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Finance dep’t reiterates fears about fish prices, supply driving inflation

A NUMBER of fish varieties available in a fish market in Quezon City — BW FILE PHOTO

THE GOVERNMENT is “very concerned” about the rising price of fish amid declining production over the past five years, raising the risk of reduced access to and higher prices for a type of food deemed to be a key source of low-cost nutrition for the population.
“We’re very concerned about the price of fish. It seems that our fish catch has really been dropping since 2012. Maybe it’s because of climate change, overfishing. We don’t really know, but we’re just signaling that this is becoming a serious problem,” Finance Secretary Carlos G. Dominguez III said in a media forum yesterday.
In 2017, fisheries production fell 1% year-on-year, though the decline narrowed from 6.3% in 2016.
Inflation in fish prices was 12% in the first quarter, up from 5% a year earlier.
In June, fish prices rose 11.2%, and accounted for 0.6 percentage point of CPI growth which came in at 5.2% that month.
Economic managers are considering the import of fish more freely and at lower tariffs to contain food prices, which are becoming a contentious political issue for the government.
Also proposed for importation at a 5% tariff rate were meat, vegetables, feed wheat and corn.
The Philippine Tariff Commission conducted a public consultation on Aug. 10. Congress is scheduled to adjourn between Aug. 16 to Aug. 27, which would provide President Rodrigo R. Duterte an opportunity to lower tariffs via Executive Order.
Mr. Dominguez has said that lower tariffs are not expected to hurt government revenue significantly as tariffs and customs duties represent about 5% of Bureau of Customs collections.
He added that imports at higher volumes might offset lower tariffs.
In July, the DoF issued an economic bulletin calling for more sustainable fisheries management practices and more intensive application of technology in the fisheries sector to ensure adequate supply. It also noted that fish products have played a significant role in the elevated inflation levels of the past few months. — Elijah Joseph C. Tubayan

DTI threatens to unleash BIR on foreign shipping lines

THE DTI CONTINUES to explore possible measures against the shipping fees, which it said are affecting the competitiveness of domestic industry. — BW FILE PHOTO

THE Department of Trade and Industry (DTI) said it will ask the Bureau of Internal Revenues to investigate foreign shipping lines to validate whether they are paying taxes properly on what it called “excessive” cargo charges.
In a statement Wednesday, the DTI said it continues to explore possible measures against the shipping fees, which it said are affecting the competitiveness of domestic industry.
The DTI said it is in possession of a study which identified fees allegedly imposed by some international shipping lines which it believes should not be passed on to Philippines exporters and importers and ultimately consumers.
“We are calling on all international shipping lines to put a halt to these unnecessary charges as these are unfair,” Trade Secretary Ramon M. Lopez said in the statement.
“Finally, we shall also call on the Bureau of Internal Revenue to investigate unpaid taxes arising from these charges,” he added.
The DTI said it supports the Philippine Competition Commission’s investigation into shipping charges.
“We thank the PCC led by Chairman Arsenio M. Balisacan and the commissioners, for listening to the plea of exporters and importers. We must put an end to this unfair practice of charging excessive fees as these charges increase the cost,” Mr. Lopez said.
A 2017 study jointly conducted by the DTI-Export Development Council and the National Competitiveness Council showed that shipping fees are costing the Philippine economy as much as $5 billion annually. — Janina C. Lim

DoF warns against rushing ‘3rd player’ selection pending better regulations

“A BETTER regulatory environment I think is the priority rather than having a third telco. The third telco is just a means to an end.”— Finance Secretary Carlos G. Dominguez III

THE FINANCE department has warned against rushing into a decision to select the third major entrant to the telecommunications industry, or “third player,” before the proper regulatory groundwork is laid.
“A better regulatory environment I think is the priority rather than having a third telco. The third telco is just a means to an end,” Finance Secretary Carlos G. Dominguez III said during the Kapihan sa Manila Bay forum on Wednesday.
“What the public is getting is inferior to what the public is getting elsewhere. That is the job of the regulators. Are we asking the right questions or are we rushing into something that may not help the long run because the regulatory environment is not sufficient?”
He said the ultimate objective is “better, more affordable, faster… more access to communications. That is the goal.”
“If you have a third telco and the regulation is ineffective, what’s the point,” he added.
The Department of Information and Communications Technology (DICT) has said that a third player will be selected before the end of the year, in time to start operations by 2019.
The Department of Finance (DoF) lost a standoff with the DICT after earlier insisting on largely financial criteria as the main basis for picking the third player. After industry consultations, the DICT found that stakeholders preferred to select on the basis of Highest Committed Level of Service (HCLoS), a scheme that assigns weights and awards points based on the third player’s promised investment levels, population coverage, and speeds achieved over a five-year period.
Regulatory concerns he cited include access to the government’s “dark fiber” network, the availability of frequency, a common tower policy, and interconnection rates.
Mr. Dominguez also noted an OpenSignal survey that found that the Philippines had the lowest 4G availability in East Asia.
“What does that tell you? It tells me that the regulation of the telco industry, for whatever reason, is not up to par with the region. Either it’s the law or the regulators. So maybe that is one of the issues we have to assess first,” he said.
“Are you going to force the third telco to build its own towers or are you going to make it an even playing field where everybody has towers, and must be available to everybody else. I’m not saying they should be free. Rent them out, make them available,” Mr. Dominguez said.
“Is it possible for the third telco to build its own fiber optics network? Will the frequencies available to the third telco be sufficient for them to compete on a fair basis?” he added.
The latest selection criteria, laid out in a draft Terms of Reference (ToR), requires the prospective third player to commit to at least five Megabits per second of Internet speed and P40 billion worth of capital expenditure over five years.
The DICT is set to conduct another public consultation on the draft ToR next week, to be followed by a meeting of the selection oversight committee, which is composed of representatives from the DICT, DoF, the National Telecommunications Commission, the Office of the Executive Secretary and the National Security Adviser. — Elijah Joseph C. Tubayan

Galunggong imports to arrive ahead of closed fishing season

THE Department of Agriculture (DA) has allowed the entry of up to 17,000 metric tons (MT) of round scad, commonly known as galunggong, which will reach markets ahead of the closed fishing season when supply of the fish is expected to dwindle.
Agriculture Secretary Emmanuel F. Piñol signed the Certificate of Necessity enabling the import of round scad on Wednesday. The timing of the permit will allow imports to arrive by Sept. 1.
On Friday, the DA and the fisheries industry agreed to set a tariff rate of 5% for such imports.
“In order to ensure national food security taking into consideration public welfare and safety… the importation of round scad up to a maximum of 17,000 MT is hereby certified as necessary to be imported by accredited fish importers,” according to the certification.
“The imported round scad under this certificate of necessity shall be unloaded only in Bureau of Fisheries and Aquatic Resources-accredited cold storage facilities and shall be sold wholesale in Navotas Fishport.”
The DA also amended an old Fisheries Administrative Order by allowing fishermen’s groups and sellers, alongside food processors, to import round scad.
Round scad, a staple protein for low-income families and therefore politically sensitive, is so far the only fish allowed for import to help shore up domestic supply.
According to the Philippine Statistics Authority (PSA) round scad output dropped 9.56% year-on-year in the first six months in 2018. More broadly, fisheries output fell 2.14% during the same period amid high fuel costs and unfavorable weather conditions.
Prices of round scad correspondingly rose 11.66% in the first six months.
The closed fishing season starts in about two months.
Mr. Piñol told reporters on Tuesday that the DA will be imposing a different suggested retail price (SRP) on imported round scad, which is frozen, as against domestically-caught, fresh, round scad.
Round scad was one of the eight non-processed agricultural commodities placed under an SRP scheme by the DA in June. — Anna Gabriela A. Mogato

DoLE suspends Kuwait recruitment escrow fund rule

THE Department of Labor and Employment (DoLE) said it has suspended an escrow fund requirement for all foreign recruitment agencies (FRAs) seeking to deploy domestic workers to Kuwait amid fears the rule might be viewed as discriminatory.
Secretary Silvestre H. Bello III said in an interview on Tuesday: “Why should only they be required to put up a $10,000 escrow deposit?”
Memorandum Circular 10-A of the Philippine Overseas Employment Administration (POEA) required that FRAs sending overseas Filipino workers (OFWs) to Kuwait put up an escrow fund with any bank authorized by the Bangko Sentral ng Pilipinas (BSP) of between $10,000 and $50,000.
The circular supplements Memo Circular No. 10, or “Guidelines on the Resumption on the Deployment of Domestic Workers to Kuwait,” issued in June.
Memo Circular 10-A has since been taken down from the POEA website.
Mr. Bello, quoting POEA Administrator Bernard P. Olalia, said Special Envoy to Kuwait Abdullah D. Mamao “asked for the withdrawal of the implementation of the escrow deposit requirement on all Kuwait FRAs.”
He added that the escrow is an additional burden on FRAs that did not form part of Philippine negotiations with Kuwait to resume worker deployments following reports of workers being mistreated there, which included the death of a domestic worker at the hands of her employer.
He added that POEA is expected “to issue another directive for the application of this escrow to all FRAs for all destination countries.”
In May, the Philippines and Kuwait signed a Memorandum of Understanding that will ensure the security of OFWs in the Gulf state. The OFW deployment ban issued by President Rodrigo R. Duterte was partially lifted, allowing only skilled workers to resume work in Kuwait.
Last month, Mr. Bello said domestic workers can return to Kuwait after both sides agree to a standard employment contract. — Gillian M. Cortez

Palace preparing EO to speed up rural electrification

MALACAÑANG is preparing an executive order (EO) on how best to bring electricity to remote areas by the end of the Duterte administration’s term in 2022, an Department of Energy (DoE) official said.
“The process has always been there. We just want to put in one document all the strategies to energize remote areas,” Undersecretary Felix Wiliam B. Fuentebella said in an interview on Tuesday.
He said the executive order will state that the exclusivity of a franchise holder will be deemed waived in certain areas considered poorly served, among other strategies to encourage other parties to step in.
Mr. Fuentebella added that if an electric cooperative submits a work plan that sets a target outcome by a given period, it will become the standard to be followed; otherwise its exclusivity will be deemed waived.
“It will become ‘deemed waived’ if you’re not meeting your obligation),” he said.
He said the regulation would ensure that consumers would not be placed at the mercy of a distribution utility at all times.
The exclusivity waiver, to pave the way for the entry of the private sector, has recently become a contentious issue after the DoE’s strict stance on power distribution utilities deemed to be remiss.
In a statement on Wednesday, Senator Sherwin T. Gatchalian said he is calling for new technology to be infused into the efforts to achieve 100% electrification in rural areas, especially on isolated islands and other remote areas.
“If we want to achieve 100% household electrification by 2022, we need to look for other technologies. Let’s improve the process of electrification,” he said.
Mr. Gatchalian, the chairman of the Senate Committee on Energy, said that grid extension, which is costly and antiquated, is not the only way to electrify unserved households.
He said the goal of his committee is to encourage the DoE to look for innovative solutions because of limited funding.
“We have to think of creative and innovative ideas to power our communities. For example, we have a lot of islands and remote areas that cannot be reached by electric wires but may be electrified by putting up microgrids and individual home systems, including solar panel systems,” he said. — Victor V. Saulon

Unacceptable tax avoidance

ABOUT two months ago, the weather bureau, PAGASA, officially announced the start of the rainy season. Despite sufficient warnings and precautionary measures by the government, these tropical cyclones often bring widespread damage to the country’s infrastructure, disrupt electricity and communication services, destroy crops, and leave behind human casualties.
Mitigating typhoon risks and managing rehabilitation efforts are the government’s primary concerns during calamities. These initiatives not only cost the government precious time and effort, but also consume significant quantities of public funds. It is therefore important for the government to collect taxes in order to raise enough calamity funds for emergency situations.
In the words of the late Justice Isagani A. Cruz, “Taxes are what we pay for a civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one’s hard-earned income to the taxing authorities, every person who is able to must contribute his share in the running of the government. The government, for its part, is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values. This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power.”
Nonetheless, majority of Filipino taxpayers see taxes as a burden. As a result, some taxpayers try to escape payment through tax evasion, while others use legal pathways to their own advantage by means of tax avoidance.
The academe, in various textbooks, has provided us with clear-cut distinctions between tax avoidance and tax evasion. In theory, tax avoidance is the legal means of reducing taxes. It is a tax-saving device within the bounds sanctioned by the law. On the other hand, tax evasion is outside of those lawful means and when availed of, it usually subjects the taxpayer to civil or criminal liability. Simply stated, tax avoidance is legitimate, while tax evasion is illegal.
Despite the legality of tax avoidance schemes, several countries have introduced a General Anti-Avoidance Rule (GAAR) to limit tax avoidance schemes and prevent the taxpayers from escaping taxation.
But what does a GAAR specifically prohibit? It prohibits aggressive tax avoidance by providing tax authorities with the power to deny the tax benefits from a transaction or arrangement that lacks commercial or economic substance and is deemed to have an illicit tax-related purpose.
Currently, Section 50 of the 1997 Tax Code is the closest our local laws have come to the GAAR adopted by foreign governments. Specifically, the provision empowers the Commissioner of Internal Revenue (CIR) with the authority “to distribute, apportion or allocate gross income or deductions between or among organization, trade or business, if he determined that it is necessary in order to prevent evasion of taxes or clearly to reflect the income of any organization, trade or business.” Note though that this provision is limited to those organizations, trades or businesses owned or controlled directly or indirectly by the same interests.
The Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) Bill proposes to expand Section 50 of the Tax Code and intends to augment the powers of the CIR. The draft bill aims to provide the CIR with the authority to:
• Impute income or deductions, if he deems it to be necessary to prevent evasion of taxes or to clearly reflect the income of any organization, trade or business;
• Disregard and consider “tax avoidance” transactions or arrangements as void for income tax purposes; and
• Adjust the taxable income of a person affected by a transaction or arrangement in a way that the CIR thinks appropriate to counteract a tax advantage obtained by the person from or under the arrangement.
The draft bill further enumerates the “tax avoidance” arrangements or transactions to include those which directly or indirectly: a) alter the incidence of any income tax; b) relieve a person from liability to pay income tax or from a potential or prospective liability to future income tax; or c) avoid, postpone, or reduce any liability to income tax, or any potential or prospective liability to future income tax.
Unacceptable tax avoidance exists in the aforesaid instances when such are motivated by obtaining a tax benefit or advantage with no commercial reality or economic effect, and the use of such would not have been the intention of the law. It is likewise worthy to note that the tax avoidance purpose or effect must not merely be incidental but is the primary purpose for entering the said transactions or arrangements.
Some may debate that the proposed GAAR seems to penalize what are known to be legal means of reducing taxes. It may also be argued that the proposed provision is prone to abuse as it gives the CIR extensive authority to punish taxpayers and impose additional taxes by merely contending that the transactions or arrangements entered into are considered “tax avoidance.”
Even so, the introduction of the GAAR will put the Philippines at par with neighbors like Singapore and Malaysia and may serve as a safeguard to thwart the incidence of unacceptable tax avoidance practices, especially for transactions which have illicit tax-related purposes.
With a GAAR scheme in place, it is prudent for our taxpayers to prepare sufficient proof (e.g., transfer pricing documentation, memoranda, among others) and justification to show that their transactions have commercial and economic substance and are not merely entered into for the purpose of avoiding the payment of taxes.
The views or opinions expressed 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.
 
Abigael Demdam is a Tax Manager at the Tax Services Department of Isla Lipana& Co., the Philippine member firm of the PwC network.
63 (2) 845-2728
abigael.demdam@ph.pwc.com

Palace declares holiday on Aug. 21

By Arjay L. Balinbin, Reporter
Malacañang issued Proclamation No. 556 on Wednesday, Aug. 15, declaring Eid’l Adha (Feast of Sacrifice) holiday on Aug. 21.
On the same day, the Ninoy Aquino Day, which is observed annually to commemorate the assassination of former Senator Benigno “Ninoy” Aquino, Jr., will also be celebrated.
“Proclamation No. 556, declaring Tuesday, 21 August 2018, a regular holiday throughout the country, in observance of Eid’l Adha (Feast of Sacrifice),” the Proclamation read.
It also noted that the Feast of Sacrifice “is one of the two greatest feasts of Islam.”
“The National Commission on Muslim Filipinos has recommended that 21 August 2018 be declared a national holiday, in observance of Eid’l Adha,” it added.
President Rodrigo R. Duterte and Executive Secretary Salvador C. Medialdea signed the document in Manila on Aug. 15.

Dancing the cha-cha to the beat of the waltz

FROM 1791 to 1992, or a period of 201 years, the US Constitution was amended only 27 times. That’s an average of one amendment for every eight years in the nation’s life. To date, the United States has been an independent democratic state for over 240 years. And yet, over these 24 decades, it has changed or revised its Constitution only 27 times.
The Philippines, on the other hand, first declared independence in 1898 or 120 years ago. But, realistically, it has been an “independent” democratic republic only since 1946 or in the last 72 years. And over this period, we have amended and revised — if not almost completely overhauled — our Constitution twice: in 1973, and in 1987. If we count the 1935 Constitution made during the Commonwealth period, then we would have had three constitutions in 83 years.
Of course, this is not to say that we have mistakenly tinkered with our charter — our most basic of the law of the land — once too often. On the other hand, perhaps we have been taking too much liberty in changing or revising the law — without the benefit of more comprehensive analysis and study. Or, maybe we have let partisan politics and self-interest get the better of us.
Charter change may be inevitable in a vibrant and dynamic democracy, over the course of a nation’s life. However, as we now go for another round of “Cha-cha,” maybe it’s time we dance it to the much slower beat of the Waltz or the Foxtrot. That is, if most of us can actually be convinced that another change is absolutely necessary.
Over lunch last Monday with former Finance Secretary Gary Teves and a few other friends, Gary brought up the possibility of making changes in “phases,” with primary focus on reviewing the limiting or restrictive economic provisions of the charter and revising them over time, through an approach or manner allowed by law. In short, study everything well first before making changes.
It is in this line that I now bring up the US Constitution, where amendments were made over a long period, but without necessarily overhauling the entire charter. Changes were made one amendment at a time. To date, 27 amendments have been ratified, but only 25 are still functioning. Two amendments, one on declaring prohibition in 1919 and another on lifting it in 1933, are no longer in effect.
Incidentally, the 27th Amendment, on setting parameters for congressional compensation, was said to have been first proposed in 1792, but did not achieve final ratification until 200 years after or in 1992. The 27th Amendment is the last and most recent change to the US Constitution to date. It prohibits any law that increases or decreases the salary of members of Congress from taking effect until the start of the next set of terms of office for Representatives.
Interestingly, if one goes over all the 27 amendments, it seems only one was related to Economics: the 16th Amendment ratified in 1913 regarding the collection of Federal Income Tax. The 16th Amendment of 1913 provided for the first-ever Federal income tax in the US as it stated that “Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
All other amendments were related more to the Bill of Rights; the rights of former slaves; the right to vote for women; and, government bureaucracy, among others. In fact, the two-term limit on the US President was ratified only in 1951, as the 22nd Amendment. This is precisely the reason why Franklin Roosevelt managed to serve three terms and not just two, from 1933 to 1945.
And, in making amendments, there are only two methods allowed: US Congress can pass a bill setting out a proposed amendment by a vote of two-thirds in each body; or, a constitutional convention can be convened by a vote of two-thirds of the state legislatures, which will propose one or more amendments. To date, however, only the first method has been used to introduce amendments.
But, in either case, constitutional amendments become effective only after being ratified by three-fourths of the states. An example of a proposed amendment that was voted down was the proposed “Equal Rights Amendment,” which intended to guarantee that, “Equality of rights under the law shall not be denied or abridged by the United States or by any state on account of sex.” Proposed in 1972, it was ratified by only 34 of the necessary 38 states. Short by four votes, the amendment was not ratified.
There is still much to learn, I believe, from how older and more mature democracies like the United States go about changing or amending their Constitution, and how we have gone about revising ours in the last three times since 1935. But, to me, some lessons are very clear: comprehensive analysis, testing, and exhausting all options, and widespread consultation are all musts.
In the news of late, 19 groups have reportedly expressed their support for some economic ministers in calling on Congress to carefully consider the financial and fiscal costs of changing the charter to change the form of government. “At this time when financial markets in developing countries are being roiled following the difficulties of Venezuela and Turkey, it is all the more important that all sectors are seen as solidly behind the call of our economic managers for fiscal prudence, more dialogues and a well-considered approach in the shift to federal form of government,” the groups said in a joint statement issued to the press.
The groups are concerned that federalism will result in a “fiscal imbalance” that “would have dire consequences on the economy, as well as the government’s push for infrastructure development, particularly the flagship ‘Build, Build, Build’ program.” Thus, they are pushing for “full, open, and dispassionate dialogues on this proposed shift in form of government, keeping in mind its long-term impacts on future generations of Filipinos.”
One cannot help but agree with the call, for the simple reason that the life of a state is more dependent on the vibrance of its economy than its politics. A proposed change in the form of government cannot be taken lightly, given its far-reaching implications, especially if the effort appears to imperil the nation’s finances if not its very survival.
 
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
matort@yahoo.com

Turkey will put capital rules to the test

By Satyajit Das
TURKEY’S economic and political conniptions have driven a significant sell-off in European bank stocks. This meltdown may illuminate a deeper question about regulation: whether more capital makes banks or the financial system resistant to periodic crises.
Additional capital requirements were the primary regulatory response to the financial crisis of 2008. Global systemically important banks now must increase their total loss-absorbing capacity over time to at least 18% of risk-weighted assets and 6.75% of unweighted exposure.
While useful, these requirements don’t eliminate financial risks. They may even create new ones. Turkey — which is suffering from a collapsing currency, rising bond yields, and soaring debt loads — should offer an important test case.
First, bank failures are triggered by funding problems; typically, a run on the bank and an inability to cover deposit outflows. More capital can’t protect against this risk. Banks are also highly leveraged by design. Unless they’re willing to return to 19th-century standards of 50% equity, the effectiveness of capital requirements will depend on the magnitude of exposure and loss in question.
As Turkey’s problems mount, these measures could be put to the test. Institutions such as Banco Bilbao Vizcaya Argentaria SA, UniCredit SpA, and BNP Paribas SA all have substantial exposure to Turkey. BBVA’s exposure is more than 15% of total risk-weighted assets. If major losses occur, then it would materially affect the capital position of these banks, with unpredictable consequences.
A second concern is that banks’ resilience to losses will depend on the type of capital instruments they rely on. At least a third of minimum capital requirements can be met with what are known as hybrid-capital instruments, such as contingent capital bonds or subordinated debt. These instruments present significant risks of their own.
Contingent capital notes can’t be repaid without a regulator’s consent. In bankruptcy, investors are repaid only after depositors, senior bondholders, and holders of subordinated debt. Crucially, the notes convert to ordinary shares when the issuer’s capital falls below a specified level. Subordinated debt presents similar problems: Repayment of principal will rank behind depositors and senior bondholders, and the debt may be “bailed-in”; that is, the liability can be written down partially or fully where the issuer suffers losses. (In practice, regulators may hesitate to do this for fear of exacerbating financial pressure on the affected institution.)
Investors have purchased these instruments for yield, and issuers have frequently sold them as a substitute for deposits. But ordinary investors may not understand that these are deeply subordinated investments with uncertain income, complex conversion or bail-in provisions, and substantial capital risk. Facing losses, panicked sellers may cause a collapse in prices and accelerate an affected bank’s failure.
As Europe has recently learned, this can be politically perilous.
In November 2015, retail investors in four Italian banks lost their savings after subordinated debt was bailed in. The suicide of a pensioner who had lost 100,000 euros led to an angry backlash against the sale of these instruments to ordinary investors. The write-down of subordinated debt after Spain’s Banco Popular Espanol SA failed in 2017 was similarly divisive and is currently the subject of legal action. If bank investors are forced to take losses once again due to the Turkish crisis, governments should expect to face rising public anger.
And this suggests the biggest problem of all: These instruments don’t eliminate underlying risks from bad lending. They transfer them from banks to investors. If the strict terms of a contract are enforced, then the losses suffered will affect the ability of pension funds, insurance companies, and other asset managers to meet their liabilities. Losses suffered by investors may affect consumption and reduce savings, which in turn might necessitate government intervention to bail out the bank or investors directly, undermining the entire rationale of increasing capital levels to strengthen the financial system and prevent the need for public support.
The Turkish crisis may provide a useful real-world stress test of the complex new regime of regulations and additional capital. Recent experience suggests some skepticism is in order.
Bloomberg

‘Greening’ the younger generation

THE recent monsoon rains that we have experienced easily resulted in severe flooding across Metro Manila and its neighboring provinces. Classes were suspended, business operations were interrupted, and the traffic situation was aggravated. While this may be “normal” for us during rainy season, the recent flooding was different as it did not require heavy rains to flood the streets.
One cause of the recent floods is the proliferation of plastic waste that clogs the city’s drainage system. While government is trying to remedy this perennial problem, it seems that these programs are ineffective.
We have witnessed rapid environmental degradation in the past years. According to Chen & Chai (2010), some of the causes are overconsumption and overuse of natural resources due to increased worldwide consumer demand. As a result, climate change and environmental problems, environmental protection, and sustainable development have become relevant issues in business and consumerism. Today, businesses and consumers confront their biggest challenge: to protect and to preserve the earth’s resources and the environment. This challenge has made “greening” an important issue for managers, marketers, and consumers.
People engage in environmental behavior to satisfy their desire to solve environmental problems, to become role models, and to feel they are helping to preserve the environment. According to Ishaswini and Datta (2011), the rising number of consumers who prefer and are willing to engage in environmental or green consumption is creating opportunities for businesses that use “green” as a component of their value propositions.
According to McEachern and McClean (2002), green consumerism includes environment preservation, curtailment of pollution, responsible use of non-renewable resources, and the welfare and preservation of animal species. Shamdasani et al. (1993) define environment-friendly or green products as those that can be recycled and processed, and do not pollute the earth or depreciate natural resources. A few examples of green products are energy-efficient light bulbs and products made of recycled or biodegradable materials.
In a local study I conducted this year, I compared the green purchase intentions of generation X, born between 1961 and 1981, and generation Y, born between 1982 and 2004 (Strauss, 2000). This study contributes to the debate about which generation has higher regard for protecting the environment. Among the variables tested were attitude toward green consumption; the subjective norm or the regard for green consumption among the groups who are important to us such as family and friends; perceived behavioral control or the resources that enable us to consume green products such as buying power and availability of green products in stores; and intention to buy green products. My findings revealed that both generations have similar levels of attitude toward green consumption and intention to purchase green products.
Interestingly, generation X registered a higher subjective norm than generation Y did. This implies that generation X faces more pressure from friends and relatives to buy green products. The results run contrary to global studies that revealed that generation Y has a higher subjective norm. This difference could be attributed to the changing orientation of younger Filipinos, who experience a strong force to uphold uniqueness and individualism.
The practical implication of these findings would be for businesses to adopt strategies to persuade generation Y, now the dominant consumers in the market, to support green initiatives. A unique selling approach integrating individualism and green consumption might drive this group to become more involved in the green revolution.
Hopefully, once generation Y becomes green consumers, their “greening” will have ripple effects on their general behavior and ultimately contribute to the protection of the environment. n
The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University and its faculty and administrators.
 
Reynaldo A. Bautista, Jr. is an associate professor at the Ramon V. Del Rosario College of Business of De La Salle University. He teaches Marketing Research, Methods of Research, and General Marketing.
reynaldo.bautista@dlsu.edu.ph

Three essential steps to becoming more authentic

By Raju Mandhyan
TALK about being authentic and, often you will hear this quote from Paulo Coelho: “We are in such a hurry to grow up, and then we long for our lost childhood. We make ourselves ill earning money, and then spend all our money on getting well again. We think so much about the future that we neglect the present, and thus experience neither the present nor the future. We live as if we were never going to die, and die as if we had never lived.”
Most all our lives, we desperately struggle to find ourselves. We strive to live, and live out our lives exactly the way we want to but end up creating and living in contradictions. It is not that in the deepest of our hearts we do not know what we want. We do, but adapting and adjusting to a demanding world we let our true selves get corroded, get covered with gunk.
Yet from deep within there is that being, that energy and that soul that yearns to fly, to go and grab a fistful of the sky and claim it as our own.
In the history of mankind there have been a few who have flown so high and so purely in the skies of their own choosing. And, there are almost all of us who for scores of times in our lives have dug a window through that corrosion and that gunk that surrounds and made our presence felt. We have, at times, lived out our dreams and desires loudly and boldly. The question that arises is how to increase the frequency of these liberating moments and sustain them so that at the end of our days we can feel that, hey, I am ready to die because I have lived a full, fruitful, and an authentic life.
Inspired by an interview I conducted of Dr. Peter Senge a few years ago, it struck me living an authentic life at work and in society when we:
Step Up: In all circumstances, especially the most challenging ones our options eventually get boiled down to just two. Should we take the well-treaded and safe path or should we step up and take the road less traveled. The roads less traveled, or the right decisions that will make us stand apart and away from others are always packed with risk but the person who steps up to the calling of his inner voice, scales up the mountains of authenticity. Yes, it takes courage to be authentic. Yes, it takes gumption to stand up, speak up and move towards what your heart, mind, and soul tell you are the right things to say and do.
Step In: Daniel Goleman in his book, Focus, talks about how a bunch of preachers-to-be on the road to take up tests in compassion and kindness totally ignore a homeless person on the street asking for help. In their case, it was probably about lack of awareness but often in life, we prefer to stay away from trouble that doesn’t belong to us. In a highly interconnected world most everything does, in a way, belong to us. The other day, someone sent me a video of some folks torching the tongue of street dog. The thought in my mind was why would someone take a video of that and not stop the carnage? Or, when we see others dumping toxic waste and plastic into our rivers why don’t we step in. Stepping in into murky situations, if our conscience calls for it, is the authentic thing to do.
Stand Tall: Dr. Peter Senge in that interview, available on YouTube, claims that the eye cannot see the eye. We don’t ever know what the objective reality is because our perceptions, our lenses towards the world are tinted with our biases, our own agendas. Some of these, surely, are unconscious but a large number of those stains on our glasses are of our own making and the cleaner our windows are to the world the better we see it and the taller and prouder we can walk. Coming from clarity and approaching situations conscientiously will allow us to be ourselves, walk and stand tall in a volatile, uncertain, changing and an ambiguous world. Said once my favorite childhood author, George Bernard Shaw, “Best keep yourself clean and bright; you are the window through which you see the world.”
Authenticity is not just honesty, it is not just being frank and outspoken but being authentic is being true to you inner calling moment after moment. It is about stepping up to challenges, stepping into situations where the right thing needs to be done and also keeping your values and your visions clean.
We live in a world that is constantly changing. We do not have to be the change because every breath we take, every idea we think about, every word we utter, and every action that we take creates change. We do not need to apply force neither do we need to use undue power. We just live out our life with authenticity and gentle influence.
 
Raju Mandhyan is an author, coach, and trainer.

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