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France to end tax breaks for palm oil in biofuel

PARIS — France’s parliament on Friday voted to remove tax breaks for the use of palm oil as a biofuel, a day after a ruling in favour of maintaining the advantage led to howls of protests from environmentalists.

A large majority of members present voted against a government-backed proposal to delay until 2026 the end of palm oil’s tax advantages, giving companies like oil major Total more time to phase out the use of palm oil in biofuels.

Late on Thursday, the National Assembly, France’s lower house of parliament, had agreed to extend the tax breaks, but following strong pushback from environmentalist MPs within President Emmanuel Macron’s ruling LREM party, the government agreed on a second vote.

“This is an important issue that warrants debate,” Environment Minister Elisabeth Borne told MPs.

She proposed maintaining the tax breaks while a committee reconsidered the issue, but the extension of tax breaks for palm oil was rejected by 58 votes to two.

“Senators considering the text in coming days and MPS who will have to consider it again before year-end will have to remain extremely vigilant to make sure that the scrapping of this tax break is not somehow again put into question during the legislative process,” Greenpeace said in a statement.

Greenpeace added that it is “shocking that the government… continues to defend the interests of multinational companies which jeopardise the climate and the environment”.

Critics say that using palm oil in biofuel adds to deforestation in tropical countries and contributes to the destruction of habitat for endangered species such as orangutans.

Moves in Europe to restrict palm oil use have also created tensions with Malaysia and Indonesia, which dominate global production of the oil.

The debate was part of 2020 budget discussions, and the bid to extend the tax breaks was another attempt to overturn 2019 budget provisions to end them.

The 2019 budget specified that palm oil would be removed from a list of permitted biofuels from January 2020.

Total had tried to overturn the ban through an appeal to France’s constitutional court, which was rejected in October.

The firm argued that removing the tax breaks would put at risk its biofuel production site in La Mede, southern France.

Total has invested 300 million euros to convert the site from a crude oil refinery. It started production in July, using palm oil as part of the feed stock to produce biofuel. — Reuters

How PSEi member stocks performed — November 15, 2019

Here’s a quick glance at how PSEi stocks fared on Friday, November 15, 2019.

 

Manila seeking private-sector partners for free WiFi, calls

MANILA MAYOR Francisco Moreno Domagoso said he is currently in talks with the private sector on his plans to put up modern phone booths offering free calls and WiFi access, particularly in the University Belt (U-Belt) area.

“I am now talking to the private sector if they can provide such facilities particularly in the U-Belt area; and I hope in the coming weeks, there will be more public free access to communication in two things: the old-school way, by calling for free, and the new technology which is the Internet,” Mr. Moreno told BusinessWorld in Pasay City Thursday.

He added: “We initially showed the proof of concept of the public telephone (similar to a scheme in) New York. What New York did was that they took away all those old telephone booths, and they introduced a new machine that provides free WiFi, and you can make calls, video calls. So we imported that machine… We asked the private sector to donate and they did. We put one machine at the Kartilya ng Katipunan near the Manila City Hall.”

He said the purpose was to determine demand. “After that (we discovered that) demand and traffic were there, so I think there is a need. It was about testing what we need before we spend money on it, so that’s how I try to be efficient as much as possible,” he said.

Mr. Moreno also said he is looking at “50” hotspots in Manila, adding that the units have a radius of about 100 meters with 500 people accessing the service simultaneously.

He added that a memorandum of understanding is needed to realize the project, though he is satisfied with the proof of concept. — Arjay L. Balinbin

Phillip Morris: heated cigarette tax should reflect ‘lower risk’

PHILLIP MORRIS FORTUNE Tobacco Corp., Inc. (PMFTC) said the tax differential between tobacco products and alternatives such as heated cigarettes and vaping products needs to reflect the varying health risks associated with each product category.

On Friday, PMFTC President Denis Gorkun told reporters that smoke-free cigarettes contain the same amount and type of tobacco leaves but the heating technology poses a lower risk to health by minimizing the volume of chemicals released compared to traditional tobacco products which employ burning.

“The taxation has to be risk-proportionate. This product costs significantly a lot more to manufacture than cigarettes. And of course, they bear much lower risk. That’s why the taxation should be lower than cigarettes. That’s our position,” Mr. Gorkun said on the sidelines of the Bright Leaf Agriculture Journalism Awards on Friday.

He said that even government agencies overseas have certified that new vapor products and e-cigarettes, have a “fraction of the chemicals” compared to traditional cigarettes while the United States Food and Drug Administration has certified IQOS, the Philip Morris group’s smoke-free cigarette product, as “appropriate for protection of public health.”

Last week, President Rodrigo R. Duterte certified “the necessity of the immediate enactment” of Senate Bill No. 1074, which increases the excise tax rates on alcohol and tobacco products, as well as e-cigarettes and vapor products, to generate additional funding for the implementation of Universal Health Care Act next year.

The measure is still pending at the Senate while the House of Representatives approved its own version of the legislation, House Bill No. 1026, on Aug. 20.

Both chambers of Congress will have to harmonize final tax rates in the two bills. Another key issue is whether heated tobacco and vapor products should be taxed at par with traditional tobacco.

Mr. Gorkun said consumption of nicotine and tobacco products should be regulated and taxation is one measure to do it, but the hike in tax rates should be gradual to deter smuggling.

“The key is to is to make sure that the tax increases are in line with GDP (gross domestic product) growth and inflation because otherwise, you have an increase in illicit market and we have seen that before in Philippines in prior history,” he said.

With higher production costs due to new technology, he said that these alternatives are more expensive than traditional smoking products, which will minimize their availability to those below 18 years old.

As PMFTC plans to launch its new “smoke-free” cigarette in the Philippines, he said it will ensure the product is only accessible to adult smokers but not cheap enough to be accessed by “the groups that we don’t want to target.”

Finance Secretary Carlos G. Dominguez III has said that the measure should be approved before the lawmakers go on break on Dec. 21 as the law will be difficult to implement midway into 2020. — Beatrice M. Laforga

Finance sector needs to raise understanding of small business needs, bankers say

FINANCIAL inclusiveness should go beyond deploying fintech and move into the area of improving the understanding of the financial needs of small businesses, speakers at a regional banking forum said.

At the Asian Bankers’ Association (ABA) conference in Makati Friday, financial institutions were encouraged to tailor their offerings to better serve the micro, small and medium enterprise (MSME) sector.

“The Philippines (has) a broad financial inclusion agenda to include everyone in our financial system knowing that everyone needs to make financial transactions,” Bangko Sentral ng Pilipinas (BSP) Director for Center of Learning and Inclusion Advocacy Pia Bernadette Roman-Tayag said in a panel discussion. However, the link with the MSME is more valuable one because when we talk about inclusion for growth, you cannot leave out the small businesses.”

Ms. Roman-Tayag said the finance industry should try to get to know the sector better to address their needs.

“The problem with MSME is that we talk about it often… without nuance… and that is because there is a lack of understanding and appreciation of the realities of this sector. So, the financial institutions are constrained to get to know this market more,” she said.

She also cited efforts from financial firms that have tried to amplify inclusion methods through technology.

“We have seen data intelligence, consumer insights, scoring tools, web-based loan applications. All of this is great and the Bangko Sentral as regulator sees this as very important to our approach,” she said.

Rizal Commercial Banking Corp. President and CEO Eugene S. Acevedo said that the road to financial inclusion is more than banks equipping themselves with technology.

“We think fintech alone cannot solve the problem… It is the way you look at credit for small businesses… it’s different. Much of it is socially driven. And you can’t socialize through fintech, at least not yet,” he said.

Philippine National Bank President and CEO Jose Arnulfo A. Veloso added that the human touch is still a vital ingredient in financial transactions.

“Even if it’s digital, even if it’s a face to face, they need someone because at the back of their mind, they know that there is somebody responsible for the money that they would like to [access]. It is no longer going to probably be a face to face engagement, but we just need to be able to have somebody be able to face the individual digitally,” he said in an ABA news conference.

Meanwhile, Mr. Acevedo also laid out the so-called “pain points” of doing business for micro-financers that are mostly in touch with the underserved segments.

“In the Philippines, the yield in micro-finance is about 60-70% depending on where you are. Unfortunately, the cost of doing business is about 40-50% as well,” he said.

He said with the removal of troublesome processes like cash handling, the cost of doing business could fall to less than 30%.

“Hard microfinance is in the 20’s (20%) that’s why they’re profitable,” he said.

Mr. Acevedo said the ideal approach is different for each firm.

“It has to be a combination of technology, process redesign and old hardcore basic credit skills,” he said.

The ABA convened in Manila for its 36th annual meeting and will gather next year in Sri Lanka. — Luz Wendy T. Noble

Philippine exports’ value-added content stagnant since 1995 — PIDS

THE Philippines must transition to an industrial economy to improve its exports, the Philippine Institute for Development Studies (PIDS) said in a statement Saturday.

Export performance has barely improved between 1995 and 2014, PIDS said, citing a study published in November 2018.

At a seminar, PIDS senior research fellow Connie Bayudan-Dacuycuy said that the Philippines must undertake a structural transformation modeled on the one pursued by developed countries.

“The problem with the Philippine case is that we seem to have skipped a step. We moved from agriculture to services without even industrializing,” she said.

She said that although the country’s agriculture employment share was still high at 26% in 2016, its contribution to the country’s gross domestic product is declining due to the “issue of productivity.”

The study found that the Philippines must significantly transform its export production process.

The paper found that from 1995 to 2014, the average sophistication of the country’s exports has barely improved.

The Asian Development Bank defines sophistication as the detailed technical characteristics that define product differentiation, product fragmentation, and resource availability.

From 2005 to 2014, a large portion of the country’s export portfolio, the statement said, belonged to integrated circuits, whose sophistication content “is very low compared to the average in the world market.”

In 2014, the Philippines exported relatively sophisticated products such as static converters, semiconductor devices, and telegraph equipment, which only took up a small portion of the export portfolio.

The export basket, the study said, has a similar sophistication level to Indonesia and Vietnam, but less sophisticated than those of Thailand, Singapore, and Malaysia.

The study found that the agriculture sector can move to producing more sophisticated goods such as woven twill and prime cuts of pork and poultry.

“The idea here is that if we’re able to improve our production structure now, then there is a possibility for new products to come along that can lead us to these products with high sophistication content,” Ms. Bayudan-Dacuycuy said.

She said that although there are production issues plaguing the agriculture sector, “there is a possibility for us to build on the production structures of cereals, fruit mixtures, glycerol, and oils in order for us to produce agro-processed goods.”

She recommended that government guide the shift towards industrialization, including strengthening industrial policy, as well as promoting competition, innovation, and science and technology research.

The study recommended that the government upgrade production capabilities by attracting investment from industrialized Asian neighbors, strengthening the link between industry and the academic community, encouraging manufacturing process innovation, and ensuring the financial sector is linked with various stages of production. — Jenina P. Ibañez

SMEs in the digital world: reboot or robots?

With the dizzying speed of digital disruption occurring in the global business environment, small and medium enterprises (SMEs) are increasingly realizing the urgent need to explore digitalization. Incorporating digitalization in their business will help expand and create new sources of value for their enterprises to remain competitive and relevant to their markets.

In my recent article, I wrote about the findings of a recent EY study, Redesigning for the digital economy: A study of SMEs in Southeast Asia. In the report, almost 370 SME executives expressed as their top priorities leveraging digital technology and prioritizing the improvement of their customer service. However, to properly implement digitally-enabled operations and meet the consumer’s increasing demand for personalization and convenience, businesses will need the support of a modernized workforce to actualize their strategies.

The function of modernized talent is critical to a company’s digital transformation. This increasing demand for appropriate digital services gives rise to new digital roles, such as digital marketers, data scientists, and automation engineers. At the same time, current employees will, by necessity, be disrupted by digital solutions that replace repetitive tasks, such as intelligent automation technologies and robotics process automation (RPA). While the use of intelligent and automated platforms to enhance efficiency will require the traditional workforce to adapt, these new and enhanced roles present the opportunity for companies to reboot their people programs and help employees focus on strategic, more value-added tasks.

THE CHALLENGES OF WORKFORCE ADAPTATION
The same study on SMEs had identified two main constraints that enterprises face in adapting their workforce to enhanced, digital roles. First is capacity and second is resources. SMEs specifically lack access to digital talent and face challenges in upgrading the skills of their employees, which understandably creates a gap between smaller enterprises and their multinational counterparts.

Many SMEs also have the disadvantage of looking less attractive to potential candidates with the right digital skills compared to larger companies with more established names and deeper pockets. In addition, they face the struggle of prioritizing effective development programs to upskill their current workforce in light of other competing business priorities.

REDESIGNING THE MODERNIZED WORKFORCE
Challenges aside, SMEs will need to go beyond identifying the roles and skills required to achieve their digital transformation. They are expected to also dedicate employees to specific digital roles instead of merely assigning these roles to existing employees as secondary positions. For example, the role of social media manager can often be a full-time job, yet some companies simply assign this task to existing sales or marketing personnel who may not have the experience and exposure to maximize and manage social media assets. SMEs will have to consciously take active steps to evolve their current workforce into one that can maximize digital investment insights and productivity gains.

One means to achieve this is by developing a clear view of critical digital roles, functions and skills instead of falling into the trap of blindly following hiring trends. SMEs need to assess and identify what roles are specifically designed to support their own digital transformation strategy. These roles and skills should then be adapted to form the career pathways of an organization, allowing management to conduct effective strategic workforce planning for the company’s future needs.

A clear overview of their talent needs also allows management to further maximize their limited pool of human resources by deploying them into strategic roles. Furthermore, this allows management to address capability gaps through targeted employee skill development initiatives and talent attraction.

For companies to effectively redesign job functions and business processes, they must leverage insights from the analysis of people data to support changes and decisions. SMEs also need to consider how to best incorporate digital solutions into any redesigned roles to improve efficiency as well as employee and customer satisfaction. This alleviates the pressure on talent shortages by expanding the workforce’s capacity to take on enhanced roles.

PRIORITIZING THE ROLE OF DIGITAL
Over and beyond considering technological or digital solutions, what is more essential is for SMEs to adopt a digital mindset and develop a digital work culture. This mindset and culture will effectively develop agility and further drive innovation. Attaining this end-goals will entail an assessment and the transformation of traditional policies, processes and platforms to better adopt and support digital thinking.

As an organization undergoes digital transformation, SMEs will benefit from engaging their employees by working together with them to minimize resistance and drive the necessary behaviors to integrate digitalization into the company. They can achieve this through effective change management and positive reinforcement through rewards linked to performance and employee recognition, both of which can go a long way in nurturing a digital work culture.

The leveraging of transformative technologies should serve as an enabler for SMEs instead of a complete replacement of their human workforce. Disruptive forces will continue to challenge SMEs in the digital age, making it increasingly apparent that digitalization cannot be relegated to a one-off project — it is by necessity a continuous and evolving journey with great impact on the entire workforce.

SMEs that prioritize digital roles and fully embrace a digital mindset will, in all likelihood, achieve a competitive edge that leads to success in the digital economy. The question now for individual SMEs is, is it better for you to reboot your digital people strategy or invest in robotic processes? Or find a solution that combines both?

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

 

Wilson P. Tan is the Vice Chairman and Deputy Managing Partner of SGV & Co.

VP risks losing post as drug czar, says Palace

VICE PRESIDENT Maria Leonor G. Robredo risks losing her position as President Rodrigo R. Duterte’s drug czar if she reveals confidential information to foreign entities, the presidential palace said yesterday.

“The president stated that disclosing classified information of the Philippine government to foreign individuals and entities will cause the removal of the vice president from her current post,” presidential spokesman Salvador S. Panelo said in a statement.

Ms. Robredo, the opposition leader whom Mr. Duterte had put in charge of his deadly war on drugs, met with United States Embassy officials last week to discuss how the US could help the country’s anti-illegal drug campaign.

Officials from the International Narcotics and Law Enforcement Affairs of the State Department, Drug Enforcement Administration, Federal Bureau of Investigation and US Agency for International Development gave a “comprehensive briefing,” Ms. Robredo said in a statement.

Philippine police have said they have killed about 6,000 people in illegal drug raids, many of them resisting arrest. Some local nongovernmental organizations and the national Commission on Human Rights have placed the death toll at more than 27,000.

The opposition leader this month said she had agreed to head the Duterte administration’s anti-illegal drug campaign, if only to stop the killings. She accepted the post against the advice of many of her party mates, who said the appointment might be a trap.

Meanwhile, Justice Secretary Menardo I. Guevarra said Ms. Robredo could lose her post as drug czar anytime the president loses trust in her.

“As the appointing authority, the president may remove any appointee at his pleasure, more especially if trust and confidence, which is the principal basis of any appointment, is lost,” he said in a mobile-phone message.

Ms. Robredo has vowed to enforce the state’s anti-illegal drug campaign within the bounds of the law. She said she would treat the drug problem not only as a crime, but also as a health issue.

The vice president has repeatedly cited the need to re-assess the government strategy against illegal drugs given the rising number of drug dependents.

“Needless to say, disclosing sensitive and classified information to unauthorized persons is betrayal of trust, and is therefore a proper and reasonable basis for revocation of one’s appointment,” the justice chief said.

Mr. Panelo on Sunday said Ms. Robredo would lose her job if she insists on getting access to all documents about the drug war.

Since accepting the post, Ms. Robredo has met with the US Embassy and United Nations officials to discuss the anti-illegal drug campaign, which majority of Filipinos support even if it has drawn international criticism.

Ms. Robredo has also asked for the list of drug targets from the Philippine Drug Enforcement Agency (PDEA) but was denied access.

Mr. Panelo said the president has the power to ensure Ms. Robredo acts according to law.

“Not only is it within the president’s discretion, but it is his constitutional duty not only to enforce all the laws but to ensure that all his alter egos, including a co-chairperson of the Inter-Agency Committee on Anti-Illegal Drugs, are performing their respective functions within the scope and ambit of the law,” he said.

Mr. Duterte has yet to meet with her to discuss her functions, Mr. Panelo said. — Gillian M. Cortez and Vann Marlo M. Villegas

Fewer Filipinos cheery about life, economy

FEWER Filipinos expect their lives and the country’s economy to improve in the next 12 months, according to the latest poll by the Social Weather Stations (SWS).

SWS said its third-quarter poll showed a net personal optimism of +41, a point lower than in the previous quarter. The net score means 46% of Filipinos thought their personal lives would improve. Only 5% of Filipinos were pessimistic about their personal lives.

Net economic optimism also fell to +28 in September from +33, SWS said. The poll showed 41% of Filipinos thought the economy would improve in the next 12 months. Only 12% said it would worsen.

The poll also found that 36% of Filipinos said their lives had improved, while 25% said their lives worsened in the past 12 months.

SWS interviewed 1,800 adults for the poll, which had an error margin of ±2.3 points. — Gillian M. Cortez

Bill seeks marshal protection of judges

A CONGRESSMAN has filed a bill that seeks to create an office for marshal services to protect judges, according to an emailed statement from the author’s office.

Surigao del Sur Rep. Johnny T. Pimentel filed House Bill 5403, which will create the Office of Philippine Marshals under the Supreme Court, according to the statement.

The measure is in line with Chief Justice Diosdado M. Peralta’s plan to boost the protection of judges.

Improving security of judges, justices and halls of justice is part of Mr. Peralta’s 10-point agenda. He wants to create a security system patterned after the United States Marshals.

Unidentified gunmen shot and killed Tagudin, Ilocos Sur regional trial court Judge Mario Anacleto Bañez, the 31st judge killed in the line of service since 1999.

“Right now, every active judge is a sitting duck with absolutely no protection whatsoever against potential attacks,” Mr. Pimentel said in the statement.

The bill is a “very important first step” in the creation of a Judiciary Marshal Service, high court spokesman Chief Brian Keith F. Hosaka said in a mobile-phone message.

“We do hope that this initiative continues to gain traction until a law is eventually passed at the soonest time possible,” he said.

“It goes without saying that when we protect our magistrates, we also protect the rule of law. We thank our lawmakers for their prompt action on this matter,” he added.

Under the bill, the chief justice will appoint a director who will lead the marshal service. Marshals must be holders of a bachelor’s degree, at least 21 years old and not older than 35, and undergo training at the Philippine Public Safety College.

They will serve as “peace officers” and may conduct arrests, searches and seizures, and investigate and fight crimes against judges.

There are 2,561 trial judges in the country, 15 Supreme Court justices, 70 from the Court of Appeals, and nine justices from the Court of Tax Appeals, according to the statement, citing the 2019 General Appropriations Act. — Vann Marlo M. Villegas

Russians interested in Filipino language

RUSSIAN schools are looking for Filipino language programs for its citizens, Honorary Consul Armi Lopez-Garcia of the Russian Federation said.

Officials from the academic institutions will come to Manila this month to present their proposals, she said in an interview last week. They will also visit Cebu and Davao.

Ms. Garcia said more Russians are becoming more interested in Filipino given closer ties between the two countries.

President Rodrigo R. Duterte visited Russia last month and witnessed the signing of 10 business deals worth about $12.57 million. — Arjay L. Balinbin

Wider Bangsamoro coverage targeted in 2nd round of polio vaccination

HEALTH AUTHORITIES are targeting a wider coverage in Mindanao, especially in the Bangsamoro region, for the second round of the polio vaccination program on Nov. 25 to Dec. 7. The first round was conducted Oct. 14–27 covering Lanao del Sur, including Marawi City, Davao del Sur, and Davao City. Rabindra Abeyasinghe, World Health Organization (WHO) representative in the Philippines, said they are expecting more challenges in the second round, particularly in terms of reaching remote areas. “Because these areas are sometimes difficult to access,” he said in a media forum last week. He stressed, however, that they are determined to have as wide a coverage as possible. “If children are unprotected, we could possibly see a resurgence of polio. So if you want to break this transmission, we have to work to very high coverage and this can be only achieved if all of other partners join hands together,” he said. The vaccination program is being implemented by the Department of Health (DoH) with support from WHO and the United Nations Children’s Fund. Mr. Abeyasinghe added that to achieve high coverage, the local government units (LGUs) must also implement a monthly vaccination program. For the long term, LGUs need to be at the forefront of a routine immunization program. “The ultimate aim is to restore every high level of coverage in the campaign,” he said.

95% COVERAGE
Health Secretary Francisco T. Duque III also called for assistance from the Philippine Pediatric Society chapters in Mindanao. “For high coverage in Mindanao, 95% of children need to be vaccinated… In some areas in Mindanao like BARMM (Bangsamoro Autonomous Region in Muslim Mindanao)… we saw a very poor implementation of the campaign,” Mr. Duque said. Four polio cases in the country have been confirmed by the DoH, after almost two decades of being free from the disease. Three of these are in Mindanao, with the first two in the provinces of Maguindanao and Lanao del Sur, while the third was not specified where. The other was in Laguna in Luzon. — Maya M. Padillo

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