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BoC to audit imports of products widely used during pandemic

PHILSTAR/MICHAEL VARCAS

THE Bureau of Customs (BoC) said it hopes to complete by year’s end an audit of products that saw a dramatic surge in demand due to the pandemic to check on whether importers are eligible to claim tax exemptions.

Vincent Philip C. Maronilla, Customs assistant commissioner heading the Post Clearance Audit Group, told BusinessWorld Sunday that the audit will cover goods that saw an increase in demand in the six months to June. The investigation will finish at the end of 2020, he said.

“(We audit mainly) for compliance (since) a lot of them are tax-exempt, but just want to make sure that they have proper permits kasi in demand goods naman ngayon mostly (because most of the in-demand goods) are the ones exempted by law in Bayanihan I and II,” Mr. Maronilla, who is also the bureau’s spokesperson, said over the phone Sunday.

He was referring to the two items of legislation passed to facilitate the containment of the pandemic and the economic recovery, formally known as the Bayanihan to Heal as One Act and the Bayanihan to Recover as One.

“(For the) compliance audit, (we will check) whether or not they were able to meet the requirements para ma-ensure din natin (to ensure) that even if we are granting tax exemptions, they are also complying with the rules,” he added.

He said the exempt goods that saw a surge in demand during the pandemic include medical supplies and equipment and personal protective equipment (PPE). He said the bureau will also look into compliance of importers of non-exempt goods like food and steel.

Republic Act (RA) No. 11469 (Bayanihan I) and RA 11494 (Bayanihan II) provide tax exemptions to crucial supplies and equipment imported during the coronavirus disease 2019 (COVID-19) pandemic.

Meanwhile, he said the bureau expects to raise at least P1 billion from this year’s round of audits on rice shipments between the third quarter of 2019 and June 2020.

Last week, Mr. Maronilla said the BoC found P1.4 billion worth of deficiencies in customs duties, penalties, surcharges, and interest by rice importers due to undervaluation of cargoes.

He said 47 out of 55 audited were found to have committed violations of Customs regulations.

The BoC launched the inquiry in August 2019 after the Federation of Free Farmers (FFF) warned the government may not meet its target collections since imported rice were being undervalued by traders to evade tariffs.

Tariffs imposed on imported rice were set at 35% for Southeast Asian grain value under Republic Act 11203 or the Rice Tariffication Law.

Rice tariff collections hit P11.036 billion in the seven months to July, up 4% from a year earlier.

Rice tariffs go towards funding the P10-billion annual budget of the Rice Competitiveness Enhancement Fund (RCEF), which was created by the Rice Tariffication Law. RCEF supports mechanization and other measures to allow farmers to better compete against imports. — Beatrice M. Laforga

Regulators to expedite permit process for small renewable projects

ENERGY REGULATORS said they are preparing to expedite the permit process for developers of small-scale renewable projects in off-grid areas.

To support electrification efforts, the National Renewable Energy Board (NREB) said it is working with the Energy Regulatory Commission (ERC) to make policy more investor-friendly.

“We’ve been working with ERC in developing a special set of rules for smaller-capacity RE (renewable energy) for off-grid (areas). At the minimum, a fast-track process for approval, (and) at best, maybe, just a reporting or a notice process. The low-hanging fruit there is a fast-track process with less documentation required,” NREB Chairperson Monalisa C. Dimalanta said in a recent webinar.

Small and large renewable power developers are both required to undergo the same process of acquiring permits from various government agencies to construct their generation facilities, which should not be the case, she said.

“Hopefully, we get to work at it at the ERC level, (and) there’s no need for legislation,” Ms. Dimalanta said in a virtual discussion with the German-Philippine Chamber of Commerce and Industry.

Two months ago, the Energy Virtual One-Stop Shop (EVOSS) went online. It was a platform created under Republic Act No. 11234 or the EVOSS Act, which streamlines the permitting process of all energy-related projects.

The platform specifically favors large renewable builders whose projects usually take two to seven years before approvals are granted. “For RE in particular, if the agency doesn’t approve your project within the permitted timeline under the regulations, then your permit is deemed approved,” Ms. Dimalanta said.

In June, the Energy and Interior and Local Government Departments issued a joint circular which requires all local government units to implement the EVOSS law, as well as to establish their own energy codes, energy sector committees that will implement policies and programs under their development blueprints, and local energy efficiency and conservation offices. They are also tasked to develop an incentive scheme for energy-efficiency project developers.

The National Electrification Administration (NEA),which is tasked to energize the countryside, has brought power to 123,726 rural villages, or 84% of its targeted 147,989 households, as of June. This equates to 13.85 million consumer connections to date.

This year, it has cut its electrification target to 635 sitios from 964 under its Sitio Electrification Program, as some of its funds were reallocated to the government’s pandemic containment effort. In the first half of 2020, it connected 209,781 households, 15% lower from a year earlier.

NEA said some 12,000 sitios or 1.7 million households remain without power.

For 2021, the government is setting aside P1.6 billion for the electrification program, good for connecting 1,085 villages. The amount is P5.9 billion less than the agency’s proposal. It is appealing for higher funds. — Adam J. Ang

House bill proposes major push to attract fintech firms

A BILL filed in the House of Representatives is seeking to attract financial technology (fintech) companies away from more crowded markets elsewhere in Asia.

House Ways and Means Committee Chairman Jose Ma. Clemente S. Salceda, representing Albay, said House Bill No. 7760, or the proposed Financial Technology Industry Development Act of 2020, will authorize the Bangko Sentral ng Pilipinas (BSP) to establish a Financial Technology Office (FTO) responsible for developing a Financial Technology Industry Roadmap, with the power to issue special investor resident visas for executives of foreign fintech firms.

The measure also allows the FTO to allow fintech firms to run pilot projects in small but deregulated markets, prior to broader launch.

“Make no mistake: We are in the game of (attracting) fintech investment. We have 74 million smartphone users who spend 10 hours a day on the internet. That is one of the biggest consumer markets for digital products in the world. For market-seeking firms, we are probably one of the most attractive,” Mr. Salceda said.

The bill defines fintech firms as those which use technology and innovation “to compete with or complement traditional financial methods in the delivery of financial services.” Some examples include virtual banks, online lending facilities, cryptocurrencies, and blockchain.

Mr. Salceda said foreign fintech companies are now looking for new host countries for their operations as “major centers of finance, such as Shanghai, are now saturated with other fintech companies.” He added that other financial centers, including Hong Kong, have imposed stringent laws on data management which hamper the sector.

On May 28, China passed a “wide-ranging” extradition law for Hong Kong which outlaws secession, “terrorism,” and other acts that endanger national security. It also allows Mainland security forces to freely operate in Hong kong. The new security law sparked protests over the alleged curtailment of basic freedoms. The law has also been widely opposed by the business sector because Beijing could interfere with data management.

HB 7760 authorizes the FTO, the BSP and the Department of Information and Communication Technology to hold an annual review of policy and infrastructure for data management to ensure that the government does “not excessively and unduly regulate data storage, transfer, and security among financial technology enterprises” and to ensure that the country’s data infrastructure meets the minimum standards required to develop a “sophisticated” financial technology sector.

“The bill is comprehensive enough to cover all the major concerns of the fintech sector. At the same time, there is enough regulatory leverage for the BSP,” Mr. Salceda said.

“Fintech is the future of money. I want the Philippines to be a leader in the area. If we are going to dream the future up, let’s dream big,” he added. — Kyle Aristophere T. Atienza

Exporters allowed to self-certify goods origin to access ASEAN perks

THE PHILIPPINES started implementing an ASEAN-wide exporter self-certification scheme that allows businesses to claim their own origin declaration for lower or no duties under the ASEAN Trade in Goods Agreement (ATIGA).

Beginning Sept. 20, the Philippines started using the ASEAN-Wide Self-Certification Scheme (AWSC), which means that exporters can issue their own origin declaration — certifying that their products meet the criteria used to deem that they have originated from a particular country.

Importers use such declarations for ATIGA preferential tariffs.

The trade department in a statement Sunday said that the scheme simplifies the origin certification procedure, and reduces transaction costs. Companies previously had to apply for certificates of origin at the Bureau of Customs for every shipment.

Exporters may now self-certify after applying for Certified Exporter Status at the Bureau of Customs.

“We are confident that this new scheme will facilitate trade and improve the ease of doing business for Philippine companies, especially for Micro, Small and Medium Enterprises (MSME),” Trade Secretary Ramon M. Lopez said.

  

“With the AWSC, it will be easier for our MSMEs to maximize the use of ATIGA and benefit substantially from the ASEAN Free Trade Agreement (FTA). This is especially important in the current situation as this removes the step where companies must apply for a Certificate of Origin with the BoC for each of their shipments,” he added.

The government last year implemented similar measures for exporters to the European Union, releasing guidelines for self-certification of origin to avail of lower tariffs under the EU’s Generalized Scheme of Preferences. — Jenina P. Ibañez

Computerizing accounting systems: COVID-19 spurs move to digitize

The Philippines remains under various levels of community quarantine due to the COVID-19 pandemic. Government and private offices are temporarily closed or maintain limited operations with alternative work schemes such work-from-home. These measures have naturally affected business operations and processes. There has also been a noted increase in the use of online selling platforms as companies and entrepreneurs try to continue or augment operations during the quarantine.

The transition to digital platforms has not been without compliance challenges. Businesses have experienced difficulties in issuing duly authorized invoices or receipts because of the expiration of the Authority to Print, the inaccessibility of invoices and receipts, or the near impossibility of mailing or sending them during the enhanced community quarantine (ECQ) from March 16 to May 31. This greatly limited sales and collection since these documents are vital for claiming deductions and input VAT.

To address this, the Bureau of Internal Revenue (BIR) allowed businesses to adopt work-around procedures such as electronically sending invoices and receipts during the ECQ, subject to certain guidelines and procedures in Revenue Memorandum Circular (RMC) No. 47-2020.

These circumstances and experiences highlight the importance of digitizing business operations and processes. It is certainly high time for businesses to adopt a computerized accounting system (CAS). For those with an existing CAS, this may be the opportunity to modify or enhance it to update bookkeeping, invoicing and accounting processes. One challenge though is that the BIR requires prior authorization or permit to use a CAS, computerized books of account (CBA) and/or its components.

Revenue Memorandum Order (RMO) No. 21-2000, issued on July 17, as amended by RMO No. 29-2002, issued on Sept. 16, required all taxpayers with a CAS or their components, to apply for a Permit to Use (PTU). The RMO also required taxpayers to apply for a new PTU for any system enhancement that will result in changes to the system’s release and/or version number.

PROCEDURE UNDER RMO NO. 21-2000, AS AMENDED
Under the RMO, all applications for CAS are to be generally filed by a company’s head office at the Large Taxpayers Office (LTO) or Revenue District Office (RDO) having jurisdiction over the head office.

The application will only be processed if the RMO requirements are complete. These include documentation on the functions and features of the application, system flow, process flow, back-up procedure, disaster and recovery plan, proof of ownership, reports, correspondences, receipts and invoices that can be generated from the system with a sample layout.

The application will then be evaluated and approved by a Computerized System Evaluation Team (CSET) at the BIR national or regional office. The evaluation will include a system demonstration showing actual use of the CAS.

Under the RMO, as amended, the PTU should be issued within 10 to 40 days, depending on certain conditions. In the experience of some taxpayers, however, the evaluation takes longer. The delay is usually due to the difficulty in scheduling the system demonstration and addressing issues identified by the CSET during the demonstration.

CENTRALIZATION OF CAS APPLICATIONS
In 2015, the BIR issued RMC No. 68-2015, creating the National Accreditation Board (NAB) composed of BIR officers from various divisions in the BIR National Office. The RMC directed that accreditation of cash register machines (CRM), point-of-sale systems (POS), and other sales machines/receipting software were to be processed at the BIR National Office level only through the NAB.

While RMC No. 68-2015 specifically covered the accreditation of CRM, POS, etc., the NAB also took on the responsibility of evaluating CAS applications of taxpayers registered under the RDOs.

Some would say that, as a result of the centralization, the scheduling of system demonstrations and evaluation of the applications took much longer because the national body was alone in handling all CAS applications of taxpayers under the RDOs. Others believe that this has contributed to a backlog of pending applications.

SUSPENSION OF REQUIREMENT FOR A PTU
Early this year, the BIR issued RMC No. 10-2020, suspending the requirements for a PTU. This was carried out to promote ease of doing business and more efficient government service delivery. The RMC also reverted the processing of CAS applications to the RDOs as well as simplified documentary requirements.

Specifically, all taxpayers with pending PTU applications (including those that had undergone system demonstrations) will be allowed to use a CAS, CBA, and/or their components, without the PTU, provided the relevant requirements are submitted to the Technical Working Group (TWG) Secretariat of the RDO or Large Taxpayer Office (LTO) where they are registered. These requirements include a duly accomplished and notarized Sworn Statement and various attachments (i.e., Summary of System Description, Commercial invoice/receipts/document description, and special power of attorney, among others); sample printouts of system-generated principal and supplementary receipts or invoices; and sample printouts of system-generated Books of Account.

Instead of the PTU, an Acknowledgment Certificate (AC) with a Control Number will be issued by the TWG Secretariat — within three working days from receiving the requirements. The Control Number should then be indicated on the system-generated principal and/or supplementary receipts/invoices. Taxpayers should be aware that a post-approval evaluation may be conducted to check compliance with revenue issuances. This can take place during a BIR audit or investigation.

For any system enhancement, modification and/or upgrade that results in a change of version number and/or systems release, the taxpayer is now only required to inform the TWG Secretariat where it is registered. This is done in writing accompanied by a matrix showing the comparative changes in the current and upgraded system.

The RMC specifically referred to taxpayers with pending PTU applications with the BIR. It is not clear if this simplified procedure is the same for new applications filed after its effectivity. Moreover, the RMC provides that the BIR release separate revenue issuances on the detailed procedures implementing the RMC and the post-approval evaluation check. Pending more succinct implementation guidelines, the RDOs and LTOs may interpret the RMC differently.

The issuance of RMC No. 10-2020 is one of the many steps taken by the BIR to achieve its plans for a more digitized tax environment, encouraging compliance from taxpayers by allowing them, in the meantime, to use their existing CAS without a PTU. This also gives them the opportunity to start preparing for the upcoming implementation of the mandatory e-invoicing and electronic sales-reporting requirement under the TRAIN Act in 2023.

RMC No. 10-2020 is certainly a welcome development for taxpayers particularly at this time when businesses may need to digitize to adapt and thrive during the pandemic. In the meantime, taxpayers eagerly await the immediate issuance of the implementing procedures to allow for greater clarity and a more uniform and effective application of the RMC. This would, once and for all, streamline the procedures for using CAS.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

 

Zorayda H. Panumpang and June Catherine G. Tañedo are Senior Directors from the Tax Division of SGV & Co.

A seat at the table

There is an important lesson to be learned from countries such as South Korea and New Zealand that are considered very successful in slowing the spread of COVID-19: They have high social cohesion, public trust in government, and government accountability.

These countries prove that consensus, trust, and accountability are absolutely necessary to win the war against COVID-19. The fourth necessity is the active participation of all sectors of society — the so-called “whole of society” approach — in this fight.

As early as March, individuals and civil society organizations (CSOs) realized this and formed the COVID-19 Action Network (CAN) as a common meeting ground to discuss and learn what we could do to stop the spread of COVID-19. CAN is an informal network of CSOs, the academe, and the private sector. CAN engages with the government at all levels — not to oppose but to help in decision making and hold the government accountable to the people.

CAN is able to bring different groups together to address common issues through its forums and bridge-building work. In partnership with the Galing Pook Foundation and the League of Cities of the Philippines, CAN organized several forums on local innovations to address COVID-19 that can be copied by any city or province. It has also sparked the development of risk communication guides and protocols for community care for LGUs, with the support of the Asia Foundation and the Alliance for Improving Health Outcomes (AIHO). Another member is the Citizens’ Budget Tracker (CBT), which is a community of over 60 volunteers tracking the COVID-19 Budget of the Philippines under the Bayanihan Act. CBT, together with the Right To Know Right Now (R2KRN) Coalition, got the National Privacy Commission to clarify that COVID-19 information on the Social Amelioration Program is public information, increasing transparency over the use of funds meant for the poor.

Mobility reform advocates banded together to establish the Move As One Coalition to advocate a safe, humane, and inclusive public transportation system in the country. Through a CAN Forum, they were able to get policy makers and government agencies to heed the call for more dedicated bike lanes, service contracting, and support for transport workers. The Move As One Coalition has since grown to 140 organizations with over 77,000 petitioners who have signed their call for reforms.

In a similar way, leaders of over 160 medical societies came together to form the Healthcare Professionals Alliance Against COVID-19 or HPAAC. They are the network of organizations of doctors, nurses, and other medical workers who called for a timeout in August to reassess the country’s COVID-19 strategy and discuss ways to improve the healthcare system. They engage the Department of Health, policy makers, and the private sector to develop occupational safety protocols and unified clinical algorithms for patient referral and care.

These developments would seem to show that the role of civil society is valued by our policy makers and leaders. Policy makers and government officials do take time to reach out and listen to proposals from civil society. But, they can do better at giving civil society a seat at the table — not to mention having more women — at the highest levels in the IATF and in regional decision-making bodies. This is already being done in cities like Pasig, Valenzuela, Lipa, Tabaco, and Iloilo.

Take the most recent case of the proposed easing of the one-meter physical distance rule in public transportation. As the government publicly debated on the Department of Transportation’s proposal, the HPAAC provided an evidence-based warning that a reduction in the one-meter rule could lead to a spike in transmissions and deaths. With two government agencies disagreeing on the proposal, it was left to the President to decide. Thankfully, the government listened to the healthcare experts and did not push through with the announced rule change.

The confusion and mess could have been avoided if stakeholders like HPAAC and the Move As One Coalition were an integral part of the decision-making process. By doing so, the government would be able to put forward evidence-based policies knowing it has the support of civil society and the private sector. What we are seeing now, however, is the government reacting to civil society and public opinion whenever a controversial policy is floated.

If the government truly wants a whole-of-society solution to COVID-19, it needs to do better at being inclusive of diverse views and approaches. It’s time to end kanya-kanya (to each his own) and replace it with “kaya natin ‘to” (we can do this).

HPAAC has launched a campaign calling on all Filipinos to ensure a safe and enjoyable Christmas by staying healthy and preventing the spread of the coronavirus. Their simple message — if we all do our part, we can be together with our loved ones this Christmas season. Kaya natin ‘to!

 

Zak Yuson is a co-convenor of the COVID-19 Action Network (CAN) Philippines and is a Fellow of Action for Economic Reforms.

Breaking out of Groundhog Day

Groundhog Day is one of my favorite films. The film is a fantasy comedy and tells the story of TV weatherman Phil Connors (Bill Murray) arriving in Punxsutawney, Pennsylvania to cover the annual Groundhog Day activities. Groundhog Day refers to Feb. 2 when the town celebrates the tradition of observing whether the groundhog emerging from his burrow foretells the arrival of spring or six more weeks of winter.

Connors hated the assignment and viewed the town with contempt. He wakes up in a motel room on Feb. 2 and goes about doing a perfunctory performance covering the day’s activities. However, after going to bed, he wakes up to find himself on the same day, which goes on and on in a sort of time loop. Realizing he’s on a time loop, Connors indulges in selfish, manipulative actions, including trying to seduce his TV producer Rita (Andie MacDowell), who turns him down.

Eventually, trapped in the time loop, Connors gets tired and depressed, engaging in suicide attempts. However, he keeps waking up on Feb. 2. Only when he becomes unselfish, using the loop to help people and to express his sincere love for Rita, does he break out of the time loop and wakes up on Feb. 3.

For the Lopezes — and the Filipino people — it must have felt like Groundhog Day when ABS-CBN was shut down by President Duterte and his congressional minions. The media giant was also shut down when martial law was declared in 1972 by former President Ferdinand Marcos, using the same rhetoric about going against the oligarchs.

Why do we keep reliving the nightmare? Why are the Filipino people trapped in a sort of time loop?

As I have said before, the causes of our time loop are the twin legislative landmarks of the Yellow Revolution: the 1987 Constitution and the 1988 Comprehensive Agrarian Reform Law (CARL).

On one hand, the 1987 Constitution restored pre-martial law electoral democracy, but on the other, it retained the protectionist provisions of the 1935 Constitution. While the people’s freedoms were restored, its economic freedoms were not. The protectionist provisions protected and nurtured monopolies in key strategic industries and in mass media. These protectionist provisions virtually guaranteed that the economic aspirations of the people would not be met compared to the Constitution’s political and democratic objectives.

These protectionist provisions, particularly those on public utilities, had a deleterious effect on the economy and on consumers. As protected monopolies, public utility companies passed on high prices and poor services to consumers. As strategic industries whose outputs are inputs to other industries, these protected monopolies made the economy uncompetitive and unattractive to investments.

The harmful effects on the public’s quality of life caused by the anti-foreign investment provisions of the Constitution laid the groundwork for a populist-fascistic Duterte to harness the people’s grievances and use them to win political points in denouncing the “oligarchs.”

For the Lopezes, these protectionist provisions have a bittersweet irony. Although they were initially passed to protect their businesses (power, telecoms, and media), in the long run, these came back to bite them. With its over-the-air franchise denied, ABS-CBN’s transitioning fully into the future with digital content is hampered by the unaffordability and unavailability of internet services in the country, a result of these protectionist provisions. The ABS-CBN’s use of Philippine Depositary Receipts (PDRs) to raise capital in foreign markets and Gabby Lopez’s dual citizenship also became issues because of the 100% Filipino ownership requirement in mass media enshrined in the 1987 Constitution.

As for the Comprehensive Agrarian Reform Law, the other landmark legislation of the Yellow Revolution, on one hand, it did succeed as an anti-insurgency political program (The CPP-NPA armed insurgency has severely waned with the diminishing struggle being waged by ageing leaders), on the other hand, it failed to increase agricultural productivity and reduce rural poverty. In fact, it did not increase agricultural productivity, it reduced it. As the study by the Canadian economists Tasso Adamapoulos and Diego Restuccia published in the prestigious National Bureau of Economic Research showed, the CARL caused land fragmentation to increase by 37% and reduce agricultural productivity by 16%. This meant that farmers became poorer after CARL.

The failure of the CARL to improve the lives of farmers and rural residents in the countryside also seeded the appeal of the populism and anti-oligarchic message of Rodrigo Duterte. Furthermore, the widespread poverty makes it easier for a politician like Duterte to channel the people’s frustrations, economic anxieties, and pessimism into a war against drug users and small-time drug dealers — the visible bad guys in street corners and community plazas.

The fact is that present socio-economic conditions will keep regurgitating a fascist-populist like Duterte. The Filipino people will be condemned to relive Groundhog Day again and again with a Marcos or a Duterte unless the evil twins of the protectionist provisions in the 1987 Constitution and the Comprehensive Agrarian Reform Law are removed or amended.

The first best solutions are undoubtedly to remove the foreign ownership restrictions in the Constitution and to remove the five-hectare retention limit in the Comprehensive Agrarian Reform Law. However, these seem to be politically infeasible presently. The administration has dissipated its political capital punishing its political enemies and pushing for non-solutions like federalism or RevGov.

The second best solutions are to pass the Public Service Act (PSA) Amendment to remove the telecommunications and transport industries from among those protected by the public utility provision in the Constitution and to pass a Debt Condonation law to reverse land fragmentation and enable land consolidation of agrarian reform lands via a vigorous rural land leasing market.

However, the PSA Amendment remains unacted upon in the Senate, the victim of unfounded fears of a Chinese take-over. In fact, the present lack of regulations and foreign investment vetting which the PSA seeks to address will make it easier for the Chinese to take over. (Foreigners already have effective majority ownership of the existing telcos using legal maneuvers.)

The politicians and the monopolists, however, should take heed that retaining these protectionist provisions will come back and bite them. Former President Benigno “Noynoy” Aquino III, protective of his mother’s legacy, killed an initiative by former Speaker Sonny Belmonte, who had the votes, to amend the economic provisions of the Constitution. That allowed poor telecom and transport services to fester and gave resonance to Duterte’s promise of “change is coming.” Ironically, therefore, former President Aquino seeded the anti-Yellow counter-revolution of President Duterte.

As for debt condonation, the country missed a historic opportunity when it was included in the Bayanihan II Act but was objected to by the administration on grounds of “moral hazard.” The administration gives out tax amnesties to tax evaders and cash transfers to poor, unemployed people, seeing no moral hazard in them, but it couldn’t imagine the government condoning the debt of farmers impoverished by the very restrictions imposed on them under the CARL.

For the Filipino people, they must realize that they aren’t condemned to relive their Groundhog Day, i.e. of reliving the déjà vu nightmare of having its democratic freedoms curtailed and its lives impoverished. They can do something about it. For the TV anchorman Conner, his selfishness and self-centeredness were causing the time loop. True love broke the time loop.

The pandemic will be a passing affliction for the Filipino people. However, the effects of the twin evils will not be. Not doing anything about these twin evils mean the Filipino people continuously experiencing toxic politics, bad governance, and deteriorating quality of life — our Groundhog Day — forever and ever. Is that the future we want?

 

Calixto V. Chikiamco is a board director of the Institute for Development and Econometric Analysis.

idea.introspectiv@gmail.com

www.idea.org.ph

Walking on water for the UNCLOS ruling

No, he did not “jetski to a disputed island occupied by China in the West Philippine Sea to plant the Philippine flag and stake the country’s claims” — a campaign promise made in 2016.

When Rodrigo Duterte was elected president, he “tried to forge closer ties with Beijing in an effort to court Chinese money and investments into the Philippine economy. The Duterte administration has also played down a 2016 United Nations-backed tribunal ruling that invalidated most of China’s expansive claim to the disputed waters,” the Philippine Star of March 1, 2018 commented. Quoted in the same article, Duterte dismissed his campaign comment as just a joke. “It’s just talk. I’m surprised you believed it,” he said before members of the Philippine National Police’s elite SWAT units.

But it was not just talk that our President favored China as a friend and ally. “So, I would say, I need China. More than anybody else at this time of our national life, I need China. I will not say something which is not true,” he said, as quoted by GMA News online on April 9, 2018. “I just simply love Xi Jinping. He understood, he understands my problem and he is willing to help,” Duterte said in a press conference in Davao before leaving the country to China to attend the Boao Forum for Asia (cnn.com, April 9, 2018).

“In his fifth State of the Nation Address (2020 SONA) Duterte again stressed that he could not afford to go to war against Beijing over the South China Sea dispute, calling himself “inutile” in that aspect, CNN Philippines reported on July 28, four months into the COVID-19 pandemic quarantines. The President already said this in his fourth SONA — that he cannot go to war with China over the West Philippine Sea because China is already “in possession” of the strategic waterway. But National Security Adviser Hermogenes Esperon, Jr. then immediately sought to clarify that the President’s remarks that China is “in possession” of the West Philippine Sea, actually should read “in position” in the disputed waters — all due to the President’s regional accent (Philstar.com July 23, 2019). Was Esperon the jester?

But it cannot be just jesting and joking about such a serious issue as the Philippine’ territorial and economic rights over the sea and its boundaries — already settled in its favor against China by the United Nations Permanent Court of Arbitration in July 2016. Efforts toward this landmark ruling were by the team of then Associate Chief Justice Antonio T. Carpio, Ombudsman Conchita Carpio-Morales and Ambassador Albert del Rosario in the administration of Benigno S.C. Aquino III and the ruling awarded early in the Duterte term.

In observance of the fourth anniversary of the UN award, and close to Duterte’s COVID-time SONA, the indefatigable Social Weather Station (SWS) asked a universe of about 1,500+ representative respondents if “the Philippine government should assert its rights over the islands in the West Philippine Sea as stipulated in the 2016 decision of the Permanent Court of Arbitration.” Seventy percent agreed and 13% disagreed, for a net agreement score of +57, classified by the SWS as “extremely strong” as reported by the Philippine Star of July 15, 2020. (The nationwide net agreement score, however, was higher at +82 in June 2019.)

A separate question was asked of the same 1,550 respondents, “(Should) the Philippines form alliances with other democratic countries that are ready to help us in defending our territorial rights in the West Philippine Sea (?)”. Four out of five people polled said the country should form alliances in light of what was happening in the West Philippine Sea (CNN Philippines, July 14, 2020).

In a maritime forum held in Makati in 2018, former ambassador Wilfrido Villacorta described the divisiveness created by the West Philippine Sea issue, and the way Duterte treats it as a non-issue. “Our country is so polarized now. If you disagree with [Supreme Court Senior Associate Justice  Antonio] Carpio, then you’re pro-China and [pro]-Duterte supposedly. And if you’re pro-enforcing the arbitral tribunal, then you are pro-US or pro-opposition,” he said. “Camps are often divided between President Rodrigo Duterte and his predecessor, former President Benigno Aquino III. The ex-president had relied heavily on the US, while Duterte is swinging hard towards China,” a Dec. 8, 2018 Rappler analysis said.

Imagine the surprise of all on Tuesday, Sept. 22, when at the online 75th session of the United Nations General Assembly, President Duterte read from a prepared speech and unblinkingly shifted a full 180 degrees on the stance he had obstinately held for four years — his intransigent resignation over his perceived unenforceability of the UNCLOS ruling and his fear of war with China.

“The Philippines affirms that commitment in the South China Sea in accordance with UNCLOS and the 2016 Arbitral Award. The Award is now part of international law, beyond compromise and beyond the reach of passing governments to dilute, diminish or abandon. We firmly reject attempts to undermine it,” Duterte said to the UN, quoted by Interaksyon on Sept. 24. He also acknowledged the “increasing number of states” that have shown support for the award. France, Germany, and the UK have recently issued a joint verbale to the UN rejecting China’s sweeping claims in the disputed waters, the Philippine Daily Inquirer of Sept. 23 said. What he declared was almost exactly the SWS questions asked of the representative Filipinos, who said that was what they felt about the West Philippine Sea (WPS) issues.

Justice Carpio, noted for his staunch leadership in the WPS issues, was the first to welcome President Duterte’s unexpected assertion to the UN General Assembly of the 2016 arbitral award that struck down China’s massive South China Sea (SCS) claims. It was Justice Carpio and former Foreign Secretary Albert del Rosario who suggested raising the Hague ruling before the UN early last year as a way for Duterte to rally world opinion behind the decision.

“I fervently hope that this is the policy that the Duterte administration will implement across all levels — in the protection of our exclusive economic zone in the West Philippines Sea, in the negotiations for the Code of Conduct (CoC), and in gathering the support of the international community for the enforcement of the arbitral award,” said Carpio in Rappler on Sept. 23. In other words, Duterte must now “walk the talk.”

In his column in the Inquirer last week, Justice Carpio strongly advised that the Arbitral award must be specifically cited in the CoC to counter China’s obvious efforts to delete mention of such an arbitral award in the document. “Clearly,” Carpio wrote, “China’s objective is to reverse the arbitral ruling through the CoC. (If China succeeds in deleting any mention of the ruling) it can trumpet before the world that since its position prevailed in the CoC, then the arbitral ruling is not in accordance with international law and the UNCLOS [United Nations Convention on the Laws of the Seas],” he added.

Maritime law expert and University of the Philippines professor Jay Batongbacal told Rappler that “a nervous Philippine military might be perceiving a ‘real possibility’ of Chinese action in the South China Sea” and that in the overheating power play between the US and China, Duterte might have trimmed his political hedge by suddenly affirming the Philippine arbitral win to the UN General Assembly. Batongbacal also warned in an ANC interview last week that despite the arbitral award, the problem remains on what to do with the islands and reefs within the Philippine EEZs, installed with military equipment by China. How to drive China out — we must now ask our President, who has judged himself “inutile” against China in our territories?

No, Rodrigo Duterte did not just jetski in the West Philippine Sea to claim to plant the Philippine flag and stake the country’s claims in contested territories, as he joked he would do during his campaign in 2016. Duterte has come miraculously by “walking on the water” (maybe like Jesus Christ in the gospel).

“But He said to them, It is I; do not be afraid.” (John 6:20)

Filipinos must have faith.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

The timing is perfect for a free trade agreement with Canada

In August 2016, the economic ministers of Canada and the ASEAN agreed to co-sponsor a study to determine the economic outcomes should an ASEAN-Canada Free Trade Area (FTA) be put into effect.

Two economic models were built and simulated. The first was a Canadian-proposed model whose scope of liberalization included trade in goods, services, and investments. The other was an ASEAN-proposed model whose scope of liberalization included trade in goods, a reduction of non-tariff measures (eg. import quotas, etc. ), and improvement of trade facilitation.

When the study was commissioned, Canada was the sixth largest trading partner of the ASEAN with bilateral trade amounting to $20.2 billion. The ASEAN enjoyed a sizable trade surplus, with exports of goods and services amounting to $14.3 billion against imports of $5.9 billion. Canadian foreign investments in the ASEAN amounted to $8.9 billion while ASEAN investments in Canada stood at only to $249.2 million.

The study was finally completed in September 2019 and it was determined that a comprehensive agreement that included the elimination of tariffs for goods as well as the liberalization of services and investments, further complimented by reductions of non-trade measures and improvement in trade facilitation was the optimal arrangement. In other words, a comprehensive FTA would work to the best interests of both the ASEAN and Canada.

According to the economic simulations, the ASEAN’s GDP would increase by up to $39.4 billion (a 1.6% increase of total GDP) in the first year alone should an ASEAN-Canada FTA materialize. ASEAN exports to Canada would surge by 18.7% to $3.46 billion on top of a deluge of Canadian investments coming in.

What does this mean for the Philippines? The Philippines would be the second most favorably affected country after Thailand. Philippine GDP is seen to increase by $7.5 billion (or 2.6% of 2019’s GDP) in the first year alone, with successive increases thereafter.

In terms of trade in goods and services, the Philippines already enjoys a trade surplus with Canada. The surplus amounted to $771 million last year. Fortunately, Philippine exports generally align with Canada’s needs. The study shows that should the FTA materialize, the Philippines can reasonably expect a 35% increase in exports of apparel, chemicals, rubber and plastic products as well as an 8.8% increase in wood and metal products.

Other products categories poised to experience an upturn in exports are rubber tires, coconut oil, leather goods, appliances, footwear, rubber products, wooden furniture and jewelry. Meanwhile, export of services, like business process outsourcing (BPOs), would increase by nearly 10%. All this means a windfall for Philippine exporters.

An important consideration too is that Canada has 14 active FTA’s with 51 countries, many of which the Philippines has no preferential tariff agreement with nor access to. This includes lucrative markets like Mexico, Central and South America. With an FTA in place, Philippine-made products and components can be integrated into the mega-supply chains of Canada, Mexico, and the United States. In addition, Filipino exporters can gain access to lucrative but untapped markets like Brazil and South Africa. All this bodes well in our quest to diversify our trading partners and wean ourselves away from traditional markets like China and Japan.

The Philippines is only one of two ASEAN countries having a Foreign Investment Promotion and Protection Agreement with Canada. Should the FTA materialize, the Philippines will be among the preferred investments destinations for Canadian enterprises involved in BPO and financial services. And since an FTA will compel Filipino regulators to improve the legal framework for intellectual property protection, an influx of Canadian investments in creative industries such as animation, gaming, arts and entertainment, software and engineering design can be expected. All these will enhance the Philippine’s position as the center for IT-BPO, knowledge services and creative industries in the region.

An FTA will also serve as an incentive for Canadian companies to invest in the government’s infrastructure program as well as in renewable energy — the two sectors where the Philippines needs most foreign inputs in. Canadians are vanguards in these fields and will be an invaluable source of capital and technology.

All in all, the country will benefit greatly from a ASEAN-Canada FTA given its positive impact on trade, investments, economic activity and tax revenues. Above all, it will generate jobs — jobs the country needs following the economic bloodbath of the COVID-19 pandemic.

Private enterprises stand to benefit too. The floodgates of opportunity will open for Filipino manufacturers and service providers to export to Canada and the 51 countries with which she has preferential trading agreements. And since cross-border investments will be liberalized, our businessmen will have the opportunity to establish partnerships and/or alliances with Canadian principals.

The entry of Canadian investors will facilitate technology transfer and an exchange of best practices — both of which will cause our industries to become more competitive.

But just as there will be winners, there will also be industries adversely affected by an FTA. With

Canadian goods allowed to enter the country with neither tariff nor friction, our producers of wood and lumber, meats, chemicals, pulp and paper, ores and metals may be edged-out of the market due to cheaper imports from Canada.

Competition has a sink or swim effect and local producers must become more efficient if they are to survive. No one says facing foreign competition is easy — but those that step up to the plate will be rewarded by becoming globally competitive. This brings a whole new dimension of opportunities for those who succeed.

But make no mistake, the consuming public will be the ultimate winner in all this since competition translates to more product options at cheaper prices.

As I write this, dialogues are ongoing between ASEAN ministers, including the Philippines, and their Canadian counterparts. The pros and cons are being weighed and the next steps are being charted.

As for me, I am very much in favor of the FTA simply because we need it. We need it to generate jobs, to narrow our ever widening trade deficit, to attract foreign investments, to widen our manufacturing base, to increase our technology quotient and to become even more competitive in the fields we are already good at like IT-BPOs. An FTA with Canada is exactly what we need to hasten our post-pandemic recovery.

 

Andrew J. Masigan is an economist

Casimero TKOs Micah in 3 rounds

By Michael Angelo S. Murillo, Senior Reporter

WORLD BOXING ORGANIZATION (WBO) bantamweight champion John Riel “Quadro Alas” Casimero of the Philippines retained his title, and he did it in impressive fashion by dominating Ghanaian challenger Duke Micah with a third-round technical knockout victory on Sunday (Manila time) in Connecticut.

Defending the title he won last year for the first time, Ormoc, Leyte native Casimero was on top of his game right from the get-go, not allowing his opponent to get much headway.

Thirty-year-old Casimero set the pace with some solid body shots that rocked his opponent.

In the second round, the Filipino champion picked up the pace further, sending Mr. Micah to the canvas with a left hook. The Ghanaian, however, would survive the round.

Sensing that his opponent was in trouble, Mr. Casimero moved to pressure Mr. Micah some more to start round three.

He unleashed solid hits to the body and head then connected with a combination of left and right upper cuts that had Mr. Micah reeling and something he could not recover from, forcing the referee to stop the fight just 54 seconds into the round.

The win improved Mr. Casimero’s record to 30 wins as opposed to four losses.

Mr. Micah, meanwhile, absorbed his first defeat in 25 fights.

NOT SURPRISING
Meanwhile, for local fight analyst Nissi Icasiano, to see Mr. Casimero win and in such a manner was not at all surprising.

“John Riel Casimero proved that Duke Micah didn’t belong in the same league where he is by pulling off a third-round demolition. I wasn’t surprised at all. The difference in terms of experience and skill level was evident. It was day and night,” said the analyst when sought for comment by BusinessWorld post-fight.

“Though Micah was aggressive and game early throughout an even opening round by throwing his jabs and a solid overhand right that cleary backed off the Pinoy champion, Casimero just rolled with the punches from his inexperienced foe. Those shots from Micah were heavy, but it didn’t put Casimero off his game as he stepped on the gas pedal and turned up the volume of his shots,” he added.

The impressive win boded well for the Filipino, Mr. Icasiano said, as it showcased Mr. Casimero’s top-class talent to a wider audience just as it set the latter to bigger fights moving forward, including the long-awaited showdown with undefeated Japanese champion Naoya Inoue.

“It’s a big boost on the part of Casimero as he made his US television debut and kicked off a pay-per-view doubleheader from the Mohegan Sun Arena with a spectacular defense of his WBO title. I can’t think of a better way to put the American audience on notice other than that,” the analyst said.

“I really wish to see him fight Inoue early next year. That will be a great curtain-raiser for the 2021 boxing calendar. Luis Nery is also a good option if he decides to go back to 118 pounds. If he does not get Inoue by early next year, the winner of the WBC title fight between Nordine Oubaali and Nonito Donaire in December is another option for him,” he added.

Lakers back to finals after 10 years

Behind LeBron James’ triple-double

LEBRON JAMES had 38 points, 16 rebounds and 10 assists, leading the Los Angeles Lakers to their first NBA finals in a decade with a 117-107 victory over the Denver Nuggets in Game 5 of the Western Conference finals on Saturday near Orlando.

Anthony Davis scored 27 points for the Lakers, who advanced to their first National Basketbal Association (NBA) finals since 2010, when they beat the Boston Celtics in seven games. They will face either the Boston Celtics or Miami Heat.

Nikola Jokic had 20 points and seven rebounds for Denver. Jerami Grant also scored 20 points, while Jamal Murray, who sustained a right knee contusion in the first half, finished with 19 points and eight assists. Paul Millsap added 13 points.

A three-point play by Jokic cut the Lakers’ lead to 103-99 with 4:35 remaining. However, James scored nine consecutive points to seal the deal for Los Angeles.

The third-seeded Nuggets rallied from 3-1 deficits in back-to-back series against the Utah Jazz and Los Angeles Clippers but the task was too much against the Lakers, the top seed in the West.

In the third, the Lakers increased their 10-point halftime edge to as much as 16. After Dwight Howard was issued a flagrant foul after a collision with Millsap with 4:29 remaining in the quarter, the Nuggets cut the gap to 80-73 after a 3-pointer by Michael Porter Jr. 16 seconds later.

A 9-2 Nuggets’ surge pulled them within 82-80 with about a minute left in the quarter. Two free throws by Murray knotted the score at 84 before Davis’ 3-pointer put the Lakers up 87-84 heading into the fourth quarter.

Grant scored 14 points in the third.

Jokic picked up his third foul at 9:32 of the second quarter with the Nuggets trailing 35-34. James sparked a 14-4 run with eight points, all of them on buckets inside, for a 49-38 Lakers’ advantage midway through the quarter.

Denver sliced the margin to seven before Los Angeles took a 61-51 lead at the break. — Reuters

AFF Suzuki Cup organizers look to have the tourney in full format next year

THIS year’s edition of the ASEAN Football Federation (AFF) Suzuki Cup cancelled because of the coronavirus pandemic, organizers of the event said while they lament the unfortunate development they look to staging the championship in its full format next year.

Originally set for November to December this year, the biennial regional football meet is now to be played from April 11 to May 8. It is hoped that by the time some clarity and improvement have been achieved as regards to the situation with the pandemic.

The AFF said the latest decision was taken with a firm intention to stage the championship in its full format — played on a home-and-away basis across the qualifying nations in Southeast Asia.

The decision was also arrived at after consultation with the region’s football federations and other relevant authorities, believing the new dates for the tournament are suited to accommodate the domestic football schedules, and give organizers enough time to monitor the situation closely to ensure the safety and well-being of all players, coaches, partners, fans and the public. 

“We are delighted with the positive support that we have had from our member associations and that we have been able to find a suitable window next year to hold our most highly anticipated tournament. While we are well aware that the fight against the global pandemic is not over, we are cautiously optimistic for the AFF Suzuki Cup 2020 to take place in its full format as we hope to deliver the best of ASEAN in the tournament next year,” said AFF President, Major General Khiev Sameth in a statement.

Adding, “The AFF also hopes that the announcement of the 2021 tournament dates will provide some clarity in planning for our commercial partners, including sponsors and media broadcasters, at a time of uncertainty. AFF and our member associations would like to express gratitude to all our fans, players, coaches, officials, media and other partners for their unwavering support and commitment despite these challenging times, and look forward to the AFF Suzuki Cup unifying the whole of Southeast Asia when we are able to come together again.

The Philippines has been doing well in the tournament, being a semifinalist in four of the last five editions of the Suzuki Cup. In 2018, the Azkals, then coached by Sven Goran-Eriksson, returned to the Final Four after missing it in the previous edition. They barged into the semifinals by finishing second in its grouping in group play before bowing to eventual champion Vietnam in the two-leg semis, 4-2, in aggregate.

The team recently extended the tenure of current coach Scott Cooper, who vowed to help the team “as it continues to make its mark in Asian and world football.” — Michael Angelo S. Murillo

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