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Nationwide round-up

Legislation on P140B coronavirus response, recovery program advances at the Senate

THE proposed Bayanihan II law, which provides for a P140 billion standby fund for the coronavirus response and recovery program, was approved on second reading Wednesday at the Senate.

Senate President Vicente C. Sotto III said the measure may also hurdle the chamber on final reading if it immediately receives an urgent certification from President Rodrigo R. Duterte.

Ipapasa namin (We will pass it) and then we can approve it on second reading,” he said in a virtual briefing.

“And then we will wait for the word if the President or the Palace will certify it as an urgent measure. If so, then we will pass it on third reading within the day.”

In its last version, Senate Bill No. 1564, the Bayanihan to Recover as One Act, maintains Mr. Duterte’s power to realign items under the 2019 and 2020 national budget to fund coronavirus disease 2019 (COVID-19) measures until September 30, 2020.

It also keeps the provision granting a P5,000-8,000 monthly subsidy to low-income families and to households with recently returned overseas Filipino workers (OFWs).

The P140 billion standby fund covers P10 billion for the procurement of testing and extraction kits, and P15 billion for a cash-for-work program and the continuation of the livelihood assistance for disadvantaged/displaced workers.

It will also provide a P17-billion assistance to displaced workers, P17 billion for capital infusion to government financial institutions, P21 billion cash subsidy and interest-free loans to farmers and fisherfolk.

Further, the transportation and tourism industries will receive P17 billion and P10 billion, respectively.

State-owned universities and colleges will get P3 billion assistance, and training institutions under the Technical Education and Skills Development Authority will have P1 million.

Meanwhile, Mr. Sotto flagged the Department of Health for its failure to comply with the provision of the first Bayanihan law, particularly in providing compensation to families of healthworkers who died due to COVID-19.

“It is very disconcerting to know that after more than two months… no health worker and his or her family has received their supposed renumeration,” Mr. Sotto said in a letter to Health Secretary Francisco T. Duque III.

On this note, he compelled the department to pay the P100,000 compensation for each healthworker who contracted the disease and P1 million each to the family of those who died since February 1.

Mr. Sotto said the Health department should prioritize the distribution despite the absence of an implementing rules and regulation.

DOST
In another development, the Department of Science and Technology has allocated P5 million for its assistance program for overseas Filipino workers (OFWs) looking to establish technology-based businesses.

In a briefing on Wednesday, Science and Technology Secretary Fortunato T. De La Peña said OFWs can apply for the iFWD PH project, which stands for innovation for Filipinos Working Distantly from the Philippines.

“We are looking after the welfare of our OFWs and we packed a project intended for them and this is really for starting new enterprises that are technology-based,” he said.

Among the potential businesses are food processing, furniture making, engineering design, and information and communications technology.

Program advisers will help the OFW entrepreneurs come up with a business plan before the department releases the financing.

The project will initially cover Metro Manila. — Charmaine A. Tadalan and Gillian M. Cortez

Palace defends anti-terrorism bill as opposition intensifies

Herminio L. Roque, Jr.
Presidential Spokesperson Harry L. Roque, Jr. — PHILSTAR

PALACE Spokesperson Harry L. Roque on Wednesday defended the proposed revisions to the anti-terrorism law as opposition to its passage increased on various fronts, including online.

“No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances,” Mr. Roque said in an ANC interview.

Critics of the bill, however, cite unconstitutional provisions in the proposal and that the expanded definition of terrorism may include political dissent.

The bill, already passed by the Senate in February, was certified as urgent by President Rodirgo R. Duterte last Monday.

It is pending third and final reading at the House of Representatives. — Gillian M. Cortez

Health authorities call for extra caution with onset of rainy season

HEALTH experts reminded the public to take even further caution with the coming rainy season when there is an even higher threat of other diseases aside from the coronavirus.

Rontgene Solante, infectious disease specialist and former president of the Philippine Society for Microbiology and Infectious Diseases, noted that from January to May, there were still patients with dengue, leptospirosis, tetanus, and pneumonia at the San Lazaro Hospital in Manila.

“Let’s not forget this other infectious disease aside from COVID (coronavirus disease 2019) because this can also be some of the infections that can multiply and increase if we will forget giving the vaccines, especially the children who are higher risk for acquiring this infection, diphteria, measles and of course polio,” he said in a virtual briefing on Wednesday.

He also noted that during the rainy season there is higher risk of getting infected with leptospirosis, typhoid, and dengue.

Lulu C. Bravo, a professor emeritus of University of the Philippines-Manila College of Medicine and executive director of Philippine Foundation for Vaccination, emphasized that “vaccination saves lives.”

“Everyone of us must actually think vaccination not just for COVID but for other vaccine preventable disease that could kill not just our babies and children but even adults, the elderly who are also at high risk of getting flu, tetanus, diphtheria for children of course, so many things, measles and dengue,” she said.

Ms. Bravo also called on the government to invest more in the country’s health system.

“Health is wealth you have to invest in health. Onvestment in health is very important just like education,” she said.

Mr. Solante also said contact tracers are important in the continued battle against COVID-19, especially now that quarantine restrictions have been eased.

Senate President Vicente Sotto III earlier this week said the Department of Health should just use the P11.7 billion budget to hire contact tracers for the treatment of coronavirus patients. — Vann Marlo M. Villegas

National gov’t vows Balik Probinsya beneficiaries to get health screening

THE NATIONAL government assured local officials that beneficiaries of the Balik Probinsya program will not be sent to their home provinces without undergoing testing for the coronavirus disease 2019 (COVID-19).

“We will not deploy anyone without medical clearance and certificates,” National Housing Authority General Manager Marcelino Escalada said in a virtual briefing on Wednesday.

Local governments around the country, most with low COVID-19 cases and zero in some areas, currently have their hands full managing returning overseas workers and locally-stranded residents, some of whom have already tested positive for COVID-19 after arrival.

Several officials have expressed apprehension over the added people who will be arriving under the Balik Probinsya program considering limited health systems in the provinces.

The Balik Probinsya aims to decongest Metro Manila and other major urban areas by attracting local migrants and businesses to the countryside. — Gillian M. Cortez

Gambling regulator seeks reopening of casinos

PHILIPPINE Amusement and Gaming Corp. (PAGCOR) said it is requesting that casinos be allowed to reopen, citing the funds that will not go to various government social programs should the company remain unable to generate gaming revenue.

PAGCOR Chairman and Chief Executive Officer Andrea D. Domingo told BusinessWorld that the regulator has “made recommendations” for a casino reopening to the Inter-Agency Task Force on Emerging Infectious Disease (IATF-EID), adding that PAGCOR lost about P5-6 billion worth of revenue a month during the lockdown.

“We have made recommendations to IATF. I am waiting for their decision… Whatever they decide, we have no choice but to follow,” Ms. Domingo said in a text message.

PAGCOR, which regulates the gaming industry, earns a cut of all gambling revenue, with which it funds various government social programs, including sports development initiatives by the Philippine Sports Commission. It is also required as a government-owned and -controlled corporation (GOCC) to remit 50% of its profits to the Treasury.

In 2020, PAGCOR’s contributions to government and funding support “will be reduced accordingly” as gaming revenue declines, according to Ms. Domingo.

“All other socio-civic projects like medical financial assistance, relief operations during fires, national calamities, etc. will also be reduced accordingly,” she added.

Casinos and other forms of gambling have been shut down since mid-March due to the lockdown, with gaming venues also deemed a health risk because of the crowding at casinos.

PAGCOR’s earnings also support a social fund controlled by the Office of the President.

In May, the IATF approved PAGCOR’s recommendation to exempt Philippine offshore gaming operators and their service providers from the gaming ban and allowed them to operate at limited capacity, as long as they settle all their taxes and observe minimum health standards.

Casinos remain banned even in areas where lockdown measures have been eased to the more permissive general community quarantine.

PAGCOR operates nine casino branches and 32 satellite casinos in major cities nationwide.

PAGCOR’s net profit dropped 49.8% year on year to P777.44 million in the first quarter due to the lockdown.

Gaming revenue declined 5.7% to P17.22 billion during the period.

PAGCOR has remitted P26.5 billion in dividends to the government, which had called on GOCCs to remit dividends early to raise cash for the coronavirus pandemic effort. — Beatrice M. Laforga

COVID-19 response improves but loss of other patients hurting local hospitals

THE health care sector’s ability to deal with the pandemic has grown based on metrics like testing capacity, but hospitals are under pressure due to rising costs as well as a sharp decline in non-coronavirus patients, health officials and industry representatives said.

Speaking at the BusinessWorld Insights Forum, Health Undersecretary Maria Rosario S. Vergeire said 52 laboratories nationwide are now licensed to test for coronavirus disease 2019 (COVID-19) disease, with an overall capacity of 34,000 tests a day, compared with 300 at the start of the pandemic.

“For now we are engaging with all our partners, especially the private sector,” she said, noting the role it has played in conducting swab tests and managing returning overseas Filipino workers, among others.

Close to 19,000 Filipinos have been infected with COVID-19 and more than 900 have died, according to the Department of Health.

Saturnino Javier, the medical director at Makati Medical Center (MMC), said the hospital is confronting issues of declining occupancy and admissions due to the postponement of purely elective procedures and the inability of patients to consult because of the closure of doctors’ clinics.

This was accompanied by higher costs due to the need to use more personal protective equipment (PPE) during the pandemic.

He acknowledged that a recovery in hospital admissions will require confidence in the safety of the facilities, which MMC is addressing by instituting safety measures like PPE and isolation zones.

An opportunity has arisen to practice telemedicine given the safety fears, he added.

“We fully embrace (telemedicine) as a form of connecting with our patient populations,” he said in the same forum.

Director Irene B. Dumlao, who represented the Department of Social Welfare and Development at the forum, said the department is preparing to distribute the second tranche of cash aid to low-income Filipinos affected by the lockdown.

She said the second round of cash distributions of between P5,000 and P8,000 will be assisted by the Armed Forces of the Philippines and the Philippine National Police. More payouts will also be made via “cashless” platforms like GCash and PayMaya.

She said the department was able to distribute the first tranche to around 13.8 million families.

Butch Meily, president of the Philippine Disaster Resilience Foundation (PDRF), said aside from raising money for procurement of ventilators, test kits, protective equipment, the organization is also supporting small businesses to help in the economic recovery.

He said the PDRF is assisting 400 neighborhood “sari-sari” stores in Metro Manila with the help of a consortium of consumer goods and telecommunications companies.

“The idea is to provide a package of goods to (store) owners so they can restart their stores because the problem is we found in a survey that up to 40% of them have closed either due to health concerns or because, to be honest, many of their consumers were not able to purchase their goods,” Mr. Meily said.

LEGISLATIVE WISH LIST
Mr. Meily told the BusinessWorld Insights Forum that the most vital items of legislation currently making their way through Congress are those dealing with assistance for businesses seeking to resume operations.

“So many of them have closed and people are struggling, they’re scared and they’re struggling. They’re being knocked back to poverty because they’re using up those savings,” he said.

He also said that having a National ID ready at the time of the pandemic would have helped with contact tracing and aid distribution.

Ms. Dumlao said any legislation should take into consideration the proposed roles of government and private sector, and proposed consultations to identify areas for collaboration.

“From there we could probably submit our recommendation to our policy actors or legislative actors so that they could study it further and pass it to a particular legislative measure,” she said.

Mr. Javier, said the Philippines is not “running out of laws, they just have to be implemented very well.”

He said any laws or regulations should ensure the steady flow of medicine, particularly test kits, while holding down prices of key supplies like N95 masks for health care workers.

“I think the idea is not to draft new laws but to put muscle and teeth into the existing laws,” he said. — Vann Marlo M. Villegas

Rescue plan should aid firms pivoting out of tourism industry — expert

THE tourism industry may include firms that have no option but to exit the industry, and the government’s recovery plan should support such companies, a think tank official said.

Maria Cherry Lyn S. Rodolfo, an advisory board member at the Dr. Andrew L. Tan Center for Tourism research at the Asian Institute of Management (AIM), said: “Given the current situation and the longer period of recovery that may likely happen… those enterprises that are willing to actually exit the industry and pursue other opportunities in other sectors of the economy should be also included in these recovery programs.”

Ms. Rodolfo, who was speaking at a webinar organized by AIM on Wednesday, said such companies could also be assisted if they decide to repurpose their facilities for other activities.

The acknowledgement that some companies will have to leave the industry underscores the devastation visited upon tourism by the coronavirus disease 2019 (COVID-19) pandemic. International arrivals to the Philippines declined 62% to 1.3 million in the first five months, while domestic tourism was largely shut down by lockdowns and the suspension of air travel. Some provinces are also imposing quarantines on visitors, effectively deterring domestic tourism.

Ms. Rodolfo noted that some hotel businesses have offered their services as accommodation for stranded foreign visitors or overseas Filipino workers.

“All of these networks are present, but the key question is: which of these strong networks can we strengthen further and which of these weak networks or poor networks in our respective local destinations can we assist or can we help so that later on we can also tap them or harness their strength to allow us to become more a resilient destination?” she added.

She cited the initial results of a Safe Travel Alliance survey, whose respondents rated air travel as “the mode that is actual safest at this point,” a finding which could be at odds with the Department of Tourism’s strategy of focusing on domestic land travel in its recovery plans. — Jenina P. Ibañez

Bicol airport, targeted for July launch, now seen ready ‘within the year’

WWW.BUILD.GOV.PH

THE P4.8-billion Bicol International Airport will be ready “within the year,” the Department of Transportation (DoTr) said Wednesday, hedging on the long-delayed project’s original launch date of July.

In a phone message to BusinessWorld, Transportation Assistant Secretary Goddes Hope O. Libiran said July target is now up in the air as “We are still determining the soonest completion considering all factors.”

She said construction activity is being accelerated to “catch up” with delays imposed by the lockdown to achieve completion “within the year.”

In a statement, the DoTr added: “In an effort to complete the airport development project the soonest time, the construction works for the passenger terminal building and runway extension are in full swing.”

It said that as of May 25, the landside portion of the airport was 80% complete, while the passenger terminal building and runway extension components were 31% complete.

The DoTr has said the airport is expected to accommodate 2 million passengers annually.

At a briefing in Malacañang Tuesday, Transportation Secretary Arthur P. Tugade said: “Kagustuhan po namin na lahat ng proyekto na nasa “Build, Build, Build” flagship projects in relation to the Department of Transportation ay matapos bago matapos ang termino ng ating pangulo. (“It is our desire to complete all transport-related “Build, Build, Build” flagship projects before our President’s term ends.”)

“Iyong “Build, Build, Build” projects, iyong flagship projects, kailangan huwag maantala, kailangang bigyang katuparan (“’Build, Build, Build’ flagship projects must not be delayed so we can deliver on our promises),” he added.

The Tourism department and the DoTr signed a memorandum of agreement in January to intensify infrastructure development that will support the development and promotion of tourism circuits across the country.

Both departments identified airport development programs as priorities in support of tourism development, including airports. — Arjay L. Balinbin

Palay farmgate price up 1.33% in mid-May, exceeds gov’t support price

THE average farmgate price of palay, or unmilled rice, rose 1.33% week on week to P19.06 per kilogram in the second week of May, with prices increasing 4.15% year on year, according to the Philippine Statistics Authority (PSA).

The P19.06 average price exceeds the P19 buying price of the National Food Authority (NFA), which serves as a buyer of last resort for domestic farmers. The price trend indicates that private traders are making stronger offers for the domestic harvest, after lowballing farmers last year with offers in the single digits.

In its weekly update on palay, rice, and corn prices, the PSA said the average wholesale price of well-milled rice fell 0.08% to P39.25 while the retail price rose 0.09% to P42.38.

The average wholesale price of regular-milled rice rose 0.93% to P35.73 while the retail price rose 0.71% to P38.17.

The farmgate price of yellow corn grain rose 0.24% to P12.48.

The average wholesale price of yellow corn grain rose 0.1% to P19.13 while the retail price rose 0.09% to P23.50.

The farmgate price of white corn grain fell 0.66% to P15.11.

The average wholesale price of white corn grain fell 1.04% to P19 while the retail price fell 0.36% to P27.90. — Revin Mikhael D. Ochave

DoF awaiting international consensus on digital services tax

THE Department of Finance (DoF) said it will propose a tax on digital services provided by online platforms once an international consensus emerges on how to tax the industry.

Finance Secretary Carlos G. Dominguez III said the DoF continues to monitor developments overseas, where countries have started to impose such taxes.

He noted that even countries that have opted to tax the industry have not yet agreed how “to reallocate income taxation rights on cross-border digital transactions.”

“We are constantly monitoring developments on this matter,” he told reporters Wednesday via Viber.

“Once an international agreement is reached, we will immediately study and propose tax reforms to capture income tax on cross-border digital transactions,” he said.

The US government recently launched an inquiry on digital services taxes imposed or considered by the UK, Italy and Brazil, on international digital platforms such as Google and Facebook, Reuters reported Wednesday.

US President Donald Trump reportedly raised concerns that these cross-border taxation schemes “unfairly” target US technology companies.

Mr. Dominguez said a digital service tax, once passed into law, will come on top of the 12% value-added tax (VAT) on online transactions which DoF is currently studying to capture and plug potential VAT leakages.

“For now, we are focusing our efforts on collecting VAT on both local and cross-border digital transactions, which is similar to what the other ASEAN countries are doing,” he said.

The DoF expects to raise incremental revenue of P14-17 billion from VAT charged on online transactions.

“The DoF and the BIR (Bureau of Internal Revenue) are currently drafting regulations and designing a system to effectively collect VAT on digital transactions to help the government raise revenues,” Mr. Dominguez said.

He said the DoF is considering a proposal by House Ways and Means Committee Chairperson Jose Ma. Clemente S. Salceda of Albay to impose a 12% VAT on digital advertising, Internet-based subscriptions and transactions made on electronic commerce (e-commerce) platforms.

Mr. Salceda last month filed House Bill No. 6765 or the proposed Digital Economy Taxation Act, which is expected to generate some P29 billion in fresh revenue each year.

“In this regard, while we are now focusing on administrative regulations, we still welcome Congressman Salceda’s proposed bill on digital tax specifically on his proposed amendments to our VAT law,” Mr. Dominguez said. — Beatrice M. Laforga

House panel passes amendments allowing farmers to offer crops as collateral

THE House Committee on Trade and Industry approved a substitute bill on Wednesday seeking to amend Act 2137, or the Warehouse Receipts Law, which would allow farmers to use their crops as collateral for bank loans.

The unnumbered substitute bill consolidates House Bills 3366 and 4413 written by Bagong Henerasyon Party-List Representative Bernadette Herrera-Dy and Camiguin Rep. Xavier Jesus D. Romualdo, respectively. If passed, the bill will be known as the Revised Warehouse Receipts Law of the Philippines.

“It is high time that we update and improve Act 2137 so it can be attuned to the needs of our Agriculture Sector. We need to take advantage of modern technological advances that could be used to establish a system that is more secure, transparent, reliable and promotes ease of doing business,” Mr. Romualdo said in his explanatory note.

A warehouse receipt is a commercial document issued by a warehouse operator acknowledging that certain goods have been stored at a warehouse.

The bill seeks to establish a central registry for all warehouse receipts which will be made readily available online.

“With the use of a reliable and secure central electronic registry, banks and other financial institutions will not be reluctant to accept these Warehouse Receipts in exchange for loans as they can easily check the veracity of Warehouse Receipts, as will as the presence and quality of the corresponding goods and products in the Warehouse,” Mr. Romualdo said.

The measure also provides for the establishment of a seven-member Warehouse Accreditation Council to be led by the Chair of the Securities and Exchange Commission, and will include the Secretaries of Trade and Industry, Finance, and Agriculture. The other three members will represent the warehouse industry.

The bill will be transmitted to the House committee on appropriations. Its counterpart measure, Senate Bill 632, remains at committee level. — Genshen L. Espedido

Take 3 on Package 2

From TRABAHO (Tax Reform for Attracting Better and High-quality Opportunities) to CITIRA (Corporate Income Tax and Incentives Rationalization Act) and now CREATE (Corporate Recovery and Tax Incentives for Enterprises), the elusive Package 2 of the government’s tax reform program may finally see the light.

The negative effects on business and economic conditions brought about by the pandemic has forced the government to rethink its fiscal strategies. To help jumpstart the economy, the Department of Finance (DoF) is now proposing to Congress a recalibration of CITIRA to CREATE to be more relevant and responsive to the challenging times. As described by the DoF, the proposal is not an effort to raise taxes, but will decisively be revenue-negative and could be the largest fiscal stimulus program for enterprises in Philippine history.

One of the primary amendments is the immediate reduction of the corporate income tax rate from 30% to 25% beginning July 2020. A further reduction of 1 percentage point is expected annually from 2023 to 2027 until it reaches 20%. Previously, the proposed adjustment was 1 percentage point per year until we hit the 20% target rate in 2029.

The immediate reduction to 25% will help spur economic recovery so that funds will be available to invest in people and capital. It will also lessen the gap and allow the Philippines to somehow catch up with other ASEAN countries. Notably though, Indonesia, as part of its COVID-19 response measures, has reduced its income tax rate from 25% to 22% for financial years 2020 to 2021, and further down to 20% starting 2022.

CREATE also proposes an enhanced net operating loss carryover (NOLCO), which will extend the current three-year carryover period for losses incurred by non-large taxpayers in 2020 by two more years, or a total of five years. However, for this to have an impact, it should be coupled with the suspension of the 2% minimum corporate income tax (MCIT), if not an outright repeal.

Under the Tax Code, MCIT is imposed on a corporate taxpayer beginning the fourth taxable year immediately following the year it commenced business operations and is due when the MCIT is higher than the regular corporate income tax (RCIT). In other words, a corporate taxpayer shall pay either the 2% MCIT based on gross income or the 30% RCIT based on net taxable income, whichever is higher. So even if the taxpayer’s operations result in a net loss, it will still be liable to pay income tax in the form of MCIT.

While the Tax Code authorizes the Finance Secretary to provide MCIT relief to any corporation which suffers losses because of force majeure, among others, this is not automatic. The taxpayer would still need to file an application and securing the approval is a long and tedious process. Hence, unless the MCIT is suspended or repealed, the enhanced NOLCO may just end up being a token relief.

The more controversial provisions in CITIRA, which derailed its passage given the concerns raised by stakeholders, pertain to the rationalization of incentives which would affect those registered with different investment promotion agencies (IPAs) such as the Philippine Economic Zone Authority (PEZA). Under CREATE, certain flexibilities are being proposed with the intention of attracting new foreign investments and retaining existing ones.

Part of the rationalization is providing a new set of incentives which are performance-based, targeted, time-bound, and transparent. Registered projects or activities shall be entitled to income tax holiday (ITH), to be followed by a special corporate income tax rate (SCIT) of 8% in 2021, 9% in 2022 and 10% from 2023 onwards, based on gross income. Depending on the category of the activity — whether basic, enhanced or advanced — the ITH period can be a minimum of two years to a maximum of four years, and the SCIT can be three to four years. The SCIT may be further extended by another three or four years, at any one time, subject to qualifications set forth in the Strategic Investment Priorities Plan (SIPP). However, the total period of incentive availment shall not exceed 12 years.

A positive development in CREATE is that the SCIT will be paid in lieu of all national and local taxes. Previously, under CITIRA, real property tax was excluded from the coverage of the SCIT. The adjustment is in response to the appeals made by stakeholders to retain a one-stop shop approach for registered enterprises and avoid the bureaucracy of going through the difficult processes and various rules of local governments.

However, the 8%/9%/10% SCIT rates which remain unchanged from CITIRA appear to be on the high side and will double the current 5% gross income tax (GIT) incentive. In fact, new registrants will not be able to avail of the 8%/9% rates since by the time their ITH expires (two years at the earliest), the applicable SCIT rate will already be at the highest rate of 10% (beginning 2023).

From previous reports, the current 5% GIT is, on average, equivalent to the 15% RCIT based on net income. Given this ratio, it can be deduced that a 1% GIT is equivalent to 3% RCIT, in which case, the proposed SCIT rates of 8%, 9% and 10% will result in an equivalent RCIT of 24%, 27% and 30%, respectively. Thus, instead of being incentivized, it seems that registered enterprises will be paying higher taxes vis-à-vis a regular corporation as the RCIT is proposed to be reduced to 25% beginning July this year.

Considering the need to improve the country’s ability to attract investments and encourage existing ones to expand rather than drive them to leave, the proposed SCIT rates should be adjusted to a more acceptable and competitive rate of 7% maximum, which is the average effective RCIT rate of 21%.

Further, under CITIRA, registered enterprises will have a sunset period of two to seven years depending on the number of years they have been under the GIT regime. CREATE has adjusted the period to a minimum of four and a maximum of nine years. However, given the current business conditions and the uncertainty of future operations of existing registered enterprises, the transitory period should at least be five to 10 years. This will, to a certain extent, place the Philippines on a level playing field with our ASEAN competitors.

There is also a need to delete the provision in the bill requiring the surrender of the certificate of registration for existing projects or activities which will be deemed an express waiver of existing incentives if the new incentive package will be availed. The provision is inconsistent with the intention and creates uncertainty. As clarified by the DoF and Congress in various business industry meetings, after the sunset period, these registered projects or activities are still allowed to apply under the new incentive package if qualified under the SIPP.

While time is of the essence, adjustments to this critical measure can still be made. CREATE will either make or break our chances of boosting the Philippines’ potential as an investment destination and turn this COVID-19 crisis into a golden opportunity.

The article is for general information purposes only and should not be used as a substitute for consultation with professional advisors.

 

Malou P. Lim is the managing partner of the Tax Services group at Isla Lipana & Co., the Philippine member firm of the PwC network.

malou.p.lim@pwc.com

In America, protest is patriotic

The police are supposed to protect free speech, not suppress it

By The New York Times, Editorial Board

WHEN George Floyd died under the knee of a Minneapolis police officer, the scourge of police violence, festering for generations, became a rallying point for Americans yearning for the fulfillment of this country’s founding aspiration to promote life, liberty and happiness.

Yet as they turned out to exercise their most basic rights as citizens, these Americans have often encountered only more contempt for those rights from the people who are supposed to protect them.

Some protesters crossed the line into violence. Some people took advantage of the chaos to loot. But all too often, facing peaceful demonstrations against police violence, the police responded with more violence — against protesters, journalists, and bystanders.

In a handful of cities, local leaders recognized what was at stake, and their response can point the way forward for the country. In Houston, the police chief, Art Acevedo, told protesters: “We will march as a department with everybody in this community. I will march until I can’t stand no more. But I will not allow anyone to tear down this city.”

He had the sense to recognize that a vast majority of demonstrators wanted what he wanted, a better city. And he clearly saw that the responsibility of the police was not to abridge but to safeguard the First Amendment, which protects freedom of speech, assembly, the press and religion.

In many places, the country is experiencing a communal breakdown so complete that mayors have thrown up their hands and ordered curfews or called in the National Guard. Unable to maintain urban life, they have tried to suspend it, just as they had done in response to the spread of the coronavirus.

Healing the wounds ripped open in recent days and months will not be easy. The pandemic has made Americans fearful of their neighbors, cut them off from their communities of faith, shut their outlets for exercise and recreation and culture and learning. Worst of all, it has separated Americans from their own livelihoods.

Fear of the police has further separated communities from those sworn to protect their rights.

President Trump, who tends to see only political opportunity in public fear and anger, is in his customary manner contributing heat rather than light to the confrontations between protesters and authority. In the absence of national leadership, it is all the more vital that mayors and governors affirm the rules that ought to govern American society. The nation is founded on the freedom of speech — and particularly the right to gather in protest against the government. Politicians must hold the police accountable for protecting the rights of everyone they are sworn to protect and serve.

In the same vein, city and state leaders should pursue the reopening of houses of worship in consultation with public health authorities. Particularly in this agonizing time, many Americans want to turn to their communities of faith for support. And religious leaders have often been at the forefront of nonviolent social change.

The chaos unleashed by the death of Mr. Floyd defies simple prescriptions; it is a result of too many underlying conditions. Authorities are facing a stern test: It can be all but impossible to police the boundaries of legitimate protest, particularly on the ground. And it must be painful for many police officers who put their lives on the line to hear themselves criticized by their fellow citizens.

Yet the testimony of local journalism, eyewitnesses and videos posted online make clear that too many police officers have little interest in protecting legitimate protest. While some officers have joined protests or knelt in solidarity, others, often in the same cities, have acted savagely, inciting or exacerbating violence.

Just a few weeks ago, the police demonstrated remarkable forbearance as heavily armed groups turned out in several state capitals to oppose coronavirus-related public health measures. Now the police are demonstrating an equally remarkable intolerance to protests against their own behavior.

The police have imposed arbitrary limits on protests, creating excuses for confrontation. They have fired countless rounds of tear gas and rubber bullets into unarmed crowds, sometimes without warning. They have attacked with fists, truncheons, shields — and cars.

They have behaved as if determined to prevent peaceful protest by introducing violence.

In some of the most troubling attacks, police officers have singled out those who spoke up, wading into crowds of protesters and silencing the loudest voices.

In Charleston, S.C., a black man dropped to one knee and told the police, “All of you are my family.” The police arrested him.

In Kansas City, Mo., a black man shouted from a crowd of protesters, “If you ain’t got the balls to protect the streets and protect and serve like you were paid to do, turn in your damned badge.” The police arrested him.

In scores of incidents across the country, police officers also have deliberately attacked journalists reporting on the protests. Minneapolis police arrested a CNN crew on live television. Video captured Louisville police firing pepper bullets at a local TV crew. The Manhattan district attorney’s office is investigating the alleged assault of a Wall Street Journal reporter by the police. Protesters, for their part, have also targeted reporters, including a Fox News crew outside the White House.

In a brazen display of this administration’s disregard for the First Amendment, the nation’s chief law enforcement officer, Attorney General William Barr, ordered federal officers to clear a peaceful protest in front of the White House. The police used tear gas, rubber bullets, and riot shields to drive away protesters, journalists, and priests standing on the private porch of St. John’s Church, all so Mr. Trump could pose for photos. The photo op managed to take aim at the freedom of assembly, speech, and religion all at the same time.

On Tuesday, the Trump administration sent more troops into the streets of Washington. Armored vehicles patrolled downtown. Helicopters buzzed overhead. Soldiers trained for war in foreign countries stood on the corners of American streets, hands on guns.

Americans aren’t holding their breath for the president to change his incendiary behavior. But city leaders and governors have plenty of room to act in the meantime.

There are signs some leaders recognize the damage that has been done. In Richmond, Va., where the police gassed peaceful demonstrators on Monday evening, the mayor, Levar Stoney, apologized Tuesday and promised to join a march. The chief of police, William Smith, took a knee in a show of contrition and solidarity.

The governor of Minnesota, Tim Walz, apologized to the CNN reporters arrested in Minneapolis, and then took a moment to dilate on the importance of a free press.

“The protection and security and safety of the journalists covering this is a top priority, not because it is a nice thing to do, because it is a key component of how we fix this,” Mr. Walz said. “Sunshine, disinfectant and seeing what’s happening has to be done.”

On Tuesday, Mr. Walz ordered a civil rights investigation into the “systemic racism” of the Minneapolis Police Department. It is not enough, right now, for officials to focus on protecting private property. It is not enough even for them to think only of protecting life, though that is critical. They need to also protect the freedoms of assembly and expression, and then, like Mr. Walz, to hear what’s being said. That’s where the healing may begin

THE NEW YORK TIMES

 

The Editorial Board is a group of opinion journalists whose views are informed by expertise, research, debate and certain longstanding values. It is separate from the newsroom.

Digital footprint

Just recently my wife and I each received P5,000 from the Makati City government, as financial assistance made available to city residents during the quarantine period.

We received the money via direct “deposit” into our mobile-based GCash accounts. If memory serves me, this was the first time that we received money from the government, and electronically at that. We have never received any “relief” goods or funds from either the barangay or the city, previously.

The distribution process was, in my opinion, simple enough. At least, for registered voters of the city, or, holders of the Makatizen card or of Makati City’s “Yellow Card.” In our case, it was a matter of using a mobile application to fill up and submit electronically the necessary forms and IDs. We also nominated a mobile phone number that was linked, or could be linked, to a GCash account. And then we just waited for the money to come in.

The city, I guess with the help of GCash itself and maybe the telcos, vetted the information submitted and probably matched it against information on the voters’ list; or, the verification information submitted to GCash (for existing mobile subscribers with mobile-linked GCash accounts). And once both the city and GCash were sufficiently satisfied that the mobile number nominated belonged to a bona fide city resident, and thus a qualified recipient of assistance, the P5,000 was credited to the GCash account.

For one practically new in the FinTech world, who rarely uses GCash for financial transactions, it was short of “amazing.” It suddenly created “value” for GCash for us. I opened the GCash “account” only last year for trial and because I was curious how it worked. But I rarely used it since then, and kept only a small amount of credit in it. But, moving forward, I believe I will be using it more often as cashless transactions have become more practical in the COVID-19 era.

I had spent about five minutes filing up and submitting the “Maka-Tulong” application, and then waited about two weeks to receive a text message confirming the transfer of the P5,000 to my GCash account. No long lines or queuing at City Hall, no written forms, no face-to-face transactions, and no need to leave the house to apply for and to receive assistance. It was impersonal but it was direct, easy, convenient and comfortable. More important, it kept me safe from possibly getting infected — or infecting others — with COVID-19.

More important, since the transaction was technology-driven and required minimal human intervention or the exercise of human discretion, then it was relatively corruption-free. It was simple and straightforward. I received what I was supposed to get, no more, no less. And I received it precisely how the city government publicly communicated how it would be received by qualified city residents. Technology helped short-circuit the problematic governance formula “Discretion — Accountability = Corruption.”

While I have also heard of complaints from people who are yet to receive the city assistance to date, I also understand that no system is perfect. And that like many other technology-driven processes, it is at times a case of bad data going in, and bad data going out. The process can get stalled by discrepancies or faults in entering or encoding personal information like names or mobile numbers, or failing to submit a clear photograph or valid government identification card. But I am confident these problems will be resolved, eventually.

The advantages of this entire distribution process were that: 1.) it kept people “safe” and minimized the spread of COVID-19 through personal contact; 2.) it minimized bureaucratic lapses; 3.) it leveraged on available technology; 4.) it made people realize there are more ways than one for the government to assist people; and, 5.) the financial aid, once credited to a GCash account, was ready to be withdrawn as cash, to be transferred to a bank account, or, to be spent via GCash payments for goods or services.

To be honest, never did I think that I would be a witness and beneficiary of such a process in my lifetime. Having been born in an era without credit cards and mobile phones, where a bank deposit was proved mainly through a passbook or a bank certificate, and where Know-Your-Client/Customer guidelines were simply a matter of establishing a direct personal relationship with bank personnel, financially transacting in the “digital world” now via mobile phones is an obvious glimpse into the world of the near future.

The entire Maka-Tulong process, I reckon, also established my personal digital footprint — a verified and recognizable “electronic identity” that could be used in transactions with both the city government and GCash in the future. In fact, if such a database is shared, the same “identity” can be used in other private and public transactions as well. Couple this “electronic identity” with a National ID with biometrics, and possibly in the near future a centralized database on me could become readily available and accessible to private and public institutions to establish my identity and to transact with my “electronic” version.

But while ease of use, convenience, and health protection can be had with the help of technology, such a process is not without its risks. In fact, I believe a digital footprint or electronic identity is far easier to hack and hijack and more prone to identity theft — and actual theft. This said, the protection of an electronic identity becomes paramount, and a shared responsibility between the identity owner sharing it and the parties with access to it or are using it for transactions.

I can only hope that the city government and GCash have both invested well in securing and protecting their systems against hacking, data breach, and data theft. While we use technology and electronic processes now primarily to protect our health, we should just be just as vigilant in protecting our personal data and electronic identities. A major breach in our electronic health can be just as bad as COVID-19 sending us to the hospital or the morgue.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

Meralco lockdown billings and coal contracts

The adverse impact of prolonged community quarantine (CQ) in Metro Manila and the rest of Luzon since mid-March is shown by the huge decline in electricity consumption. From the Independent Electricity Market Operator Philippines (IEMOP) data for Luzon-Visayas grids, I compared the April-May 2020 data to the same months in 2019 and the result is really bad.

The decline in average electricity demand was as follows: -2,101 MW (-20.3%) in April 2020, and -1,713 MW (-15.6%) in May 2020. Assuming a -5% decline for June 2020, the second quarter 2020 average would be -13.6% and this can translate to potential GDP contraction of about -10% or higher this quarter. The number of job losses and business bankruptcies should be very high this quarter.

Meanwhile, the country’s biggest energy company, Meralco, has been attacked recently based on half-truths with three or more agenda: refund consumers due to “overcharging,” push for free electricity up to 200 kwh, and kill coal and mandate more wind-solar energy. The sporadic attacks as reported in other newspapers came from the Power for People Coalition (P4P)/Gerry Arances, Bayan Muna leaders Neri Colmenares and Congressman Carlos Zarate, and Tony la Vina.

Let us check the facts to see if these claims and agenda hold water or thin air.

First, Meralco “overcharging” in May 2020 billings due to averaging of December-February electricity consumption for the March-April billings, “least favorable to customers because December usage is usually higher than normal” so the average is inflated.

This is not so. December-February are the coldest months of the year and hence, electricity consumption is lowest then. From IEMOP data on the Luzon-Visayas grids in 2019, the average power demand for January, February and December was 9,098 MW, while average power demand for March to November was 10,333 MW, higher by 1,235 MW.

Meralco’s mistake is not overcharging but that they used the consumption in the coldest months as the reference period for March-April billings, which created a moral hazard problem — consumers consumed more electricity since they would just pay the low kWh average for the cold months. Then the ECQ was extended to May, and the moral hazard problem was extended by another month, and when the actual meter reading was made, mid-May minus mid-February, the actual electricity consumption in kwh was big, and this created the surprise and conspiracy theory of “over-charging.”

Second, that Meralco should “waive the electricity bills of customers consuming an average of 200 kwh or less… and the first 200 kwh of households who consume 200 to 500 kwh.” To cover generation, transmission, distribution and other charges.

This is socialistic and parasitic thinking. Power plants do not get free fuel, free labor, free interest payment for their loans, etc. The same for the grid/system operator, the distribution utilities (DUs), and electric cooperatives (ECs). It is very unlikely that Bayan Muna would demand this kind of irrational electricity freebies from all other DUs and ECs in the country, they just target the biggest and richest DU for media mileage and other political interests.

Third, Meralco has a “preference for dirty energy from coal and fossil fuels” when “coal power causes sickness and makes people sick” so the solution is more renewables like biomass, solar and wind (BSW) plus a silent endorsement for natural gas.

Again, this is not so. Among the richest and most developed economies in the world with healthier people who have a high life expectancy are the major coal consumers — the US, Germany, Japan, Taiwan, Australia, South. Korea, Malaysia, etc. Coal consumption in million tons oil equivalent (mtoe) is divided by population to derive the kilos of oil equivalent (koe) per capita (see the table).

The Philippines’ coal consumption of only 153 koe per person in 2018 is the smallest, the lowest among developed and emerging East Asian countries and yet certain lobbyists of renewables want to further restrict coal power development in the country. DUs like Meralco and ECs should get more coal power contracts, not less.

Fourth, variable renewables like BSW are cheap and abundant enough to replace coal power. Far out. In 2019, the BSW plants reached 1.7 gigawatts (GW) or 6.7% of total installed capacity of 25.5 GW. But BSW’s actual electricity generation was only 3.3 terawatt hours (TWH) or 3.1% of total power generation of 106 TWH. In contrast, coal power constituted 41% of total capacity but produced 55% of total electricity consumption in the country.

All the attacks and claims are plucked from thin air and emotionalism, and are not based on hard data and reason.

 

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

minimalgovernment@gmail.com

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