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ADB pushes results-based lending scheme

By Marissa Mae M. Ramos
Researcher

WEST NUSA TENGGARA, INDONESIA — “After 70 years of the freedom of Indonesia, we can finally understand its meaning… free from darkness,” said Wahidin, a village chief in the fishing community of Kwangko, which is among the beneficiaries of the Asian Development Bank’s (ADB) results-based lending (RBL) scheme that links disbursements of funds to achievement of target outputs in covered government programs.

With scarcity of concrete-paved roads, the fishing village in Eastern Indonesia had been connected to an electricity grid only in 2017 following five failed proposals to the Perusahaan Listrik Negara (PLN), Indonesia’s state electricity firm.

Almost two years after its electrification, Kwangko’s per capita income rose as much as 35% or 70,000 Indonesian rupiahs per day, roughly equivalent to five US dollars or about P260 daily.

Kwangko’s connection to electricity meant that the villagers can make ice through a refrigerator, which in turn, is used to keep their fish catch fresh, thereby helping to increase household earnings.

Prior to this, residents in the remote village used to pay 50% more than their 24-hour electricity expense today to operate a diesel generator for a few hours of electricity.

Kwangko is just one among thousands of villages that benefited from the “Sustainable Energy Access in Eastern Indonesia-Electricity Grid Development Program” of the ADB and the PLN, under which the regional lender agreed to provide $600 million for electrification expansion in Nusa Tenggara and Sulawesi islands.

It is intended to spur economic activity through sustainable use of electricity and is the second project in the energy sector lent through the RBL scheme, first introduced by the ADB in March 2013 with a six-year pilot period.

The project loan is a part of Indonesia’s broader program under PLN’s Electricity Power Supply Business Plan or Rencana Usaha Penyediaan Tenaga Listrik 2017-2026, which aims to deliver modern energy services as well as raise nationwide electrification ratio to 100% by 2024 from 89% in 2016.

Florian Kitt, ADB energy specialist for South East Asia, said increasing the electrification ratio in that region can be costly for the Indonesian government due to high infrastructure costs. Hence, the PLN needs partners like the ADB to plug the funding gap in the government’s investment plans.

RBL is a performance-based form of financing of the ADB wherein disbursements are linked to time-bound indicators agreed upon by the PLN and ADB. This financing method links financing to “pre-agreed” intermediate and final outputs “rather than to upfront expenditures, as is the case with traditional investment lending,” ADB said on its Web site.

“In the Philippines, like Indonesia, we believe that the country systems and financial management systems are robust so we are able to use the results-based lending [system],” said Kelly Bird, ADB Country Director for the Philippines, noting that both countries have procurement systems in place that are necessary for RBL loans to work properly.

A similar scheme was implemented in the Philippines with the first ADB-led RBL program being the Senior High School Support Program in 2014. With a closing date in 2020, the $300-million venture aims to develop the senior high school program for an estimated 5.9 million students as the country added two years to its basic education curriculum.

ADB agreed to provide another $300-million RBL loan for the education sector in May, said Mr. Bird.

Mr. Bird said results of the country’s first RBL program have been “very promising,” encouraging the approval of the second loan under this program.

In a mobile phone message, Socioeconomic Planning Secretary Ernesto M. Pernia, who worked for the ADB for almost two decades, cited the ADB’s and the Philippine government’s “productive and harmonious partnership” wherein the former continues to provide financing and technical assistance for feasibility studies and projects prioritized by the latter.

The Bureau of Customs’ police authority

Every business aims to minimize disruption in its operations. For importers, effective and efficient supply chain management is vital to ensuring business performance targets are achieved. These enterprises heavily rely on the smooth and free flow of imported goods for use in their operations, be they for manufacturing or retail. As such, any risk of a freeze in movement or seizure of goods which may arise from the Bureau of Customs’ (BoC) exercise of police authority is potentially troublesome.

Early this year, the Department of Finance and Bureau of Customs (BoC) issued the implementing rules and regulations governing the post-clearance audit of importers. Under the rules, the BoC is duly authorized to conduct an audit of past import transactions going back three years to determine whether customs duties and taxes on imported goods have been properly paid, and to assess and/or collect deficiencies and penalties, if warranted.

In the wake of the promulgation of the Customs Modernization and Tariff Act (CMTA), the BoC’s powers to enforce customs laws and prevent smuggling are given more teeth through the issuance of Customs Administrative Order (CAO) No. 03-2019 governing customs jurisdiction and police authority. The BoC may exercise its police authority through seizure, require assistance and information from National Law Enforcement Agencies, enter properties, vessel or aircraft searches (including persons or goods conveyed therein), searches of persons arriving from overseas, and controlled delivery investigations. Among other ways and methods, the BoC can exercise its police authority through inspection and visits. This is a new power introduced by the CMTA following the repeal of the Tariff and Customs Code of the Philippines.

In a nutshell, the power to inspect and visit authorizes the BoC to demand evidence of payment of duties and taxes on imported goods openly offered for sale or kept in storage. For reasons of security, safety, and economy, the BoC may constitute the premises where the goods are at as a special customs area for the duration of the exercise of the power. During this period, the goods are deemed, for all intents and purposes, in customs custody; the owner of the goods will be unable to remove, sell, or dispose of such goods.

Failure to present or produce evidence of payment of duties and taxes within a period of 15 days may immediately result in seizure and forfeiture. Hence, it is critical for importers to immediately present proof of payment of duties and taxes (i.e., the BoC Official Receipt or the Statement of Settlement of Duties and Taxes); otherwise, the BoC may issue a Warrant of Seizure and Distraint.

The process of retrieving and producing proof of payment of duties and taxes within the prescribed period of 15 days may be relatively simple and easy if the imported goods are few. However, this process may be particularly challenging if the warehouse or site subjected to the BoC’s inspection stores significant volumes.

To exercise the power to inspect and visit, the BoC must be equipped with a Letter of Authority, which is a special authorization exclusively issued by the Commissioner of Customs. It is different from the BIR’s Letter of Authority, which authorizes it to conduct an examination of the taxpayers’ books of account and other accounting records for internal revenue taxes generally covering a period of one calendar or fiscal year, whichever may be applicable. It is also different from the BoC’s Audit Notification Letter which allows the BoC to conduct an audit of importations over the past three years, as mentioned.

Based on the regulations, customs authorities are being given wider discretion to exercise police authority. Mere suspicion of violation or reasonable cause based on profiling or derogatory information received may trigger the exercise of police authority, and there may be no apparent process to validate the causes triggering such exercise. Hence, on the part of businesses, awareness as to the extent of the BoC’s police authority is necessary to ensure that the exercise is impartial and in accordance with the law, as well as commonly accepted ethical practices.

Importers must be familiar with the rules to ensure their rights are properly protected. Once subjected to the BoC’s exercise of police authority, importers should be keen and vigilant to check whether the BoC has the proper authorization and is acting strictly within the bounds of its authority. The prescribed formalities should also be observed, such as the propriety of the signatory, and existence of a valid customs seal, among others. Failure to comply with the requirements and formalities may be explored as basis to question the BoC’s exercise of police authority.

Business owners and company leaders should therefore have a deeper awareness of their supply chain, procurement or import-export teams which may fall under the scrutiny of the BoC’s police authority. They should be trained to identify and flag such matters as urgent concerns, and at the minimum, be able to deliver timely responses and perform standard procedures, which, in the past, were often matters handled purely by counsel or legal teams.

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

 

Alden Patrick C. Labaguis is a Tax Senior Director of SGV & Co.

How does the Philippines compare with other economies in terms of commitment to cybersecurity?

How does the Philippines compare with other economies in terms of commitment to cybersecurity?

Senate to probe risks of Chinese developments

A SENATOR has filed a resolution seeking an inquiry into the potential national security risks of wider foreign presence on three Philippine islands.

Senator Ralph G. Recto said development projects on the Islands of Fuga, Grande and Chiquita in northern Philippines could become a security risk, an issue that Defense Secretary Delfin Lorenzana had also raised.

“Foreign control of the islands of Fuga, Grande and Chiquita can potentially provide a locus to access, surveil and control strategic locations in the Pacific Ocean, West Philippine Sea, Luzon Strait and Subic Bay,” Mr. Recto said in Senate Resolution 84.

The development projects include business agreements worth $12.16 billion that the Philippines and China had agreed on during a Belt and Road Initiative forum in Beijing in April.

Among these were six memoranda of understanding signed by the Cagayan Economic Zone Authority for projects on the Island of Fuga in Aparri, Cagayan and other areas under CEZA. Also signed was a framework deal between GFTG Property Holdings and Sanya CEF Sino-Philippine Investment Corp. to develop Grande and Chiquita islands in Subic Bay, Zambales province.

“The island of Fuga is in proximity to telecommunications submarine cables that connect the Philippines to territories in Mainland Asia and North America,” according to Mr. Recto.

Meanwhile, Grande and Chiquita may be allowing surveillance of civilian and military naval assets in Subic Bay and the South China Sea, he said.

Mr. Lorenzana earlier warned that the development projects might affect national security, noting that the Philippine Navy had not been consulted before the agreements were signed.

Mr. Recto asked the Senate defense committee to come up with mechanisms to preserve Philippine territorial integrity and counter the risks of business and economic deals with foreigners.

Aside from Mr. Recto, Senators Maria Lourdes S. Binay and Risa N. Hontiveros have also separately filed resolutions to investigate the development of the three islands.

Mr. Lorenzana earlier said the Philippine military was looking at the security risks of Chinese-dominated online gaming operations in the capital, where gambling centers are very near military installations.

While online gambling operations are not by themselves a security threat, there is a potential for these “to be used by unscrupulous people to attack or to even listen to what we are saying — to spy on us,” Mr. Lorenzana told “The Chiefs” segment on Cignal’s One News Channel.

There is a POGO center at Eastwood City and another at Araneta Center near Camp Aguinaldo, the Armed Forces headquarters in Quezon City, Mr. Lorenzana said.

Resorts World, a joint venture between Alliance Global Group and Genting Hong Kong, is occupying part of a former military camp and is near Villamor Airbase, home of the Philippine Air Force.

Senator Leila de Lima last month warned against the planned setup of a 32-hectare complex called Pogo Island in Kawit, Cavite, which she claimed could be the start of a creeping Chinese colonization.

There were earlier reports that a wealthy Chinese-Filipino businessman had bought the former Island Cove resort from the Remulla clan in Cavite and turned it into a complex for Chinese POGO workers.

President Rodrigo R. Duterte has sought closer trade and investment ties with Beijing since he assumed power in 2016 as part of his pivot away from the US.

Philippine police in April said it would probe claims that China could use Huawei for spying. Authorities later found no evidence of that. The US has increased pressure on its allies to sever ties with the telecommunication company. — Charmaine A. Tadalan

State auditors flag PNU overpayment

STATE-OWNED Philippine Normal University has overpaid P1.72 million to faculty members whose teaching overload occurred during regular work hours, state auditors said.

The teaching overload happened from 8 a.m. to 12 noon and from 1 p.m. to 5 p.m. and should not have been considered overtime work, the Commission on Audit said in a report.

“The teaching overload was rendered within the 40-hour a week exclusive of time for lunch as prescribed by the Commission on Civil Service hence, should be considered as service rendered during the regular official time and not as extra pay,” it said.

It added that almost all faculty members were given extra teaching load, even those who were on study leave.

State auditors said the management of PNU North Luzon must justify its 25-hour weekly work instead of the prescribed working hours by Civil Service Commission.

CoA also said extra and emergency loads should be kept low to maintain teaching efficiency.

Responding to the audit, the university said the 25-hour weekly working schedule was also being followed by other PNU campuses based on a resolution approved by the Board of Regents in 2016.

The state university also said the teaching loads did not affect the effectiveness of its faculty members, as shown by students’ performance in licensure exams.

In reply, CoA said board order on the working schedule violated civil service rules. — Vince Angelo C. Ferreras

Regulator blacklists 21 recruitment firms

THE PHILIPPINE OVERSEAS Employment Administration (POEA) has blacklisted 21 foreign recruitment firms and direct employers to protect Filipinos seeking to work abroad.

In a statement on Sunday, the agency also said it had suspended and cancelled the licenses of more than 20 local recruitment agencies as part of a plan to rid the overseas placement industry of misfits.

POEA said the recruitment agencies were found to have violated the rules from January to July.

The disqualified foreign recruitment agencies or direct employers were AV Global Harvest PTE Ltd., Isa KhouriMetal Industries Ltd. and Amir Khoury, Raffles International Christian School, Al Tauqueet Trading and Services Est/Al Tauqet Trading & Services Co., NooraSalem Saad Occie for Recruitment of Domestic Helpers Office, All Pro Recruitment Agency, and Marwan Slim.

Also disqualified were Food Equipment Supplying Company Limited (Fesco) & Thaer H. Abdou, Wanasah Manpower Supply & Mohammed Naser Al Naser, Bader Contracting & Trading Company/Bard Cont and Trad, Speedy Tech Electronics Co. Ltd., Staff Buro Staffing, Candice Cruz and Allan John Wilton.

Also making it to the blacklist were Jalal Al Jalal Construction Est./ Al Nassr AhssaTrading Contracting Company/Jalal Al Jalal/Saad Saleh Al Jalal, and Marhaba Shopping Center, Hadi Al HamroorContracting Est. and Fawzi Al Najrani Est./Fouzi Saleh Najrani Contracting, Yacht Tours Maldives Pvt. Ltd., and Al Falax Electronics Equipment and Supplies Company/Al Falak Equipment.

Agensi Pekerjaan YSL SDN BHD Lim Pooling and Saw Boon Foong, West Labour Supply and Abdalla Ali Adalla Alsari, Tsaheel Al Janoob Office for Recruitment, Al Bahli Manpower Recruiting Office & Omar Saad Al Hamad, and Special Manpower Supply were likewise blacklisted, according to POEA.

POEA Administrator Bernard Olalia said they had to disclose the list to make the public aware.

P18M budget planned for Irisan eco-park development

THE BAGUIO City government will be allocating P18 million to convert a portion of the former Irisan dumpsite into an eco-park by late 2020 or early 2021. Mayor Benjamin B. Magalong, in a statement last week, said the eco-park project would start after the ongoing processing of over 40,000 cubic meters of raw compost into fertilizer. Two Environmental Recycling System (ERS) machines are at the site for the compost production. City General Services officer Eugene Buyucan said the budget proposal for the eco-park will soon be submitted to the city council for review and approval. Mr. Magalong, earlier this month, also Mayor Benjamin Magalong called on residents and business owners to adopt their own backyard composting methods to lessen the city’s biodegradable waste production. “Every business especially restaurants should have their own composting facility,” the mayor said as he directed the General Services Office to disseminate information on simple composting methods that can be used by establishments.

MinDA tracks 1,385 kilometers of roads and bridges programmed for better inter-regional connectivity

THE MINDANAO Development Authority (MinDA) is tracking 1,267 kilometers (kms) of roads and 118 kms of bridges programmed to improve connectivity within the Mindanao regions. These infrastructure will provide links to remote and agricultural areas as well as serve as alternate routes to the existing main road network. Assistant Secretary Romeo M. Montenegro, MinDA deputy executive director, said these projects are part of the national government’s 2017-2022 public investment program on infrastructure, where Mindanao has a P761 billion allocation. “The priority projects that had been identified at the national scale, we want to see much of this moving on a desired trajectory and desired timeline,” he said at the Habi at Kape forum last week. Among the big ticket projects identified for Mindanao is the 102-km Tagum-Davao-Digos line of the 1,550-km Mindanao Railway Project, which has yet to be started. Mr. Montenegro said they are optimistic that these will be fast-tracked based on the national government’s “catch-up” plan following the delay in the enactment of this year’s budget as well as the project ban during the election period. Mr. Montenegro also said they are optimistic of the continued implementation of MinDA’s programs and advocacies under its new head, Secretary Emmanuel F. Piñol. “Time is not on our side and we are left with half of the (term of the current) administration, and our window to get what we desired for Midanao is closing,” he said. “That is why we have to work hand-in-hand with all other agencies of the government to make sure that the implementation of these projects are pursued on time and within budget,” he added. — Maya Padillo

Cagayan de Oro creates anti-dengue task force, to hold city-wide cleaning drive on Aug. 20

CAGAYAN DE ORO City, the regional center of Northern Mindanao, is stepping up its campaign against dengue following the Department of Health’s (DoH) declaration last week of a national epidemic for the mosquito-borne disease. Northern Mindanao was among the 10 out of 17 regions under an epidemic threshold status, with 7,731 cases recorded, including 56 deaths from January to July 27 this year, based on DoH data. The city government, in a statement, said local cases reached 1,655 with 15 deaths, based on data from the City Health Office (CHO). An anti-dengue task force has been formed to closely monitor at the barangay-level, which have been ordered to lead in the implementation of clean-up activities and continued information campaign. A city-wide simultaneous clean-up day has also been scheduled on Aug. 20, from 4 p.m. to 6 p.m., to boost awareness. CHO’s Dr. Fe Bongcas appealed to barangay officials and the community to “work together to maintain hygiene in their area to prevent dengue.”

Drilon pushes for construction of Panay-Guimaras-Negros bridge

SENATE MINORITY Leader Frank M. Drilon, who hails from Iloilo, is helping push for the immediate construction of the Panay-Guimaras-Negros bridge, citing its urgency in light of the Aug. 3 Iloilo Strait tragedy. “I feel very sad of the tragedy. I urge the national government to already proceed with the Iloilo-Guimaras bridge. It is really high time, and the tragedy which claimed the 31 lives of the passengers should be a justification to consider the building of the project,” he said in an interview last Friday at the newly-restored University of the Philippines Visayas (UPV) main building. Mr. Drilon said he recently talked to Public Works and Highways Secretary Mark A. Villar “and we are hopeful and we will follow and monitor the construction of this project.” The project — covering two bridges connecting Guimaras to Iloilo in Panay island and the other to Negros — is currently undergoing a feasibility study funded by China. “We do hope that this feasibility study is finished on time so that the construction can commence,” Mr. Drilon said.

E-TICKET
Meanwhile, the Philippine Ports Authority (PPA) said they are aiming to pilot test within the year the electronic ticketing system that will be rolled out in all PPA-managed ports. PPA General Manager Jay Daniel R. Santiago, speaking to the media in the aftermath of the mishap involving three motorboats, said the e-ticketing system is intended to eliminate overloading of boats as well as ticket fixers. “Ito ay para sa ating mga pasahero na kung saaan ang PPA na ang mismong mag i-issue ng ticket para sa mga sasakyan (This is for our passengers, with the PPA directly issuing the tickets,” he said. — Emme Rose S. Santiagudo

Big-game experience propels Beermen to another PBA title

By Michael Angelo S. Murillo
Senior Reporter

THE San Miguel Beermen proved once again that they are the A-1 team in the Philippine Basketball Association right now after adding the 2019 Commissioner’s Cup title to their list of many championships with collective big-game experience propelling them.

On Friday, Aug. 16, the Beermen completed what they described as a “roller-coaster” journey with the midseason PBA tournament championship trophy in their hands after defeating the TNT KaTropa, 102-90, in Game Six of their best-of-seven finals and taking the series, 4-2.

Import Chris McCullough stepped up for San Miguel anew in the clincher, finishing with 35 points, 13 rebounds and four blocks.

June Mar Fajardo had 19 points and 13 rebounds while Christian Standhardinger had 18 points.

Alex Cabagnot and finals most valuable player Terrence Romeo each had 10 markers.

The win gave the Beermen their 27th PBA title and fifth in the last eight conferences of Asia’s first play-for-pay league.

But while they are happy and proud of their latest achievement, the Beermen were the first to say that it did not come easy and that it took a lot of digging deep and relying on experience on their part to pull through, hence, making this new championship all the more significant.

“Our journey to the finals was really roller-coaster and we were at risk of missing the playoffs after starting the tournament with a 2-5 record,” said San Miguel coach Leo Austria, who is now tied for fifth overall with eight championships won along with Chot Reyes.

“In the playoffs we faced a twice-to-beat disadvantage against Northport but overcame that and in the semifinals had a hard time against Rain or Shine. But the players really worked hard,” he added.

The San Miguel coach went on to say that in the finals they were made to further work by a tough TNT crew, led by best import awardee Terrence Jones, but once again collective experience especially in big games made a difference for them.

“The team showed their experience in the finals. Even if we were down in matches the players’ composure was there and they kept fighting all the way to the end,” said Mr. Austria, whose team won three straight games in the finals after going down 1-2 early on in the series against TNT.

Mr. McCullough had the same assessment of his team.

“That’s SMB basketball. They’ve been doing that (winning through experience) for years. This is my first year with them, but they’ve been doing that for years,” said the former National Basketball Association campaigner, who replaced erstwhile San Miguel import Charles Rhodes after the Beermen struggled off the gates.

Chalking up their second straight PBA title, the Beermen now have a chance to win another league grand slam, something they were in a position to do in 2017 but failed to complete.

San Miguel won a grand slam 30 years ago in 1989.

Mr. Austria said it is a feat they want to achieve but mindful not to get ahead of themselves as they recognize that it will not be easy.

“I think we have a good chance of winning the grand slam. The team and players want it but we will take it one game at a time. There is a lot of work to be done and I’m sure the other teams will prepare and play hard in the next conference. So we’ll see if we succeed,” the San Miguel coach said.

Thomas cards course-record 61 for six-stroke lead at BMW

CHICAGO — Justin Thomas enjoyed “one of those freaky days in the zone” as he carded a course-record 11-under-par 61 to vault to a six-stroke lead in the third round at the BMW Championship in suburban Chicago on Saturday.

An eagle with an eight-iron from 180 yards at the par-four 16th was just one highlight of an eventful day for the American, who broke by two strokes the previous best score at Medinah, set just 24 hours previously by Hideki Matsuyama.

Thomas posted a 21-under 195 total in the penultimate event of the PGA Tour season, while compatriots Messrs. Tony Finau and Patrick Cantlay fired 68s for a share of second place on 15-under.

Halfway leader Matsuyama plunged 10 strokes behind with a 73.

“I hit the ball pretty unbelievable,” Thomas told broadcaster NBC after his fourth career round of 61 or better.

“It’s not like I made any long putts. I hit it close to the hole, and took advantage of some opportunities.

“I got a couple of good breaks and that’s stuff that happens when you shoot 11 under.”

Thomas started his round with five successive birdies, and later recorded a tap-in eagle at the par-five 10th after a precise five-wood approach shot.

The highlight reel continued when he chipped in from 20 feet from lush rough to birdie the 14th hole.

He then drove his tee shot into a pond at the 15th and took a penalty stroke, but still saved par, setting the stage for his most unlikely eagle at the par-four 16th, where his ball landed a couple of yards in front of the cup and trickled in.

“It looked good in the air,” said the 26-year-old. “That’s a little bit of a bonus.”

Thomas finished with two eagles, eight birdies and one bogey, and vowed to continue attacking the rain-softened course in the final round.

“I’m trying to win by as many as I possibly can. If I just keep playing how I’ve been playing I feel like I can shoot another good round.”

The performance was a reminder of the talent possessed by Thomas, who clinched his first major title two years ago at the PGA Championship and has been ranked number one in the world.

But his this year campaign suffered a setback when he injured a wrist in March and he eventually took six weeks off to let it heal, missing the PGA Championship before failing to make the cut at the US Open.

If Thomas wins, he will start next week’s season-ending Tour Championship in Atlanta as the top seed, with a two-stroke head start over the second seed in the 30-man field, which may not include last year’s winner Tiger Woods.

Woods shot 67 on Saturday to improve to equal 31st, but is projected to need a top-six finish to advance to the East Lake, where he ended a five-year victory drought last year after returning from a major back surgery.

“This was nice to at least give myself a chance to make it to next week,” the 15-times major champion said of his round.

“It has been in the back of my mind to get there (to East Lake),” said by the golf’s icon superstar Woods. — Reuters