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Business groups support separation of PPA commercial, regulatory functions

REUTERS

BUSINESS GROUPS and members of the Joint Foreign Chambers (JFC) said they support a Senate bill that will separate the commercial and regulatory functions of the Philippine Ports Authority (PPA).

The JFC, in a statement on Wednesday, said the business groups and chambers sent a joint letter to Senator Mark Villar on Tuesday seeking a counterpart Senate bill to House bills 1400 and 8055.

“The proposed bill can be understood by the simple logic that an examiner cannot also be the examinee,” according to the letter.

They said since the PPA was created in 1974, its regulatory and development functions “have been a source of conflict of interest for the agency’s functions.”

“While it has long been established as the policy of the state to avoid such conflicts of interest, PPA’s case, seemingly, did not catch the attention and scrutiny of previous Congresses,” it added.

A policy brief published by the JFC and business groups had recommended the passage of a law that will create Philippine Ports Corp. (Philports), which will handle the development, management, and operation of public ports.

The policy brief also recommended the transfer of PPA’s regulatory functions to the Maritime Industry Authority (Marina), which is currently responsible for promoting the maritime industry and regulating shipping enterprises.

The groups said that reports and studies for so long “have discussed inefficient management of Philippine ports.”

“Complaints of patrons and users of ports about low service levels, inefficient port operations, and increasing port charges have been reported,” according to the letter.

“At the same time, the role of sea transport has become increasingly important in the nation’s strategy to maintain high levels of economic growth,” it added, citing the success of the roll-on, roll-off system.

They added that shipping is still the top choice for trade as it is too expensive to move most cargo by plane, which means that improving the country’s sea transport will increase its competitiveness and output in local and foreign trading networks.

“Based on such considerations, we believe it is timely and relevant to separate the regulatory and development functions of PPA,” the letter read.

“(This is) not only to abide by the long-established State policy against conflict of interest, but also to allow the agency to focus on improving port operations, while Marina will assume the regulatory functions over ports currently handled by the PPA,” it added.

Asked for comment, the PPA had yet to reply at the deadline. – Justine Irish D. Tabile

BoI approves P125-million steel frame module project

THE Board of Investments (BoI) said on Wednesday that it approved a P125-million project that will produce steel frame modules for structural building system.

The project will be located in Taguig City and operated by Accutech Steel and Service Center, Inc.

Accutech will establish a new production line for steel frame modules or panels, to be manufactured from slit rolls of galvanized cold-form steel (CFS).

“(The) project stands out as highly technical, utilizing computer-aided and controlled processes for project management, structural design, and engineering,” the BoI said.

The modules are used in the construction of houses, medium-rise buildings, factories, warehouses, and other structures.

Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo said CFS frames, a technology new to the Philippines, are in use in the US, Australia, and New Zealand.

“We are forging ahead with groundbreaking investment opportunities in the Philippines. This project heralds a revolutionary chapter in our construction industry, showcasing cutting-edge innovation,” Trade Secretary and BoI Chairman Alfredo E. Pascual said.

According to the BoI, Accutech’s project will help the construction industry improve in terms of cost, speed, and sustainability.

“This is the first project approved under Tier III of the Strategic Investment Priority Plan (SIPP) since it falls under ‘highly technical manufacturing and production of innovative products,’” the BoI said.

The Department of Science and Technology – Research and Development endorsed the project, noting that it represents the “commercial implementation the DoST’s Smart Manufacturing for Rapid Technology in Housing Construction program.”

Accutech will be entitled to income tax holidays (ITH) for six years and duty exemptions on imports of capital equipment, raw materials, spare parts, and accessories for a maximum of 12 years.

After the six-year ITH, Accutech will be eligible for enhanced deductions for five years. — Justine Irish D. Tabile

POGOs: Stay or go?

POGO, POGO and more POGO stories seem to be flooding everyone’s news feeds. As the troubled industry generates news that ranges from controversial at best to illegal at worst, it would be good to know more about POGOs and how they affect us. The short answer is — in more ways than we may realize.

POGOs or Philippine Offshore Gaming Operators (now going by the name Internet Gaming Licensees), offer gaming in the Philippines to virtual customers placing bets online. E-casinos and sports betting sites are types of POGOs. However, contrary to popular belief, POGOs do not actually cater to players or bets placed within the Philippines. Bets and payouts are made overseas through the operators’ chosen financial institutions. Limiting the players to foreigners ensures that Filipinos are protected from the negative effects of gambling. In fact, while Republic Act (RA) No. 11590 (the law taxing POGOs) recognizes legal forms of gambling, including offshore gaming, it declares that such a recognition cannot be construed as the State endorsing such activity.

POGO licenses are mainly issued by the Philippine Amusement and Gaming Corp. (PAGCOR), which has a legal mandate to license games of chance, card games, and number games, to generate revenue for the government’s socio-civic and national development programs and help promote tourism. In the past, freeport authorities like the Cagayan Economic Zone Authority (CEZA), the Aurora Pacific Economic Zone and Freeport Authority (APECO) and the Authority of the Freeport Area of Bataan (AFAB) were granted, under their respective charters, the power to operate or approve licenses to operate gambling businesses, including POGOs. However, this power has since been curbed by RA No. 11590.

Currently, there are two main types of offshore gaming licensees in the Philippines. They are Philippine-based POGO Licensees or Foreign-based POGO Licensees. Foreign-based POGO Licensees must have an appointed Local Agent which has to be PAGCOR-accredited. POGO sites in the Philippines must comply with PAGCOR regulations — for instance, they must not be in a residential area, and must have a maximum floor area of 25,000 square meters.

The Philippines started regulating POGOs in 2016. It was seen as a new source of revenue by the then administration, subject to regulation by gaming regulators and operators, PAGCOR and other mandated economic zones. On Sept. 22, 2021, RA No. 11590 otherwise known as the Act Taxing Philippine Offshore Gaming Operations, was signed into law, amending the Tax Code to include sections on taxing POGOs. Notable provisions are the corporate income tax of 25% on non-gaming revenue, final withholding tax of 25% on the gross income of alien employees, and gaming tax of 5% of their gaming income.

In 2023, P5 billion in PAGCOR revenue came from legitimate POGOs, leading PAGCOR to take the position that the industry helps provide jobs and livelihoods.

However, POGOs have again recently been attracting controversy for illegal activities conducted within their premises. Residents near POGO establishments have also expressed alarm about the establishments serving as breeding grounds for crime and human rights violations. Immigration violations are also a concern with foreign nationals employed by POGOs apparently illegally entering and residing in the Philippines. Add to these the potential national security concerns, many are now calling for a total ban of POGOs.

Nevertheless, PAGCOR reiterates that licensed POGOs are legal. It stresses that entities must go through a rigorous licensing process and satisfactorily demonstrate their fitness to hold such licenses like any other business. They are also closely monitored by the regulator.

PAGCOR has released a revised regulation for POGOs known as the Internet Gaming Licensing Regulations, which have the aim of strengthening and maintaining the highest standards of integrity for POGOs. The regulations took effect on June 12, 2023. Significant provisions require that licensees must have a capital of P100 million, of which P25 million must be paid up. Licenses are also valid for only two years and are site specific.

It appears, however, that the new rules have not managed to cull questionable activities. As such, on Sept. 19, 2023, the Senate Committee on ways and means issued Committee Report No. 136 calling for a total ban of POGO as a crime-prevention measure. In fact, as early as 2022, a cost-benefit analysis conducted by the Department of Finance (DoF) found that costs associated with enforcement and immigration relating to POGOs resulted in a net cost of about P3.3 billion to P14 billion annually.

On May 21, Senator Sherwin T. Gatchalian, filed a bill seeking to outlaw and prohibit offshore gaming operations, noting the industry’s involvement in human trafficking and scams. The bill seeks to repeal RA No. 11590 which effectively legitimized POGOs by amending the Tax Code. On June 5, 2024, Senator Anna Theresia N. Hontiveros expressed her support for a total POGO ban, citing national security concerns and the industry’s connection to money laundering. Recently, Rep. Francisca L. Castro filed House Bill 10525 or the Anti-POGO Act of 2024, which calls for licenses of current operators to be revoked and criminalizes their operations, citing the crimes associated with the industry such as murder, illegal recruitment, prostitution, illegal detention, inhumane labor practices and bribery of immigration officials.

After all is said and done, the latest commotion involving POGOs  might just be the wakeup call to further examine the legal and social issues brought in by the industry that will allow us to finally answer the question: stay or go?

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

 

Vhalerie Buluran-Reyes is a senior associate at the Tax department of Isla Lipana & Co., the Philippine member firm of the PricewaterhouseCoopers global network.

vhalerie.buluran-reyes@pwc.com

Stop harassing Philippine vessels in waterway, US envoy tells China

PHILIPPINE COAST GUARD FILE PHOTO

By John Victor D. Ordoñez, Reporter

THE UNITED STATES Embassy in Manila on Wednesday urged China to stop harassing Philippine vessels trying to deliver food and other supplies to a military outpost in the South China Sea, days after a standoff with Chinese forces that has prompted calls for de-escalation.

“We urge the People’s Republic of China to cease harassment of Philippine vessels lawfully operating within the Philippines’ exclusive economic zone,” US Ambassador to the Philippines Mary Kay L. Carlson said at a media conference on regional issues near the Philippine capital.

China should “end its interference with the freedoms of navigation and overflight of all states lawfully operating in the region,” she added.

“When the United States sees our partners being bullied in their backyard, we speak up and we encourage others to speak up as well — and they are doing so,” the US envoy said.

The Chinese Embassy in Manila did not immediately reply to a Viber message seeking comment.

On the sideline of the event, Philippine Foreign Affairs Secretary Enrique A. Manalo told reporters the Philippines has filed a note verbale to China expressing concern over the June 17 standoff, in which bolo-wielding Chinese coast guard men threatened Filipino soldiers on a resupply mission to Second Thomas Shoal.

In his keynote address, the Philippine envoy said it is crucial to report developments in the South China Sea with complete accuracy amid tools such as artificial intelligence that may be used to distort facts.

“So-called alternate realities sometimes drown out the truth and adversely affect the public discourse,” he said.

“One such false narrative paints the West Philippine Sea as merely a stage for the great power rivalry in the region, that the Philippines is just a pawn in this game, and that we act only at the behest of another country,” he added.

Recent maritime run-ins between China and the Philippines, a US treaty ally in Southeast Asia, have made the highly strategic South China Sea a potential flashpoint between Washington and Beijing.

The United States has condemned China’s actions and reaffirmed its ironclad defense commitments against any attack on Philippine aircraft or vessels in the South China Sea under their Mutual Defense Treaty.

China claims almost the entire South China Sea, a conduit for more than $3 trillion of annual shipborne commerce, including parts claimed by the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

In 2016, a United Nations-backed tribunal in the Hague voided its claims for being illegal.

The Philippines under President Ferdinand R. Marcos, Jr. has filed 164 diplomatic protests against China as of Wednesday, 31 of which were filed this year, Foreign Affairs spokesperson Ma. Teresita C. Daza said in a WhatsApp message.

A Philippine Navy officer lost his thumb after the rubber boat he was in was rammed by Chinese coast guard men last week, according to the military. The Chinese Coast Guard also looted several rifles stored in gun cases, actions that military chief Romeo S. Brawner, Jr. said only “pirates” do.

Manila is trying to hold talks with China to discuss the sea dispute including the blocking of the June 17 resupply mission to BRP Sierra Madre, Mr. Manalo told senators on Tuesday.

He was referring to the World War II-era ship that the Philippines grounded at Second Thomas Shoal in 1999 to bolster its sea claim.

JOINT DEVELOPMENT
Meanwhile, international relations experts said the Philippines should negotiate with China for joint fishing and other development activities in disputed areas of the South China Sea to ease tensions.

“There should be more interactions in agriculture and fisheries,” Zha Daojiong, a professor of international studies at Peking University in China, told BusinessWorld on the sidelines of Wednesday’s conference.

“That’s a long-term solution. I think there should also be a compromise based on the assessment of costs,” he added.

In May, the Philippine Department of Foreign Affairs (DFA) said it had protested China’s yearly four-month-long fishing ban within disputed areas of waterway, which it said violates international law.

The ban, which started on May 1 and will end on Sept. 16, would worsen tensions at sea, it said.

The Philippines does not plan to engage in defense talks with China, Defense Secretary Gilberto C. Teodoro, Jr. told a Senate hearing on Tuesday that is looking into the June 17 incident.

On Monday, he said the Philippines would not announce the schedule of its resupply missions to the shoal.

China has issued a policy allowing its coast guard to detain people it deems trespassers in disputed areas.

China’s new policy, which the Philippine Coast Guard said is illegal, allows its coast guard to detain foreigners it suspects of violating its exit-entry rules including in disputed areas of the South China Sea for up to 60 days without a trial.

Foreign vessels may be seized, and foreigners detained if they are accused of illegal entry and exit, of helping others “to illegally enter and exit the country,” and of “endangering national security and interests.”

Suthad Setboonsarng, a former deputy secretary general of the Association of Southeast Asian Nations (ASEAN), said the Philippines should explore every option to ease tensions with China including a code of conduct and joint development areas.

“Some work, some do not. Take the one that works but it may take two or four years,” he told BusinessWorld.

China’s Foreign Ministry has said Beijing is willing to continue working with members of ASEAN including the Philippines to manage differences at sea and deepen sea-related cooperation.

The ASEAN and China have been in talks as far back as 2002 to craft the code.

Mr. Setboonsarng said a solution to the sea dispute is not apparent, and the parties have to explore avenues to resolve it.

PHL to deploy fiber optics, submarine cables this year

REUTERS

By Kyle Aristophere T. Atienza, Reporter

THE PHILIPPINES on Wednesday said it seeks to finish this year cable projects that would boost internet connectivity in parts of Luzon and in poor areas in the central and southern parts of the country.

This was after economic managers on Tuesday approved a wider digital infrastructure plan that seeks to bolster the digital economy and beef up defense against cyberthreats.

“This year, we are going to finish phases two and three of the National Fiber Backbone, which connects Metro Manila to Southern Luzon,” Information and Communications Undersecretary Jeffrey Ian C. Dy told a news briefing at the presidential palace.

“With this loan, we should be able to get submarine cables across the Visayas and then connect it to Mindanao,” he added, referring to official development assistance from the World Bank.

The country in June launched the National Fiber Backbone’s first phase, which covers 1,245 kilometers and is composed of 28 nodes from Laoag, Ilocos Norte north of the capital down to Roces district in Quezon City.

The National Economic and Development Authority (NEDA) Board on Tuesday approved the P16.1-billion Philippine Digital Infrastructure project, which complements the fiber backbone program, as the government seeks to connect more Filipinos to online markets and networks.

Under the project that will be financed through official development assistance from the World Bank, the government will set up more than 700 free WiFi sites mostly in Mindanao.

The internet penetration rate in many areas in Mindanao is below 17%, Mr. Dy said.

He said the digital infrastructure project is development-oriented since it prioritizes areas that are not commercially viable for telecommunication companies.

Private telecommunication companies do not have the appetite to boost their internet presence in areas with low internet penetration like the Caraga region in Mindanao, he said.

“Globe, PLDT and Smart wouldn’t bring their services there because the population will not be able to support payment of a commercial internet,” Mr. Dy said. “That’s why they say [this is] a developmental project.”

“When we are there and once we get the cable networks ready, then we can tie up with the local government units and make this available also for fiber,” he added.

The Department of Information and Communications Technology said the long-term digital project, which is expected to be completed by 2028, will encourage local businessmen to become internet service providers.

There’s a 1.38%-increase in the country’s gross domestic product for every 10% increase in internet penetration rate, he said, adding that internet connectivity boosts demand for e-commerce.

“Internet connectivity is a requirement nowadays for the movement of goods,” he said. “E-commerce is two ways — one is e-commerce for the suppliers and of course, e-commerce for the consumers.”

The digital economy accounted for 8.4% or P2.05 trillion of economic output last year.

Mr. Dy said there would be negotiations with the World Bank in the next few days to discuss the interest rate for the P16.1-billion loan. “We hope to start procurement by early next year.”

NEDA on Tuesday said the digital infrastructure project has five components such as a backbone network, a middle-mile network, an access network, network security and project management support.

A network operation center — a centralized location responsible for monitoring telecommunication or satellite networks — will also be established to ensure “the network is not being used for illegal activities.”

“It’s a mitigation of risk.”

Meanwhile, Mr. Dy said Congress should fast-track the approval of a bill that will mandate the private sector to report cyberattacks to the National Government.

“Singapore is only like 6 million people, but they are detecting approximately 18,000 attacks per year,” he said. “We are only detecting around 3,000 per year but we are 118 million Filipinos.”

Mr. Dy said the country has pursued information-sharing with allies to improve the detection of cyberattacks affecting both the public and private sectors.

The country in recent months faced hacking incidents targeting both government and private assets. The hackers were linked to Chinese entities.

The Chinese government has dismissed the allegations.

Mr. Dy said there have been reports in other countries including the United States and the United Kingdom indicating that Chinese actors, but not necessarily the Chinese government, are active in hacking government assets.

He said the best defense against cyberattacks linked to foreign actors is transparency. “They are operating in the dark and we can’t catch them because laws are jurisdictional.”

Tondo slum reserved for housing program

PHILSTAR

THE PRESIDENTIAL palace has issued a proclamation reserving a slum area in the district of Tondo, Manila for development under the government’s housing program.

The June 21 proclamation reserved a portion of land in Tondo, Manila identified as Lot 4-A, Csd-00-003715, for the Department of Human Settlements and Urban Development’s township development projects.

An inter-agency committee composed of the Human Settlements and Environment departments and city government of Manila will issue the rules that will enforce the proclamation.

In 2020, there were 654,220 people living in Tondo, the largest of Manila’s 16 districts in terms of size and population.

Tondo was the pilot site of the government’s food stamp program launched last year, with more than 2,000 beneficiaries.

In an executive order (EO) last year, Mr. Marcos declared the Pambansang Pabahay Para sa Pilipino (4PH) a flagship program of the government. Under 4PH, the government will build a million housing units yearly until 2028.

The order allows the Human Settlements department to identify national and local government lands for housing, including new townships and estates that will be developed with the help of local governments.

It mandated government entities including state corporations and local governments to conduct an inventory of the lands they own and administer, and submit a complete list to the agency.

“The inventory of lands shall include government-owned idle lands or lands that have not been used for the purpose for which they have been originally reserved or set aside for at least 10 years, and on which no improvements have been made by the owner as certified by the concerned local government unit,” according to the order.

It also tasked the Land Registration Authority to help prepare the inventories by providing a list of titles.

Pag-IBIG Fund, a government-owned and controlled corporation, released a record P28.09 billion in housing loans in the first quarter. — Kyle Aristophere T. Atienza

Gunmen fire at Maguindanao hall

MAX KLEINEN-UNSPLASH

COTABATO CITY — Moro gunmen on Tuesday fired assault rifles at a village hall in Bialong, Shariff Aguak in Maguindanao del Sur and stopped a convoy of local officials out to deliver relief supplies to villagers.

A group led by a commander from the 118th base command of the Moro Islamic Liberation Front was behind the atrocities that caused panic among innocent villagers, officials of the Maguindanao Provincial Police Office and units of the Army’s Sixth Infantry Division in Shariff Aguak told reporters on Wednesday.

The gunmen opened fire on the barangay hall in Bialong, causing villagers to run for their lives. Displaced Bialong residents said the group is hostile to their village chairman.

Shariff Aguak Mayor Akmad A. Ampatuan, Sr., who was supposed to hold an outreach mission in Bialong, stopped government soldiers and policemen accompanying him from responding to the provocation to avoid displacing more villagers. — John Felix M. Unson

Smuggled frozen goods seized

BW FILE PHOTO

THE BUREAU of Customs (BoC) has seized smuggled agricultural products in Kawit, Cavite worth P100 million.

“This initiative was supported by a mission order and a letter of authority to inspect three warehouses suspected of storing illegally imported agricultural products without payment of correct duties and taxes,” it said in a statement on Wednesday.

During the operation, its team discovered about five container loads of illegally imported frozen agricultural goods stored in the unregistered facility, it said.

In a separate statement, the bureau said it also inspected currency declarations at the Ninoy Aquino International Airport (NAIA) on June 25.

It said it apprehended two Korean nationals with an undeclared 80 million won (P3.4 million). — Luisa Maria Jacinta C. Jocson

Power firms told to prepare for rains

PHILIPPINE STAR/MIGUEL DE GUZMAN

  

CONGRESSMEN on Wednesday urged electric generation and distribution companies to ensure their grids are structurally sound to prevent power failure during the rainy season.

Power companies should also formulate plans to prevent and mitigate brownouts caused by heavy downpours, which the lawmakers said disrupt economic productivity.

“Our energy infrastructure has to be resilient,” Zambales Rep. Jefferson F. Khonghun said in a statement. “Any weakness in our power grid could lead to severe consequences for our people and the economy “Power companies must assure us that they have contingency plans in place.”

The country’s grid infrastructure should be able to withstand torrential rains caused by La Niña, ensuring uninterrupted power generation and distribution services to Filipinos, Party-list Rep. Ramon Rodrigo L. Gutierrez said in the same statement. — Kenneth Christiane L. Basilio

Gov’t told to boost rice stock

Workers arrange sacks of National Food Authority (NFA) rice in Balagtas, Bulacan. — PHILIPPINE STAR/MIGUEL DE GUZMAN

THE GOVERNMENT should ensure it has ample supply of rice during the rainy season, a congressman said on Wednesday.

The National Food Authority’s (NFA) bugger stock should cover at least 15 days of national rice consumption, Party-list Rep. Wilbert T. Lee said in a statement.

“According to the NFA earlier, its nationwide rice inventory can only cover four days of [rice consumption] in times of disasters or emergencies,” he said in Filipino.

Under the Rice Tariffication Law of 2019, the NFA must keep a rice inventory for 15 to 30 days of national rice consumption or 480,000 to 960,000 metric tons of rice.

Mr. Lee said the NFA should buy palay at higher farmgate prices to “entice [farmers] to boost their production.”

The lawmaker has filed a bill that seeks to increase the price of rice bought by the agency from local farmers by as much as P10 per kilo. — Kenneth Christiane L. Basilio

Senate summons Bamban mayor 

PHILIPPINE STAR/JESSE BUSTOS

THE SENATE committee on women, children and family relations has summoned suspended Bamban Mayor Alice L. Guo and her associates after they failed to attend a hearing investigating their ties to illegal Philippine Offshore Gaming Operators (POGO) and alleged Chinese espionage.

At a hearing on Wednesday, Senator and committee Chairman Ana Theresia N. Hontiveros Baraquel moved to subpoena the mayor, whom she suspects is a Chinese national.

The Bureau of Immigration on Tuesday issued an immigration lookout bulletin against Ms. Guo and her associates over her alleged link to illegal POGOs in her town, an allegation that she has denied. — John Victor D. Ordoñez

Tuburan gets P120-M loan

BW FILE PHOTO

LAND BANK of the Philippines (LANDBANK) has approved a P120-million loan to the local government of Tuburan to boost its agriculture and infrastructure development.

The funds will be used to buy heavy equipment to speed-up the construction and maintenance of farm-to-market roads and other infrastructure projects, the state lender said in a statement on Wednesday.

The equipment will enhance the city’s road network and provide more than 1,500 local farmers and fishers improved access to technology and farm material inputs, while cutting transportation costs for their produce.

Tuburan will buy 10-wheeler dump trucks, 10-wheeler mixer trucks, wheel loaders, a hydraulic crawler excavator and a 10-wheeler self-loading truck. — Aaron Michael C. Sy