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Taxation of foreign POGO workers to start this month

THE Bureau of Internal Revenue (BIR) will start to collect taxes this month from foreign workers employed by Philippine Offshore Gaming Operators (POGOs), Finance Secretary Carlos G. Dominguez III said.

“I talked to the BIR end of last week and they said they are already in position to start collections from foreign workers in the POGO industry,” Mr. Dominguez told reporters in Pasay City on Monday.

“BIR said they will start making the collections in July,” Mr. Dominguez added.

He noted that the government foregoes revenue of about P2 billion a month for every 100,000 foreign workers that do not pay tax, amounting to P24 billion a year.

Earlier, the BIR said that foreign nationals and non-residents planning to work in the Philippines should obtain a Taxpayer Identification Number (TIN) before securing a work permit.

“Calls have been made for a public inquiry into the proliferation of foreign workers in the country,” the bureau has said.

The DoF led a task force to consolidate data on foreign workers. The initial finding turned up 138,000 foreigners, with 54,241 holding alien employment permits and 83,760 holding special working permits.

The DoF estimates that foreign workers earning an average of $1,500 per month and taxed at 25% of gross income can generate P32 billion in taxes each year. — Reicelene Joy N. Ignacio

Palace proclaims new IT economic zone in Bonifacio Global City

PRESIDENT Rodrigo R. Duterte issued proclamation designating as a special economic zone a building at the Bonifacio Global City in Taguig City, which will be known as BGC Corporate Center.

The site was classified as an Information Technology Center.

The proclamation signals movement in the ecozone approval process for the information technology industry, which the Philippine Economic Zone Authority said last week had about 22 pending proclamations from the Office of the President.

Mr. Duterte signed on June 26 Proclamation No. 759, known as “Creating and designating a building and the parcel of land upon which it stands, located at Block 1, 30th Street, Corner 5th Avenue, Bonifacio Global City, Taguig City, as a Special Economic Zone (Information Technology Center), pursuant to Republic Act No. 7916, as amended by Republic Act No. 8748.”

Mr. Duterte signed the proclamation “upon the recommendation” of the Board of Directors of the Philippine Economic Zone Authority (PEZA).

The building has a gross floor area of 35,439.29 square meters. The land where the building stands has an area of 2,149 square meters.

The project’s developer was Ayala Land Inc.

“This office tower is bound by two main roads, 11th Avenue and 30th Street and within close proximity to Ayala Land Premier’s residential condominium One Serendra, Ayala Land’s Seda hotel and steps away from Bonifacio High Street. With a Gross Leasable Area of 28,000 square meters, [the building] is set to capture the increasing demand for office space in Bonifacio Global City,” Ayala Land said. — Arjay L. Balinbin

Dominguez says gov’t taking ‘close look’ at sugar import liberalization

FINANCE Secretary Carlos G. Dominguez III said that the government is looking into liberalizing sugar imports because prices of the domestic product are uncompetitive.

At a news conference for the Pre-State of the Nation Address (SONA) Economic and Infrastructure Forum at the Philippine International Convention Center in Pasay City Monday, Mr. Dominguez said domestic prices are double the world market price, weighing on the competitiveness of the food processing industry.

“Just compare it to Thailand, where they have a very, very healthy food and fruit processing industry. There the price of sugar is world market price even though they are also producers of sugar,” he said.

“We are looking at this and saying maybe we should really take a close look at who is benefitting from these restrictions her and probably… some kind of liberalization will actually benefit the country as a whole,” he said.

The interests of the sugar and food industry have clashed in recent months, with Philippine Food Exporters, Inc. (PhilFoodex) President Roberto C. Amores saying that domestic producers are greatly affected by the high cost of domestic sugar.

Confederation of Sugar Producers (CONFED) Spokesperson Raymond V. Montinola said that the price of sugar has not drastically increased, and described calls for liberalization as a lobbying effort by the food processors to ease the rules on imports.

He added that imports could threaten over 5 million jobs tied to the industry.

SRA Administrator Hermenegildo R. Serafica has dismissed the need for imports since supply is sufficient.

“We still have lots of sugar in warehouses so if need be, SRA is always prepared to do what it takes,” he said in Pasay City last week.

Meanwhile, sugar production as of the first week of June rose 1.29% year-on-year, the Sugar Regulatory Administration (SRA) said.

SRA said raw sugar production was 2.064 million metric tons (MMT) in the first week, up from 2.038 MMT a year earlier. This is equivalent to 41.29 million 50-kilo bags, compared with 40.76 million a year earlier.

The crop year for sugar starts in September and ends in August.

Demand for raw sugar declined 16.89% to 1.61 MMT. Total sugarcane milled decreased 7.03% year-on-year to 21.67 MMT. Refined sugar output fell 6.65% year-on-year to 780,430.45 MT.

The millgate price fell 20.07% to P1,479.22 per 50-kilo bag. The retail price was stable at P45 to P55 per kilo. — Vincent Mariel P. Galang

Business sector pushing for earlier tax cuts

PCCI

BUSINESS GROUPS questioned proposals to lower corporate income tax in phases, saying that the cuts could come sooner.

Philippine Chamber of Commerce and Industry (PCCI) President Ma. Alegria Sibal-Limjoco said tax reforms contained in the second package of legislation put forward by the government, known as the Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bills which were left unpassed by the last Congress, call for phased reductions in corporate income tax (CIT) which she said the government should consider implementing sooner.

“There is the lowering of the corporate income tax… why 10 years? Maybe (the cuts) can come (over a shorter period),” she said in a text message following the government’s Pre-State of the Nation Address (SONA) economic briefing at the Philippine International Convention Center.

The House version of the TRABAHO bill intends to cut CIT to 20% from 30% by 2029 while the Senate version proposed to reduce it to 25% on the first year.

She noted that the main question about TRABAHO now is its ability to hurdle Congress, with a new set of legislators taking over effective yesterday as the term of the 17th Congress expired.

“The big question now is in proceeding with BBB (Build, Build, Build), what are the alternatives with Package 2 appearing to have difficulty passing Congress.”

Commenting on the government’s reforms so far, she said businesses support earlier components of tax reform and looks forward to “other infra (infrastructure initiatives)… for water and sanitation, waste management including waste to energy facilities, disaster resilient infra,” she added.

The American Chamber of Commerce of the Philippines, Inc. (AmCham) also cited underdeveloped sectors that could be given more attention.

In a text message, AmCham Senior Adviser John D. Forbes said, “The forum correctly highlighted much of the progress and success of the current administration, especially in fiscal management and hard infrastructure. In the future it would be interesting to hear more information on programs to make the poorly-performing agricultural sector reach its potential.”

The Philippine Exports Confederation, Inc. also sought more information regarding the implementation of the mandatory e-invoicing under the first tax reform law, known as TRAIN, and support for micro, small and medium enterprises (MSMEs).

In an interview, PHILEXPORT President Sergio R. Ortiz-Luis Jr. said, “We were looking for…pronouncements to support MSMEs… especially as the labor related policies that have been approved will hurt MSMEs.”

“For the exporters, we’re looking at the implementation of e-invoicing of TRAIN 1… e-invoicing is critical to facilitate tax reforms,” he added. — Katrina T. Mina

Bank secrecy lifting seen key to ‘A’ credit rating — BSP

AN UPGRADE to a credit rating of “A” is achievable in the next 18 months if the government addresses issues like the lifting of the bank secrecy law and raises per capita income, according to Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo.

“S&P gave us BBB+ with a stable outlook. What we want is for the next 18 months that we’re able to address all the issues raised including per capita income, the current account… the secrecy of bank deposits. Once these are addressed probably we can expect an upgrade in the next 18 months,” Mr. Guinigundo said in a news conference during the 2019 Pre- State of the Nation Address (SONA) Economic and Infrastructure Forum in Pasay City.

Mr. Guinigundo, however, said that the government should push for these developments by legislating the remaining components of the Comprehensive Tax Reform Package (CTRP), because these are needed for overall fiscal health, and not simply to obtain a credit rating upgrade.

S&P Global Ratings increased the Philippines’ credit rating to BBB+ from BBB.

Asked if he is positive that these can be achieved in the next 18 months, Mr. Guinigundo replied, “It is not a question of whether we are positive. It’s what we need to be able to address those issues raised not only by credit rating agencies but also by the BSP itself.”

“We need to establish the paper trail of all these transactions… Once the deposits hit the banks, ‘di mo pwede galawin iyon. Hindi ka na pwede magtanong (you can no longer do anything, You can no longer ask questions).”

“We need to get those bills enacted in Congress because that’s what we need to be able to sustain a high level of economic growth for our country and for our people. If the credit rating agencies recognize those accomplishments, fine, they give us credit upgrade. But we are not doing this for the sake of getting an upgrade,” Mr. Guinigundo said.

Finance Secretary Carlos G. Dominguez III has said that the recent upgrade from S&P should encourage lawmakers to pass the whole CTRP in two years to be able to achieve a higher credit rating of A.

“We want to pursue the remaining tax reform measures to ensure sustainable financing for the infrastructure and human capital expenditures,” Mr. Dominguez said.

Mr. Dominguez clarified that package 2 of the CTRP, which seeks to rationalize corporate income tax, will not remove fiscal incentives but only modernize them.

“We want our tax incentives program to be like those in other countries,” Mr. Dominguez said.

Mr. Guinigundo, on the other hand, said that a credit rating upgrade would be good both for the private and public sector, but is not the main reason for the push for passage of the CTRP.

“May benefits din iyang credit upgrade. (A credit rating upgrade will bring with it a number of benefits) ‘Yung tungkol sa TRABAHO and other tax reform packages, are they good? (Are the tax reform packages including TRABAHO good?) Yes. Because it we are able to pass those revenue-raising laws, then our propensity to borrow from abroad will be reduced. Yung level of both external and internal indebtedness will be much less. Hindi mo na kailangan umutang (the need to borrow externally and internally will be reduced) because you’re able to pay your way in supporting the Build, Build, Build program,” Mr. Guinigundo said.

Mr. Guinigundo also said the Philippines and its latest Panda bond float amounting to 2.5 billion yuan received a rating of AAA from China Lianhe Credit Rating Co. Ltd.

“We raised funds through the Panda bond market and they gave us 32 basis points. A bond given 32 bps is actually an AAA. As far as China is concerned, the Philippines enjoys an AAA credit rating,” he said. — Reicelene Joy N. Ignacio

Economic reforms seen driving growth to 7% in three years

THE PHILIPPINES is on track to hit 7% economic growth in three years with the acceleration of the Build, Build, Build program, the reform of the tax system, and other economic reforms, Finance Secretary Carlos G. Dominguez III said Monday.

“First is to accelerate implementation of the Build, Build, Build infrastructure program. We have, for the first time in history, exceeded 5% of GDP (gross domestic product) in spending on infrastructure and we are on track to achieve 7% of GDP in three years time,” Mr. Dominguez said in his speech during the 2019 Pre-State of the Nation Address (SONA) Economic and Infrastructure Forum in the PICC.

Mr. Dominguez added that the government seeks to pursue the remaining tax reform packages and economic reforms to increase foreign direct investment (FDI) and generate jobs.

According to Mr. Dominguez, implementation of measures such as the National ID system, the Ease of Doing Business Law, Universal Health Care and the Rice Tariffication Law, will help achieve the targeted growth.

There is a need to “improve productivity of agriculture including distribution of individual titles to land reform beneficiaries,” Mr. Dominguez said.

“All these will help us ensure further GDP growth, lower poverty and more opportunities,” Mr. Dominguez added.

Socioeconomic Planning Secretary Ernesto M. Pernia, meanwhile, said that the National Economic and Development Authority (NEDA) is now fast-tracking the implementation of the national ID system.

“We are now in the stage of procuring various technologies needed… We expect to conduct multiple pilot tests between September and December to make sure that the system is flawless and perfected before we ramp up and increase registration and enrolment,” Mr. Pernia said.

“By mid-2022, we should have enrolled 105 million Filipinos,” he added. — Reicelene Joy N. Ignacio

First Senate bills tackle medical scholarships, drug measures, 14th-month pay

THE PROPOSED Medical Scholarship Act and measures supporting the war against illegal drugs, lowering the minimum age of criminal responsibility, and requiring employers to provide 14th-month pay were among the first bills filed in the Senate Monday.

Senate President Vicente C. Sotto III filed proposed legislation to provide medical scholarships at state universities and colleges, in order to increase the number of doctors working in the public sector.

“There is lack of physicians in the country caused by most doctors preferring to practice in the urban areas than in the rural,” Senator Sotto said in a statement Monday.

“The granting of scholarship to deserving medical students would aid in the increase of the number of physicians in the country.”

Senator Sotto filed a similar bill in the 17th Congress, which failed to make it out of the committee. Under the measure, medical scholars will be required to work in the country for five years after graduating, two years of which must be rendered in a government hospital or office.

The 18th Congress has yet to conduct its first session, but legislators elected to the 17th Congress ended their terms on June 30.

The proposed scholarships will cover tuition fees, laboratory and miscellaneous fees, textbooks, school supplies and equipment, clothing and uniform allowances, travel expenses, board and lodging as well as subsistence and living allowances.

The Senator also filed bills that will improve the system for detaining and penalizing those involved in drug-related crimes. Senate Bill Nos. 2, 3 and 4 proposed to establish a detention program and facility for high-level drug offenders; amend the Comprehensive Dangerous Drugs Act of 2002, creating the Presidential Drug Enforcement Authority; and creating a special court to try and hear cases relating to the illegal drug trade.

Mr. Sotto also re-filed bills that will lower the age of criminal liability to 12 years, from the current 15, under SB 5; and the proposed amendments to the Human Security Act of 2007, by expanding the definition of terrorism and imposing additional sanctions, under SB 6.

He also filed SB 7, in which he proposed the conduct of a hybrid electoral system for national and local elections, through manual voting and counting and automated transmission and canvassing.

Under SBs 8 and 9, Mr. Sotto sought to increase the penalty for perjury, and penalize the publication and proliferation of false content on the Internet.

Mr. Sotto also proposed in SB 10, to require employers in the private sector to provide 14th-month pay, in addition to the mandatory 13th-month salary.

The filings come three weeks ahead of the opening of the first regular session of the 18th Congress on July 22, the same day President Rodrigo R. Duterte delivers his fourth State of the Nation Address. — Charmaine A. Tadalan

Economic team sees prolonged trade war, armed conflict as biggest risks to economy

THE GOVERNMENT has warned that prolonged trade disputes or the outbreak of armed conflict in strategic parts of the world pose big risks to even small trading economies like the Philippines.

“Definitely a lot of the big risks we have are unresolved trade issues, and also quite frankly the threat of armed conflict, these are going to certainly be negative for us unless there is a resolution to these problems,” Finance Secretary Carlos G. Dominguez III said at a news conference Monday accompanying a forum briefing the public on economic aspects of President Rodrigo R. Duterte’s State of the Nation Address (SONA).

Mr. Dominguez was responding to a question on the factors that he expects will influence the government‚ as management of the economy.

Mr. Dominguez said interest rates and the manufacturing industry are two of the areas where the impact of the United States-China trade war is serious.

Nevertheless, Mr. Dominguez said the economy can weather the risks from trade tensions.

“[W]e should be confident that our economy is not a big trading economy, and our growth is going to be dictated by how we spend domestically,” Mr. Dominguez said at the pre-SONA forum.

However, he noted the country is still “not immune” to global events.

Economic analysts have said that the Association of Southeast Asian Nations can benefit in the short term from the trade war, the region being the top relocation site preferred by businesses affected by the trade war.

Trade Secretary Ramon M. Lopez said attracting investors is one opportunity presented by the trade war.

“We really have to catch and absorb all these investments that will be transferring hopefully from China and other affected countries if they have to relocate to the Philippines,” Mr. Lopez said.

Investment from China, for instance, has grown to $200 million from less than $1 million per year. As recently as 2015, the average was about $17 million annually.

“We just have to continue with this. There are a lot of pending projects, manufacturing, energy and infra,” Mr. Lopez added.

Meanwhile, diversifies export markets will also help the Philippines survive the negative impact of the trade war, Mr. Lopez said.

“We’re talking to a lot of markets not only the traditional markets. We are talking to Russia, the Middle East, and to other places where we usually don’t export to in a big way,” Mr. Lopez said, adding that new products, higher value-added and maximizing the preferential tariff schemes granted by the US and the European Union will also help the Philippines offset the negative impact of the trade war. — Janina C. Lim

Tax exemption of expat employees under tax treaties

Can expatriate employees assigned to the Philippines qualify for personal income tax exemptions under tax treaties? This is a question often asked by foreign corporations sending employees to the Philippines for various purposes.

Most tax treaties to which the Philippines is a signatory require compliance with all three conditions to be exempt for income tax in the`Philippines, namely:

a. The employee stays in the Philippines for a period or periods not exceeding 90 or 180 days in a calendar or taxable year;

b. The employee is paid by, or on behalf of, a nonresident employer, and

c. The compensation is not borne by a permanent establishment or a fixed base that the employer has in the Philippines.

Many expatriate employees sent to the Philippines could easily qualify for exemption from Philippine income tax under the treaty provisions mentioned earlier.

To avail of the exemption, however, the applicant should submit the following:

a. application form for treaty relief and a consularized certificate of residency issued by their home country. The Bureau of Internal Revenue (BIR) has not issued guidelines on the acceptability of an apostille in lieu of consularization

b. a certificate from the Department of Trade and Industry that they are not registered to engage in business in the Philippines

c. a certificate of no pending case. The said certificate must attest that the transaction applied for ruling is not subject to investigation, an ongoing audit, administrative protest, claim for refund or issuance of tax credit certificate, collection proceedings, or subject of a judicial appeal

d. copy of the contract of work

e. passport showing the dates of entry to and exit from the Philippines to allow the checking of compliance with the threshold on the number of days of stay in the country

f. confirmation from the Philippine company with whom the expatriate will work on the duration of the service to be performed by the employee in the Philippines

g. a special power of attorney for the tax agent who will process the application in behalf of the employee.

Applications are filed with and evaluated by the International Tax Affairs Division (ITAD) of the BIR, and the confirmatory rulings are signed by the Commissioner of Internal Revenue.

The reality is that very few apply for treaty relief under this provision. The database of BIR rulings shows that, from 2010 to 2017, only one ruling was issued by ITAD, confirming the qualification of the expatriate employees who applied for exemption. Many decisions to send employees to the Philippines are made on short notice, and the preparation of the treaty availment documents does not become a priority. In addition to the documentary requirements, it takes time-sometimes years-for the rulings to be issued, making it irrelevant as the assignment of the expat is often already completed. The latest ITAD ruling that I researched from our database took three years to be approved.

The reality is that there is a limited paper trail available for the BIR to enforce taxation. The Philippines is a visa-free country to residents of more than 150 territories, and the list includes most of our trading partners. On the other hand, a temporary visitor visa is available for foreigners travelling to the Philippines as tourists or businessmen. Since these employees are being paid by their home office, there are no payments for compensation appearing in the books of the Philippine hosts that would trigger enforcement of the tax.

Under these circumstances, most companies would just disregard both the application for treaty relief and the payment of Philippine income tax for their employees. A few companies would require their employees to declare and pay income tax in the Philippines, while ensuring that such taxes are credited against the income tax payable by the employees in their home country.

A tax treaty relief application would be most useful only for those regularly sending employees to the Philippines.

If the application for treaty relief could be simplified, the requirement can, at least, be acknowledged and respected. An application or notification system similar to that being implemented for tax treaty relief for interest, dividends, and royalties can be adopted. The certificate of residency and the number of days worked in the Philippines would easily be documented. While it may not be easy to show proof that the compensation was not paid by a Philippine company, we can trust our withholding tax system to ensure that such income would have been covered by withholding taxes.

Whether under a simplified system or the regular application for treaty relief, the timelines should conform to the requirements under the law on ease of doing business.

In this way, we can say that we are able respect and uphold the integrity of the privileges we agreed to implement under international agreements.

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.

 

Lina P. Figueroa is a principal of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Constructing transitional justice

Transitional justice has been one of the buzzwords in the peace agreement between the Government of the Philippines (GPH) and the Moro Islamic Liberation Front (MILF), specifically, under the Annex on Normalization. True to its mandate, the Transitional Justice and Reconciliation Commission (TJRC) submitted its Final Report to both panels in March 2016, providing explanations for historical injustice, legitimate grievances, human rights violations, and marginalization through land dispossession, and offering analysis as to the root causes of the Bangsamoro conflict as well as recommendations based on the pillars of Dealing with the Past.

Not much has moved since then, except for some executive rhetoric here and there, some civil society gatherings, and a handful of international actors linking transitional justice specifically to the prevention of radicalization and violent extremism. Fairly recently, however, there seems to be renewed interest in moving forward with transitional justice — especially, with the Bangsamoro Organic Law mandating a mechanism to be established.

Additionally, Executive Order (EO) 79 provides for transitional justice as one of the aspects of the Normalization Program with the Inter-Cabinet Cluster Mechanism on Normalization to take the lead on implementing recommendations of the TJRC. Note that both grounding documents are only within the ambit of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

WHAT OF EXCLUSIONS?
Quite obviously, the huge gap in the construction of transitional justice is the nature of where it shall supposedly operate in — only within BARMM, crafted by GPH and MILF implementing panels, supported by other actors in Track 1 space, and participated in by chosen ones to provide substance and expertise.

Even the grand plan to have a National Transitional Justice and Reconciliation Commission in the Bangsamoro as recommended by the TJRC and mimicked by Representative Jose Christopher Belmonte’s House Bill (HB) 5669 (or An Act Establishing a Transitional Justice and Reconciliation Program for the Bangsamoro, Creating for the Purpose of the National Transitional Justice and Reconciliation Commission for the Bangsamoro, and Appropriating Funds Thereof) seems to fall short for those they are intended to reach. Sure, these shall be the possible mechanisms in BARMM — but what about victims of atrocities committed in other areas in Mindanao during Marcos’ Martial Law?

In the past few days, I, along with other colleagues, have had a opportunity to listen to victims from Ipil, Zamboanga Sibugay; Labangan, Zamboanga del Sur; and Palimbang, Sultan Kudarat. Narratives of atrocities — massacres, torture and mutilation, rape, starvation — were closely similar. These were clearly war crimes and crimes against humanity, possibly even ethnic cleansing. Equally important was that the peoples’ concept of justice was also the same — that of reparation.

Unfortunately, very few claims were awarded by the Human Rights Victims Claims Board (HRVCB) in the whole of Mindanao. Those we spoke to in Ipil and Labangan did not know about the HRVCB nor the law on reparations; in Palimbang, despite experiencing the same atrocious event in their community, only 26 or small percentage of the claimants were awarded. Until now, they are still waiting for justice with the question hanging over them: “Why were we excluded?”

COLLECTION OF TRUTHS
In constructing transitional justice in the country, participation of and consultation with a select few simply will not cut it. There should be a systematic effort to document as many narratives as possible — of individuals and collectives. Just to be “written in” is an important acknowledgement for victims. A community’s desire to commemorate their collective tragedy as a simple message of “yes, this happened… and, yes, never again” is already an empowering tool for them.

For example, women in Palimbang said that a memorial marker at the Tacbil Mosque — site of the massacre of husbands, sons, brothers, and fathers — is of symbolic importance; a marker in the fish pond that turned out to be a mass grave should also be in place to honor those who were killed. Local government officials from Ipil, Lambangan, Palimbang and other similar areas could craft a resolution memorializing their collective narrative. We should never stop collecting truths.

THE RIGHT TO REPARATION
In addition, we should also pay attention to the restoration of victims’ dignity. The central idea of reparation is to try to “repair” the damage or harm done. It can come in material (i.e. compensation) or symbolic forms (i.e. commemoration days, memorialization, etc). It seeks to nurture empathy and solidarity in society — healing our collective pain and brokenness.

But in as far as available reparative mechanism is concerned, the HRVCB has ended its work — awarding 11,103 legitimate claimants out of 75,000 applicants, with supposedly 1% of claimants awarded in Mindanao.

In 2016, then Representative Herminio “Harry” Roque, Jr. introduced HB 226 or An Act Amending Republic Act 10368, Providing Reparations for Victims of Human Rights Violations, Creating a Permanent Human Rights Victims Claims Board, and for Other Purposes. To a large extent, the bill not only seeks to expand the period of coverage of human rights violations beyond Marcos’ Martial Law but also extends accountability to both state and non-state actors. Such an initiative should be revived, albeit amended further to include nuances of context, culture, and identity (i.e. gender, ethnicity, religion).

And maybe, just maybe, we can at least mitigate exclusions, intentional or otherwise, that may trigger tensions in the future. This is our country, our people and sure as hell we know what must be done ourselves, if only the platform for participation had not been closed to us by gods and demigods who took it upon themselves to engineer our future without us in the picture.

 

Ma. Lourdes Veneracion-Rallonza, Ph.D., is an Associate Professor at the Department of Political Science, Ateneo de Manila University. She is also the Program Director on Gender and Atrocity Prevention at the Asia Pacific Center for the Responsibility to Protect.

mrallonza@ateneo.edu

Which Philippine regions are advancing and lagging?

Over the past eight years and two administrations, the Philippine economy posted a high growth rate averaging over 6% a year and an average gross domestic product (GDP) per capita growth of 4.5% a year. The strategic question is: Which regions have been advancing and which have been lagging over the past eight years?

Related to this concern, the Department of Finance (DoF), in its economic bulletin dated June 14, cited that regional inequality, as measured by the coefficient of variation (CV) of gross regional domestic product (GRDP) per capita, diminished slightly in 2018. This coefficient, the report explained, measures how levels of GRDP per capita vary with respect to the national average. It said inequality worsened from 2016 to 2017 but improved in 2018. Over a longer period, however, the CV rose from 1992 to 2012 and further in 2016.

This article analyzes that differential growth of regions as compared to the Philippine average. The analytics are based on the ratio of regional GDP per capita with the national (Philippine) GDP per capita in real (inflation-adjusted) terms. It spans two periods, 2010-2016 (the Benigno Aquino administration) and 2016-2018 (the Rodrigo Duterte administration).

(Note: Questions may arise on data comparability, especially considering the short period of the current administration. That is the risk the author took. A complete comparable data set can only be done in 2023 at the earliest.)

Among the 17 regions, which regions fared better or worse?

IN LUZON:

• The National Capital Region (NCR) advanced in the first period (2010-2016) and lagged in the second (2016-2018). The latter is a positive development as the NCR has almost three times the national income per capita.

• The Cordillera Autonomous Region (CAR) fared badly in the first period and recovered in the second period. By contrast, Ilocos and Cagayan Valley recorded near stagnancy.

• Central Luzon consistently performed well across the two periods.

• Calabarzon, Mimaropa and Bicol posted deceleration across the long span.

IN VISAYAS:

• Western and Central Visayas registered modest improvements in the two periods.

• Eastern Visayas suffered notably, in part due to Typhoon Yolanda in 2012. It has not recovered since then.

IN MINDANAO:

• Zamboanga’s performance was mediocre. Northern Mindanao’s growth was aligned with the national advance.

• Davao posted the most outstanding record in the past eight years from Aquino to Duterte.

• Soccsksargen lagged in the first period and recovered mildly in the second period. Caraga grew in the first period and lagged in the second.

• ARMM suffered a decline in the first period and remained flat in the second.

CONCLUSIONS
During 2010-2016 (under the Aquino administration), eight regions advanced in income per capita while nine lagged. Similarly, in 2016-2018 (the early phase of the Duterte administration), again eight regions moved up while nine fell away.

Only six regions posted growth consistently: the Ilocos, Central Luzon, Western Visayas, Central Visayas, Northern Mindanao, and Davao. Davao and Central Luzon performed best, in that order. I am optimistic that over the remaining years of the Duterte administration, more regions will be added to the list.

The greater challenge is not only in reducing the regional inequality but the high poverty in the regions, especially in Bicol, Visayas, and Mindanao.

There are several factors (agriculture, industry, and services growth) which affected the regional performance. But since agriculture and its linkages are dominant in many regions, agriculture productivity has been found in earlier studies to be a key growth driver. Low productivity usually translates to low income.

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

 

Rolando T. Dy is the Co-Vice Chair of the MAP AgriBusiness Committee, and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.

map@map.org.ph

rdyster@gmail.com

http://map.org.ph

Election cycle: New Leaders in an old system

Our country has witnessed countless national and local elections. Our people have elected many brilliant candidates. A lot of them had the best interests of the nation in mind when they started.

Of course, many undeserving winners also callously participated and took their oath of office although the common welfare of our citizens was farthest from their plans.

Every three years, our Constitution mandates that we endure the long lines and typically chaotic polling centers in order to cast our ballots with the silent hope that this electoral process will uplift the lives of our people and eventually catapult our country to the proud group of democratic and wealthy nations.

However, after so many elections, why are we still at the tail end of global economic progress. What always goes wrong that in spite of the individual competence, even excellence, of our elected officials, we still cannot achieve the level of economic strength that we are supposed to enjoy? As a country, we have already almost surrendered our much delayed goals of industrialization, global competitiveness, technological advancement, and diplomatic and military respectability.

WEAK MULTI-PARTY SYSTEM
Candidates win or loose on the basis of their individual qualifications, campaign machinery, and financial war chest. The political party that they belong to is not a decisive factor for victory or defeat. In fact, there is no distinct economic or political program that the majority of candidates represent. Hence, there is no sacred social contract that is forged between the candidates’ political parties and the people whom they court for votes.

There is no solid commitment on what economic platform shall be collectively pursued after winning the elections. Ultimately, there is no accountability to deliver any long-term and broad formula that will finally end the poverty and backwardness that afflict our nation.

CREATIVE MESSAGING VERSUS COMPREHENSIVE PROGRAMS
We cannot fully blame the candidates for resorting to simply adopting savvy marketing strategies that would capture the imagination of the voters and assure instant name recall. One liners and crisp messages are necessary substitutes for technically confusing advocacies and programs. In other words, candidates don’t need to seriously ride on party commitments because the electorate is not exactly demanding such commitments anyway.

After all, it’s a grand popularity contest that is hinged (whether true or not) on individual claims of integrity, track record, hard work, courage, and many other personal qualifications.

This further explains why the tolerated practice of politicians switching their party affiliation to that of the party in power is the usual aftermath of all our elections. Almost no one is beholden to uphold the party platform because there is not much of that in the first place.

DIFFICULT WAY FORWARD
If we honestly hope that our political system would deliver the much needed social and economic changes that we all wish for, then we will just be frustrated. Remember the old saying that expecting a different result from doing exactly the same thing is foolish. And we haven’t done this exercise only twice.

On June 30, the new leaders that were elected during the recent mid-term elections took their oath. Let’s try to convince many of them to introduce immediate political reforms such as making it difficult to switch party affiliations, demanding the publication of party programs, obliging public debates during campaign periods, ending the pork barrel system, re-engineering the dynamics of the party list in congress, and many more doable reforms while we are still debating on the bigger alternatives such as federalism, a parliamentary form of government, and overhauling the Constitution.

Let’s first see how our elected leaders transform our country within the limited space provided for by our current Constitution. Let’s still hope that we will be able to elect new leaders but in a new system of governance.

 

Ariel F. Nepomuceno is a management consultant on strategy and investment.

arielnepo.businessworld@gmail.com

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