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ERC sets hearing on Mindoro wind project connection to Napocor line

THE ENERGY Regulatory Commission (ERC) said it will hold this month a hearing to evaluate the Philippine Hybrid Energy Systems, Inc.’s (PHESI) application to develop, own and operate a transmission line that will connect its 16-megawatt wind farm in Oriental Mindoro to one of National Power Corp.’s transmission lines.

In an advertisement published Monday in a local newspaper, the ERC said the hearing, pushed back from the original Aug. 30, 2018 date, is set for June 20, to be conducted at the agency’s hearing room in Pasig City at 2:00 p.m.

The hearing intends to determine whether to give the green light to PHESI’s application to own, operate and develop a transmission line from the wind power energy facility in Puerto Galeria in Oriental Mindoro, the output of which has been contracted to Oriental Mindoro Electric Cooperative. Inc. (ORMECO) under a provisional sales energy agreement the ERC approved in April 2014.

The transmission line is proposed to connect the wind facility to the eight-kilometer Napocor-owned 69 kiloVolt between Calapan and Minolo, particularly in Barangay Tabinay.

The initial cost of the connection facilities for the transmission line is pegged at P131.30 million, which may fall to P102.76 million with about half accounted for by the Napocor’s inclusion of a cut-in scheme in its connection agreement with PHESI.

Although the connection agreement with the Napocor was executed in November 2017, PHESI further seeks the proper determination of the party to bear the cost on the construction of facilities as well as coming up with a proper mechanism for recovery.

PHESI also sought the hearing to confirm PHESI’s asset boundary and line protection responsibility.

ERC called on parties interested in the matter to file before the regulator a petition to intervene five days before the initial June 20 hearing.

Pasig City-based PHESI is a renewable energy development company engaged in developing wind, hydro, and solar energy projects in the country and other countries in Asia.

Upon the issuance of the approval, the company intends to engage the services of ORMECO or any of its operation and maintenance providers so as to undertake the operation, service and maintenance of the dedicated facility involving, among others, periodic inspection of the point-to-point interconnection facilities, regular assessment of pole and wire conditions.

The firm will subsequently seek from the ERC a certificate of compliance to complete the project. — Janina C. Lim

CCC tells investors to seize opportunities in renewable energy

THE Climate Change Commission (CCC) said the renewable energy sector is among the “biggest” opportunities for investment amid the global shift by companies seeking ways to pursue a greener energy strategy.

“There is no debate that coal is the most carbon-intensive of all fossil fuels. It brings serious public health, ecological, and economic risks,” CCC Secretary Emmanuel M. De Guzman was quoted as saying in a statement Monday. He was delivering a speech at the CEO Forum on Financing Government Energy Efficiency Projects held recently in Makati City.

The forum was attended by business leaders, government officials, and civil society, and was organized by the European Union-supported Access to Sustainable Energy Programme and the Department of Energy. The event hopes to facilitate discussions on key issues and challenges in implementing energy efficiency projects.

“Renewable energy now presents the biggest opportunity for local investment,” Mr. De Guzman added.

He noted that the energy sector has consistently accounted for a significant percentage of the country’s greenhouse gas emissions (GHG) and, as such, offers the highest mitigation opportunity for the country’s Nationally Determined Contribution to reduce by 70% its GHG emissions by 2030, as it committed under the Paris Agreement.

“Energy efficiency is the easiest and often cheapest way to reduce the need for expansion of power generation. And with the country’s energy demand projected to increase by 80% between 2017 and 2040, improving energy efficiency in the building sector would be our best course to reduce emissions,” Mr. De Guzman said.

Citing a report released by the International Renewable Energy Agency, Mr. De Guzman said that the decade-long trend of strong growth in renewable energy capacity continued in 2018.

“As total global renewable energy generation capacity reached 2,351 gigawatts at the end of last year, renewable energy now accounts for a third of global power capacity[1],” he noted.

He added that renewable energy can provide a major share of the Philippine electricity mix in a stable and reliable manner and at the same time increase energy self-sufficiency and reduce supply-related risks.

The CCC is the lead policy-making body of the government in coordinating, monitoring and evaluating government programs and ensuring mainstreaming of climate change in national, local, and sectoral development plans towards a climate-resilient and climate-smart Philippines. — Janina C. Lim

NCR mango sales seen absorbing half of surplus

THE Department of Agriculture (DA) said it expects to sell at least one million kilos of mangoes in Metro Manila through the Metro Mango Marketing Program, helping farmers dispose of this season’s bumper crop which was not anticipated because of a failure of coordination and monitoring.

“We’re launching this Metro Mango Marketing Program in the hope that we’ll be able to sell the produce of our farmers to our Metro Manila consumers,” Agriculture Secretary Emmanuel F. Piñol told reporters.

The DA estimates that mango will be in surplus this season by 2 million kilos in Luzon.

“Ang problema lang, hindi agad nakipag-coordinate ang mga farmers na meron silang expected na oversupply and siguro nagkulang rin siguro ang DA sa monitoring ng mga event na ito (The problem is the farmers did not indicate that they are expecting an oversupply and maybe the DA also had shortcomings in monitoring these kinds of events),” he said.

Also present in at launch was Tetusji Yurakawa, a representative from Japanese fruit importer Diamond Star.

“They have committed 100 metric tons (in additional mango purchases) if possible this season,” Mr. Piñol said. The market for mango in Japan is 12,000 MT.

He also noted that the use of chemicals by mango farmers affects the volume of mango exported to Japan.

“From a high of 7,000 metric tons ang ating (our) supply ng mangga sa (of mango in) Japan, we’re down to about 300 metric tons because of those issues,” he said, referring to the maximum residue limit (MRL) of 0.05 parts per million for chlorpyrifos and cypermethrine, which are active ingredients in insecticides.

Mr. Piñol said that these practices will be addressed as the roadmap for mangoes is implemented. He also encouraged mango farmers to produce other kinds of mango products.

“We are, of course, encouraging our farmers to go into processing and value-adding. This is the way to go for Philippine agriculture. We must focus on value-adding,” he said.

Some mango products also featured in the event are mango vinegar and pickled mangoes. — Vincent Mariel P. Galang

CoA blames jail overcrowding on drug cases, slow courts

THE COMMISSION on Audit (CoA) has found that the total jail population was 111,046 in 2018, far exceeding the “ideal” capacity of Philippine prisons of only 25,268.

According to CoA’s audit report on the Bureau of Jail Management and Penology (BJMP), state auditors said the overcrowding violates the BJMP Manual on Habitat, Water, Sanitation, and Kitchen in Jails which states that the ideal habitable floor area per inmate is 4.7 square meters, 10 inmates per cell, and 5 units of two-level bunk beds.

The auditors noted that the overpopulation in jails is due to the increasing number of drug-related cases and the slow progress of cases through the judicial system.

“The jail populations for the years increases in various months attributed to the increase in the number of drug-related cases in the country as well as the court’s slow or no action on the pending cases due to lack of judges, postponement of hearings and the slow disposition of criminal cases that carry the penalty of reclusion perpetua or life imprisonment,” CoA said.

CoA reported that Region 9 had the most crowded jails last year with an overcapacity of 4,943, relative to its ideal population of 766.

However, CoA said the BJMP’s Good Conduct Time Allowance gives inmates leave to attend various activities inside prison, helping make them more productive. The activities include livelihood training, alternative learning sessions, and the like.

According to the report, BJMP is working with the Supreme Court to initiate programs that would help decongest jails.

One of this is the Katatagan Kontra Droga sa Komunindad (KKDK) program to serve as an in-house intervention program for detainees facing illegal drug charges.

“Should this program be approved by the Supreme Court as substitute ‘compliant rehabilitation program’… it will be easier for PDL [persons deprived of liberty] to comply with the requirements and for the court to issue orders since there is already an intervention being undertaken by the BJMP,” CoA said, quoting the BJMP. — Vince Angelo C. Ferreras

Palace EO expands Clark industrial estate’s authorized activities

PRESIDENT Rodrigo R. Duterte has issued an executive order reclassifying the Clark Industrial Estate 5 (IE5) as an international center of commerce, industry, leisure and recreation.

Mr. Duterte signed on June 4 Executive Order (EO) No. 81. The Palace released to reporters copies of the order on Monday.

The new order amends EO No. 716 (series of 2008), which declared the IE5 a logistics center and ordered, among others, that the Clark International Airport Corp. (CIAC) “shall only engage in aviation, aviation-related services and aviation-related logistic activities.”

The new EO noted that the IE5 has “attracted international attention and interest as the Asia-Pacific Region’s emerging premiere hub for aviation and international logistics, as well as an international center for commerce, industry, leisure and recreation.”

With the new EO, the CIAC is now “authorized to enter into lease agreements and similar business arrangements covering the IE5 for a broad range of commercial, industrial, leisure and recreation-related activities.”

The EO, which takes effect immediately, said the move is “vital to the development of the entire Clark area as a globally competitive international commercial center in the Asia-Pacific Region.” — Arjay L. Balinbin

Philippines to bid for hosting rights to world tourism conference in 2021

THE Philippines will be bidding to host the next United Nations World Tourism Organization (UNWTO) General Assembly in 2021, with other Asian countries expressing support for the bid.

In a statement Monday, the Department of Tourism (DoT) said that the Philippines will bid to host the event, held every two years, garnering the support of the Joint Meeting of the United Nations World Tourism Organization Commission on Asia and the Pacific (CAP) and the Commission on South Asia (CSA).

“The bid is timed with the celebration of the quincentennial (500th year) of the world’s first circumnavigation” which reached Cebu in 1521 prior to completing the return voyage to Spain, the DoT said.

This year’s 23rd UNWTO General Assembly will take place on Sept. 9-13 in Russia. At that conference the host for the 24th UNWTO General Assembly will be announced.

Tourism Secretary Bernadette Romulo-Puyat said hosting will give the Philippines the opportunity to show off the sustainability of its tourism programs.

“The Philippines is excited to host the UNWTO General Assembly in 2021, primarily to showcase the country’s sustainable tourism programs and actions and secondly, to give importance to the nation’s significant role in world maritime history and to draw highlight to our country’s discovery,” she said.

During the UNWTO meeting in Bhutan on June 4, the Philippines was chosen as member of the Committee on Tourism and Sustainability and Committee on Statistics and the Tourism Satellite Account. — Gillian M. Cortez

Filipino curriculum backers cite absence of SC oral arguments

ALYANSA ng mga Tagapagtanggol ng Wikang Filipino (Tanggol Wika) on Monday filed a protest against the Supreme Court’s (SC) March 5 resolution denying its motion to halt the exclusion of Filipino as a core university subject.

In a 20-page letter of protest addressed to the Justices, Tanggol Wika said public oral arguments should have been held for all K to 12 related cases.

“We believe that the High Court should have conducted public oral arguments for all K to 12-related cases as these cases are transcendental in nature, having unique and compelling arguments, filed by a long list of individual leaders of organizations that count tens of millions of citizens among its fold,” it said.

“It is unfortunate that the High Court did not conduct public oral arguments for the case that Tanggol Wika filed, and for the other K to 12-related cases,” it said, noting that High Court conducted oral arguments on the issue of same-sex marriage which was filed by an individual.

In a five-page notice of resolution dated March 5, the SC “denied with finality” the motions for reconsideration against its Oct. 9, 2018 decision.

It reiterated that the assailed Commission on Higher Education (CHED) Memorandum Order No. 20, which removed Filipino and Panitikan as required subjects for university did not violate the Constitution as it merely transferred the subjects to primary and secondary education and only provides minimum standards for the general education component of all degree programs.

Tanggol Wika also said that the decision of the SC is “patently unjust as it involves the violation of the Constitution’s language provisions, acts that will kill the soul of the General Education curriculum in college — Filipino and Panitikan; and clearly, the assailed decision is not only ‘potentially’ but also actually ‘capable of causing unwarranted and irremediable injury or damage to the parties.’”

It added that it caused the displacement of hundreds of faculty members in various universities with “full impact” potentially affecting at least 10,000 educators.

The group also noted that the memorandum of CHED is “illegal and unconstitutional act” of stopping “what has been initiated,” which is contrary to the mandate of the Constitution for the official use of Filipino in the education system to be sustained and continued.

It also said that relegating the two subjects to the elementary and secondary education only, “defeats the purpose laid down by the Constitution and certainly go against the Constitutional Commission’s vision.”

Article XIV, Section 6 of the Constitution states that Filipino “shall be further developed and enriched based on the existing Philippine and other languages.” It also said that the government shall take steps to initiate and sustain Filipino as medium of official communication and language of instruction. — Vann Marlo M. Villegas

Ease of doing business at the BIR

A few weeks ago, I attended the first anniversary celebration of the Ease of Doing Business Law (Republic Act No. 11032) at the Philippine International Convention Center. RA No. 11032 was signed on May 28, 2018 and became effective on June 17, 2018. Many stakeholders and government officials were present to witness this milestone, all curious how the law has improved government services since its effectivity. Anniversaries are always nostalgic, as they force us to look back and see what has been accomplished in the past year.

Listening to the speeches of various government officials enumerating the responsibilities and mandate of the Anti-Red Tape Authority, I did hear the sincerity and desire to improve the pace at which government services are delivered. I even met some of the familiar faces from the Bureau of Internal Revenue (BIR) who are tasked to implement the provisions of the Ease of Doing Business Law within the Bureau. Their mission is not easy. Breaking down decades-old practices and mindsets at the BIR is definitely a gargantuan task that needs to be done as soon as possible.

The good news is that the BIR has implemented changes. Various regulations setting strict timelines for processing BIR applications have been issued. A 2019 Citizens Charter is posted on the website. At the last BIR kickoff event held in February this year, the BIR showed a case study proving that an application for business registration can be done within the same day. Some taxpayers during an ease of doing business seminar I attended even acknowledged that they were able to get a Certificate Authorizing Registration (CAR) for transfer of land ownership within the three- to 20-day period specified in Revenue Memorandum Circular No. 048-18. These are indeed noteworthy developments.

I was even optimistic when I joined in May this year a workshop conducted by the Department of Finance (DoF) on what an ideal taxpayer experience should be. It was a forum where I was able to share my expectations every time I have to deal with the BIR. These are signs that indeed the DoF and the BIR are, at the very least, interested to know what taxpayers expect from the BIR. I get all excited when I imagine a future when taxpayers are treated like VIP clients. Perhaps then, timelines will be set and met for every transaction; and businesses will finally be able to achieve a bit of certainty in planning transactions that require BIR approval or action prior to implementation.

However, much needs to be done. Listening to the speeches brought me to reminisce about the old days when I was still starting my tax practice. Retrospection is generally flawed, as it is mostly seen through rose-colored glasses, but I remember that dealing with the BIR then was simpler and easier. When a request for ruling was submitted, I could expect that the ruling would be issued within three to six months. Of course, there were requests that were complicated and would need more time to process, but I know that I would generally be able to get a ruling or approval within a reasonable amount of time.

Unfortunately, the same is no longer true. Most times, a client will ask me how long it would take to process their application for a request for ruling or approval of their computerized accounting system. Unfortunately, I am always reluctant to give a specific timeline, knowing the unpredictability of when an approval or ruling will be issued.

The Ease of Doing Business Law states that all applications or requests must be acted upon within three working days for simple transactions and seven working days for complex transactions. For applications or requests that are highly technical, the processing time shall in no case be longer than 20 working days or as determined by the government agency or instrumentality concerned, whichever is shorter. To ensure that the application is not buried in the quagmire of bureaucratic red tape, the law limits the number of signatories to three officers directly supervising the office or agency concerned.

Failure to act on an application or request within the prescribed processing time shall be deemed approval of the application, provided that all required documents have been submitted and all required fees and charges have been paid.

The timelines set by the law are definitely strict and short. Perhaps 20 days is pushing it and does not consider the limited resources of government agencies such as the BIR. Limiting the signatories to three needs to address the issue of trust and confidence within the BIR. But dura lex sed lex, indeed.

Considering the lack of resources within the BIR, maybe it is time to evaluate the number of transactions that require prior approval or confirmation rulings. If the BIR does not have enough manpower to look at the thousands of pending applications, it is probably time to consider whether removing the prior approval or confirmation ruling requirements for simpler transactions is acceptable. The BIR has started this move, particularly in the tax treaty relief application for dividends, royalties, and interest, where the submission of the required documents is sufficient without need of waiting for a confirmation ruling. Perhaps, taxpayers can even be allowed to rely on prior rulings issued to them, if there has been no change in the facts or circumstances during the intervening period.

In two decisions, the Court of Tax Appeals (CIR vs. Dakudao & Sons, 2015 and CIR vs. Lucio L. Co, et al, 2018) held that a BIR confirmation ruling for a tax-free exchange is not a condition sine qua non for the availing the tax exemption. The Supreme Court (in Deutsche Bank AG Manila Branch, vs. CIR, 2013) also held that the period of application for availing of tax treaty relief as required by Revenue Memorandum Order No. 1-2000, should not operate to divest entitlement to the relief, as it would constitute a violation of the duty required by good faith in complying with a tax treaty. Yet, most revenue district offices (RDOs) still require the BIR confirmation ruling before processing the certificates authorizing registration (CARs) for transferring shares of stock or real properties involved in the transactions. Perhaps the BIR can consider allowing the respective RDOs to process the CAR based on the surrounding facts and circumstances submitted to them. However, the varying interpretations and requirements of the respective RDOs is another problem worth another article.

The BIR’s task of expediting its processing time in compliance with the Ease of Doing Business Law is indeed an enormous task. It requires reengineering procedures. Mindsets have to be pivoted and processes have to be streamlined. The good news is that the BIR has started in this task and improvements can already be seen and felt by taxpayers. We can only hope that, perhaps, same time next year, we will once again celebrate the anniversary of the Ease of Doing Business Law with a triumphant pronouncement that doing business with the BIR has indeed become easy and, at times, even pleasurable.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Eleanor Lucas Roque is the head of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Facing up to the managerial challenges of the Fourth Industrial Revolution

The theme of the World Economic Forum (WEF) which was held in Davos, Switzerland over the four-day period of January 22–25, 2019, was “Globalization 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution.”

The conference focused on four global transformations that will define the next wave of globalization. Among these, the one that is certain to have the most cathartic and far-reaching impact on the way business is organized and conducted today is the bewildering array of technological changes wrought by the ongoing Fourth Industrial Revolution (4IR), and the amazing speed at which these developments are taking place. The uncertainties posed by the 4IR is unquestionably the most unsettling among the many issues facing the well over 1,000 corporate CEOs and business leaders who attended the WEF in January 2019.

A major concern among today’s distraught corporate CEOs and COOs is how to adapt quickly enough to the rapid and unpredictable changes taking place under the chaotic conditions that prevail in today’s business environment.

There is an emerging consensus that in order to survive and remain viable in today’s extremely volatile world, businesses must be organized for maximum flexibility.

THE DIGITAL PLATFORM BUSINESS MODEL
The past several years have seen the emergence of companies across many industries that employ what are known as digital platforms, a collection of cloud-based software and services that allow businesses to form extended networks of interactive product users and providers. The peer-to-peer ride-sharing company Uber and the hospitality service firm Airbnb are easily among the best-known businesses in this genre.

The term “digital platforms” includes anything from social platforms, such as Facebook and YouTube, to search engines (Google, Bing, Yahoo!), to online merchandisers like Amazon and Alibaba. Digital platforms typify today’s sharing economy, and appear to have universal applicability.

The digital platform business model (DPBM) is a special case of extended value networks (EVNs) consisting of highly interacting players that include customers, owners of physical assets, producers of goods and services, government regulatory agencies, and so on. These ongoing transactions are overseen by business organizations that serve as network nodes for EVNs. The continuous tracking and sharing of information on ongoing transactions, decisions and processes taking place in these EVNs is facilitated by powerful computer software supported by advanced technologies, such as voice recognition and other sensor applications.

DPBMs allow businesses to capture value by facilitating interaction between transacting parties and interconnecting extended networks of users, resource owners, and producers that can be accessed on demand. They create large communities of potential users and suppliers and permit them to scale up transactions among themselves using the Internet, and in this way create value through network effects.

Most importantly, DBPMs give businesses the needed flexibility to adapt with ease to the swirl of technological, market, regulatory, and other changes taking place continuously in their immediate domains — and in the world beyond.

An extensive 2018 study of business organizations around the world showed that the most successful businesses today are those that have adopted DPBMs. These include seven of the world’s top 10 companies — a list that includes Amazon, Apple, Alibaba and Microsoft, and an equal percentage of so-called “unicorn” startups, such as Airbnb, SpaceX, and Grab. Yet, the report observes, fewer than 2% of all companies studied have done so. Undoubtedly, only a small number of the remaining 98% are prepared to adopt the DPBM.

The platform business model can very well serve as an exemplar for tomorrow’s business organizations.

BLOCKCHAIN: A POWERFUL ENABLING TECHNOLOGY
Blockchain, also known as distributed ledger technology, is a transformative enabling technology for the creation and implementation of DPBMs. According to commentary from Fortune magazine:

“… Blockchain has the potential to fundamentally change how we share information, buy and sell things, interact with government, prove our identity, and even verify the authenticity of everything — from the food we eat to the medicine we take to who we say we are. It will also augment other advanced technologies: For example, supercharging both artificial intelligence and the Internet of Things. When you consider moving from the identity of humans to the identity of companies to connected devices to bots, the possibilities become truly endless.”

In essence, Blockchain is a technology that ensures permanence, transparency and privacy in the record keeping of transactions among multiple parties, and provides real-time access to a single source of verifiable information on these transactions. What we have in Blockchain is “an Internet of value — a secure platform, ledger, or database where buyers and sellers could store and exchange value without the need for traditional intermediaries.”

THE CHANGING ROLE OF LEADERSHIP
Business organizations are complex systems that comprise highly interactive components that continuously adapt to each other and to their continuously changing environments. Any change that takes place within the system and its environment, no matter how small, is bound to have ripple effects elsewhere in the system (a phenomenon popularly described as the “butterfly effect”). Organizational managers should, therefore, refrain from focusing on narrowly defined problems, specialized operations or specific issues, and should avoid making changes in any part of the organization without first ascertaining their overall impact.

Adapting to complexity requires us to challenge traditional concepts of leadership. Gone are the days of the archetypal “great leader” who knows best what needs to be done to enhance organizational performance, and who has the necessary personal skills to effectively goad, inspire or intimidate others to play their assigned parts.

In today’s knowledge-driven world, the exemplary leader is not necessarily the one who is the most knowledgeable but one who knows who in the organization or elsewhere has the relevant knowledge and expertise. Her main responsibility is to manage interphase, to create an organizational structure and culture that allows a large number of individual experts both within and outside of the organization to come together in a massive collaborative effort. Her role is not to initiate action but to create context. Her main concern is not to show the way but to set the tone. Organizations must, therefore, be given the utmost opportunity to create their own self-organizing dynamics — with a minimum of administrative control and directions from persons of authority.

The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.)

 

Dr. Niceto “Nick” S. Poblador is a member of the MAP Corporate Governance Committee and a retired U.P. Professor of Economics and Management.

map@map.org.ph

nspoblador@gmail.com

MORE employment and labor productivity

The Philippine Statistics Authority (PSA) released the Labor Force Survey (LFS) April 2019 last week and the result was generally good compared to April 2018: both unemployment and underemployment rates in 2019 have significantly declined, and labor force participation rate (LFPR) has increased. Thus, the labor force Q1 data seem to contradict the GDP Q1 data where growth has decelerated further.

Are things in the labor force really improving? To answer this question, I backtracked and got data for the past five years, not just the last year. The numbers are interesting (see table 1).

One, the LFPR is declining. Meaning more people are postponing joining the labor force, choosing instead to pursue more studies or internships, or bum around. The K+12 must have contributed to this trend too. When LFPR is declining, both unemployment and underemployment rates tend to decline because those who join the LF are more equipped and more confident that they will be hired as full-time or part-time workers or entrepreneurs.

Two, both rates of unemployment and underemployment (people who work below 40 hours a week, or those already working above 40 hours but want additional work) are indeed declining and hence, the employment rate is increasing.

Three, compare election years 2016 (Aquino) and 2019 (Duterte) — higher LFPR in the former. In terms of absolute numbers in LF, 43.3 million vs. 44.5 million, or an increase of only 1.2 million in LF over three years, an average of 0.4 million per year was added to the LF under the Duterte administration. This is not good.

Therefore, labor force Q1 2019 data is actually not as rosy as it initially looks, and the numbers support — not contradict — the macro GDP growth deceleration: 6.9% in 2016, 6.7% in 2017, 6.2% in 2018, 5.6% in 2019 Q1.

Among the employed people, how is the labor productivity of the Philippines compared with its neighbors in East Asia?

I checked the International Labor Organization (ILO) Organization Database (ILOSTAT) for Key Indicators of the Labour Market (KILM). Numbers show that ours is lower than Indonesia, Thailand, Malaysia, but higher than average for world lower middle income (see table 2).

I also checked the same database from ILOSTAT-KILM for the unemployment rate covering many countries. There seems to be wrong data for the Philippines 2017: an unemployment rate of 2.6%, and a combined rate of unemployment and potential labor force (LU3) of 5.9%. What??

The market-oriented reforms for efficiency (MORE) for the Philippines in the labor sector — more competition and deregulation, more investments and entrepreneurship, investors hiring more workers or people hiring themselves as entrepreneurs — mean faster growth.

The main hindrances to this — more/higher taxes and fees, more bureaucracies and business permits that take a long time to be secured, government-created monopolies and oligopolies via congressional franchising, agency and local government franchising, and low respect for rule of law.

We need fewer hindrances, we need more growth, more employment, more labor productivity and, hence, higher income for workers and entrepreneurs.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Lightweights for Speaker

“I am the Speaker, I can always impeach the President,” Speaker Pantaleon Alvarez was supposed to have boasted, according to the President’s daughter Sara Duterte-Carpio. If he did, he must have considered himself in a position of power. However, Mr. Alvarez denied he made such a statement.

Whether he did say it or not, the fact is that the Speakership is a position of power. When Manuel Villar was the Speaker of the House of Representatives, he caused the impeachment of then President Joseph Estrada. Seconds after the opening prayer, and dispensing with the traditional roll-call, Speaker Villar read a resolution signed by more than two-thirds of the members of the House sending the impeachment case to the Senate for trial.

The Speaker is the presiding officer of the House of Representatives. His duties and powers are as follows:

a. prepare the legislative agenda for every regular session, establish systems and procedures to ensure full deliberation and swift approval of measures included therein;

b. conduct regular monthly caucus of all members or groups thereof or as often as may be necessary to discuss priority measures and to facilitate dialogue, consensus and action on issues and concerns affecting the House and the performance of its functions;

c. exercise general supervision over all committees and, in furtherance thereof, conduct regular monthly meetings with the chairpersons and vice-chairpersons of all standing and special committees to set legislative targets, review performance in the attainment of targets, ensure that the priority legislative measures of committees are attuned to the legislative agenda of the House, and resolve such other issues and concerns that affect the operations and performance of the committees.

But a few months after Speaker Alvarez was said to have boasted he could impeach the President, he was removed from the Speakership. A number of congressmen told mass media reporters that the President’s daughter Sara had a hand in the ouster of Mr. Alvarez as Speaker. Ms. Duterte-Carpio denied she had anything to do with Mr. Alvarez’s fall. But President Duterte said in a speech during the 44th Philippine Business Conference and Expo, “Be careful with that woman. This is a female. She operated in Davao as mayor. Look at what happened in Congress, (Alvarez) was ousted.”

The fact that Mr. Alvarez was removed from the Speakership by the mayor of a provincial city, a “female” at that, to use the word of the misogynist President, showed that Mr. Alvarez was a political lightweight vulnerable to the schemes of the wily, the ambitious, and the more powerful.

Mr. Alvarez graduated from Ateneo Law School in 1983. He went into private practice of law in 1984. In 1992, he became an action officer at the Manila International Airport Authority (MIAA). He was promoted to chief operating officer of MIAA in 1995, a position he held until September 1997.

He was elected representative of the 1st District of Davao del Norte in 1998. President Gloria Arroyo appointed him acting Secretary of Transportation and Communications in 2001.

He was elected again as representative in 2016. Newly elected President Duterte made known to his political allies in the 17th Congress that his preference for Speaker was his province mate and long-time friend. When the daughter of the President turned against Speaker Alvarez for whatever reason, whether it was the alleged braggadocio of Mr. Alvarez or the political agenda of the President’s daughter, Mr. Alvarez was toppled from his pedestal.

While the Speakership is a position of power, the person occupying it must be equal to the position. He or she must himself or herself be powerful, lest he or she become expendable.

The Speaker must be a person of gravitas. Before he aspires for the Speakership, he should already be a person of achievements. He should have attained national recognition for his accomplishments; he should be a political giant and leader of a major political party; and he should have the staunch support of the president. Many past Speakers — from the Commonwealth years, through the post-World War II era, to the post-martial law period — were such men.

The very first Speaker, Sergio Osmena, Sr., belonged to the rich and prominent Chinese-Filipino family with vast business interests in Cebu. He served as a courier and journalist in the war staff of Emilio Aguinaldo during the Philippine-American War. He placed second in the 3rd Philippine Bar exams (1903). He was governor of Cebu before he was elected speaker of the first National Assembly in 1907.

The second Speaker was Manuel A. Roxas. He was a descendant of Antonio Roxas y Ureta, the brother of Domingo Roxas y Ureta, the progenitor of the Róxas de Ayala and Zóbel de Ayala clans. He graduated as valedictorian from the University of the Philippines School of Law and subsequently topped the bar exams of 1913. He was governor of Capiz before he was elected speaker.

Jose Yulo placed 3rd in the bar exams of 1913. Because he was underage, he was not allowed to practice Law until two years later. He became known as one of the best corporation lawyers of his time. He helped draft the Philippine corporation law. At first, he declined all offers of government position as his law practice was very lucrative. He eventually relented to President Quezon’s pleas. He was Justice Secretary prior to his election to the National Assembly and election as Speaker.

The Speaker of the 1st Congress of the Republic of the Philippines was Eugenio Pérez who was elected member of the Philippine Legislature for eight consecutive terms. He along with Manuel Roxas and Elpidio Quirino formed the Liberal Party after the Philippines regained its independence in 1946.

Jose Laurel Jr. was the eldest son of Jose P. Laurel, who was president under the 2nd Philippine Republic (Japanese Occupation) and a colossal figure in the Senate in the 1950s. Jose Jr. himself was elected representative for four terms — two during the Commonwealth years and two after World War II — before becoming Speaker. Because his father had declined the nomination of the Nacionalista Party as its presidential candidate in 1953 in favor of Ramon Magsaysay, the Laurels enjoyed in return the full support of President Magsaysay.

The Speaker of the House of Representatives after the restoration of Congress in 1986 was Ramon Mitra. He had been a congressman for two terms and was a senator prior to the proclamation of martial law in 1972. As he was a bitter critic of President Marcos, he was among the first to be arrested and jailed when the country was placed under martial law.

In 1984, he was elected as an Assemblyman to the Regular Batasang Pambansa where he continued to be a thorn in the side of Marcos. After Marcos was chased out of the country in 1986 and national elections were restored in 1987, he ran for the second district of Palawan and won. With the members of the parliament of the streets swept into the House of Representatives, Rep. Mitra, a stalwart in the struggle against the Marcos Dictatorship, was elected Speaker.

Jose de Venecia was an entrepreneur before he entered politics. He pioneered overseas contract work for Filipinos. He went into port operations, mass housing, and oil exploration in the Middle East, leading to the employment of millions of Filipinos. In the 1970s, he started oil and gas exploration in offshore Palawan. He was the brains behind the dollar-remittance program for overseas Filipino workers worldwide.

He ran and won as congressman in 1969. He was acclaimed one of the Ten Outstanding Congressmen. He was elected again in 1987. In 1992, he initiated the unification of three political parties, including President Ramos’ Lakas ng Tao into the dominant party Lakas-NUCD.

Manuel Villar was a recipient of many awards for his achievements in his professional and business career before entering politics in 1992. Forbes magazine ranked him among the Top 5 richest men of the Philippines long before he became a member of Congress.

He took over the then moribund Nacionalista Party. He is known to have bankrolled the candidacy of many members of the House of Representatives. That is why it was a cinch for him to get elected Speaker.

Except for Messrs. Perez and Laurel, all those mentioned were presidential timbers. Messrs. Osmena and Roxas became president. Messrs. Yulo, Mitra, de Venecia, and Villar were their respective party’s candidate for president but lost to Carlos Garcia, Fidel Ramos, Joseph Estrada, and Benigno Aquino III, respectively. Mr. Laurel ran as the vice-presidential running mate of Mr. Garcia but lost to Diosdado Macapagal, Jose Yulo’s running mate.

Are the current aspirants for Speaker of the House of Representatives men of gravitas? Are they presidential timbers? Or are they lightweights who can be pushed over the top like Mr. Alvarez, who is again an aspirant for the Speakership?

 

Oscar P. Lagman, Jr. is a retired corporate executive, business consultant, and management professor. He has been a politicized citizen since his college days in the late 1950s.

Why the opposition lost in the 2019 Midterm (Senatorial) Elections

The opposition lost. Not one of the Liberal Party (LP)-dominated “Otso Diretso” senatorial contenders made it to the 12 Senate seats up for grabs. Not even its frontrunner candidate Bam Aquino who was a reelectionist or Mar Roxas who topped the 2004 senatorial race (15 years ago!), both with outstanding legislative track records to their credit, made it against the other reelectionist senators and political newcomers who ran under the President’s ruling party The Partido Demokratiko Pilipino–Lakas ng Bayan (PDP–Laban) or under Davao City Mayor Sara Duterte-Carpio’s regional party, Hugpong ng Pagbabago (HNP). To date, questions about the integrity of the 2019 midterm elections remain in public discourse.

Whether or not there was election manipulation or vote rigging, the results of the 2019 midterm elections painted a picture of a positive referendum on the performance of the country’s president. This is contrary to the opinion of some observers of Philippine politics who thought that the midterm elections could penalize the president, hence, picturing the electorate as punitive and the midterm elections as a protest vote against the president. But the opposition lost! Why did the opposition lose the senatorial race?

A confluence of factors can help explain why the opposition lost. One set of factors can be understood from the demand side (voters) and another from the supply side (parties and candidates) of the electoral competition.

To begin with, the race to the Senate was not highly contested. It was very divisive, yes, but not highly contested. Candidates did not feel obliged to be more responsive to voters and their preferences. There were 62 candidates who competed for the twelve seats in the Senate. But how many of these candidates participated in public debates?

Administration bets have obviously stayed clear from these debates, not because they were afraid or intimidated, but simply because they did not see any electoral value or add-ons in joining these debates. For the opposition, it was different. Lacking resources, the opposition saw the debates as gratis opportunities for electoral mileage. But without administration candidates in the debates to challenge or to respond to, the opposition could not present itself as better or strong contenders.

Due to the lack of resources and weak party institutionalization of the Liberal Party, Otso Diretso failed to microtarget voters for personalized mobilization. Yes, the LP had Project Makinig (PM), “a nationwide, technology-driven, door-to-door” listening campaign launched by the party in October 2018 that aimed at “re-connecting” the party with the people, especially at the grassroots. But how many voters did the party reach? How many did it mobilize? How many did it “re-connect” with? With its launch almost seven months before the midterm elections, the project was rather late.

The effort of the LP to focus its campaign strategies at grassroots organizing and personal contacting of select voters was commendable. But strategically, what impact did it make particularly in vote-rich provinces and regions in the country? Did the voting publics know about Project Makinig in the first place?

In terms of platforms, how different were the opposition candidates from the other contenders? Didn’t they promise better lives and a more peaceful Philippines just like the others? Didn’t they promise to work for social and economic justice, inclusive growth and development, and the country’s sovereignty like the others? With the same or similar platform and agenda, the voters often must settle for the candidate who is either popular or who they are familiar with. The endorsement of, and alliance with, the popular incumbent president sealed the victory of the administration candidates.

The opposition lost not just because they failed to microtarget voters, but more fatal than this omission was a campaign strategy to turn the senatorial race into a zero-sum game, intentionally or not. Worst, it was a zero-sum game between them, the opposition slate, and the popular president. With the President’s popularity across all classes of society, the opposition’s boat was definitely sinking, and its votes shrinking.

By defeating the administration bets and allies either through negative campaigning or shaming (as some political observers have surmised already), Otso Diretso thought that votes would automatically transfer to them. They were wrong. The negativity manifested itself strongly at the ballot box.

Turning the senatorial race into a zero-sum game weakened what was already a weak campaign strategy. The opposition identified multiple issues where each issue took many stances. Under such conditions, voters are more inclined to settle for the candidate whose stances are closest to their own. Unfortunately, we have not yet reached the stage wherein voters can truly vote on issues. This is due to a lack of full information, which is either a problem of availability or accessibility of information, or both.

Without complete information (and ample time as well as the temperament to consume information judiciously) voters cannot decide on the basis of the actual salience of any issue to them. Hence, the voters often must settle for the candidate who is either popular or who they are familiar with. Again, it worked against the opposition.

A more alarming omission by the opposition was that it mistakenly focused more on its strategy and less on its strategic goals. The immediate goal of the senatorial race was to win votes. Administration bets and allies campaigned for votes. But the opposition campaigned for seats. What a huge difference!

So busy with defeating the President’s candidates, the opposition exhausted limited resources to persuade voters by offering a government and policy agenda that questioned and sought to replace the incumbent government’s priorities. It campaigned against the government’s war on drugs primarily due to human rights violation concerns, its “alliance” with China, the movement towards charter change and/or federalism, as well as the president’s misogynist remarks, among other things.

Doing so, they projected themselves as a group of people who could push for change. But they fell short of convincing the voting public that they were the right group to lead the charge. The combined effect of the president’s popularity and the relatively good economic performance of the country under his watch undermined the opposition candidates’ incentives to present themselves as leaders for change.

What seemed to have happened was that the government was “rewarded” instead of “punished” despite the “excesses” and “failures” that dominated the campaign discourse of the opposition.

And so, what is next for the opposition after the 2019 midterm elections? With only four opposition Senate members (with one still detained) left in the incoming 18th Congress, will the opposition make or break the Senate? What does the opposition need to do to (re)gain relevance in the synchronized national and local elections in 2022? They need to recalibrate. For example, they need to microtarget voters and match their strategy to context.

 

Diana J. Mendoza, PhD, is Chair of the Department of Political Science at the Ateneo de Manila University.

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