Grab denies fake bookings, warns Micab

July 30, 2018 | 12:01 am

GRAB PHILIPPINES (MyTaxi.PH) denied the accusations of its competitor Micab Systems Corp. on allegedly sending “phantom bookings” or fake bookings, and threatened to file a libel suit if the latter continues to make such claims.
Brian P. Cu, Grab country head, addressed the allegations of Micab Chief Executive Officer Eddie F. Ybañez in a statement on Friday, saying it can confirm the company was not sending the fake bookings.
“We took the last week to investigate internally and can confirm that Eddie Ybañez’s allegations are untrue and appears to have malicious intent,” Mr. Cu said in the statement.
“Grab did the responsible thing in taking the time to investigate, and we encourage [Mr. Ybañez] to be similarly responsible in his speech and actions. If he continues to make further false allegations, we will have to consider taking libel action,” he added.
Last week, Mr. Ybañez told BusinessWorld Micab had received 29,000 phantom bookings since June, adding “over several hundred” of its drivers reported phone invitations to attend Grab driver orientations after a booking cancellation.
Grab denied making the offers to Micab’s drivers. “We did less than 15 completed bookings a day to benchmark industry allocation rates and service levels. Further to this, we categorically did not make any follow-up phone calls to the drivers,” Mr. Cu said.
The dominant transport network company has yet to release the complete results of its investigation, but it stood firm that it is not liable for Micab’s “significant allocation problems.”
On July 18, Mr. Ybañez took to online platform e27 to write about Grab’s alleged tactics to discourage Micab drivers from staying with the new ride-hailing app. He said the drivers are now “less keen” to accept rides, as phantom bookings cost them their gas, time and safety.
He also said the company is looking to file legal charges against Grab if the experience goes on. He noted the invitation to attend driver orientations from Grab is the “single most compelling piece of evidence pointing to them as the culprit of the phantom bookings.” — Denise A. Valdez

Domestic market capitalization of select stock exchanges in Asia Pacific

July 30, 2018 | 12:00 am

How PSEi member stocks performed — July 27, 2018

July 30, 2018 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Friday, July 27, 2018.

San Miguel levels series with Barangay Ginebra after Game Two win

July 29, 2018 | 9:19 pm

By Michael Angelo S. Murillo
Senior Reporter
THE best-of-seven Philippine Basketball Association Commissioner’s Cup finals series between the San Miguel Beermen and Barangay Ginebra San Miguel Kings is now levelled at a game apiece after the former pulled abreast with an impressive 134-109 victory in Game Two on Sunday night at the Smart Araneta Coliseum.
Showing the sense of urgency of a team whose back was against the wall, the defending champions Beermen went all-out right from the opening tip to take end-to-end control of the game to book the series-tying win and reduce the series to a best-of-five.
San Miguel got off to a strong start led by import Renaldo Balkman and guard Alex Cabagnot.
The Beermen opened things with a 6-0 blast in the first minute and a half before extending their lead to 21-10 by the halfway point of the opening quarter.
Barangay Ginebra tried to narrow the gap the rest of the way but found itself still down by 11 points at the end of the first 12 minutes, 34-23.
In the second period, the Beermen continued with their strong push, outscoring the Kings, 24-14, three-fourths into the quarter to take their lead to 23 points, 64-41.
Mr. Cabagnot and Christian Standhardinger then got to help their team to finish stronger and end up with an even bigger lead of 29 points, 75-46, at the half.
June Mar Fajardo started the third canto with a basket to take San Miguel’s lead briefly to 31 points, 77-46.
But Barangay Ginebra, led by import Justin Brownlee and Joe Devance, started to make their move after, outscoring San Miguel, 19-8, to narrow the distance, 85-65, with 5:30 to go in the quarter.
Messrs. Cabagnot and Standhardinger, however, would save the period once again for the Beermen as they maintained a 20-point cushion, 99-79, heading into the final frame.
The two teams went back-and-forth to begin the fourth quarter.
San Miguel held a 112-90 lead with seven minutes remaining on the clock.
The Kings attempted to charge back but just could not get the leverage they wanted even when San Miguel forward Arwind Santos and Chris Ross were ejected in succession for a Flagrant Foul 2 and two technical fouls, respectively.
Barangay Ginebra got to within 18 points, 119-101, with 4:55 remaining but could not get any closer than that as San Miguel made its way to the win.
Mr. Cabagnot paced the Berrmen with 33 points, nine assists and four steals.
Mr. Fajardo had 25 points while Messrs. Balkman and Standhardinger had 20 points apiece.
Mr. Brownlee, meanwhile, led the Kings with 29 points with Mr. Devance and Scottie Thompson adding 16 each.
“We were sad after the first game but the players knew the importance of Game Two and they came out furiously at the start,” said San Miguel coach Leo Austria after Game Two.
“Good thing we got this win. It would be hard to be down 0-2. Now we have a series,” he added.
Game Three of the PBA Commissioner’s Cup finals is on Wednesday.

PHL rice still uncompetitive at 35% tariff — Villar

July 29, 2018 | 8:59 pm

By Camille A. Aguinaldo
Reporter
THE imposition of 35% tariffs on imported rice will still leave Philippine rice uncompetitive relative to the produce of Southeast Asian neighbors, Senator Cynthia A. Villar said on Sunday.
In a radio interview, Ms. Villar, who chairs the Senate committee on agriculture and food, said the national government should provide assistance to rice farmers, particularly for mechanization and acquiring high-yielding seed.
“Even if we provide 35% rice tariffication, our rice is still not competitive. Now I’m asking an assurance from the national government that they provide funds to rice farmers to mechanize and to offer seed that can increase their production per hectare from four metric tons per hectare to six,” she said.
“Because that’s the only way we can compete with Vietnam. And to mechanize as well because the labor cost in Vietnam is cheaper. Ours is expensive because we’re not mechanized,” she added.
Ms. Villar said she plans to take up the rice tariffication bill at the Senate plenary this Congress session. She has identified the bill as among her committee’s legislative priorities.
She said the Senate’s version of the bill has the needed remedies for the sector once the tariff system is imposed, including the P10-billion rice competitive enhancement fund for farmers and the provision mandating the Bureau of Customs (BoC) to implement the national single window system to prevent rice smuggling.
“We will pass the rice tariffication (bill),” she said.
The Bangko Sentral ng Pilipinas (BSP) and the National Economic and Development Authority (NEDA) have cited the rice tariffication bill as one of the levers for easing inflation, which hit 5.2% in June. The proposed measure seeks to amend Republic Act 8178 or the Agricultural Tariffication Act of 1996 in order to lift the quantitative restrictions (QR) on rice imports and impose a 35% tariff on rice.
In his third State of the Nation Address (SONA) on July 23, President Rodrigo R. Duterte asked Congress to prioritize the measure, certifying it as urgent as well.
“We are also working on long-term solutions. On top of this agenda to lower the price of rice, we need to switch from the current quota system in importing rice to a tariff system where rice can be imported more freely. This will give us additional resources for our farmers, reduce the price of rice by up to P7 per kilo, and lower inflation significantly,” he said.
“I ask Congress to prioritize this crucial reform, which I have certified as urgent today,” he added.
The bill remains pending at committee level both in the Senate and the House of Representatives. It has been identified as among the priority bills of the Legislative-Executive Development Advisory Council (LEDAC).

DTI to add more construction materials for certification

July 29, 2018 | 8:58 pm

THE Department of Trade and Industry (DTI) said it will be adding more construction materials to the list of products subject to mandatory certification and labeling standards to support the government’s aggressive infrastructure campaign.
Trade Undersecretary for the Consumer Protection Group Ruth B. Castelo said the DTI, through its Bureau of Product Standards (BPS), is currently reviewing its current rules and the list of products to be included.
“By the end of the year we’ll have more products in the mandatory list,” Ms. Castelo told BusinessWorld in Pasay City last week, noting that the proposed materials are “mostly for construction.”
“We will increase it because of the building program,” she added.
She said pole line hardware and polyvinyl-chloride pipes are under consideration while reinstating flat glass, plywood and galvanized iron sheets — items removed from the list in 2015.
The glass industry appealed that the removal of the material from the list has encouraged the influx of cheap imports, posing safety risks.
TQMP Manufacturing Glass Corp. said it is expecting glass to be reinstated by the last quarter of the year at the latest.
“It is the consumers that will benefit the most, by ensuring the quality of flat glass that are being installed in residences and commercial buildings,” said Nonito B. Galpa, Executive Vice-President of TQMP’s subsidiary, Pioneer Float Glass Manufacturing, Inc., in a text message over the weekend.
Pioneer was formerly known as AGC Asahi Glass. TQMP bought the firm from AGC Asahi Glass Ltd., a world leader in glass, chemicals and high-tech materials.
As to the plans of constructing a new float furnace — part of its over P5-billion expansion plan to nearly triple its production capacity, Mr. Galpa said the firm first has “to make sure that the situation is favorable for us.”
“Having flat glass reverted to the mandatory standard status, other concerns like technical smuggling, must also be addressed,” he added.
The BPS is tasked to implement mandatory product certification for various building and construction, electrical and electronics, chemical and consumer products under its product certification scheme.
Such products cannot be sold or distributed in the Philippines without the necessary Philippine standard or import commodity clearance mark.
As of April 2018, there are 85 products the BPS deems critical to safety and required to undergo mandatory certification. — Janina C. Lim

House panel confirms receipt of spending plan; budget hearing starts Tuesday

July 29, 2018 | 8:58 pm

THE House Committee on Appropriations has confirmed that Speaker Gloria M. Arroyo has transmitted the National Expenditure Program (NEP) in time for the budget hearings beginning Tuesday.
“The Office of the Speaker officially transmitted (the budget) to the Committee on Appropriations, so on Tuesday we can begin our hearings,” Committee chair Karlo Alexei B. Nograles told BusinessWorld in a phone interview Saturday.
Mr. Nograles also said “social services” and “infrastructure” will be the priority of the General Appropriations Act (GAA) of 2019.
Under the NEP, the education sector will receive the highest allocation with P659.3 billion, followed by infrastructure with P555.7 billion, and interior and local government with P225.6 billion.
The first sector to be subject to review is the Development Budget Coordination Committee (DBCC) which will discuss the proposed budgets of the Department of Budget and Management, National Economic and Development Authority, Department of Finance, and Bangko Sentral ng Pilipinas, Mr. Nograles said in a statement Sunday.
Appropriations Committee Vice-Chair Jose Ma. Clemente S. Salceda said he is looking out for the DBCC’s “revenue forecast and underlying assumptions and macroeconomic framework.”
Ways and Means Committee chair Dakila Carlo E. Cua said the DBCC economic forecast is “the most critical.”
After the DBCC, the Committee on Appropriations will next review the proposed budgets of the Philippine Charity Sweepstakes Office (PCSO), Philippine Amusement and Gaming Corp. (PAGCOR), and Department of Agriculture (DA) among others. — Charmaine A. Tadalan

Subsidies rise 7.34% in first half led by NIA

July 29, 2018 | 8:57 pm

SUBSIDIES given to government-owned and -controlled corporations (GOCCs) rose 7.34% in the first half of the year, the Bureau of the Treasury (BTr) said.
Total subsidies the national government remitted to state-run firms hit P62.49 billion in the six months to June, equivalent to 33.08% of the P188.93-billion subsidy target for 2018.
The National Irrigation Administration (NIA) captured the largest share of subsidies in the first half at P16.58 billion, or about a quarter of the total.
This was followed by the Philippine Health Insurance Corp. (PhilHealth), which obtained P15.21 billion and Land Bank of the Philippines (LANDBANK), which received P12.33 billion.
The Local Water Utilities Administration was the sole GOCC that did not require subsidies during the period.
Also receiving subsidies that period were the Tourism Infrastructure and Enterprise Zone Authority at P3 million, Cagayan Special Economic Zone at P6 million, and the National Home Mortgage Finance Corp. at P11 million.
Subsidies cover operational expenses that are not supported by the GOCCs’ respective corporate revenue or to fund specific projects or programs.
In June, subsidies fell 69.92% year on year to P9.72 billion but were significantly higher than the P3.83 billion in May.
In June the National Food Authority received the largest share of subsidies with P5.2 billion, followed by P3 billion for NIA. — Elijah Joseph C. Tubayan

Developing a skill-based talent strategy

July 29, 2018 | 8:57 pm

Companies around the world are now understanding that the talent paradigm is shifting. There is, in fact, a continuous war for talent worldwide, with a pressing need for businesses to develop a skills strategy that looks at both the need to operate the business in a cost-efficient matter, while redefining the business model at the same time.
In Singapore, government and the private sector have come together to develop Industry Transformation Maps (ITMs), which are part of their strategy to sustain their economy into the future. The ITMs are designed to be road maps tailored to industries to address specific challenges collaboratively, by trade associations and chambers, businesses and government, in order to develop skilled manpower. While ITMs are perceived to still need streamlining and improvement, the basic concept is sound.
Each ITM includes a relevant Skills Framework, which was established to provide a common skills repository for individuals, companies and training providers to help people remain competitive and employable in the disruptive business environment. However, for companies to truly benefit from the Skills Framework, they need to adjust the context to their own business needs.
A recent EY article, Skills at the heart of talent strategy, identifies five key considerations for companies:
ALIGN YOUR TALENT WITH THE BUSINESS STRATEGY
As more disruptions occur, companies are starting to see that their past successes are not guaranteed to carry them into the future. Digital, for example, is a primary concern. Companies need to identify the right skills to sustain their strategic digital goals in their work force plan, regardless of industry. Without a clear idea of how digital will impact future operations, some companies may struggle to balance the need to “buy” or hire digital talent, and “build” or develop the talent internally through training. They will also need to constantly monitor the skills development of the existing work force in order to manage possible obsolescence.
PLAN YOUR WORK FORCE BASED ON SKILLS
To remain competitive and successful, organizations need to have the right people with the right skills, when they need it and at a reasonable cost. This means identifying the optimal number of people and the type of skills profiles needed. This includes analyzing existing competencies and abilities, and projecting how they will fit into future business needs, and performing a gap analysis between the required work force strength, the changing job requirements, and the necessary training to develop the right skills and competencies.
HIRE FOR SKILLS
Another traditional practice that companies should consider changing is how they recruit talent. Recruitment teams should place more emphasis on skills-based interviews — combining the parameters of knowledge, attitude and competencies, as opposed to the usual getting-to-know-you interviews. The interview process should replicate the work environment as closely as possible, and should ask questions that specifically assess the needed competencies for the role. One such technique is using a behavioral event approach, where candidates are asked to describe their behavior in an important situation in the past, so that the evaluation is based on actual events.
Likewise, this goes back to the earlier point about skills-based manpower planning. Recruitment can leverage effective job profiling to identify candidates who have the right skills for a position, independent of academic degrees. It also allows candidates to better communicate how their knowledge, skills and competencies are relevant to potential employers, as well as how they fit into the organizational culture.
IMPLEMENT SKILLS-BASED REMUNERATION
To better develop and retain needed skills, companies can consider shifting from a “fixed-pay” remuneration system to a skills-based one where wages and pay progression are linked to knowledge, skill mastery and competency. This, however, will require companies to accurately measure their employees’ perception of rewards and balance against a cost-benefit analysis that is specific to the company’s strategy. Using data analytics, companies can better make holistic decisions on reward programs.
Having a skills-based pay system may result in higher wage costs since employees receive more wages, incentives and bonuses for acquiring the right skills. However, it may also translate into leaner work force models, higher productivity and new avenues of business for the company.
INVEST IN TRAINING
One of the oldest jokes in the business world has one manager asking another, “What if we train our people and they leave?” To which the other manager says, “What if we don’t, and they stay?” This illustrates the challenge some companies face in weighing return on investment for skills training. One way to address this is by shifting perspectives to see training as a long-term investment in the company’s success, and not a short-term cost. Proper training can help people add value to the company and expand their job scopes.
At the same time, employee surveys also often indicate that training is one of the key elements that employees look for in a job. By providing useful and relevant training, companies can help their people stay engaged and motivated.
This also boils down to the need for companies to create a corporate culture that embraces lifelong learning and flexibility. This is particularly important for businesses that are becoming more and more reliant on technology. A culture of learning can encourage your people to learn with enthusiasm, allowing them to maintain their lifelong employability and be more productive.
In SGV, we have made lifelong learning a consistent part of our corporate DNA since the company’s inception. Training is a major investment from Day One of a new employee. Even senior partners are provided with learning and development opportunities. True and effective training goes beyond classroom lectures although we also have those consistently. The bulk of the actual training for our people is on-the-job supported by a powerful and inclusive culture of mentoring. And as our people progress through the organization, they in turn become leaders and mentors who embody our values of excellence, service and stewardship to empower successive generations of professionals.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Clairma T. Mangangey is a Partner and the Head of Learning and Development of SGV & Co.

TRAIN 2: The failures it addresses

July 29, 2018 | 8:54 pm

In the 2018 SONA, President Duterte affirmed his unequivocal ownership of TRAIN 1 and 2. What welcome news for TRAIN advocates who felt orphaned when, previously, the President hinted that he will leave the tweaking of TRAIN 1 (in view of inflation) to the ‘wisdom’ of Congress! A successful flagship economic program will ensure Duterte a bright legacy; a mangled one will sink that legacy no matter the political projects. Even so, TRAIN 2 still has ways to go.
Three questions are always posed on TRAIN 2:
1. WHAT IS THE MARKET FAILURE THAT TRAIN 2 IS TRYING TO ADDRESS?
In Economics, we are drilled to press upon policy makers the canon that “a market failure is necessary but not sufficient for an efficient government intervention.” A market failure is economist-speak for the social waste resulting from unbridled interaction of private actors pursuing self-interest. A government intervention in a market failure, if properly executed, can expunge the waste; but badly done, it can also produce a bigger social waste — a government failure. Good governance abhors intervention without a social waste to correct. TRAIN 2 can create a social mess if not targeted to a failure. In real economies such as the Philippines, government routinely violates the canon in either of two ways: (i) by intervening despite there being no failure; or (ii) by failing to lift an extant intervention even when the original market failure has long expired. The expiry may come about because the market has grown and/or technology has improved. Subsequent well-meaning administrations can try to clean up the mess left behind by past administrations and recoup the foregone welfare. Thus, the familiar canon should read, “A failure, whether market or government, is necessary but not sufficient for efficient government intervention.”
Let us apply this to the Philippines.
The prevailing VAT-, tax-, or tariff-free incentives enjoyed by some corporations were granted by past administrations. The idea then was that investors were shying away from the country because of institutional or market deficits. For example, the extant market may be too small for current fixed capital investment requirement — a ‘missing market’ failure. An analogous idea in trade policy is the ‘infant industry argument.’ No firm — not even a monopolist — will break even under laissez faire in a missing market failure. But a direct or indirect (tariff) subsidy or a tax holiday can push firms to profitability and induce entry. If so, such a subsidy or tax holiday could eliminate a social waste.
An incentive frequently offered to induce entry into a missing market is a franchise. The entrant loses money in the first years and recoups in the following years when the market has grown sufficiently. The franchise acts as an indirect subsidy in the form of future profits protected by the franchise in the remaining years. When the market has grown and matured sufficiently to allow for two or more firms to be viable, the continued protection from rivals now becomes a socially costly since other investors will now want to enter, based only on market returns. After sufficient recoupment, the franchise overstays its usefulness and becomes wasteful. This is usually taken care of by a sunset clause in the franchise contract — say, 25 years — specifying the number of years of effectivity. Unfortunately, many of the so-called pioneer or infant industry contracts did not have sunset clauses, thereby granting “forever incentives.”
In this paradigm, the current corporate incentive system has overstayed and now become a ‘government failure.’ And the sitting government is in the right to try to correct it. There may have been market failures at the start but which either market growth and/or technical progress have cured. TRAIN 2 is designed to lift or replace such government failures. We have done this to good effect in the past.
The NASUTRA sugar monopoly, the coconut levy, and the Oil Price Stabilization Fund (OPSF) were government failures that impoverished farmers and nation. Their abandonment was a great relief to suffering Filipinos. The second question is:
2. WHY LIFT ‘COST-US-NOTHING’ INCENTIVES?
The most potent argument over the years in favor of maintaining overstaying incentives is the ‘cost-us-nothing’ argument. It goes this way: “You don’t collect from these firms what you otherwise will collect if the incentives aren’t there, yes, but you don’t collect anything anyway if nobody invests.” How valid is this?
The argument is valid if the extant problem is a missing market failure — in a missing market failure no investor will enter the market without a subsidy or some tax-free privilege! No tax revenue without entry anyway. The argument is, however, invalid if the market has grown enough and/or the technology has changed enough so that some investors will enter even without the subsidy.
For example, the cost of solar power generation has fallen so that by 2018, some investors are willing to enter even without the fit-in tariff. So the fit-in tariff for solar — though perhaps helpful in 2009 — may now be overstaying and wasteful. This is one reason why Germany has moved from granting to auctioning additional access to fit-in incentives. The burden of showing that the missing market still exists should rest on the shoulders of the retain-defenders.
3. IS TRAIN 2 CONFUSING APPLES AND ORANGES?
Modality matters.
In the rule-of-law world, the state is obligated to recompense the holders for the loss of contractually granted privileges. One has to make the case that such a privilege to such a firm has already sufficiently recompensed the firm for its investment and could be lifted. The process cannot however be arbitrary.
For example, the water regulator, MWSS, cannot, in the rule-of-law world, unilaterally do away with tax incentives granted to water concessionaires in the concession contracts without proper compensation.
Institutions matter.
The old adage, “A bird in hand is better than two in the bush,” applies especially under weak institutions. That X pesos implied in automatic incentives are naturally valued more than X pesos still to be reimbursed by BIR. Different delivery modalities render the same nominally equivalent pesos as apples and oranges — non-comparable. And even if such comparability is provided for in the bill, can Congress be trusted to comply? A serious populist mangling looms if TRAIN 2 passes before the mid-term elections. The DoF TRAIN 1 took a beating in Congress and the demonization of TRAIN 1 is still strong and will threaten TRAIN 2. And mitigation measures taken will also need time to pull inflation down.
TRAIN 2 is needed but “haste makes waste” and we may regret a hasty and Congress-battered TRAIN 2.

Raul V. Fabella is a retired professor of the UP School of Economics and a member of the National Academy of Science and Technology. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.

The sharing economy index

July 29, 2018 | 8:53 pm

The “sharing economy” involves strangers sharing several services among themselves without being forced or mandated by a government to do so. They do so voluntarily, allowing suppliers to earn income for services they are willing to provide to consumers who are willing to avail of them at a price both have agreed upon.
A new report, the first edition of the Timbro Sharing Economy Index (TSEI) 2018, was published last week by several free market think tanks in the world. It was produced by Timbro, the biggest free market think tank in Sweden and the Nordic countries, co-sponsored by other free market institutes like the Americans for Tax Reforms (ATR), Center for Indonesian Policy Studies (CIPS) and the Institute for Democracy and Economic Affairs (IDEAS, Malaysia).
Timbro defines the sharing economy service (SES) as “a platform that facilitates agreements between identifiable suppliers of marketable services and identifiable customers demanding said services. The transaction may not involve any transfer of ownership and is conducted on a case-by-case basis, where neither party is bound to engage in future transactions. The SES activity must lower the costs of transactions beyond merely providing advertisement.”
The index is compiled using traffic volume data and scraped data and some 286 worldwide were classified as SES. Monthly traffic data was collected for the services in 213 countries. The largest company in their data set is Airbnb with almost 1.5 million suppliers judged as active in an average week.
Of these 286 SES companies, one-third supply housing and one-half fall into the broad category of business services.
One drawback of the construction of their index though is that the database is not shown and it underestimates app-centric services. Thus, ride-sharing services like Uber and Grab have not contributed much to the ranking and scoring.
The index scoring seems suspect so I add a factor, individuals using the internet as % of population from the World Bank’s World Development Indicators (WDI) database 2018 since SES is highly dependent on internet connectivity and use. This somehow reduces the pessimism implied by TSEI (see table).

We go back to SES in public transportation in the Philippines and other Asian countries. Buses and taxi are also part of SES but they are not internet-based and hence, lack the transparency and safety that are available in internet-based companies like Grab and Uber. In the latter, even before the car arrives, the passengers already knows the name of the driver, the car model, and plate number. The driver also knows the name/s of the passenger/s even before they meet. This helps establish trust between driver and passenger.
Enter government regulators like the Land Transportation Franchising Regulatory Board (LTFRB) regulating and restricting new internet-based SES, the transport network vehicle service (TNVS) and Transport Network Companies (TNCs).
Since SES is a voluntary arrangement between service providers and customers, the providers should be free to expand or reduce their services/vehicles, and free to set its pricing and the customers are free to agree or decline the pricing offered by the providers.
The three levels of control and restrictions practiced by LTFRB — (1) franchise control or limited number of accredited TNVS, (2) surge price control, and (3) abolition of per minute pricing in heavy traffic or flooded areas — are policies that distort the incentives system in a sharing economy.
The agency’s intervention diseconomy can only result in (a) less TNVS supply when demand for them is high and hence, (b) more people stranded in streets and offices unable to go home or their next destinations earlier.
Does LTFRB derive pleasure and contentment seeing thousands of people unable to get safe and comfortable rides daily?
Perhaps.
After all, it continues to implement its irrational intervention diseconomy policies. Of course it will not admit this, always providing the alibi that it is “protecting public welfare” even if its policies result in the opposite effect.
A regional player in ride-sharing, Go-Jek, plans to enter the Philippine market.
This is good news on several levels — good for customers because it strengthens competition and expands choices, good for the dominant player Grab because it will deflect or disprove accusations of being a monopoly, and good for new small players because an opportunity for merger with a new regional multinational will allow them to learn more about the sector.
There should be more multinationals from abroad coming into the Philippines and there should be more local companies becoming multinationals and going abroad. Government regulators like LTFRB should simply reduce their appetite for intervention diseconomy and distortion.

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.
minimalgovernment@gmail.com.

A rare opportunity for Sec. Berna Romulo-Puyat

July 29, 2018 | 8:51 pm

Expectations could not be higher for newly confirmed Secretary of the Department of Tourism, Bernadette “Berna” Romulo-Puyat. Following Wanda Teo who used her position as a piggy bank for the entire Tulfo clan, the public now demands a sensible, no nonsense tourism program.
The stakes could not be higher. Apart from the fact that 2.22 million Filipinos depend on the tourism industry for their livelihood, tourism revenues are now an important contributor to help minimize our widening current account deficit.
The Aquino administration did a splendid job in developing the country’s tourism industry.
From a minor cog in the economy, it has become a major contributor to gross domestic product. Under the baton of former Secretary Mon Jimenez, foreign tourist arrivals expanded from just 3.5 million visitors in 2010 to 6 million visitors in 2016. Even local tourism flourished with some 66 million Filipinos travelling across our islands. Tourism revenues increased from just $2.5 billion in 2010 to $5.6 billion six years after.
Secretary Berna must supersede the performance of former Secretary Jimenez for the Duterte administration to claim that it performed better then its yellow predecessor. Talk about a job cut out for her.
Last week, I had the privilege to have lunch with Secretary Berna along with colleagues from the Bulong Pulungan group. I have known of Secretary Berna since high school as we have many friends in common. However, this was the first time I was able to have an earnest conversation with her.
As first impressions go, I was fairly impressed with her disposition. Apart from having the beauty and charm befitting a tourism marketer, I found her to be articulate, pragmatic, and focused. She clearly understands the principles of branding and the importance of infrastructure in tourism development. As a government worker, she has thrived at the Department of Agriculture for 12 years, so its safe to say that she knows how to navigate the bureaucracy to get things done.
From what I gather, at the heart of Secretary Berna’s agenda is sustainable and responsible tourism. In other words, creating a vibrant tourism industry without damaging the environment and its heritage sites. Also, to minimize tourism’s social costs like prostitution, gambling, and drug use.
In her short discourse, she promised to work with local government units to ensure that the environmental disaster in Boracay never happens again. Painful as it was for Boracay’s stakeholders, she sees the proverbial silver lining in the incident as it made other government units aware of the importance of environmental law enforcement. So hard was the lesson that the President himself warned LGUs to strictly enforce environmental laws in his state of the nation address.
To Sec. Berna’s relief, foreign visitor arrivals still increased by 10.4% in the first half of the year despite Boracay’s closure. Destinations like Mactan, Siargao, Palawan, La Union, and Bohol benefitted while virgin territories like Siquijor, Romblon, and Panay were discovered. For its part, Boracay has been able to heal itself from years of inundation.
Sec. Berna has spent the last three months killing fires left by Teo and consolidating the DoT’s budget, whatever is left of it. She is strengthening the internal audit systems of the DoT to prevent abuses in the future.
In terms of promotions, she has been meeting with the likes of J. Walter Thompson, Evident Communications, and BBDO Guerrero to strategize the country’s next tourism ad campaign. We were told that the “It’s more fun in the Philippines” slogan will continue to be used, albeit refreshed. I consider this a wise move considering the traction and recall the slogan has already built up.
The next campaign will still feature our beautiful beaches, but emphasis will be given to local gastronomy, heritage tourism, and agricultural tourism
THE OPPORTUNITY
I have no doubt that Sec. Berna will succeed in as far as tourism arrivals and revenues go. Everything is working to her favor, not the least of which is the commissioning of numerous provincial airports and more access roads to and from tourist destinations. Infrastructure is a great enabler of tourism and it is all coming on-line in the next few years.
Numbers aside, Sec. Berna has the rare opportunity to forever change the way our country is perceived by the rest of the world. I’m not talking about our image as a tourist destination, but our image as a people, as a culture, our heritage, our achievements, our competencies and our aspirations. I am talking about our country brand.
Even today, despite the great advances we’ve made economically, we are still perceived by the world as a third world country with third world mentality. We are associated with national disasters, grime, and squalor.
To foreigners, images of Smoky Mountain and the annoying jeepney still come to mind when speaking about the Philippines. The jeepney has been used as our icon for decades. It is a national symbol that ceased to be cute a long time ago — it is now a symbol of backwardness.
These images do not give justice to the talent of the Filipino, our achievements in the BPO and electronics space, our strength, resilience, and creativity. It certainly does not do justice to the fact that the country is now among the fastest growing economies in the world with aspirations to be a developed economy by the year 2040.
Country branding refers to the process of defining, building and managing a nation’s image. It is an important component in national development given its effect on tourism, global trade, investments, and diplomacy. It also has a profound influence on our sense of identity as a people and national pride. If ever, Secretary Berna will be the first Secretary to shape our country brand since former Secretary Jose Aspiras in the 1970s.
How the country should be branded is not for me to say — it is something that should be decided upon by experts in global communication. We can look at best practices from other nations.
Germany, for instance, built an image associated with precision and technology. France established theirs based on design and craftsmanship. Both nations have intentionally crafted these images to lend credibility to their exports, industries, and of course, in tourism.
Malaysia and Singapore have crafted their image as modern, progressive economies with advanced infrastructure and strong institutions. All these are meant to make them the first choice of foreign investors
Spain built its image around its passion for life and the humanities. It serves as the perfect building block for its goal to be the global champion in tourism, gastronomy, and agro-industries — a goal it achieved.
If the Philippines does not purposely craft images and perceptions that it wants to be associated with, then the world will do it on its own based on the inputs it receives from international media. Let’s face it, most of the news feeds circulated about the Philippines are of negative persuasions. Hence, the urgent need to manage it.
The importance of country branding cannot be over emphasized since it also affects our “soft power.” Soft power is the ability to influence policy and global decisions on the back of who you are as a nation and the gravitas you wield. It is the ability to attract coalitions, followers, cohorts, and cliques not by force or money but by persuasion.
At this time in our history when government is pursuing an independent foreign policy, soft power is a tool we cannot do without.
At this time when China is encroaching on our borders and the US is looking inwards, soft power will play an important role in defending our sovereignty.
At this time when we need to attract more foreign investments to keep the economy growing apace, soft power is the way in which we can compete against our aggressive neighbors.
Secretary Berna’s role as the tourism chief is clearly much larger than merely increasing visitor arrivals. Her work has sway on the nation’s foreign policy, defense, and the economy.
Having the rare opportunity to shape our country brand is great responsibility and a great opportunity. Done right, Secretary Berna can come down in history as the someone who has changed development trajectory of the Philippines forever.

Andrew J. Masigan is an economist

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