed doors on Monday at the Smart Araneta Coliseum.
Using a better showing in the second half, the Philippines successfully overcame a rough start to book the victory and go back on the winning track.
Prior to the victory, the Philippines suffered back-to-back losses to Australia on July 2 and Iran on Sept. 13.
The Philippines-Qatar contest started tight, with the two teams fighting to an 8-7 count and the home team on top with 7:14 to go.
Qatar, however, would make a 12-0 run, on the strength of three consecutive triples, in the next three minutes to build a 19-8 advantage.
Marcio Lassiter tried to jump-start the Philippines’ offense after but Qatar would stave off any charge back to hold a 26-15 lead after the first canto.
The visitors continued to hold sway to start the second period, extending their lead to 17 points, 43-26, with a little over four minutes left.
The Philippines scrambled to regain lost ground and had some success as it cut its deficit to just nine points, 45-36, at the 1:42 mark.
Qatar though would regain its footing and reestablish control, 52-39, by the halftime break.
Coming out with more energy and aggressiveness on both ends to begin the third period, the Philippines managed to gain headway in its fight back.
Led by Scottie Thompson, Matthew Wright and Beau Belga, the Filipinos came within two points, 54-52, with 5:26 left.
They eventually seized the lead, 59-58, at the 3:19 mark off a Japeth Aguilar basket.
The Philippines built on it the rest of the way to regain control after 30 minutes of play, 67-64.
The hosts kept giving it to the Qataris at the start of the payoff quarter, stretching their lead to seven points, 71-64, after a minute and a half.
Mohd Yousuf Mohammed kept Qatar in the game with his play inside the paint.
The count stood at 80-69 for the Philippines with 4:22 left on the clock before the hosts sped further, 86-70, by the 3:04 mark.
Team Pilipinas would use the clock after before holding on for the win.
Mr. Aguilar and Alex Cabagnot led the Philippines with 16 points apiece with Stanley Pringle adding 13 and Beau Belga 11 points, respectively.
Mr. Mohammed paced Qatar with 26 points with Tanguy Alban H Ngombo and Nasser Khalifa Al-Rayes adding 17 each.
“First half was just bad from a shooting perpective. These are the best shooters in the land and yet they were missing. But I just told them at halftime just shoot and don’t mind the percentage and stick to the game plan,” said Philippines coach Yeng Guiao in the postgame press conference.
“The guys really wanted to win and it showed with how they defended in the second half,” added the coach whose wards played the game behind closed doors as part of the sanctions meted by world basketball governing body FIBA on the Philippines for its role in a brawl with Australia in their July game.
With the win, the Philippines created further separation with its closest pursuer in Group F, Japan, which improved to 4-4 after cutting down Iran in an earlier match on Monday, 70-56.
As of this writing, Australia leads the merged Group F with a 7-1 record, followed by Iran (6-2), the Philippines (5-3), Japan, Kazakhstan (3-5) and Qatar (2-6).
The top three teams at the end of the second round advance to the 2019 FIBA Basketball World Cup.
The fifth window of the Asian Qualifiers will be played in November and December.

DENR revokes all small-scale miners’ permits in Cordillera

ENVIRONMENT and Natural Resources Secretary Roy A. Cimatu on Monday cancelled the permits of all small-scale mining operations in the Cordillera Administrative Region (CAR) following a landslide in typhoon-stricken Itogon, Benguet, over the weekend that killed dozens.
“In view of this current situation in the Cordillera, to prevent further danger to the lives of our small-scale miners, I officially order cease and desist of all… small-scale mining operations in the whole of Cordillera Administrative Region,” Mr. Cimatu said in a briefing with Presidential Spokesperson Harry L. Roque, Jr. and other officials.
Mr. Roque reported that as of 6:00 a.m. of Monday, 54 people were confirmed dead in CAR, broken down as follows: 9 in Baguio City; 1 in Kalinga; 6 in Mountain Province; and in the following Benguet towns, 1 in Tuba, 3 in La Trinidad and 34 in Itogon. Meanwhile, 49 individuals have been reported missing: 5 in Baguio City; 1 in Kabayan, Benguet; 42 in Itogon; and 1 in Tuba.
Mr. Cimatu said he was there “to look into the incident that happened in a small-scale mining community in Itogon wherein there were several casualties.”
“And I was told that we will not stop until we will recover (the bodies), whether they are still alive in the mining area,” he added.
He also said the Department of Environment and Natural Resources (DENR) “will be sending men from the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP) to effect the stoppage of all the mining activities, especially in Itogon.”
Itogon Mayor Victorio T. Palangdan described the affected area as “an abandoned mining area, but the Benguet Corp. still maintains ownership over the surface of the land.”
He added that there were small-scale miners operating in the area even before the typhoon came. “I wrote a letter to our MGB (Mines and Geosciences Bureau) people in the Cordillera to stop this mining operation. I issued a stoppage order, but the small-scale miners claimed that they were allowed to mine (an old tunnel originally dug by) Benguet Corp. I also wrote MGB to put a stop to it,” Mr. Palangdan said.
MGB-CAR Regional Director Fay W. Apil added: “For the information of everybody, there are 10 associations which were given temporary small scale mining contracts. Because when EO (executive order) 79 was issued, it says there that: those who are in possession of small scale mining permits will be given temporary small scale mining contracts until their areas are declared as Minahang Bayan. Of the more or less 10,000 small scale miners in Itogon, may 500 only are members of the 10 associations.”
In response, Mr. Cimatu said: “Okay, by virtue of what happened, I’m revoking those permits, effective today.”
President Benigno S.C. Aquino III imposed a moratorium on the grant of new mining permits by issuing EO 79 in 2012. The Minahang Bayan is a program provided for in the People’s Small-Scale Mining Act of 1991 (Republic Act No. 7076), which identifies sites “suitable for small-scale mining, subject to review by the Secretary [of the DENR], immediately giving priority to areas already occupied and actively mined by small-scale miners.”
Also during the briefing, Mr. Palangdan said: “I am appealing to the Secretary that my letter to him, the National (Task Force) Mining Challenge, that we should have first a technical conference to determine the areas that are dangerous and that should be stopped; and not to stop all the mining operations of small- scale [companies].”
Mr. Cimatu replied, “I understand the predicament of these people… Their livelihood. But… we cannot ignore (the deaths). Mining has been taking place for a long time but only now have we seen this many casualties.” — Arjay L. Balinbin

PCC outlines notification requirements for JV deals

THE Philippine Competition Commission (PCC) has approved final guidelines for notification requirements covering future joint ventures (JVs).
According to the guidelines posted on its website, parties forming joint ventures are required to notify the PCC when the revenue or assets of one of the parties to the JV exceeds P5 billion.
Alternatively, mandatory notification is also required if the value of the assets to be combined in the JV exceeds P2 billion.
JV partners are required to notify the PCC 30 days after they agree to transfer assets.
In a mobile message on Monday, PCC Chairman Arsenio M. Balisacan said the guidelines provide “ample” and up-to-date guidance in assessing their transactions.
“It demonstrates how PCC is attuned to the realities of how corporations are run — in particular, when control of a company is shared between two or more shareholders,” he added, noting the terms will take effect immediately.
“While recognizing that joint ventures can result in business efficiencies, the Commission is mindful that such agreements may pose competition concerns when they may result in a substantial lessening of competition in the relevant market,” the guidelines read.
The guidelines define a JV as “a business arrangement whereby an entity or group of entities contribute capital, services, assets, or a combination of any or all of the foregoing, to undertake an investment activity or a specific project, where each entity shall have the right to direct and govern the polices in connection therewith, with the intention to share both profits and risks and losses subject to Agreement by the entities.”
To help the PCC determine the effects of a JV in a market, each party involved should submit to the PCC, prior to the completion of the deal, information on the deal’s business objectives or purposes, terms, degree of participation and management roles of each JV partner, and respective rights and powers in the management of the JV.
Parties subject to the notification requirements should also provide details of their proposed combination or contribution of assets; the division of profits, risks, and losses; a dispute mechanism to avoid deadlocks or litigation; termination or liquidation and/or relevant buy-out provisions; terms of confidentiality; and indemnification mechanisms.
The PCC added that a JV can be subject to merger review.
The PCC’s standard for determining whether a deal constitutes a JV is a finding of joint control , defined as the ability of the partners to substantially influence or direct the actions or decisions of the joint venture, whether by contract, agency or otherwise.
“Forms of joint control may be seen in the equality of voting rights or appointment to decision-making bodies, veto rights, joint exercise of voting rights, or in similar or analogous cases,” it said. — Janina C. Lim

The PSE wants more small investors to join IPOs

Local small investors — or LSIs — can now look forward to greater participation in companies’ initial public offerings (IPO), following new regulations changes meant to attract more investors to the Philippine markets.

An IPO is a company’s debut into the public market — wherein new or existing shares are sold to the public for the first time.
According to the Philippine Stock Exchange (PSE) memorandum issued last Thursday, the Securities and Exchange Commission has just approved amendments to their regulations, prioritizing the involvement of LSIs in these initial public offerings.

New rules

Under these revisions, LSIs can now invest a maximum of P100,000 in a company’s IPO, four times higher than the previous cap of P25,000. In addition, companies are now required to allot 10 percent of their entire IPO to local small investors.
For IPOs exceeding P5 billion, the PSE may opt to increase LSIs’ subscription cap “on a case to case basis… to help facilitate greater participation and subscription to the LSI allocation.”
The new rules also require issuers to employ share “clawback” or “clawforward” mechanisms in the event of over- or under-subscription within the 10 percent allocated for LSIs. Simply put, these would be provisions that allow issuers to take back or give out shares as needed, in order to maintain balance.

The PSE first raised the possibility of increasing subscriptions for LSIs back in 2016 after noticing that IPOs were growing larger and the investing public was expressing more interest in putting their money in these newly listed companies.

Philstocks Financial, Inc. Research Head Justino R. Calaycay, Jr. expects the rules to positively impact future IPOs. “That will give more room for individuals to participate in IPOs.”
 
“However, given the current times, IPOs in general don’t seem attractive,” he said. While recent economic gains have seen Filipinos gain more and more capacity to invest, current market volatility may prove to be a hindrance.

Omen, or opportunity?

The PSE index has lately been trading within a 7,500-7,800 range, a far cry from its peak of 9,058 last January. While performance metrics were up last Thursday, those numbers were still 17% lower than the record high posted at the start of 2018.

“If we look at the precarious level of the market right now as well as the internal and external factors that influence the recent move of the index, I think market participants will stay cautious until they see signs of recovery in the market,” said Jervin de Celis, a trader with Timson Securities, Inc.

But flagging market performance may also present opportunities for retail investors.
“In reality, from an investors’ point of view, the recent slump of the market can be seen as a buying opportunity, a good entry point to position into stocks that have reduced its valuation,” said Rens V. Cruz II, an analyst with Regina Capital Development Corp.
“If you’re an investor, you’re looking at prospects long-term, and you enter at dips, such as the recent weakness of the market,” he said.

Edited by Santiago J. Arnaiz
With reporting by Arra B. Francia and Anna Gabriela A. Mogato. Read Arra’s original piece on the new changes in IPO rules here.

Typhoon to raise inflation expectations, draw monetary policy response

THE AGRICULTURE sector’s lackluster performance in the second quarter will continue this quarter and may further weigh on overall economic growth, with the destruction from typhoon Ompong (international name: Mangkhut) exacerbating inflation, analysts said.
Economists said the damage to agriculture will stoke inflation expectations, possibly leading to a more aggressive policy stance by the central bank, notwithstanding moves by the national government to address supply-side concerns.
“Because of the typhoon, agriculture will continue to contribute a measly amount to growth. Inflation can be moderated if the government carries out its plan of aggressively importing rice and other basic food commodities,” University of Asia and the Pacific Professor Bernardo M. Villegas said in an e-mail.
“Growth of GDP (gross domestic product) could be below 6%,” he added.
Reuters reported on Monday that typhoon Ompong destroyed 250,730 tonnes of paddy rice and 1,204 tons of corn over the weekend.
Nicholas Antonio T. Mapa, a senior economist with ING, said in a separate e-mail: “Agriculture generates roughly 9% of total economic growth. With the severe weather we’ve seen in August and September, we may see a similar struggle from the sector in 3Q.”
The economy grew 6% in the second quarter against 6.6% a year earlier, making for a 6.3% GDP growth average in the first half, which was also slower than the 6.6% average recorded a year earlier.
Agriculture, hunting, forestry, and fishing grew 0.2% in the second quarter from 6.3% a year earlier — accounting for 0.01 percentage points of GDP.
“The typhoon damage will likely exert additional price pressures on the food basket in the near term. The corn damage may have a longer lasting impact on feeds and eventually meat prices,” said Mr. Mapa.
Both economists said that the BSP will hike interest rates in its Sept. 27 policy meeting, which if realized, would add to the 100 basis-point increase made from May to August — and possibly weigh down consumption spending.
“The 50 bps rate hike by the BSP next week will be carried out in an attempt to anchor inflation expectations and we will have to see whether this forceful action will be enough to quell brewing inflation expectations,” said Mr. Mapa, noting that the economy “may have to contend with increased borrowing costs that could enervate the consumption and investment momentum alike.”
“The central bank will continue hiking benchmark rates, driving interest rates to higher levels. This will lead to further slowdown of car sales and housing units,” said Mr. Villegas.
Inflation in August accelerated to 6.4% from 5.7% a month earlier and 2.6% a year earlier. The eight-month inflation average was 4.8%, above the central bank’s 2-4% target range.
“If at all, rate hikes would need to feed into the economy, slow overall GDP before inflation is pulled lower, but at the cost of economic growth,” said Mr. Mapa.
However he said that monetary policy action may only do little to slow down inflation.
President Rodrigo R. Duterte is expected to sign within this month measures to address food supply shortage.
These include the immediate release of 4.6 million sacks of rice from National Food Authority (NFA) warehouses, authorizing the NFA Council to import of five million sacks of rice that will arrive next month and other five million early next year; streamlining the licensing procedures for NFA rice imports; facilitating the distribution of imported fish to wet markets; the formation of teams consisting of law enforcers and farmer groups to monitor the transport of rice from ports to NFA warehouses to retail outlets; the establishment of cold storage facilities for chicken; outlets to minimize farmgate and retail price differentials; and the priority release of essential food items in Customs ports.
The economists said manufacturing and the government’s infrastructure program will be major growth drivers this quarter, cushioning the slowdown in agriculture.
“Fortunately, manufacturing is still growing faster than services. Build, Build, Build, is gaining traction. The seasonal increase in consumption expenditures in the last quarter will keep the GDP growth for the whole year above 6%, still one of the highest in the East Asian region,” said UA&P’s Mr. Villegas.
Mr. Mapa added: “Going forward, investment in infrastructure will help in addressing these susceptibilities and safeguard the country’s agricultural output.”
Mr. Villegas said that the expected large inflows of overseas Filipino worker (OFW) remittances during the holiday season, complemented by the peso’s depreciation to 12-year lows, will boost consumption spending — which accounted for 56% of second quarter GDP.
“The peso-dollar rate will settle below P54 to $1 as massive remittances are expected in the last quarter since OFWs will be more generous with their remittances as they know that their relatives are facing higher prices for their daily expenditures,” said Mr. Villegas. — Elijah Joseph C. Tubayan

Initial rice crop losses due to typhoon Ompong estimated at P4.97 billion

LOST RICE production accounted for the vast majority of the initial estimates of agriculture damage due to Typhoon Ompong (international name: Mangkhut), reckoned at P4.97 billion out of the Department of Agriculture’s (DA) preliminary crop damage estimate of P4.99 billion Monday.
Department of Agriculture (DA) logo
The estimate issued by the DA’s Disaster Risk Reduction Management on Monday does not include data from northeastern Luzon, specifically the Cagayan Valley region that was directly in the path of the typhoon, where communications may still be unreliable. The DA was also awaiting reports from the hard-hit Cordillera region, an important vegetable farming area.
Reuters, quoting Agriculture Secretary Emmanuel F. Piñol, who was speaking in an appearance on CNN Philippines, said total crop damage from all types of produce could hit “P11 to P12 billion” when all reports come in. Reuters said the DA’s damage assessment was P9.6 billion as of midday Monday.
The DRRM damage assessment covers 175,485 hectares of agricultural land in the Ilocos, Central Luzon and Calabarzon regions with the volume of lost production at 251,933 metric tons, the DA said.
According to DA DRRM, Central Luzon accounted for P2.89 billion or 58% of the initial damage estimate. Losses in the rice-growing Central Luzon province of Nueva Ecija amounted to P2.84 billion, while Ilocos Norte, the province in Ilocos Region closest to the track of the typhoon, lost P2.06 billion.
Rice accounted for 99.35% or P4.97 billion affecting 913 farmers in Ilocos Norte, Aurora, Bulacan, Nueva Ecija, Pampanga, Cavite, Rizal and Quezon, the DA said.
“The vast increase in the overall damage and losses are attributed to the reports in the provinces of Ilocos Norte, Aurora, Bulacan, Nueva Ecija, and Pampanga, particularly in rice, corn and irrigation facilities,” the DA DRRM said.
“The projected damage and losses before the landfall of typhoon Ompong are smaller than the actual values reported since it was predicted that Batanes and Cagayan are the areas that will be heavily affected. However, due to the change in path and the wider area covered by the typhoon between Sept. 13 and 14, rice fields in Region III (Central Luzon) were also heavily affected. Most of these affected crops in the region are on their reproductive and maturity stages,” the DA added.
Corn production losses, meanwhile, amounted to P16.73 million affecting a total of 183 hectares in Aurora, with estimated lost production estimated at 1,204 metric tons, all of which of which were in their reproductive stages.
The initial estimate for high-value crop losses was P12,500, while damage to irrigation in Ilocos Norte was reckoned at P15.72 million, including Small-Water Impounding Projects (SWIP), impounding dams and spillways.
The initial assessment for provinces south and east of Metro Manila was P10.62-million, affecting 270 hectares in Rizal, Quezon and Cavite. Volume was estimated at 620 metric tons, and included rice and high-value crops such as eggplant and sweet potato.
Reports from the Cordillera Administrative Region and the Cagayan Valley remain pending, according to DA DRRM.
Meanwhile, the Bureau of Fisheries and Aquatic Resources said that there might be a need to import more round scad, or galunggong, on top of the 17,000 metric tons of the fish scheduled to arrive starting September, due to the damage caused by the typhoon.
In an interview with reporters on Monday, BFAR National Director Eduardo B. Gongona said the agency is expecting a shortfall in the fish supply due to likely damage to aquaculture.
“Many fish cages and fish farms were affected, so that (adds weight) to speculation that we need more imports,” Mr. Gongona said.
Mr. Gongona cited Laguna and Batangas as possible areas that might be tapped for more supply, as well as Iloilo and parts of Mindanao.
“Otherwise, we have to import,” he said, though the actual supply levels are still being assessed. Davao is requesting imports, and talks are ongoing,” Mr. Gongona added.
The closed fishing season for galunggong will begin in November. Some 80% of the galunggong imports will go to the commercial sector, while 20% is set to be received by cooperatives.
Mr. Gongona said that the Philippines is only 92% sufficient in fish, and he hopes to close the 8% supply gap in two to four years, with every percentage point equivalent to 84,000 metric tons.
He said closing the gap is doable and added that imports will be resorted to only “during the lean months,” Mr. Gongona said.
According to Mr. Gongona, 60% of the country’s fish output is maritime, while 40% is from aquaculture. — Reicelene Joy N. Ignacio

Senate’s rice tariffication bill reported out to plenary

SENATOR Cynthia A. Villar reported out to the plenary on Monday the rice tariffication bill, which seeks to liberalize rice imports while imposing a tariff system on the commodity.
In her sponsorship speech, Ms. Villar, who chairs the Senate committee on agriculture, said the bill will help reduce rice prices and provide support for local farmers who will be affected by the influx of cheaper imported rice.
“It’s really timely that we implement rice tariffication, not only because of our commitment to the World Trade Organization (WTO) but also to address the country’s present problems with the price and supply of rice,” she said.
Senate Bill No. 1998 seeks to amend Republic Act No 8178 or the Agricultural Tariffication Act to implement a system of rice tariffs. A 35% duty will be imposed on imports coming from the Association of Southeast Asian Nations (ASEAN), while a 50% rate will apply to imports from non-ASEAN countries.
Ms. Villar said the bill will also remove the authority of the National Food Authority (NFA) to regulate the importation of rice and to issue import licenses or permits for the private sector.
“In effect, it will remove unnecessary government intervention in the rice market… and the government can focus on regulating to ensure food safety and fair market competition,” she said.
Another feature of the bill is the creation of the Rice Competitiveness Enhancement Fund consisting of an initial appropriation of P10 billion sourced from the national budget until such time that there are sufficient collections from tariffs.
Funding for succeeding years will come from the tariff revenue for rice importation, estimated at P8 billion yearly.
The proposed fund will be allocated as follows: 50% for grants to farmers’ associations, registered rice cooperatives, and local government units in the form of rice equipment, to be implemented by the Philippine Center for Post-Harvest Development and Mechanization (PhilMech); 30% for the development, propagation and promotion of inbred rice seeds to rice farmers and organizations, to be implemented by the Philippine Rice Research Institution (PhilRice); 10% in the form of credit at preferential rates to rice farmers and cooperatives to be managed by Land Bank and the Development Bank of the Philippines; and 10% for extension services to teach rice farmers modern methods of farming, seed production, and farm mechanization, to be administered by PhilMech, PhilRice, the Agricultural Training Institute (ATI) and the Technical Education and Skills Development Authority (TESDA).
Beneficiaries of the rice fund will be listed in the registry system for basic sectors in agriculture, which will also be managed by the Department of Agriculture (DA).
The bill also mandates the completion of the rice industry road map in order to encourage sustainable investment and to restructure delivery of the government’s support services in the rice industry.
The Bangko Sentral ng Pilipinas (BSP) and the National Economic and Development Authority (NEDA) have cited the rice tariffication bill as one of the measures that will help ease inflation, which hit 6.4% in August.
The bill’s counterpart version at the House of Representatives passed on third and final reading on Aug. 14. It has been identified as a priority bill by the Legislative-Executive Development Advisory Council (LEDAC). — Camille A. Aguinaldo

Tax bureau clarifies interest charge on unpaid tax is 12%

THE BUREAU of Internal Revenue (BIR) has released implementing rules and regulations for the interest rate imposed on unpaid taxes, as well as guidelines on how the charges are to be computed.
Bureau of Internal Revenue (BIR) logo
The BIR published Revenue Regulation (RR) 21-2018 yesterday reducing the interest charged on unpaid taxes to 12%, from 20% previously.
The Tax Reform for Acceleration and Inclusion (TRAIN) law requires that the unpaid interest rate should be “double the legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by BSP,” which is currently at 6%.
Although the BIR has been applying the 12% rate since the law became effective in January through memorandum orders, it has not consistently applied the rate for delinquencies and deficiencies.
It clarified the difference of tax treatment between delinquency interest and deficiency interest, noting that it shall “in no case be imposed simultaneously.”
“The RR was made with an illustration to show how it is going to be computed, because deficiency interest is different from delinquency,” BIR Deputy Commissioner Marissa O. Cabreros told reporters yesterday in a chance interview at the House of Representatives.
The regulation defines the deficiency charge as the “interest imposed on any deficiency tax due, which interest shall be assessed and collected from the date prescribed for its payment until: full payment thereof, or upon issuance of a notice and demand by the commissioner or his authorized representative, whichever comes first.”
A delinquency charge is the interest imposed on the failure to pay tax due on any return to be filed; tax due for which no return is required; a deficiency tax or “any surcharge or interest thereon on the due date appearing in the notice and demand” of the BIR until the amount is fully paid, which interest shall form part of the tax.
“Before, the interest was imposed simultaneously, and was doubled up,” said Ms. Cabreros.
Asked for comment, Isla Lipana & Co. Tax Managing Partner Maria Lourdes P. Lim welcomed the move as the issuance “while long overdue, considering that the TRAIN law became effective last Jan. 1, 2018, clarifies the proper application of the 12% deficiency interest rate.”
“There was confusion on the implementation as the BIR revenue district offices are not consistent in the application of the 12% interest rate particularly on settlement of tax assessment cases involving 2017 and prior years as there are no prescribed guidelines,” she said in an e-mail.
This is because some revenue officers have ruled that the rate only applies to assessment cases beginning 2018 as the guidelines only pertain to amendment of returns. — Elijah Joseph C. Tubayan

Senate warns DoH staffing may not meet needs of universal health care

SENATORS warned that the uncertain job security of health workers employed by the Department of Health (DoH) could disrupt the implementation of the Universal Health Care Bill next year.
Senate Minority leader Franklin M. Drilon, speaking during the budget hearing of the health department on Monday, said: “You cannot have an ‘endo’ situation in the DOH, because the services will be affected. Let us regularize them so that we can provide stability to our health system.”
“Endo” or end-of-contract is a hiring practice that denies workers a path to permanent employment and the related benefits.
Health Secretary Francisco T. Duque warned during the hearing about the possible displacement of more than 15,000 of 26,307 workers who are on job order status because of the reduction in the health human resources deployment (HHRD) portion of the department’s 2019 budget. He said the reduced funding will only accommodate about half of them, as contractuals.
The Department of Budget and Management (DBM) slashed the 2019 budget of the health department to P71 billion for 2019 from P107.3 billion last year.
Senator Joseph Victor G. Ejercito told reporters on Monday that reducing the roster of health care workers will throw obstacles in the implementation of the Universal Health Care Bill, which the Senate hopes to pass as early as next month or as late as February 2019.
“You can’t deprive people of health care services they deserve especially (now) we are about to pass the Universal Health care program. Let’s hope we don’t have a reduction in workers in the first year of implementation,” he said.
Mr. Duque said there was a competing call on the DoH’s resources from “mobile health stations and rural health centers, district hospitals, provincial hospitals.”
The senators also questioned the reduction in the 2019 budget allocation for the Health Facilities Enhancement Programs, which fell to P50 million from P30.3 billion previously.
“The better alternative is for the DBM to readily recommend amendments to the DoH budget so that it won’t be vetoed,” Mr. Drilon said.
Sen. Risa Hontiveros-Baraquel said that the HFEP budget needs to be restored to accommodate the DoH’s planned facilities projects.
“I will move that we restore the HFEP budget based on the list submitted by the DoH. Second, I also move to make a similar motion regarding the health and human resources budget,” she said.
“We can sacrifice the other (department’s budgets), but not health,” said Mr. Ejercito. — Gilian M. Cortez

DoTr, LTFRB say not causing Grab driver shortage

THE Department of Transportation (DoTr) and the Land Transportation Franchising and Regulatory Board (LTFRB) said they are not causing a shortage of ride-sharing drivers, contrary to the claims of Grab Philippines (MyTaxi.PH).
In a joint statement on Monday, the DoTr and LTFRB urged the company to withdraw its earlier claims that the government is causing its “supply crisis.”
“As DoTr and LTFRB seek ways to expedite to complete the target of 65,000 TNVS (transport network vehicle services units) with the required franchises, it is in Grab’s best interest to engage its own constituency and help clarify the issues,” it said.
The government was responding to an e-mail sent Grab Philippines to its customers last week, which blamed the LTFRB for its difficulties in meeting ride demand. It said the regulator’s master list of 65,000 vehicles, which are the only ones allowed to operate as TNVS, included inactive drivers.
“Grab submitted a proposal to LTFRB to increase the limit of cars to at least 80,500, taking into consideration the number of people trying to get a ride everyday. To date, no action has been taken by the LTFRB,” according to the e-mail.
“The LTFRB must review, clean up, and increase the supply cap of the masterlist,” it added.
The DoTr and LTFRB said, however, that drivers and TNVS should not be mistaken as the same, as TNVS in the master list are registered vehicles which could be operated by any driver.
“Grab seems to confuse drivers with TNVS in determining supply. LTFRB issues franchises or Provisional Authority (PA) to TNVS for them to legally get bookings and accept passengers. Hence, if a TNVS with a PA or franchise cannot run because it does not have driver, it can find a replacement driver,” it said.
It also noted that they recently added 10,000 new vehicles to the master list, and are planning to open applications for new vehicles to take the slots of inactive TNVS in the master list.
“We note Grab sharing its position on these issues in public notwithstanding the frequent, open and cordial dialogue with (transport network companies), including Grab. It makes us wonder… why Grab puts LTFRB on the spot, so to speak and in an uncomfortable position,” the agencies said.
In response, Grab Philippines country head Brian P. Cu in a statement apologized for the confusion and said it was a result of miscommunication.
“We would like to sincerely apologize for any miscommunication brought about by the (e-mail) to targeted recipients. In no way was this (e-mail) meant to undermine the ongoing progress and dialogues being undertaken to add TNVS supply,” he said.
He also praised the LTFRB for “treating this matter with the urgency it deserves.” — Denise A. Valdez

The rise of POGOs: A new landscape in e-casinos and sports betting

With the increasing popularity of e-gaming, foreign online casino operators have expressed keen interest in expanding their business in the Philippines. In fact, the Philippine Amusement and Gaming Corporation (PAGCOR) expects Philippine Offshore Gaming Operators (POGOs) to account for additional revenue of P6 billion this year.
Considering the huge foreign interest in the country’s online gambling business, PAGCOR must ensure that the industry is strictly regulated: revenue must be monitored, taxes should be paid, facilities should not be used to commit crime or engage in money laundering, and employees treated well. Offshore gaming implies that only foreigners, excluding Filipinos working abroad, can access online casinos. This limitation somehow assures us that our fellow Filipinos will not be dragged into gambling through these facilities.
WHAT IS POGO?
PAGCOR conceptualized POGO to enable the Philippine government to capture a greater share of the growing, yet previously unregulated, online gaming pie.
In 2016, PAGCOR issued rules and regulations covering the operations of POGOs. A POGO refers to an entity that offers and participates in offshore gaming services by providing games to players, taking bets, and paying the winning players. The gaming activity refers to online games of chance through the internet, using a network and software, exclusively for offshore-authorized players who have registered and established an online gaming account with the PAGCOR-licensed POGO. Filipino citizens, even while overseas, are not allowed to play.
PAGCOR can issue a POGO license to qualified operators, which could be Filipino-based operators or foreign-based operators.
The POGO framework also covers service providers that provide the various components of gaming operations, such as the gaming software provider, business outsourcing provider, and content streaming provider. These providers also need to secure a PAGCOR license.
TAXATION OF POGO
Under Revenue Memorandum Circular (RMC) No. 102-2017, POGO operators and accredited service providers are subject to three types of taxes. First income from gaming operations are subject to a 5% franchise tax in lieu of all kinds of taxes, levies, fees or assessment. This is the same tax regime enjoyed by PAGCOR. Second, income from other related services or non-gaming operations is subject to normal income tax, value-added tax, and other applicable taxes. Third, POGO operators are not relieved of their liabilities as tax withholding agents. Hence, compensation, fees, commissions, or any other remuneration for services rendered to a POGO by its employees and service providers (e.g., consultants, contractors) are subject to withholding tax on compensation or to the expanded withholding taxes.
COMPLIANCE REQUIREMENTS
The Bureau of Internal Revenue recently issued RMC No. 78-2018 to clarify the taxability of POGOs and their registration requirements with local tax authorities.
RMC No. 78-2018 further clarified that online gaming activity is sufficient to constitute doing business in the Philippines for a foreign corporation. Thus, a foreign POGO is considered a resident foreign corporation engaged in business in the Philippines, and is not considered a non-resident foreign corporation.
As of Q2 2018, there are 55 accredited POGOs, of which 45 are e-casinos and 10 taking sports bets. The number of POGOs is expected to grow, considering that the original cap of 50 licensees was waived by PAGCOR. The POGO and licensed service providers should comply with the following requirements:
REGISTRATION
All foreign-based and Philippine-based operators, including those that have already been issued a license to operate, are required to register with the Revenue District Office (RDO) having jurisdiction over the principal place of business on or before the commencement of business.
The “commencement of business” shall be reckoned from the day when the first sale transaction occurred, or within 30 calendar days from the issuance of the Mayor’s Permit or Professional Tax Receipt (PTR) by the local government unit or the Certificate of Registration issued by the Securities of Exchange Commission (SEC), whichever comes first.
The minimum documentary requirements to prepare and submit are BIR Form No. 1903, SEC Certificate of Incorporation or License to Do Business in the Philippines, Articles of Incorporation, Mayor’s Business Permit, Payment of Registration Fee, BIR Form No.1906, a final and clear sample of principal receipts or invoices, and the appointment letter of the Local Gaming Agent.
If a POGO transfers its registered address to a new location, it is the duty of the operator or its Local Gaming Agent to file a BIR registration update (BIR Form No. 1905) on the transfer to the new business address.
TAX FILING AND PAYMENT
POGOs must file the applicable tax returns on or before the due date, pay the correct internal revenue taxes, and submit information returns and other required tax compliance reports. The Certificate of Registration (BIR Form No. 2303) is a good reference for tax returns to be filed and paid.
BOOKS OF ACCOUNT
All POGOs must keep books of account and other business or accounting records, which shall be made available anytime for inspection and verification by a duly authorized Revenue Officer for the purpose of ascertaining compliance with tax rules and regulations. The registration of the books of account should be done within 30 days from the date of registration.
The rise of offshore gaming will definitely bring additional revenue that will help fund the government’s nation-building programs. However, the BIR acknowledges that the challenge with such operations is how we can implement a fair and equitable taxation of online gaming businesses and how we can monitor the revenues and revenue-generating activities of POGOs to lessen or, if not, to mitigate the potential tax revenues loss.
I hope that the generated revenue would really translate to concrete projects and let us not allow that our welfare not to be sacrificed in exchange for the perceived economic gains from gambling revenues.
 
Richard R. Ibarra is a senior manager of the Tax Advisory and Compliance of P&A Grant Thornton.
Richard.Ibarra@ph.gt.com
+63(2) 988-2288

Modernizing Tax Administration

Instead of increasing excise taxes on fuel and coal which has inflationary impact on consumer goods, the government must prioritize modernizing tax administration to broaden taxpayer base and increase voluntary compliance.
The Tax Reform for Acceleration and Inclusion (TRAIN) law aims to make our tax system simpler, fairer and more efficient but has included only a few administrative changes to complement the policy reforms. Despite its noble intention to unburden the middle class by lowering personal income tax, the offsetting measures introduced seem to have countered any expected benefit.
TRAIN’s goal was further compromised by the delayed implementation of the social mitigating measures. These assistances were intended to protect the ten million poorest households which did not benefit from TRAIN.
Increasing the excise tax on non-essential goods and services such as alcohol, cigarettes, casino, and mining is an acceptable offsetting measure. Excise tax that burdens the poor is not. What the tax reform should aim for as an offsetting measure instead is improving the revenue collection efficiency.
The second package of the tax reform program proposes administrative changes that will do so.
Overshadowed by the more significant portions of TRABAHO Bill are its propositions that aid the Bureau of Internal Revenue (BIR) in going after tax evaders, and more importantly, modernizing the revenue collection agency.
TRABAHO implements provisions that authorize electronic record keeping for receipts and sales reports, filing via electronic channels, and implementation of electronic sales reporting.
These modernization measures ensure that taxpayers will find it easier to file and pay their taxes. Still, how the changes are implemented would be crucial.
The filing via electronic channels should authorize electronic channels created by third-party software. More electronic channels would mean more options for taxpayers to file and pay their taxes. Taxpayers would then be able to choose which method will be most convenient for them.
For the electronic record keeping, it only authorizes the records for receipts and sales reports. However, it needs to include electronic bookkeeping as well. Manual books of accounts are tedious to accomplish and, with recent developments in technology, outdated. Electronic bookkeeping is already allowed, but only as an exemption when, on the contrary, it should be the norm. Manual bookkeeping should be the exemption, such as for the computer illiterate or those that cannot afford computer systems.
Proposed Major Tax Administrative Reforms
While already commendable, more can still be done to improve collection efficiency. The government needs to implement a comprehensive administrative reform.
The BIR’s budget needs to be raised in order for it to have the capability to modernize. Despite its increasing year-on-year revenue collection, its budget has decreased for 2018. As the administration’s tax reform initiative broadens the taxpayer base, the revenue collection agency would require more personnel to administer taxpayers.
A higher budget would also help in raising the salaries of BIR examiners. The current compensation system, bound by the Salary Standardization Law, is inflexible. Exempting the BIR from this regulation would create a more competent and less corrupt bureaucracy.
Thereafter, there needs to be provisions that govern a risk-based audit. Under the current system, audits are done on a yearly basis and to the same taxpayers over and over again. This is a costly and redundant approach. Quality needs to be sought for audits, not quantity. All the violations of the taxpayer should already be addressed during the first audit. This can be done by targeting high-risk business per industry, instead of targeting every single business.
In line with the policies on audit is the implementation of a no contact policy as much as possible. Moreover, examiners need to be made accountable for their assessments. If they are unable to collect at least half of their assessed deficiencies, then it should be a demerit on their performance. This should stop examiners from issuing large assessments with no bases.
Improving the tax administration is key in ensuring taxpayers will find it easier to comply with rules and regulations. Once taxpayers can easily comply, then it will be up to them to avoid unnecessary fines and penalties. Tax education is an important factor in tax compliance. While large seminars help in providing a general idea of the regulations, a more exclusive tax coaching will be suitable for answering questions specific to your business.
The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
 
Raymond A. Abrea is one of the 2017 Outstanding Young Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and Founding President of the Asian Consulting Group (ACG) and the Center for Strategic Reforms of the Philippines (CSR Philippines).
consult@acg.ph.
map@map.org.ph
http://map.org.ph

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