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How PSEi member stocks performed — July 29, 2019

Here’s a quick glance at how PSEi stocks fared on Monday, July 29, 2019.

 

Big oil firms back fuel marking, citing need to curb smuggling

THE Philippine Institute of Petroleum (PIP) said its members, which include the country’s biggest oil companies, support the government’s fuel marking program as a means of curbing smuggling.

“As early as last year, our members have been working closely with the Department of Finance (DoF) to ensure the program’s proper and effective implementation. We support the government’s efforts to curb smuggling which continues to undermine the industry and the government in general,” PIP said in a statement Monday.

Fuel marking involves the use of dyes blended into the fuel, to mark the stages undergone by a particular batch of product. The absence of the marker will be taken by the authorities as prima facie evidence that a shipment of fuel is not tax-compliant.

PIP’s members include Chevron Philippines, Inc., Isla LPG Corp., Petron Corp., Pilipinas Shell Petroleum Corp., PTT Philippines Corp., and Total Philippines Corp.

The group said the DoF consulted in June PIP member-companies on the draft implementing rules and regulations (IRR) of the program. It said initial visits to their facilities were conducted by the department, along with implementing bodies like the Bureau of Customs and Bureau of Internal Revenue, and the fuel marking provider.

“From the formulation of the IRR to the issuance of the implementing guidelines to conducting tests and visits to the facilities of PIP members, we have been generously lending our time and expertise as a unified body fighting the same fight,” the group said.

It said before the passage of Republic Act No. 10963 or Tax Reform for Acceleration and Inclusion (TRAIN), around P40 billion in government revenue was being lost as a result of petroleum smuggling. It said the findings were validated by various independent studies.

The group said it believes that fuel marking will address the shortfall in revenue collection “provided that it is done on a level playing field.” It added that the program has to be implemented across all industry players in order for it to be fully effective.

“The success of this program would mean a significant increase in tax collection and the opportunity to utilize these for much-needed social services and infrastructure. Consumers would also be assured of the quality of fuels in the market coming only from reputable sources,” PIP said. — Victor V. Saulon

Rice import duties on track to fund RCEF, BoC says

THE BUREAU OF CUSTOMS (BoC) said it has collected tariffs worth nearly P6.5 billion as of mid-July on rice imports since the Rice Tariffication Law went into effect in March, with the monthly average of P1.4 billion on track to fund the P10-billion-a-year Rice Competitiveness Enhancement Fund (RCEF).

In a statement Monday, the BoC said it is “on course” to meet RCEF funding requirements, which will allow the fund to support farm mechanization, seed and fertilizer acquisition and make credit more readily available.

The Rice Tariffication Law permitted more liberal imports of rice by private entities, who had to pay an import tariff of 35% on foreign grain sourced from Southeast Asia. It replaced the system of largely government-to-government rice orders overseen by the National Food Authority (NFA), which has been relegated to procuring rice from domestic farmers.

“At an average of P1.4 billion a month, the BoC remains on course to collect the minimum of P10 billion needed for the RCEF per year,” the BoC said.

The BoC reported to its parent agency, the Department of Finance, that it took in P6.479 billion from importer-traders as of July 15. It also raised a further P3.103 billion from the tax on import permits issued by the National Food Authority (NFA) since January.

The Port of Subic collected P1.598 billion worth of rice duties, followed by the Manila International Container Port (MICP) with P1.033 billion collections, and the Port of Manila with P998.77 million.

Economic managers have estimated that the law will reduce the price of the staple by at least P7 per kilo. — Beatrice M. Laforga

Iloilo province plans to become MICE destination

By Emme Rose S. Santiagudo
Correspondent

ILOILO CITY — Government agencies, the private sector, and local government units (LGUs) in Iloilo province have completed a three-year plan to become a major meetings, incentives, conferences/conventions and exhibitions (MICE).

The campaign, with a P50-million budget, will carry the tagline “Meet you in Iloilo” in a bid to promote the area as “your next MICE Destination.” The campaign is due to be launched on Oct. 10.

Tourism Undersecretary Arturo P. Boncato Jr. said the first two years of the MICE tourism marketing plan include promotions focusing more on domestic conventions, in preparation for bigger international conventions.

“What this program is doing is rationalizing all resources, setting up one major direction for everybody, where part of the direction is improvement along the way, facilities-wise, service wise, marketing and promotions-wise,” Mr. Boncato said Friday during a presentation to Iloilo provincial officials.

Mr. Boncato noted that the Iloilo Convention Center (ICC) accommodated 79,198 MICE participants in the first half of the year, more than double the 36,500 full-year total in 2017.

“We hosted the Asia-Pacific Economic Cooperation (APEC) and Association of Southeast Asian Nations (ASEAN). It’s an achievement. We achieved a certain standard. All of the meetings that transpired in Iloilo met a global standard,” he said.

Aside from the marketing plan, an Iloilo MICE Alliance Core Group composed of representatives from various tourism sectors was formed earlier this year to develop promotions, incentives, and related tourism packages.

Cleofe C. Albiso, general manager of Courtyard by Marriott Iloilo, said available incentives based on the number of MICE participants include a 5% discount on accommodations for the first night and an additional 5% for succeeding nights.

The ICC, meanwhile, will give a 10% discount and no ingress charge to a MICE event occupying the entire Convention Hall.

Ms. Albiso added that MICE participants will be able to avail of discounts and other incentives from participating restaurants, transport service, tour operators, and airlines.

“We have put our personal interests and corporate goals aside to collaborate to make this happen. We have to do this because if we do not work together, we can never move forward. We are not here to represent our brands because we know our businesses will fly once we really make this happen,” she said.

Mr. Boncato said the program details will be ironed out and ready in time for the launch.

“We will have a set of packages to attract more (events)…. The ICC is the golden hen, that’s why it is important that (stakeholders) support the biggest meeting facility in Iloilo. It’s already there, Iloilo is already a MICE (destination),” he said.

India clears abaca shipments from PHL

THE Philippines has been cleared to resume abaca fiber exports to India after New Delhi lifted an import ban, the Department of Agriculture’s (DA) fiber industry regulator said Monday.

“We are very happy to announce that the import ban on the Philippine abaca fibers by India due to the alleged Moko disease contamination in the abaca fibers has finally been resolved and lifted in less than a year of high-level bilateral meetings,” the Philippine Fiber Industry Development Authority (PhilFIDA) said in a social media post yesterday.

A letter from Rajesh Malik, director of the Ministry of Agriculture and Farmers Welfare of India, said its pest risk analysis failed to detect the bacterium Ralstonia Solanacearum Race-2, which causes Moko disease.

“The Ministry of Agriculture and Farmers Welfare avails itself of the opportunity to renew to the Embassy of the Philippines its highest consideration,” it read.

PhilFIDA Executive Director Kennedy T. Costales earlier said the trade of abaca between the Philippines and India is worth an average of 99.7 metric tons per year.

The trade was halted in October 2017 due to an Indian Plant Quarantine Order, which required that imported abaca fibers undergo a pest risk analysis.

In a statement earlier this month, Mr. Costales said there have been three bilateral meetings to discuss the issue.

“The abaca fiber is already a semi-processed/finished product extracted or stripped from the leaf sheaths of matured abaca stalks, then sun-dried, hanked, cleaned of its foreign matters, sorted, classified, tipcut, weighed, baled and stored ready for shipment. Moko disease will not survive these processes,” he said then.

Mr. Costales noted that as the world’s largest abaca fiber supplier, the Philippines views Indian claims that the shipments might harbor Moko disease as a threat to the industry, and as a result the DA requested that India conduct a new pest risk analysis. — Denise A. Valdez

SEC fines Abacus Coal P2M over ‘misstatements’ in audited results

Securities and Exchange Commission (SEC) logo

THE Securities and Exchange Commission (SEC) said it ordered Abacus Coal Exploration and Development Corp. (ACEDC) to pay a fine of P2 million “for the material deficiencies and material misstatements” in its 2008 and 2009 audited financial statements.

“The Appellant is hereby ordered to correct its 2008 and 2009 Audited Financial Statements to reflect the total misstatements of assets and equity amounting to P2.7 billion,” the SEC in an decision signed by its Chairman Emilio B. Aquino on July 16.

The SEC affirmed with modification the order of its Company Registration and Monitoring Department (CRMD) outlining the penalty. The fine amounts to P1 million for each year of misstatement pursuant to the Securities Regulation Code (SRC).

The CRMD order was issued on Jan. 19, 2011.

The SEC also directed CRMD “to investigate the misstatements carried forward to succeeding audited financial statements” and reserved the right “to impose additional penalties until such are corrected.”

The case stemmed from the execution on Sept. 23, 2008 of ACEDC’s parent firm Abacus Consolidated Resources and Holdings, Inc. (ACRHI) of a deed of assignment of coal mining rights with appraised value of P2.7 billion in exchange for P295 million worth of new shares issued by the coal company. The transaction’s intent was to gain further control of ACEDC.

On Nov. 13, 2008, ACEDC filed with the SEC an application to increase its authorized capital stock to P300 million from P20 million in a filing subsequently approved by the SEC on Dec. 24, 2008.

The issuance of P295 million worth of new shares was fully subscribed and paid for by ACRHI through the assignment of coal mining rights.

ACEDC filed its 2008 audited financial statements on May 7, 2009 and its 2009 audited financial statements on May 7, 2010. In both 2008 and 2009, the company did not record in its balance sheet the increased capital stock and the acquired coal mining rights. Instead, it disclosed the information in the notes to financial statements.

On Nov. 30, 2010, ACEDC received from the CRMD a notice of conference to show cause why it should not be penalized for material deficiencies and material misstatements in its 2008 and 2009 audited financial statements.

Despite the company’s explanation in the conference, the SEC unit directed ACEDC to settle the imposable fine for violation of SEC Memorandum Circular No. 8 Series of 2009. The company filed its appeal on Feb. 28, 2011.

However, the SEC said the subsequent disclosures made by ACEDC in its notes to financial statements “are incomplete/deficient not only for the missing amounts or values but also for failure to make a clear connection” to the deed of assignment of mining rights by ACRHI in exchange for the appellant’s shares of stock worth P295 million. — Victor V. Saulon

Captive services firm touts productivity gains from inclusiveness

CAPITAL ONE Philippines, which provides captive services to its parent Capital One Financial Corp. (COFC), said it has found productivity to improve if the workplace promotes inclusiveness and diversity.

Capital One Philippines General Manager Peter Hayden told BusinessWorld in an e-mail interview that COFC’s captive center in the Philippines, said acknowledging worker individuality allows them to work to their potential.

“When associates are able to bring their whole selves to work — their different backgrounds, life experiences, and unique perspectives — everyone has a chance to thrive and realize their full potential. This enables ideas, approaches, and innovative solutions that reflect the interests and needs of our customers,” he said.

He said employees have an avenue known as Business Resource Groups (BRGs), which were “established as forums for employees to celebrate their shared culture, support each other and encourage continuous learning to meet business objectives,” he said.

Mr. Hayden also said work relationships improve when the company allows for flexible work time and periodic dialogue with management.

“We celebrate people. We see them with malasakit (compassion). We value our associates as much as we value our customers and communities,” he said.

COFC is a New York-listed bank and one of the largest credit card issuers in the US. — Gillian M. Cortez

Indonesia warns of damage to rice crop as drought parches fields

INDONESIA’s rice crop is at risk of damage from an unusually long dry weather spell that’s gripped several producing regions, raising prospects of elevated imports for a second year.

The dry weather has parched paddy fields across Java island, the main growing region, and the agriculture ministry sees the harvest failing in more areas than the 20,000 hectares already reported, according to Edy Purnawan, director of crop protection at the ministry.

With some areas going without rain for more than 60 days, the nation’s weather forecaster has warned the archipelago may be under the impact of a weak El Niño. The drought has prompted President Joko Widodo to order steps to mitigate the impact and consider artificial rain as an option.

The government will continue to monitor and assess the impact of the dry season on inflation and will announce measure to tackle the issue next month, Coordinating Minister of Economic Affairs Darmin Nasution said on Thursday.

Indonesia is preparing aircraft loaded with chemicals for cloud seeding, a type of weather modification that aims to change the amount of rainfall from clouds.

While there may be no impact from the drought on palm oil and rubber, the weather agency has warned of forest fires developing in Sumatra and Kalimantan, the country’s main growing regions of these commodities. Paper producer Asia Pulp & Paper Co. said it has taken steps to prevent forest fires.

“The drought-impacted areas are increasing and may reach 200,000 hectares, while failed harvest could double to 40,000 hectares by the end of the dry season in October,” Mr. Purnawan said.

While the estimate for the failed harvest is small compared with Indonesia’s total cropped area of about 12 million hectares, a similar crop failure last year forced the government to boost imports to the highest in six years. Ample stockpiles of rice with state-owned Bulog will likely prevent significant additional imports, according to the U.S Department of Agriculture.

The agriculture ministry plans to minimize the impact of future droughts by planting drought-resistant seeds, Mr. Purnawan said. Other food crops such as corn and soybeans were yet to be impacted by the dry weather, he said. — Bloomberg

As rural India develops taste for chocolate, a dominant Mondelez extends its reach

CHICAGO/HAROHALLI, INDIA — Two years ago, Satish P., a bakery owner in the small village of Harohalli near Bengaluru, had his doubts about stocking Mondelez’s Cadbury Silk bars.

Priced between 70 and 170 rupees, they seemed out of reach for customers used to paying only 5 rupees for the tiny chocolates he has sold for years. But he took a chance and now rings up to 3,500 rupees ($50) in Silk bar sales a month.

“Villagers can afford premium chocolates now,” he said.

As Satish and other Harohalli shopkeepers have found chocolate sales in India are taking off, helped by growth in disposable incomes that extends to the country’s 650,000 poorer villages where more than two-thirds of the population reside.

A boom in e-commerce and a sharp tax cut are also propelling sales higher, spurring global confectioners like Mondelez International, Inc., Nestlé SA and relative newcomer Hershey Co to invest further in the still small but rapidly expanding market.

Illinois-based Mondelez, India’s No. 1 chocolate maker, told Reuters “the big bulk” of a $150-million increase in global investment this year — the first hike in five years — will be in rural India.

The company, which first started providing Indian store owners with free display coolers in early 2000s, ramped up their distribution to rural areas over the last year. It now plans to be in about 75,000-100,000 villages in the next three years, up from 50,000 in 2018.

To that end, it is also expanding its fleet of refrigerated trucks and building a database that maps India’s small neighborhood stores and monitors sales of its products at those shops.

“There’s a misconception that rural consumers are poor. Not all of them are. There are rich farmers, who are coming into the consuming class,” Deepak Iyer, Mondelez’s managing director for India told Reuters.

Iyer said Mondelez was targeting villages with as few as 3,000 people. “There are families aspiring for premium products because they see them through mobile connectivity today.”

NEW PRODUCTS, MORE MARKETING
Mondelez CEO Dirk Van de Put said competitors will find it hard to match the firm’s scale in the country.

Cadbury’s vast, decades-old distribution network in India was a key attraction for Kraft Food in its $19.6-billion takeover of the brand in 2010. Kraft later split into two firms with its global snacks business renamed Mondelez.

“It’s not going to be easy (for rivals) to carve out space, to be really be noticed in the store,” he said an interview, adding that Mondelez has consistently grown market share in India for several years.

Mondelez says it now commands 66% of the Indian chocolate market. Cadbury, a 195-year old British confectionery brand, entered India in 1948 and its Dairy Milk, Silk and 5Star products have since made it a household name. The Dairy Milk brand alone accounts for 40% of the market.

Nestlé is ranked No. 2, followed by Ferrero and Hershey, according to Euromonitor. The companies have not disclosed market share estimates.

At $1.9 billion in annual sales, India has plenty of room to grow. China, also a developing economy with a similar population size, is a $3.2-billion market but both pale in comparison to the US market of $19.2 billion, Euromonitor data show.

Last year, chocolate sales in India jumped 15.4% after the government, keen to win reelection, overhauled its national sales tax for many items. The cut in tax to 18% from 28% reduced chocolate retail prices and companies nearly tripled the amount they spent on promotions, according to market research firm Nielsen.

Mondelez says its Cadbury brand, which has worked for decades with WPP’s Ogilvy India on Bollywood star-studded TV ads, is spending more on marketing. And to tap online demand, the company has created a Cadbury-only store on Amazon.com that personalizes gift boxes for India’s year-round festivals.

It is also introducing new products. Last month, it launched a low-sugar Dairy Milk bar, addressing a growing market for healthier products in India where 9% of adults have diabetes.

KISSES IMPACT
Nestlé, the world’s biggest packaged foods company, has also been investing in counter-top coolers, expanding distribution, running celebrity ads and launching premium products. Last year, it began importing its “hand-crafted artisanal” Les Recettes De L’Atelier bars from Europe.

Hershey is doing its best to catch up.

It entered India’s chocolate market in 2016 with its lesser known Brookside brand and announced plans the next year to spend $50 million in five years.

Rapid growth has come with the introduction of its 112-year-old Kisses brand last autumn, helping it replace Mars as India’s No. 4 chocolate company, although its products are only available in 14 cities and major online stores like Amazon.com, BigBasket.com and Flipkart.com.

“We’re at an early stage…we will extend this by going national and subsequently we’ll look at going down from urban to rural,” Herjit Bhalla, Hershey India’s managing director, told Reuters.

The unit had spent more than expected over the past year, funding celebrity ad campaigns and technology including hand-held devices that analyze store preferences, Bhalla said.

India’s e-commerce market is a priority, he added, with online orders accounting for over 4% of sales, higher than the 1% seen for India’s overall consumer goods market. — Reuters

Carry-over of excess EWT: Now an option

“Options! Options! Options!” – This was one of the lines I would always remember in the movie Four Sisters and a Wedding. The movie revolves around the abrupt decision of CJ, the youngest in the family, to get married to his fiancée, Princess. His four sisters, Teddie, Bobbie, Alex and Gabbie, connived to formulate a plan to stop the wedding from happening. One of which is to provide CJ with other options as the four sisters believed that CJ is only marrying Princess as she was the “best candidate in a diminishing pool of options.”

The continuous improvement in the tax rules and regulations gives taxpayers an additional option specifically on the over remittance of expanded withholding tax (EWT). The new option allows the taxpayer to carry over the over remittance to the succeeding quarter. However, before we explore the new option, let us revisit the old rules.

The rules and regulations, before the TRAIN (Tax Reform for Acceleration and Inclusion) Act took effect, provide two options in case the taxpayer overpays EWT. The options are (1) to file a claim for refund or (2) to be issued a tax credit certificate (TCC). These options were reiterated in a ruling (New Coast Hotel, Inc. vs. Commissioner of Internal Revenue) promulgated by the Court of Tax Appeals (CTA) en banc (EB). In the case, the taxpayer filed its EWT return for July 2012. Thereafter, the taxpayer filed an amended EWT return and reflected an over remittance in the amended return. The taxpayer indicated its intention to seek a refund on the over remittance by marking the “To be refunded” box. However, when the taxpayer filed its EWT return for the month of August, it reported the over remittance from the amended July 2012 return as “Advance Payments Made.”

Thereafter, the taxpayer received a Preliminary Notice from the Large Taxpayers-Document Processing and Quality Assurance Division (LT-DPQAD) which indicated that the August EWT return could not be processed due to underpayment of tax. The LT-DPQAD stated that the offsetting of EWT is not allowed. Determined, the taxpayer filed a letter addressed to the Commission of Internal Revenue (CIR) requesting the cancellation and withdrawal of the assessment. However, without waiting for the decision for the CIR, the taxpayer paid the assessed deficiency to stop the accumulation of interest and subsequently filed a claim for refund.

The CTA EB ruled that the over remittance of EWT when the taxpayer filed its July EWT return cannot be used to offset against EWT due on the succeeding period or be treated as an advance tax payment. Line 18 of the BIR Form No. 1601-E only allows taxpayers to choose any of the two options in, i.e., to be refunded or to be issued a TCC. The CTA EB states that clearly, that the option to carry over the excess to the subsequent month/s is not a remedy.

The CTA EB also noted that the taxpayer reflected the over remittance in the amended July 2012 return as “Advance Payments Made” of the August 2012 EWT return. The CTA EB took note that the payment form (BIR Form No. 0605) is accomplished every time a taxpayer pays taxes and fees which do not require the use of a tax return (e.g., second installment of income tax return, deficiency taxes, delinquency tax, registration fees, advances payments, etc.). In case of over remittance, BIR Form No. 0605 is not accomplished. Hence, it is clear that the “advance payments made” contemplated in BIR 1601-E do not refer to an over remittance of EWT made from previous month/s.

The above rule has proven to be very inefficient and sometimes overly difficult, on the part of the taxpayer. Any mistake in the computation of the EWT which results in over remittance requires the taxpayer to file a claim for refund or TCC. As the refund process of overpaid taxes is most times too costly in terms of time and effort on the part of the taxpayers, such overpaid taxes remain unclaimed for long periods.

Hence, the issuance of a new regulation by the BIR giving the taxpayers a more viable option to claim overpaid EWT offers a new ray of hope to taxpayers. This is Revenue Regulations (RR) No. 11 -2018 issued by the Bureau of Internal Revenue (BIR) on March 15, 2018. The RR provides the new forms and deadline for filing of EWT returns. In the RR, taxpayers are instructed to use BIR Form No. 0619E for the monthly remittance of EWT and BIR Form No. 1601-EQ for filing the quarterly EWT return.

The BIR further publicized the new BIR Form No. 1601-EQ through the issuance of Revenue Memorandum Circular (RMC) No. 27-2018. The RMC provides that the amount to be indicated in the return shall be the total taxes withheld for the quarter. Likewise, remittances made for the first two months of the quarter using the BIR Form No. 0619E shall also be reflected therein. In the event that the result after indicating the total taxes withheld and remittance made for the quarter is still payable, the taxpayer shall remit the tax due thereon. On the other hand, in case of over remittance, the amount can be carried over to the next taxable quarter within the same taxable year. Such option was reflected in the new BIR Form No. 1601-EQ. Before, this option was not available in the old EWT return. (See illustrations)

Now, taxpayers have the option to carry over the overpayment for EWT to the next taxable quarter. However, it should be emphasized that the new form allows the carrying over of an over remittance to the next quarter but only within the same calendar year. It specifically stated that the carrying over is not applicable to the succeeding year.

The additional option given to taxpayers is a good indication that the BIR is continuously improving our withholding tax system. This new option is indeed more practical on the part of the taxpayers. It allows for easy means of correcting mistake which resulted to over remittance of taxes. I am hoping that the tax authority will give more Options! Options! Options! to ease the tax compliance requirements in our country.

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.

 

Anthony Joseph A. Cometa is a manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Scenarios

Reliable sources have disclosed that Operation “Awakening the Believers” was rolled out globally in early July. Simultaneous attacks were launched in Syria, Libya, Mozambique, Somalia, Tunisia, Afghanistan, Egypt, and Iraq. Islamic State Southeast Asia (ISEA) will allegedly follow suit with multiple coordinated attacks in the Philippines, Thailand, and Indonesia. The attacks will reportedly come in waves, first from July to September, then another wave till the end of the year. High value targets such as churches, hotels, malls, public transport, and other heavily populated areas are reportedly in their sights.

Extremist organizations around the world regard themselves as part of Islamic jihad. They refer to themselves as the “World Islamic Front for Jihad against Jews and Crusaders,” serving as an umbrella organization for terrorist coalitions and independent networks with common ideologies and shared operational ties, such as the “black flag” groups operating in the Philippines which are aligned either with Al Qaeda (AQ) or Islamic State (IS or Daesh), e.g. the Abu Sayaff Group (ASG), Sayful Ansarul Khilafa fi Luzon, Ansarul Khilafa fi Filipin, Bangsamoro Islamic Freedom Fighters (BIFF), and IS Ranao.

They regard Islam as their way of life and despise Western values (e.g. democracy, secularism, equality, human rights). Islamist terror organizations advocate all-out jihad against unbelievers (kuffars) wherein ends justify any and all means of terrorism. “Black flag” is the term used to denote terrorist groups and social movements that follow the Salafi religious interpretation of Islam which is literalist and puritanical. Based on traditional Islamic literature its followers are known as the “al-Khawarij.”

Terrorist financing funds specific missions and sustains the organization’s existential requirements. These are sourced from state sponsors, business fronts, criminal activities, and tithing. They are also supported by Black Flag-affiliate International Non-Government Organizations (BINGOs) such as the Muslim World League, the World Assembly of Muslim Youth, the International Islamic Relief Organization, Islamic Wisdom Worldwide, and Benevolence/Mercy

Foundation that fund education-social-cultural-youth coalitions, movements or foundations. Additionally, the link between terrorism and organized crime is well established, such as drug trafficking, kidnapping, extortion, arms smuggling and other criminal acts connected to terrorists.

Extremist organizations use state-of-the-art communications technologies to promote their cause worldwide, threaten, recruit, coordinate attacks, shape public opinion, and influence the global political and media agenda. The Internet is an ideal means for marketing terrorism: it’s decentralized, unrestricted, and accessible. Many Facebook accounts for example are used by IS, AQ, local black flag groups and support organizations here and abroad. There must be a focused effort to identify the users, take them offline, and shut down these accounts.

Due to ISIL’s crushing defeat in the Middle East, there has been an observable migration of foreign terrorist fighters (FTFs) to South East Asia to seek safe haven (Wilayatul Mashriq) and establish new provinces or “wilayats” under Daulah Islamiya (IS) governance rules. During and after the Marawi siege, FTF bodies were recovered and identified by the authorities. Marawi was part of the IS campaign to establish a Southeast Asian caliphate and a wilayat in Mindanao. Foreign jihadists were, and still are, “embedded” among local terror groups, waiting to strike at opportune times, perhaps ala Mumbai or Sri Lanka, or Ipil.

The Daulah Islamiya Wilayatul Mashriq coalition of the ASG, the Maute Group, and BIFF is a serious concern because geographically and ethnically diverse groups banded together and fought as one to lay siege on Marawi. Their areas of operation dangerously intersect, if not overlap, with those of the Moro National Liberation Front and Moro Islamic Liberation Front, as well as that of the Communist Party of the Philippines-National Democratic Front of the Philippines-New People’s Army. This has led to cross-pollination of ideologies, grievances, and subversive tactics that fan opportunities for tactical cooperation nationwide in the realm of terror attacks where they’re co-located.

The increasing number of suicide bombings in the past 12 months indicate a higher level of commitment to the militant cause. Last January, an Indonesian couple was behind the Jolo cathedral’s bombing that killed 21 people. A month ago, on June 28, two suicide bombers attacked an army camp. Eight were killed (including the two bombers) and 22 were wounded in that attack. A year ago, in July, 10 persons were killed at a Lamiftan, Basilan checkpoint when a suicide bomber allegedly from Morocco detonated the bomb in the van he was driving.

Our authorities believe that at least seven foreign Islamic terrorists — allegedly from Egypt, Malaysia, Indonesia, and Singapore — are currently scattered in Sulu, Basilan, and Maguindanao teaching skills like producing IEDs, planning attacks, recruitment and developing potential suicide bombers. Furthermore, Defense Secretary Delfin Lorenzana recently disclosed that reports are being verified that close to 100 foreign jihadists from Indonesia, the Middle East, Thailand, Bangladesh, Turkey, and Morocco are scattered in various parts of the country.

Despite its territorial and manpower losses, ISIS is expected to persist in 2019. Classic ISIS operations such as vehicle to knife attacks, bombings and armed assault, arson, raids, and even explosives-laden drone attacks are likely. Compounding matters is the violent discord between Sunnis and Shiites. Here at home, we’ve seen dangerous signs of that in Mindanao and in Manila as rivals fight for turf and influence. Local religious leaders are dismayed by this troubling development with the prospects of sectarian violence worsening.

Preparedness is everything. It’s about saving lives, protecting the economy, and preserving our freedom from oppression, hatred, prejudice, and intolerance. Our safety and security depend on our vigilance and preparations for the worst case scenarios. Prevention is top priority but if they manage to slip through, a swift crushing response is essential. Staying on top of the game requires thorough planning, integration, training, equipage, jointness of effort at the policy, crisis management and operational levels, and skillful execution.

Intelligence and counter-terror forces should keep sharing information and conducting joint drills — table top exercises and field training exercises — over and over again until they get it right. Incident commanders should be pre-chosen and thoroughly trained to have zero tolerance for incompetence and laxity. Bottom line: do not underestimate, or be overconfident, or take anything for granted.

 

Rafael M. Alunan III served in the cabinet of President Corazon C. Aquino as Secretary of Tourism, and in the cabinet of President Fidel V. Ramos as Secretary of Interior and Local Government.

rmalunan@gmail.com

map@map.org.ph

http://map.org.ph

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