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Agriculture association pushes back against hybrid rice ‘certification’

AN agricultural industry association has questioned the Department of Agriculture’s plan to draft a list of its preferred hybrid rice seed varieties, saying that farmers need to make their own choices or develop their own seed instead of being steered to products of certain suppliers.

In a text message to BusinessWorld, Samahang Industriya ng Agrikultura (SINAG) noted that “usually, these ‘certified seeds’ come from one company that is being promoted by the DA,” the SINAG said, without identifying the company.

“What is needed is a favorable policy space that will ultimately provide rice farmers the opportunity and incentives to breed their own seeds or freely choose commercial seeds that will suit best the conditions of their farms.”

Agriculture Secretary Emmanuel F. Piñol in a social media post on Tuesday asked President Rodrigo R. Duterte to exempt hybrid rice seed from government procurement rules that award contracts to the lowest bidder.

Mr. Piñol claims that Mr. Duterte has agreed, and instructed the department to list its preferred hybrid seed varieties.

The DA considers hybrid seed, which is more expensive but also higher-yielding, to be key towards achieving rice self-sufficiency. SINAG, however, said certain varieties of proven non-hybrid seeds “are well-suited” for Philippine planting conditions. — Anna Gabriela A. Mogato

Allowances for gov’t workers to rise by P1,000

GOVERNMENT workers will receive an additional P1,000 in allowances this year after the Budget department approves guidelines for its release.

“We increased the uniform allowance of all national government employees from P5,000 to P6,000 per year. P1.12 billion has been allocated under the miscellaneous personnel fund,” Budget Secretary Benjamin E. Diokno said during a news conference yesterday.

Mr. Diokno was referring to Budget Circular No. 1-2018 dated March 8, 2018.

It covers civilian government personnel occupying regular, contractual, or casual positions; appointive or elective; rendering services on full-time or part-time basis.

However it excludes military and uniformed personnel of the Armed Forces of the Philippines and Philippine National Police, Philippine Public Safety College, Bureau of Fire Protection, and Bureau of Jail Management and Penology.

It also excluded foreign service personnel of the Department of Foreign Affairs, barangay officials and employees paid monthly honoraria; and those hired without employer-employee relationships and funded from non-personnel services appropriations.

The allowance is “granted to defray expenses for uniforms or distinctive clothing which are the required appropriate attire for employees in the regular performance of their work,” according to the circular. — Elijah Joseph C. Tubayan

Toyota Motors parts suppliers registered for CARS program

THREE auto parts makers and a manufacturing services provider have successfully registered for the Comprehensive Automotive Resurgence Strategy (CARS) program as suppliers for the new Toyota Vios small car.

In a statement Wednesday, Toyota Motor Philippines Corp. (TMP) said the suppliers were Manly Plastics, Inc. (Manly), Technol Eight Philippines Corp. (TEP), Toyota Boshoku Philippines Corp. (TBPC), and Valerie Products Manufacturing, Inc. (Valerie).

The parts makers — Manly, Valerie and TEP — will make body shell and large plastic parts for the new Vios and are considered major participants in TMP’s localized outsourcing program.

Manly and Valerie signed a technical assistance agreement with Toyoda Gosei Co. Ltd. and Ogihara Co. Ltd in October 2016 to supply parts for the new Vios.

Toyota requires some suppliers to sign technical assistance agreements (TAA) with the automaker’s suppliers in Thailand, a major supply hub for the region, to ensure quality and adherence to technical standards.

Meanwhile, TEP acquired a 1,000-ton capacity press to allow it to stamp larger parts.

TBPC specializes in process improvements to increase productivity.

CARS provides incentives for the volume manufacture of small cars, thereby spurring investment and employment.

In the statement, TMP said the parts projects were worth P1.3 billion. It did not specify whether this total represented its investment in localization.

The contracts were issued to upgrade the automaker’s capacity to deal with large expected volumes under CARS.

TMP also approved 26 local direct suppliers for the new Vios.

The company expects to start local production of the new Vios in mid-2018.

The high volume of production under CARS will give suppliers greater operational stability, Toyota said.

“The benefit of CARS to suppliers is long term. The newly acquired production capability and manpower skills will become their advantage even after the CARS program,” TMP President Satoru Suzuki said. — Janina C. Lim

ERC orders TransCo to respond to consumer petition over 2016 FiT

THE Energy Regulatory Commission (ERC) ordered state-run National Transmission Corp. (TransCo) to respond to a petition filed by a consumer group seeking to render null and void the regulator’s decision that called for the collection of a higher feed-in-tariff allowance of P0.1830 per kilowatt-hour for 2016.

In its order dated Feb. 27, 2018 the ERC gave TransCo up to 10 days upon receipt of the order to respond to the petition filed by Victorio Mario A. Dimagiba, president of consumer advocacy group Laban Konsyumer, Inc. (LKI).

The ERC order was in response to Mr. Dimagiba’s petition that was filed on Oct. 27, 2017. It followed the decision by the regulator to grant a feed-in-tariff allowance (FiT-All) that is higher than the P0.1025 per kilowatt-hour (kWh) asked for by TransCo.

Calculated annually, the FiT-All is a uniform charge applied to the kilowatt-hours billed to consumers who are supplied with electricity through the country’s distribution or transmission network.

The uniform charge is paid to developers of renewable energy power plants. The FiT-All mechanism was established under the Renewable Energy Act of 2008, which aims to jump-start the development of renewable energy sources such as wind, run-of-river hydroelectric-power, solar and biomass plants.

The collected amount is managed by TransCo before the fund is paid to the developers. The FiT-All was added in the monthly bills of electricity users starting in 2016.

TransCo applied for a FiT-All for 2016 of P0.1025/kWh and set the case for submission of jurisdictional compliance on March 8, 2016 for the Luzon consumers and other dates for the rest of the country.

On Feb. 16, 2016 while TransCo’s application was pending, the ERC issued a provisional authority for a FiT-All for 2016 in the amount of P0.1240/kWh, which took effect immediately.

But on May 9, 2017, the commission granted an additional amount of P0.0590/kWh from the current P0.1240/kWh, bringing the total FiT-All for 2016 to P0.1830/kWh.

Mr. Dimagiba said in his petition that there was no amendment and no republication of the TransCo application on the FiT-All variance approved by the commission in May 2017 and the rate applied for by TransCo.

He cited a Sept. 5, 2017 order by the ERC on TransCo’s FiT-All application that laid down doctrines on jurisdiction and due process. He then raised the issue of whether or not there would be legal implications in allowing the proposed amendments.

In his petition, Mr. Dimagiba asked the ERC to render the May 9, 2017 decision null and void for lack of jurisdiction.

Mr. Dimagiba said he had received a copy of the ERC order to TransCo on March 12, 2018. He said it was “good the petition is now moving.”

“LKI will exhaust all legal remedies to ensure a successful petition,” he said.

Melvin A. Matibag, TransCo president and chief executive officer, earlier said that he expected to end 2017 with P8 billion in outstanding payables. The amount includes the interest incurred because of the delay in meeting payment obligations.

He said the P0.1830/kWh approved by ERC for 2016 was insufficient to address TransCo’s total payables. TransCo has a pending application for P0.2291 for 2017 and has yet to receive even a provisional authority to collect the higher amount.

Mr. Matibag said for 2018, TransCo requires a FiT-All of P0.29 to P0.30/kWh.

As of Nov. 6, 2017, TransCo has managed to pay P27.26 billion or 79.44% of its obligations. Its unpaid balance as of the period was P7.06 billion, excluding interest payment of P288.92 million. — Victor V. Saulon

Unraveling the secrets of ERM

If we liken businesses to machines, risk management would probably be those cogs scattered throughout that are so tiny one cannot help but overlook them during maintenance. And yet, when even one of them breaks, the machine would continue to run but at the cost of rapid deterioration. Eventually, when it stops running, only then do we realize how critical these small bits of metal are to the machine.

Risk management is an interesting conundrum. The challenge of managing risk is like clearing a maze with no end in sight — as soon as you think that you’ve found the correct path, you find yourself back at the multiple, twisting crossroads where you started. Thus, the cycle continues all over again. Such is the landscape in which businesses currently find themselves.

There have been great improvements though. Where traditional risk management only focuses on managing risks with performance, the new COSO ERM framework takes this concept even further at the onset of strategy formulation. This helps in ensuring a smoother trajectory towards the goals to maximize business profits and to enhance corporate performance.

APPLYING ERM TO FAMILY AND ONESELF
What comes to mind when you hear the term “risk?” The regular person would most probably think of these words: dangers, crises, and disasters. Corporate boards and managers, on the other hand, would probably think of strategy, operations, technology, legal, finance, regulatory compliance — anything that may cause business profits to drop or anything that could prevent the achievement of goals that were originally set by management.

ERM concepts do not only apply to a workplace setting. Look at this (rather oversimplified) overview of child rearing in a typical household:

• Governance and Culture. Parents can be likened to the Board, the ones at the top who set the tone, which would shape the child’s behavior.

• Strategy and Objectives. At this stage, the parents have an idea of the objectives that the child needs to become successful. They chart a winning strategy in order for this to happen, debating the pros and cons of each decision they make, such as which school to send their child to and the amount of resources that they need.

• Performance. Parents would carefully consider the possible risks that could affect the results and determine the appropriate actions to take. For example, if the child’s progress is lacking, the parents may arrange for additional tuition.

• Review and Revision. Regularly, parents would monitor the child’s learning and development (such as through games, tests and report cards). This would allow them to determine if additional changes to the “game plan” are required, as well as appropriate corrections.

• Information, Communication, and Reporting. Parents would continuously interact with other stakeholders involved in the child’s development such as relatives and teachers to guide the child’s growth.

Risk management is something that is actually ingrained in the human psyche. We all have a corresponding “fight-or-flight reaction” to any perceived risk to our well-being. Our instincts immediately warn us as soon as we perceive something wrong with our environment. We then decide if we should stay and fight, or if we need to run. This is ERM in its purest, basest form.

BUILDING RESILIENT ORGANIZATIONS THROUGH ERM
Businesses require more intricate and comprehensive tactics to ensure the proper achievement of goals and objectives. Philippine businesses need to ensure that threats to business strategy and performance are being handled in an efficiently and effectively.

As a risk management professional, an observation is that the powers and responsibility for risk management are often than not too concentrated and reliant on the directives issued out by the Risk Oversight Committee (ROC) and by extension, the Risk Management Department (RMD). This is something that organizations should act upon with great speed — while it is true that (as watchdogs) the ROC and the RMD should take the lead in matters involving risk, effective risk management is a collective responsibility of all the units of the organization. It entails active collaboration between the organization’s front line units (i.e. operations) and the other lines of defense (i.e. risk, internal audit, and compliance). The actual units themselves have a more comprehensive view of the risks that affect organizational performance.

With the new COSO ERM framework, organizations have the opportunity to think about how they can ready themselves to confront the threats to the viability of their business strategies. At PwC, we have identified five specific trends that are reshaping the world: rapid urbanization; climate change and resource scarcity; shifts in global economic power; demographic and social change; and technological breakthroughs. All these require consideration from strategic formulation down to execution. For businesses to flourish, management should continuously assess such risks and have the ability to deploy the appropriate strategies and tools to minimize their adverse effects to operations.

LIGHTING THE SPARK
Now that we’ve gained a clearer understanding of Enterprise Risk Management and how it relates to businesses (and one’s personal life), where is the way forward? How do we leverage ERM to make businesses grow? Having the right policies, procedures, and tools have a large impact on the effectiveness of risk management processes; the starting point, really, is to incorporate them into day-to-day operations by weaving it into the very heart of our conversations at the office.

Management should consider potential risks to the organization at all steps of the decision making process. This would facilitate the development of strategies that result in the continued resilience of the organization. Otherwise, it might find itself overtaken by competitors who able to navigate in trying times.

All of us need to do the right thing. Everyone must be willing to bring up issues to be considered to the table, no matter how small, especially if it would have an impact on business.

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

 

Rochelle C. Dichaves is a senior associate with the Risk Consulting practice of PricewaterhouseCoopers Consulting Services Philippines Co. Ltd., a Philippine member firm of the PwC network.

+63 (2) 845-2728 local 2121

rochelle.dichaves@ph.pwc.com

Relief for Metro Manila’s traffic

On a normal day, commuting 12 kilometers from Quezon City to Makati City could take two hours. If you are in Makati City and must cross EDSA to get to the Ortigas Center, expect to be stuck in gridlock for at least one hour. This is life in Metro Manila, a city with 39,000 people per square kilometer, 2.5 million cars, and a network of 5,000 kilometers of roads, half its true requirement.

In its 2014 report, the Japan International Cooperation Agency (JICA) confirmed that the country has been sustaining economic losses of P2.4 billion a day on the back of Metro Manila’s traffic. The report was updated in 2017 and daily losses have escalated to P3.5 billion. The damage is so great that it is equivalent to 8% of gross domestic product. With inaction, JICA says, losses can skyrocket to P5.4 billion in a few years. This will render Metro Manila unlivable.

How did we get here? All these are a result of government’s failure to invest in appropriate infrastructure to support Metro Manila’s ever growing population. Records show that from 1980 to 2009, infrastructure spending in the Philippines amounted to only 2.4% of GDP as compared to 5%+ in other ASEAN countries.

Average infrastructure spending during Marcos’s 20-year term was only 3.2% of GDP. Cory, FVR, and Erap each spent 2.2% of GDP. The 10 years under GMA was a virtual infrastructure dry-spell as Arroyo spent only 1.9% of GDP on roads, bridges, and ports. This is largely the reason why we have an acute infrastructure backlog today.

Noynoy Aquino spent 2.9% of GDP on infrastructure. However, if we factor-in the projects built (or being built) at no cost to government through Private Public Partnerships (PPP), the ratio should be more than 5%. Among the projects done under a PPP scheme are the Daang Hari Expressway, NAIA Elevated Expressway (NAIAX), LRT-1 Extension, MRT-2 Extension, MRT-7, the NLEx-SLEx connector road via Skyway, and the South & SouthWest Integrated Transport Systems (ITS).

The Daang Hari Expressway and NAIAX are already operational. The later, however, will be extended all the way to Bonifacio Global City (BGC). Meanwhile, the extensions of LRT-1 to Bacoor and LRT-2 to Antipolo are scheduled for completion on October 2021 and April 2019, respectively. MRT-7, connecting North EDSA to San Miguel, Bulacan, is presently under construction and is scheduled for completion in the second quarter of 2020.

The NLEx-SLEx connector road via the Skyway will be a game changer for Metro Manila. Cars, trucks and buses travelling from Cavite to Bulacan, or vice versa, need not pass through EDSA or C5 as the connector road provides the direct link. It is scheduled for completion this year.

The Integrated Transport Systems (ITS) are universal bus depots meant to replace the hundreds of bus terminals that dot southern EDSA. They are a modern transport hubs where arrivals and departures of buses are pre-programmed and ticketing is centralized. Two ITS depots are presently being built, both to service southbound buses. ITS-Southwest is located near the Coastal Road in Parañaque City and will be finished this year. ITS-South is located at the FTI Complex and is scheduled for completion on March, 2019. There is no ITS to service northbound buses yet.

BUILD, BUILD, BUILD
The Duterte administration intends to accelerate infrastructure spending to as much as 7.4% of GDP or P8.13 trillion over five years. There are 75 keystone projects in the Build, Build, Build agenda and the majority of them are geared to relieve Metro Manila’s traffic. After all, the National Capital Region accounts for 37% of the nation’s GDP.

The Department of Public Works and Highways (DPWH) will spend more than P450 billion on roadworks this year, which is more than the amount spent from 2010 to 2013, combined. Among the centerpiece projects is the second NLEx-SLEx connector road, a project awarded to Metro Pacific. This is an eight-kilometer elevated highway with 2 x 2 lanes that extends NLEx further south from C3 Road in Caloocan to PUP in Sta. Mesa and onward to connect to the Skyway. It will feature interchanges in Caloocan and España Ave. Construction is scheduled to begin in 2019 and be completed in 2021.

The Harbour Link Road is a 14-kilometer highway that connects the Port Area to NLEx. Container vans can now bypass EDSA when heading north. A portion of the Harbor Link Road is scheduled to be operational next month, barring delays.

Also in the DPWH pipeline is the construction of 12 bridges to cross the Pasig River. They are: the Binondo-Intramuros Bridge; the North-South Harbor Bridge; the Carlos Palanca-San Marcelino Bridge; the Pandacan-Sta. Ana Bridge; the Estrella-Pantaleon Bridge; the F. Blumentritt-Antipolo Bridge; the Kabayani-Katipunan Bridge; the Reposo-Guatemala Bridge; the JP Rizal-Yale Bridge; the G. Gabriel-Mercury Ave. Bridge; and the East-West Bank Bridges 1 & 2. All these will be completed in five years.

The Department of Transportation (DoTr) has numerous projects in its pipeline, the most ambitious of which is the Metro Manila Subway System. Funded by the Japanese government, the country’s first subway will run from Mindanao Ave. to NAIA, passing through Ortigas and BGC among eight other stops. Civil works are ongoing while tunneling work will start on the 4th quarter of 2019. The subway will have a capacity of 370,000 passengers a day. The subterranean line will be completed in 2025 but the DoTr will attempt to make three stations operational before the end of President Duterte’s term.

Other railways in the works are the Manila-Clark line, via Malolos, and the Manila-Bicol line, via Calamba. Both lines are scheduled for completion by the 4th quarter of 2021.

Linking LRT-1, MRT-3, and MRT-7 is a grand central station in North EDSA which had its ceremonial groundbreaking last September. The project was scheduled to be completed in 2020. However, new disagreements among the taipans who have stakes in the project — the Sys, Ayalas, and Angs — have arisen. This has caused the project to be delayed anew. There is no telling when the project will finally be finished. This is unfortunate because it has been on the drawing board since 2009.

To decongest the seaport of Manila, the DoTr, in collaboration with ICTSI, is building the Cavite Gateway Terminal in Tanza, Cavite. The terminal serves as a holding area for container vans whose final destination is in the south. Transfers of containers from the port area to the Tanza terminal will be done by barge plying Manila Bay. This will relieve our roads from 140,000 truck trips a year.

The DoTr will also be constructing two Bus Rapid Transit (BRT) lines, the first is a 48.6-kilometer line running throughout EDSA and the second will be a loop to connect the Ortigas Center, Makati City, BGC, and NAIA. Both BRTs will commence construction in 2019, to be completed in 2021.

The Bases Conversion and Development Authority (BCDA) has a game-changing project of its own. Since it owns the right of way of roads in BGC, it is building a BRT loop that starts from McKinley Road on to Boni High Street, forward to Uptown Mall, Kalayaan Ave. and back to McKinley through the Mind Museum. There will be 13 stops altogether and this will make every point in BGC a mere five-minute walk from any BRT station.

The BRT will extend to McKinley Hills and McKinley West and onto the LRT-1 station in Baclaran, passing through all three NAIA terminals. The BRT Line from Lawton Road in BGC to Baclaran will run underground. Target date of completion is 2021.

With the realization of all these projects, we can expect a tremendous reduction in Metro Manila traffic. There is light at the end of the gridlocked tunnel after all.

The good news is that all the projects mentioned are moving forward. The bad news is that they can easily be derailed by interfering politicians and/or legal injections by losing bidders. Civil society should remain vigilant to make sure personal or corporate interests don’t get in the way of our infrastructure building spree.

 

Andrew J. Masigan is an economist.

Passportify?

We might yet see the advent of an application by 2019, to be available on mobile phones, that can allow Filipino citizens to renew their passports online using “selfies” or self-taken photographs. That is, if Foreign Affairs Secretary Alan Peter Cayetano can follow through on his claim that the Department of Foreign Affairs (DFA) is now “preparing the technology” for this.

“We think next year will be the first time” we can use selfies for passports, Cayetano told a hearing at the House of Representatives last week regarding the delays in the passport application system. But, going by the DFA’s track record in the last three years, I doubt if what Cayetano envisions can actually come true by 2019.

Delays in passport processing have become the rule rather than the exception since maybe about three years ago, and Cayetano blames this on a surge in demand rather than faults in the application and renewal systems. However, what I cannot understand is that up until towards the end of the previous administration, there was actually little reason to complain about the passport process. Since late 2015, however, the process has been problematic.

And controversial, to say the least. Take the case in August 2016, when almost 200 foreigners were stopped at the airport for illegally using Philippine travel documents to leave the country. Five Filipino escorts were reportedly with 177 Indonesians and 10 Malaysians who attempted to pass themselves off as Filipinos travelling to Saudi Arabia as Filipino Hajj pilgrims.

The pilgrims were about to board a Philippine Airlines flight when stopped. Issued special documents from the Philippine government, each pilgrim reportedly paid travel agents in Indonesia between $6,000 and $10,000 for travel documents and arrangements to go on the mandatory Holy Pilgrimage through the Philippines.

Then there was, also in 2016, the allegation that the production of e-passports, under a 10-year contract with state-run APO Production Unit starting October 2015, was overpriced by as much as P10 billion. The claim was that passports were being sold at a price higher than what should be. This was after the same APO was caught in a controversy with a plunder suit against officials who approved allegedly questionable payments of millions in sales commissions to “sales specialists” from 2011 to 2015.

And then, just early this month, 23 “fixers” selling passport appointment slots for as much as P10,000 each were arrested in separate operations in southern Metro Manila. The suspects were collared in entrapment operations at Gate 3 Plaza in Taguig City; in Libertad, Pasay City; and at Yah Suy travel agency, which was just across the DFA Aseana office at the corner of Macapagal Ave. and Bradco St. in Parañaque City. There were no such fixers until the passport appointment system was taken over by APO.

Obviously, some unscrupulous syndicates have been taking advantage of the change in the passport appointment system, the change in passport printing supplier, and the change in government officials to conduct criminal activities. Meantime, legitimate passport applicants have been enduring delays in applying for or renewing a passport.

In a congressional hearing just last week, ex-DFA secretary Perfecto Yasay said the P38.53-billion, 10-year electronic passport contract between the government and its official passport printer, state-run APO, is grossly skewed against the government and is more in favor of a private printing company tapped by APO as its joint venture printing partner.

Yasay questioned the venture and claimed to have lobbied for the return of passport printing to the Bangko Sentral ng Pilipinas (BSP). This was after noting that the state-run APO Production Unit “was grossly ill-equipped, (and) did not possess the technical capability to print e-passports.” To fulfill its contract with the DFA, APO needed to partner with a private printer.

The change in printer, from the BSP to APO, occurred during the Aquino administration, after the DFA sent a letter of inquiry to all recognized government printers (RGPs) on Feb. 24, 2014 for the supply of e-passports. In March that year, the BSP informed the DFA that it was no longer interested in undertaking the job. Prior to this, the BSP had been producing passports for decades. The DFA’s printing contract with the BSP expired in January 2015. Thus, the contract went to APO, a government-owned and -controlled corporation as well as one of three recognized government printers.

Incidentally, other than passports, I believe that in 2014, APO also started undertaking the security printing of tobacco tax stamps. These stamps are put on cigarette packs, as required by law. While the BSP could have done this as well, both passport and tax stamp printing — both security printing jobs — ended up with APO at the government’s behest, during the Aquino administration.

Yasay claimed that APO entered into a Joint Venture Security Printing Agreement (JVSPA) in November 2014 with a private company, after acknowledging that it did not have the technological capability to print “highly sensitive” and “high volume” jobs that its private partner could deliver. I believe this contract was for the printing to tobacco tax stamps.

But Yasay also claimed that he suspected “an elaborate scheme” for the multibillion-peso contract for passport printing to eventually go to APO. When the DFA signed a memorandum of agreement with APO for the printing of e-passports, on Oct. 5, 2015, APO already had a private partner — the same one from 2014 for the tax stamps — that could provide it technical expertise.

My personal position on the matter has always been that security printing, whether for money or passport or tax stamps, should always be with the BSP. Even if this means the BSP will have to take on private suppliers. My thinking is that no other place can be more secure than where we print the country’s currency. Moreover, the BSP has its own printing facility.

I can only hope that Congress can propose measures that could allow the DFA to return passport printing to the BSP. The DFA can also consider investing in its own facility and equipment, with all procurement going through public bidding. After all, the DFA will never cease to print passports. And the same facility, while owned by the DFA, can be run and managed by the BSP for it.

Any existing arrangement for passport production and passport appointment should be reexamined to ensure that they fully comply with government procurement and auditing rules. No negotiated deals, no leases, and no joint ventures. And, as I have written previously, any review should be skewed towards ensuring complete transparency and accountability in the process, all with the aim of improving delivery of public service at best value to passport applicants.

 

Marvin A. Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com

Mining tax and TRAIN

“Government does not tax to get the money it needs; government always finds a need for the money it gets.”

— Ronald Reagan,
former US president

Under the Mining act of 1995 (RA 7942), mining firms pay, among others, an excise tax 2% of sales. For many years and decades, this has been deemed “too low” despite the presence of many other taxes, fees, royalties, mandatory contributions, obligatory community expenditures.

So under the new law Tax Reform for Acceleration and Inclusion (TRAIN), RA 10963, the mining excise tax has been raised from 2% to 4%. And this was a belated insertion because this idea was not present in both House and Senate bills before the Bicameral Committee meetings.

Now there is TRAIN 2 bill in Congress and the Department of Finance (DoF) has voiced out that it wants all tax reforms ratified by December 2018. The DoF wants a “comprehensive mining tax that will give the government a bigger share of miners’ revenues.” Translation: another round of mining tax hikes.

Philippine mining taxation is not exactly modest or low. Globally, it is somehow midway based on taxes, fees and royalties paid to the government, national and local. Or high if mandatory and obligatory expenditures for communities are included, like the Social Development Management Program (SDMP) that amounts to hundreds of million pesos yearly.

One international non-governmental organization, the Natural Resource Governance Institute (NRGI), produces an annual report called the Resource Governance Index (RGI) that measures how good or bad the governance of extractive industries are — oil, gas and mining (metallic and nonmetallic). The index is constructed using a framework of 149 critical questions answered by 150 researchers, drawing upon almost 10,000 supporting documents. Scores are on a scale of zero to 100 at each level of the index.

The RGI is composed of three components and several sub-components:

1. Value Realization — sub-components are licensing, taxation, local impact, and state-owned enterprises.

2. Revenue Management — national budgeting, subnational resource revenue sharing and sovereign wealth funds.

3. Enabling Environment — open data, political stability, control of corruption, rule of law, regulatory quality, government effectiveness, voice and accountability.

The RGI 2017 report was released last year covering 89 country-level assessments (in eight countries, both oil-gas and mining sectors were assessed). In the table below, I did not include countries in the oil-gas sectors, also low-score African, S. American countries after S. Africa, but I included low-score ASEAN countries to have a regional overview (see table).

Resource Governance

So in the overall score, the Philippines ranked 21st out of 89 country-assessments, it belonged to the top, which is good. In the component Value Realization, it scored a midway 55 and in sub-component taxation, it scored high at 60. Which means that the statement “Philippines mining taxation is low” is not correct.

In that report, I was surprised to see that there is a government-owned Philippine Mining Development Corporation (PMDC). It is not involved in actual mining exploration and extraction though, perhaps one of those white elephants among the remaining government-owned and controlled corporations (GOCCs).

Among the big state-owned mining firms in the world are Codelco (Chile, 2016 revenue was $11.69 billion), Erdenes Mongol (Mongolia, $1.25 billion 2016 revenues) and Antam (Indonesia, $680-million revenues).

Aside from TRAIN’s tax-tax-tax in the sector, there are other proposals that seem idiotic and too interventionist. Like a bill in Congress, HB 5674, requiring a legislative franchise as prerequisite to the issuance of a Mineral Agreement or Financial and Technical Assistance Agreement (FTAA) for any mining project in the Philippines. Why bring in the legislators and politicians on top of national and local bureaucracies inspecting and investigating companies even before they can do mining exploration and extraction?

Then there are other bills declaring this and that province to be a “mining free zone and providing penalties therefor.” Example: HB 6727 for Nueva Vizcaya. Not all provinces have big mining potential and even in provinces which have such potential, not the entire province is resource-endowed.

Mining is either good or bad. If it is bad, people should stay away from using materials that use mining products so that they can reduce or avoid creating new demands for mining. Like cars, TV, mobile phones, computers, watches, electrical wires and cables.

If mining is good, then get the good practices in other countries and have them applied here. But blanket prohibitions like “no open-pit mining,” “no mining in this province,” “over-tax mining” should be avoided because they are based on emotions, not reason and economics.

Government should prioritize reason and economics in its legislation and implementation. Create values and consumer products from nature, create lots of jobs for the people, generate taxes for its social-economic programs.

 

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

minimalgovernment@gmail.com.

Woman, you have the power

I was bullied when I was in grade school. I was fat and had acne. In contrast, some of my female classmates had waists that were getting smaller and bust lines that were getting bigger. The thinking was (and still is) that if you’re thin, you’re pretty. I have never been “thin.” What does being “thin” mean? Does it mean having a thigh gap or a firm jawline? Wearing a size zero? All along, I thought those were the standards for beauty. Now, I realize I don’t ever want to be a size-zero, jawline-popping, thigh-gap-loving woman. Nonetheless, because of the bullying, I had self-esteem issues until college; sometimes, they still bother me.

Tyra Banks changed my life; she helped me get through the awkward phase of puberty. She used to be a Victoria’s Secret model. She had been rejected many times by modeling agencies until she had the opportunity to model in Europe. After that, she became big in the modeling industry. But back then, being thin was in, and those days were not her shining days. Yes, she was appearing in big modeling shows and on billboards. But people, most especially women, admired her more when she started her show, America’s Next Top Model.

Tyra started fighting for women’s rights. She told stories of how the modeling industry was pressuring her to be thin. On the way to becoming a household name and big TV personality, she empowered women and showed them that being a size zero wasn’t necessary to be beautiful. On Instagram, she asked women to remove their makeup and send “smize” (smiling with your eyes) selfies. She posted these selfies and told the women that they don’t have to try too hard to look pretty.

Tyra has been through abusive relationships. According to her, the worst one was not about physical abuse but emotional abuse. She says she has become stronger since then.

Now you can see different sizes and body shapes of women modeling and empowering each other. I am not a fan of the Kardashians, but they sure know how to carry those large hips and still manage to walk in high heels while pregnant. It’s a good thing that women of my generation are fighting more. Sure, we still lack push especially here in our country, but we are definitely making our voices heard. One issue we should address is sexual harassment.

In 2016, Quezon City became the first city in our country to penalize street-level harassment of women with its Anti-Catcalling Ordinance. Thus, people who stalk, make offensive gestures (whether with their mouths, hands, or bodies), or greet women on the streets with comments such as “Hi, ganda!,” “Uy, sexy!,” or “Smile ka naman, ate,” can be penalized with fines or jail time.

This law complements national laws that protect women, including the Anti-Sexual Harassment Act of 1995, which is defined as “committed by an employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, requests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said Act.” We also have Republic Act No. 9710, or the Magna Carta of Women, which recognizes, protects, fulfills, and promotes women’s rights.

The Anti-Sexual Harassment Act of 1995 is limited to workplaces, schools, and training environments. However, sexual harassment cases can happen anywhere. Thus, Senator Risa Hontiveros last year filed Bill No. 1326, or “An Act Defining Gender-Based Street and Public Spaces Harassment, Providing Protective Measures, and Prescribing Penalties Therefor, and for Other Purposes.” The bill contains provisions for harassment in schools, streets, public-utility vehicles, and privately owned spaces that are open to the public.

However, despite the number of laws enacted, preventing harassment should start at home — and in school.

After having watched a series of #ThatsHarassment videos produced by Friends actor David Schwimmer, I believe that women still do not have enough knowledge of sexual harassment and do not have enough courage to act on it. I myself didn’t know that “small” acts of harassment are still indeed forms of harassment. Anything that harms a woman physically, mentally, and emotionally is wrong. We should eliminate our trait of being matiisin, of suffering in silence. We should realize that we have the power to speak out.

I work in a university, which has rules on harassment. I should ensure that these rules are strictly implemented so that the employees and students feel safe in what most of them consider as their second home. And starting this National Women’s Month, I commit to advocate through our social media accounts and university website the need for our students to respect women and indeed, both genders, so that they can become good leaders.

 

Abegail H. Cayco is an MBA student at the Ramon V. Del Rosario College of Business of De La Salle University. She is the assistant to the Vice-President for Marketing of Arellano University. She wrote this essay for her class in Lasallian Business Leadership, Ethics, and Corporate Social Responsibility during her first term in the MBA program.

abegail_h_cayco@dlsu.edu.ph

Expert: Withdrawal from ICC to make PHL ‘pariah’

THE PHILIPPINES’ withdrawal from the Rome Statute, a treaty which created the International Criminal Court (ICC), will make the country a “pariah” state, an expert said.

The chief legal counsel of President Rodrigo R. Duterte on Wednesday issued an unsigned statement by Mr. Duterte saying “the Philippines is withdrawing its ratification of the Rome Statue effectively immediately,” referring to the 1998 international proclamation establishing the ICC.

Sought for comment about this development, professor Renato C. de Castro of the International Studies Department of De La Salle University (DLSU) said: “You cannot simply withdraw unless you have the concurrence of the Philippine Senate.”

“We will become a pariah,” added the professor, who is also a trustee of the Stratbase ADR Institute.

The Philippines became a party to the statute in 2011, according to the United Nations’ (UN) website, following the Senate’s concurrence that year.

Mr. Duterte’s statement, as issued by Chief Legal Counsel Salvador S. Panelo, said there was “a concerted effort on the part of the UN special rapporteurs to paint me as a ruthless and heartless violator of human rights who allegedly caused thousands of extrajudicial killings.”

It also said the ICC “prematurely made a public pronouncement of a preliminary examination” on a complaint against Mr. Duterte that he has committed “crimes against humanity” in his war on drugs. Malacañang itself disclosed this development in February.

“The attempt to place me under the jurisdiction of the ICC is (a) brazen display of ignorance of the law. The ICC has no jurisdiction nor will I acquire jurisdiction over my person,” Mr. Duterte’s statement said.

The statement further noted that Article 127 of the statute — on a state’s withdrawal taking effect only a year after the date of receipt by the UN Secretary-General of the said notice to withdraw — “is not applicable…for the reason that there appears to be fraud in entering such agreement.”

“The Philippines…was made to believe that the principle of complementarity shall be observed, that the principle of due process and the presumption of innocence as mandated by our Constitution and the Rome Statute shall prevail; and that the legal requirement of publication to make the Rome Statute enforceable shall be maintained,” Mr. Duterte said in his statement.

But Mr. De Castro said the Philippines cannot simply withdraw from the treaty, “because it has been concurred to by the Senate.”

“So, it also requires the consent of the Senate. The Senate came out with a resolution that all agreements that had been concurred to by the Senate requires that the Senate has to be consulted. That’s the first legal obstacle it faces,” he said.

On the other hand, Senate President Aquilino Martin L. Pimentel III said there is “no” need for the Senate’s revocation of the treaty.

“The power belongs to the President. We are back to the status where we are not a member. Now that we’re withdrawing, we’re back to the situation that the treaty terms are not part of the law of the land,” he added.

Senate Minority Leader Franklin M. Drilon also agreed that the Senate cannot step in the administration’s move to withdraw from the statute.

As stated in the treaty’s rules, only a state — not a parliament or a political party — can withdraw from the ICC.

But Mr. Drilon also noted that the Philippines’ withdrawal from the treaty would not have any effect on the case against Mr. Duterte.

“That is the rule. The ruling as to the continuation of the investigation will be ruled upon by the court itself. I’m sure the government will assert that it is no longer bound by the statutes. That is a legal issue which will now be resolved by the court,” Mr. Drilon said, also citing Article 127 of the statute.

Also, according to Mr. Drilon, there is no existing resolution that requires Senate’s concurrence in all treaty withdrawals.

“I have tried to introduce a resolution before, in February of last year, where I filed Senate Resolution 289, a resolution expressing the sense of the Senate that the termination of or withdrawal from treaties and international agreements concurred in by the Senate shall be valid and effective only upon the concurrence by the Senate. I filed the resolution and it was signed by the majority of the senators; unfortunately, I think it was Senator Manny Pacquiao who objected to it, so it was not passed,” the lawmaker explained. — Arjay L. Balinbin with a report by News5/interaksyon.com

House OK’s on 2nd reading bill postponing barangay, SK polls

By Minde Nyl R. dela Cruz

THE BILL seeking to postpone the synchronized barangay and sangguniang kabataan (SK) elections from May 14 to Oct. 8 this year has hurdled second reading in the House of Representatives.

House Bill (HB) 7378 is a consolidation of four bills authored by Surigao Del Sur Rep. Johnny Ty Pimentel (HB 7072), ANAC-IP party-list Rep. Jose T. Panganiban, Jr. (HB 7128), Oriental Mindoro Rep. Reynaldo V. Umali (HB 7167), and Samar Rep. Edgar Mary S. Sarmiento (HB 7217).

Mr. Panganiban cited in the explanatory note of his original proposal the anticipated “referendum or plebiscite over the impending debate on amending or revising the 1987 Constitution” as the reason for postponing anew the elections.

But ACT Teachers party-list Rep. Antonio L. Tinio, during the interpellation, said this was baseless.

“Kaya raw Oktubre, para isabay sa plebiscite. Eh ’yung plebiscite na ’yon, drawing lang….Ibig sabihin, Mr. Speaker, pwedeng dumating ang Oktubre, hindi pa handa ang plebesito, ay baka ipaurong ulit ito,” Mr. Tinio said. (Apparently, they wanted the elections in October for the plebiscite. But that plebiscite is just a projection… It means, Mr. Speaker, that should October come and the plebiscite is not yet ready, the election could be postponed again.)

In response, CIBAC party-list Sherwin N. Tugna, chair of the House committee on suffrage and co-author of the consolidated bill, said: “[T]he proposed postponement of the barangay elections to Oct. 8, 2018 with the corresponding possibility of plebiscite will be beneficial to the country if in case a Charter change will be approved because it will save the government of conducting a barangay and SK elections and a plebiscite on two different occasions.”

Should the measure be enacted into law, this will be the third time the barangay and SK elections will be postponed.

For their part, senators of the opposition Liberal Party said postponing the elections would lead to a no-election scenario in May 2019, the scheduled midterm elections.

Senate Minority Floor Leader Franklin M. Drilon said: “Ang pagkilos na ito ng Kamara ay patunay lang ng aking unang binanggit na talagang may plano silang ipagpaliban ang eleksyon sa 2019 para mapalawig ang kanilang termino.” (This move by the Congress is a proof of my earlier pronouncements that there is really a plan to postpone the 2019 elections to extend their terms.)

Senator Paolo Benigno Aquino IV, who co-authored and co-sponsored the SK Reform Law, said that “[t]here is no initiative in the Senate and no reason to postpone the Barangay and SK elections again.”

MWSS flags lack of sewerage coverage in Metro Manila

By Victor V. Saulon Sub-Editor

THE Metropolitan Waterworks and Sewerage System (MWSS) is asking the help of the Department of Environment and Natural Resources (DENR) in solving the low sewerage coverage in Metro Manila, which the agency’s head described as a problem worse than the Boracay environmental issue.

“MWSS is in talks right now with the DENR to try to find a way to assist, to convince or find a solution to increase the sewerage coverage of Metro Manila,” Patrick Lester N. Ty, MWSS chief regulator, told reporters.

Mr. Ty said Metro Manila’s two water concessionaires Maynilad Water Services, Inc. and Manila Water Co. are having a hard time convincing residents to have their septic tanks cleaned. The companies offer desludging services without extra cost to their customers.

He also said the water concessionaires are having a problem with local government units (LGUs) in obtaining the necessary permits to build sewer lines and sewage treatment plants.

“MWSS is part of a committee that is talking to the DILG (Department of Interior and Local Government) and other government agencies to assist the concessionaires as fast as possible,” he said, adding that he was hopeful that the public would understand the inconvenience caused by construction activities.

“The second problem is the public at large,” he said, noting that many are not connected to sewer lines.

“Every five years, our concessionaires will desludge our septic tanks,” he said.

“But one-third of the people asked, they decline or waive this service. They don’t want to allow the concessionaires to desludge because it’s inconvenient for them,” he said.

Sometimes, residents build structures over their septic tanks, making desludging difficult, Mr. Ty said.

He said the contents of septic tanks go into the ground water and other water ways, polluting our water and contaminating the environment.

Mr. Ty said MWSS is coordinating with the DILG and LGUs to urge them to pass ordinances that will force the public to have their septic tanks desludge.

“If the LGU is lax, like what happened in Boracay, that’s the problem we will be facing,” he said.

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