UNEMPLOYMENT should continue to ease in the coming years, as planned infrastructure development absorbs workers laid off by firms seeking to weather higher levies under current tax reforms, the government’s Budget chief told reporters on Wednesday.

Budget Secretary Benjamin E. Diokno said in a briefing that he expects joblessness in the country to maintain its downtrend, supported by the “Build, Build, Build” program of the administration of President Rodrigo R. Duterte that plans to spend more than P8 trillion on major infrastructure until 2022, when he ends his six-year term.

“We can build forever. Look at Singapore,” Mr. Diokno said, citing the “multiplier effect” of infrastructure projects and other initiatives like the jeepney modernization program.

Mr. Diokno made the remark when asked about layoffs announced by a soda producer, who cited organizational “restructuring” in the wake of additional taxes imposed on sugar-sweetened drinks starting January.

Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act that was signed into law in December last year, imposed an excise rate of P6 per liter on drinks containing caloric or non-caloric sweetener and P12 per liter on drinks containing high-fructose corn syrup. Instant coffee mixes and milk are exempted from this new tax.

All four to five tax reform packages — of which TRAIN is just the first — are projected to contribute about a fourth of the P8.13 trillion needed to make “Build, Build, Build” come true.

Philippine Statistics Authority data show unemployment eased to five percent in October last year from April’s 5.7%, even as the latest level was still worse than October 2016’s 4.7%.

Underemployment — involving those who want an additional job or more work hours — fell to 15.9% in October last year from April’s 16.1% and from October 2016’s 18%, reflecting improvement of job quality as the economy grows.

The Duterte administration is stepping up spending on infrastructure projects in hopes of spurring gross domestic product (GDP) growth to a faster 7-8% annual pace from this year to 2022, from last year’s 6.7%, 2016’s 6.9% and a 6.2% annual average in 2010-2015.

Infrastructure spending, under “Build, Build, Build,” will increase to P1.84 billion in 2022, equivalent to 7.3% of GDP, from a planned P1.098 billion or 6.3% this year.

This strategy is designed to cut unemployment rate to 3-5% by 2022 from 5.5% in 2016 and poverty incidence to 13-15% by 2022 from 21.6% in 2015.

In the same briefing, Mr. Diokno said the government has enough funds to support overseas Filipino workers (OFWs) who flew home from Kuwait. Mr. Duterte on Friday asked OFWs in Kuwait to leave the country “within 72 hours” after the body of a Filipina maid was discovered in a freezer at a house where she used to work. Mr. Diokno said funding for livelihood assistance to returning workers may be sourced from the budgets of the Department of Labor and Employment, the Department of Foreign Affairs and the Department of Social Welfare and Development. — Melissa Luz T. Lopez

By Victor V. Saulon
Sub-Editor

THE PHILIPPINES has asked the High Court of Singapore to “set aside” the first partial award granted to Maynilad Water Services, Inc. in July last year relating to the arbitration case between the government and the privately owned water utility, the listed companies holding stakes in the company said on Wednesday.

DMCI Holdings, Inc. and Metro Pacific Investments Corp. separately told the Philippine Stock Exchange that Maynilad received on Tuesday afternoon an e-mail from the Philippines’ Singapore counsel advising about the application at the Singaporean court seeking to set aside the award.

“While it has yet to be served copies of the summons and the Setting Aside Application, Maynilad is confident that there are no valid and meritorious grounds to challenge or set aside the Arbitral Award, and that the Republic’s latest efforts to frustrate and stonewall the enforcement of the Arbitral Award will fail,” DMCI and Metro Pacific said.

“Maynilad has already engaged Singapore counsel to ensure that the Republic’s baseless application is disposed of expeditiously.”

The July 24, 2017 award by the arbitral tribunal ordered the government to compensate the water utility for revenue losses from March 11, 2015 onwards resulting from the refusal of government’s Metropolitan Waterworks and Sewerage System (MWSS) to implement Maynilad’s rebased tariffs. It upheld the validity of Maynilad’s claim — amounting to P3.4 billion in March 2015-August 2016 — against the Philippines’ undertaking letter issued by the Department of Finance.

“The Arbitral Award upheld the validity of Maynilad’s claim against the Undertaking Letter issued by the Republic, through the Department of Finance, and ordered the Republic to compensate Maynilad for its revenue losses, commencing on 11 March 2015 onwards, resulting from the refusal of the [MWSS] to implement Maynilad’s relevant tariffs,” the companies said.

Sought for comment, the Office of the Solicitor General (OSG) declined to disclose details of the case, citing confidentiality of the proceedings. Erik S. Dy, spokesperson of the OSG, said the first partial award was granted by the Singapore International Arbitration Center. “We are requesting to have the order set aside,” he said, adding that the filing with Singapore’s high court was made on Feb. 9, 2018 through the OSG’s foreign counsel.

“Of course we will oppose kasi (because) we don’t see any reason that they can cite para ma-set aside ‘yun (to set aside the partial award),” Randolf T. Estrellado, Maynilad chief operating officer, told reporters on the sidelines of MWSS’s 140^th anniversary celebration on Wednesday.

“In fact they even have an issue on the timing because they only have three months to set aside the ruling. The original ruling came out in July.”

Mr. Estrellado said the OSG took as opportunity a correction in November of the awarded amount, which was reduced by about less than a P100 million.

“Nagkamali lang ng one month (There was an error for one month). Kinapitan nila (They held on to that interpretation). They used the November correction as the starting point for the three months,” he explained.

In the arbitral court’s ruling in July last year, the Philippine government was ordered to reimburse Maynilad a total of P3,424,690,000 for losses from March 11, 2015 to Aug. 31, 2016, but without prejudice to rights that the company may seek against MWSS for losses incurred from Jan. 1, 2013 to March 10, 2015.

The same tribunal also ruled that Maynilad is entitled to recover from the Philippines its losses from Sept. 1, 2016 onwards. It said in case a disagreement on the amount of such losses arises, Maynilad may revert to the tribunal for further determination.

Wednesday saw the stock price of DMCI gain 2.19% to close P14 apiece while that of Metro Pacific dropped 8.65% to finish P5.60 each, making it one of the biggest losers on Wednesday.

Maynilad holds the exclusive concession granted by the MWSS, on behalf of the government, to provide water and sewerage services in the west service area of Metro Manila. Metro Pacific owns 52.8% of Maynilad, while DMCI has a 25% indirect economic interest in the utility.

Metro Pacific Investments Corp., which has majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.

THE PHILIPPINES and China have agreed to set up a special panel to work out how they can jointly explore oil and gas in part of the South China Sea that both sides lay claim without having to address the explosive issue of sovereignty.

China claims most of the South China Sea, where $3 billion in sea-borne trade pass every year, and has competing claims in various parts of it with Brunei, Malaysia, Taiwan, Vietnam and the Philippines.

“It’s just the start of a process,” Philippine ambassador to China, Jose Santiago “Chito” L. Sta. Romana, told reporters late on Tuesday after diplomats from both sides met for the second time under a bilateral mechanism aimed at defusing long-standing maritime tensions.

He said the decision to form a working group on cooperating on energy was a “breakthrough.”

Forming an agreement for a joint project would be extremely complex and sensitive as both countries claim jurisdiction of the site of the oil and gas reserves, so sharing them could be deemed legitimizing the other side’s claim, or even ceding sovereign territory.

The idea of joint development was first hatched in 1986, but disputes and the sovereignty issue have stopped it from materializing.

But time is of the essence for the Philippines, which relies heavily on energy imports to fuel its fast-growing economy. That is complicated by estimates that its only domestic natural gas source, the offshore Malampaya field, will be depleted by 2024.

Mr. Sta. Romana said a second coordinating group was formed to address sovereignty issues and “to prevent any crisis from escalating.”

The Philippines in 2011 accused Chinese ships of harassing a survey vessel hired by Forum Energy Technologies, which won a contract to explore oil and gas in the Reed Bank, near the Spratly.

The Philippines went the Permanent Court of Arbitration in the Hague in 2013 to question that, among other bones of contention.

The tribunal’s 2016 ruling, which China refuses to recognize, included clarifying that the Reed Bank was within the 200 nautical mile exclusive economic zone of the Philippines and therefore it had sovereign rights to exploit resources there.

A senior Philippine official also said Southeast Asian countries and China would next month start negotiations on a long-awaited maritime code of conduct.

TROUBLE AT BENHAM RISE
But the Philippines on Wednesday said it would oppose what it said were attempts by Beijing to assign Chinese names to undersea features on part of Manila’s continental shelf on its Pacific Ocean coast.

“We object and do not recognize the Chinese names given to some undersea features in the Philippine Rise,” Presidential Spokesperson Herminio Harry L. Roque, Jr. said in a media briefing at Malacañan Palace, adding that the Philippine embassy in Beijing has already raised the concern with the Chinese government.

Mr. Roque said the issue would be raised with the International Hydrographic Organization that is responsible for assigning names to underwater features.

The area, which the United Nations designated in 2012 as within Philippine jurisdiction, is better known as Benham Rise. It is roughly the size of Greece and believed to be rich in biodiversity and tuna.

Senate Science and Technology committee chairman Senator Paolo Benigno A. Aquino IV said a public hearing on Feb. 26 will tackle this issue. — Reuters with inputs from Arjay L. Balinbin