Businessmirror september 08, 2015

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Thursday 18, 2014 Vol.8,102015 No. 40 Tuesday, September Vol. 10 No. 334

Govt posts deficit on better spending

By VG Cabuag

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roperty developer Megaworld Corp. said it is spending P10 billion over a 10-year period in developing its township project in the city of San Fernando in Pampanga.

The company said its 19th township development, measuring about 35.6 hectares beside the provincial capitol, will have clusters of buildings both for residential and the business-process outsourcing industry. “This is the perfect time and opportunity to be present in this progressive province, where else but right at the heart of the provincial capital, which is a prime location for See “Megaworld,” A8

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PHL to adopt new development targets despite difficulties in achieving MDGs

By Cai U. Ordinario Second of three parts

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By David Cagahastian

he nation’s budget as of end-July ended as a shortfall, amounting to P18.5 billion, and attributed to higher disbursement in the preceding three-month period ending in June. The government quickly announced to spend more beginning the current quarter to achieve higher economic growth.

In the first half, the government’s fiscal position stood as a fiscal surplus, which quickly generated renewed speculation of another bout of underspending that could mean another period of subpar performance in terms of local output, measured as the gross domestic product (GDP), this year.

However, the Department of Finance (DOF) reported that the budget surplus as of end-June was due to higher revenue collection, and that the government had been ramping up on its disbursement program beginning the April-toJune period. Officials said this was reflected in the July fiscal data, which showed a budget deficit of P18.5 billion.

The DOF said that, in the first nine months, total expenditures amounted to P1.28 trillion, reflecting an increase of 11 percent from expenditures made during the same seven-

month period last year.

Out of the amount, only P209.2 billion was used to pay interest on government debts.

This was only 16 percent of total expenditures for the period, down from 18 percent registered in the same period in 2014, implying that more money was freed to spend for projects that have social or economic impact.

“The pace of expenditure growth we are seeing has a clear positive trend since we adopted a whole-of-government approach to addressing underspending. Expenditures are on track to drive our growth for the third quarter. We will continue to unblock constraints to growth.

It is encouraging to note that we are starting the quarter with a better footing on the public expenditure side,” Finance Secretary Cesar V. Purisima said.

Continued on A8

he country’s struggle to address poverty and other social ills through the Millennium Development Goals (MDGs) has been long and arduous.

Gilbert Llanto, former National Economic and Development Authority (Neda) deputy director general-turnedPhilippine Institute for Development Studies (Pids) president, said prior to the MDGs, the Philippines’s main development thrust was on poverty reduction through a more general approach.

Llanto said most of the projects and programs implemented aimed to address poverty reduction through agriculture, since it is believed that a third of the poor in the country are engaged in farming or fishery.

With the introduction of the MDGs, he said the government was able to craft programs and projects that addressed specific social concerns apart from poverty. Llanto added that the common development framework of the MDGs also pushed countries, like the Philippines, to meet the goals and address its development concerns. “Because you’re now comparing yourself with peers, there is peer pressure for the Philippines to reach the targets,” Llanto said.

Pids senior research fellow Celia Reyes added that the MDGs represented a “major shift” in how countries viewed development. While some countries were focused on addressing poverty or reducing their indebtedness, Reyes said the MDGs provided a framework by which these development concerns can be viewed from a wider perspective. The multidimensional approach to development presented by the MDGs helped countries give attention to other development concerns that may have been neglected through the years or may have been put aside because of globalization. Reyes said inequalities between countries were addressed by the targets that were specified in the MDGs. Most targets did not recommend absolute numbers; rather, these targets focused on percentages.

Continued on A2 KEVIN DELA CRUZ

Megaworld allots P10B for Pampanga township

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Abac bares proposals for Cebu Action Plan

By Cai U. Ordinario

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EBU CITY—The Asia-Pacific Economic Cooperation (Apec) Business Advisory Council (Abac) has made key recommendations that seek to modernize the region’s markets. The Abac is hoping that these proposals would be included by Apec finance ministers in

PESO exchange rates n US 46.7370

the Cebu Action Plan.

The recommendations are divided into key areas: financing of micro, small and medium enterprises (MSMEs) and supply chains; expansion of financial inclusion; microinsurance; disaster-risk financing; bankable infrastructure projects; expansion of the role of the insurance and pension industries in regional development; development and integration of capital markets; and the Asia Region Funds Passport.

“We believe that Apec has an important role to play in addressing the causes of these uncertainties by

promoting the inclusive and broadbased growth that will transform the entire Asia-Pacific region into a strong and resilient engine of the global economy,” the Abac wrote to Finance Secretary Cesar V. Purisima, who is the chairman of the Apec Finance Ministers’ Meeting.

In financing MSMEs, the Abac said it endorsed the proposal to establish a public-private Financial Infrastructure Development Network to build credit-information systems for secured transactions and the use of movable assets as collateral.

Continued on A8

n japan 0.3927 n UK 70.9374 n HK 6.0306 n CHINA 7.3533 n singapore 32.8209 n australia 32.3283 n EU 52.1164 n SAUDI arabia 12.4682 Source: BSP (7 September 2015)

A2 Tuesday, September 8, 2015

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PHL to adopt new development targets despite difficulties in achieving MDGs Continued from A1

“Some might argue that the targets may be very hard to achieve for some of the countries, but I think they tried to address that by setting targets based on where you are rather than setting absolute levels. [That’s why the targets aimed to] reduce by half so wherever you are, you still have to reduce by half,” Reyes said.

“In fact, some might say that if you’re already up there, almost 100 percent, it’s even more difficult to achieve the 100-percent target. So I think the way that they constructed it somehow addressed that problem of different starting points for countries,” she added.

Further, Llanto said the government’s perspective in solving poverty has also changed because of the MDGs. He said that if the approach prior to the MDGs was more general like urban and rural, the new approach of the government is more specific, such as addressing poverty in specific regions and provinces.

“Before, poverty reduction through agrarian reform, very general. Poverty reduction through improving the agricultural sector, very general. ’Yung dito sa MDG, naka-focus sa household. What makes people poor, ’yun and question? It is diseases, what kind of diseases? Ignorance, so ’yung intervention has more face to it,” Llanto said.

Challenges

The Neda said challenges, such as economic growth that has not been inclusive, natural ang man-made disasters and shocks such as typhoons and sudden unemployment, caused

programs to fall through or prevented Filipinos from accessing social services.

Further, the Neda admitted that there was “weak” MDG implementation in local communities as evidenced by the lack of conscious effort to achieve the MDGs. Apart from these problems, financing the MDGs did not come cheap especially for a cash-strapped government like the Philippines which was, at that time, already teetering on the edge of an Argentina-like fiscal crisis.

Economists from the University of the Philippines Diliman who were later called the “UP 11” warned of an impending fiscal crisis brought about by the country’s high level of indebtedness as a proportion of its gross domestic product (GDP).

The 11 economists said that by the end of 2003, the national government’s total debt was at P3.36 trillion, or 78 percent, of GDP in that year. The outstanding debt of the public sector as a whole was running at more than 130 percent of GDP. The newly installed government, fresh from the Edsa II uprising that installed former economist-turned-Vice President Gloria Macapagal-Arroyo to the presidency, had to implement firefighting measures and the little funds left from the government coffers were stretched to finance the country’s needs—including the MDGs. In 2008 Philippine Institute for Development Studies (PIDS) senior research fellow Rosario G. Manasan said the country needed P39.7 trillion between 2007 and 2015 to meet the MDGs.

In the PIDS study titled, “Financing the Millennium Development Goals: The Philippines,” Manasan said the country may fall short of around P409.5 billion to finance the MDGs from 2007 to 2010. This, unfortunately, may reach up to P778 billion by 2015.

Using a low-cost assumption, Manasan said that if the government improves in the delivery of services for health and education, the estimated cumulative resource gap is P350.6 billion for 2007-2010, and P605.3 billion for 2007-2015.

Manasan said the estimates of the resource needs and resource gaps for MDGs presented were computed using 2006 prices and were based on the assumption that the population will continue to grow by 2.3 percent every year.

To address this situation, former Speaker Jose de Venecia and later former Neda Director General-turned-Sen. Ralph Recto pushed for the adoption of an MDG debtswap scheme.

Through this, developing countries like the Philippines can rechannel its resources from debt repayment to programs and projects toward achieving the MDGs. Recto said that, at that time in 2009, Germany already discussed with the Philippines and granted the option of a debt swap for the country’s health-sector program worth €25 million.

But the debt-swap scheme did not materialize due to reservations on the part of agencies like the Department of Finance.

Due to these reservations, Neda Social Development Staff Director Erlinda Capones

said the government had to look for other ways to finance the MDGs. Capones said the Neda started advocating for MDG funding through the General Appropriations Act or the national budget.

The government also sought assistance from its development partners through Official Development Assistance (ODA).

Data from the Neda showed that cumulative ODA loans and grants for MDG as of 2014 reached P262.61 billion for 98 programs/ projects that supported the achievement of the eight MDGs. Of this amount, around 60 ODA projects provided P134.8 billion, or 51 percent, to support specific MDGs, while 38 ODA projects support several MDGs with P127.8 billion, or 49 percent.

Further, some 18 of the 60 ODA programs/projects supported specific MDGs were geared toward the achievement of Goal 7 (Ensuring Environmental Sustainability). Goal 1 (Eradicate Extreme Poverty) had the next highest number of programs/ projects with 17.

“Of course resources will never really be enough to address everything, but I think the government provided enough resources within the funds that they had for MDG-related concerns,” PIDS senior research fellow Celia Reyes said.

Another major concern was in obtaining timely data to monitor the country’s progress.

One of the most difficult data to obtain was poverty because the Family Income and Expenditure Survey (FIES) was only conducted every three years.

The FIES is the basis for the country’s poverty-incidence estimates. In place of the FIES, the government conducts the Annual Poverty Indicators Survey (Apis). But the data obtained from Apis was not used to estimate poverty incidence on an annual basis.

It was only in the last three years that the government began using the Apis to estimate annual and semestral poverty incidence nationwide. However, the annual poverty estimates were not disaggregated into provinces, municipalities and cities.

To address this, the government has undertaken a project on Small Area Estimates (SAE). But funding was not forthcoming and while the first SAE was conducted using 2003 data, it took another three years to finance a new SAE study done in 2006. Since that time, the government has conducted SAEs in 2009 and 2012.

Apart from poverty estimates, the government also had problems monitoring data including those for maternal mortality and HIV incidence, both of which may also suffer from underreporting.

Monitoring the country’s progress through timely data was also compounded by the lack of funding provided for statistical agencies. The lack of funding for statistical agencies even impeded the conduct of important surveys.

In 2005 the country was supposed to have a mid-decade census but the lack of funds caused the National Statistics Office (now part of the Philippine Statistics Authority) at that time to push back the country’s middecade census to 2007. To be concluded

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Editor: Dionisio L. Pelayo • Tuesday, September 8, 2015 A3

SC reverses self, stops QC local govt, Congress leadership to ensure DENR from expanding Payatas dump passage of priority measures

By Jovee Marie N. dela Cruz

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PEAKER Feliciano Belmonte Jr. said on Monday that the leadership of the 16th Congress will continue to meet to ensure the passage of its legislative priorities.

Belmonte said Congress leaders will meet regularly to identify the common legislative priorities of both the House of Representatives and the Senate.

“Until our next meeting after the brief recess, these priority measures will be our focus,” the speaker said.

Congress will go on recess from October 10 to November 2. The session will again resume on November 3 to December 18.

The third and last regular session of the 16th Congress is expected to be cut short because of the elections in May next year.

“The choice of priorities were determined based on their advanced stage in the legislative process, therefore making their passage more achievable,” Belmonte said.

“This also veers away from traditionally giving full focus to the passage of the General Appropriations Act alone. Congress feels there are other equally urgent measures that can benefit our people,” he added.

Late last week, Belmonte and Senate President Franklin Drilon identified the two chambers priority measures in the next five weeks or before their October 10 break.

Quorum

A SENIOR member of the House Minority Bloc, meanwhile, expressed hopes that the quorum in the House of Representatives will further improve in the coming weeks to enable the House leadership to fast-track the approval of several priority measures on the legislative table.

Nationalist People’s Coalition Rep. Rodolfo T. Abano III of Isabela urged his fellow lawmakers to cooperate with the House leadership in addressing the quorum problem to ensure the passage of vital legislative measures on time.

“We are the representatives of the people and we have to show our constituents that we fulfill religiously our constitutional duties by diligently attending plenary sessions and committee hearings of the House of Representatives,” Albano, House contingent head for the Minority Bloc to the Commission on Appointments, said.

He lamented that the quorum problem plaguing the House leadership in the past weeks have prevented lawmakers from holding plenary sessions, thus resulting in the delay of pending measures.

Albano hopes that the idea broached by Belmonte. and House Majority Leader Neptali Gonzales Jr. to hold sessions from Monday to Friday would effectively fast-track and secure the approval of priority bills identified as urgent by Senate and House leaders in a meeting recently.

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By Joel R. San Juan

HE Supreme Court (SC) has abandoned its earlier decision denying the petition filed by residents of Payatas in Quezon City who are seeking the issuance of a writ of kalikasan against the expansion of the sanitary landfill in the area.

It can be recalled that in March, the SC turned down the petition for being incomplete in form and insufficient in substance.

The Court also ruled that the magnitude of environmental damage required by the rules on the writ of kalikasan (must affect the life, health or property of residents of two or more cities or provinces) has not been met as no evidence has been shown prima facie to support any such claim of damage.

The Court also noted in the earlier ruling the lack of affidavits, scientific studies or documentary evidence to support the claimed environmental damage, as required by the rules on the writ of kalikasan.

In a four-page resolution promulgated on September 1 butmade public only on Monday, the Court issued a writ of kalikasan and ordered respondents—Quezon City Mayor Herbert Bautista and the Department of Environment and Natural Resources’ Environmental Management Bureau (DENR-MB)—to answer the petition of the group led by Leonita Panoy, within a non-

extendable period of 10 days from receipt of notice.

The SC also referred the case to the Court of Appeals (CA) for hearing and resolution.

The SC issued the new order after granting the motion for reconsideration filed by petitioners on July 10.

The petitioners sought the issuance of a writ of kalikasan against the Quezon City government’s expansion of the sanitary landfill, which petitioners claim will encroach upon the area where their houses are built.

The petitioners argued that the sanitary landfill endangers the health of the people living around the facility.

The petitioners, mostly residents living near the landfill, also sought the closure of the facilty for violating the provisions of Republic Act 9003, or the Ecological Solid Waste Management Act, and other environmentl laws, such as the Clean Air Act, Clean Water Act, Toxic Substances and Hazardous and Nuclear Wastes Control Act.

Economy

A4 Tuesday, September 8, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

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Maynilad, Manila Water gear up for El Niño effect

Lower generation charge brings down September electricity rates–Meralco W

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By Lenie Lectura

OWER rates for September dropped by P0.57 per kilowatthour (kWh) on account of a lower generation charge last month.

The Manila Electric Co. (Meralco) said on Monday that residential customers with an average monthly consumption of 200 kWh will enjoy a P113.46 reduction in their electricity bills compared to last month; P170.19 for a 300-kWh consumption; P226.92 for 400 kWh; and P293.65 for 500 kWh. This month’s reduction, Meralco said, brings the total reduction to P2.13 per kWh over the past five months. This reduction also marks the seventh time this year that rates have gone down.

“At P8.55 per kWh, this month’s overall rate is lower by P1.81 compared to September 2014’s P10.36

per kWh,” said Meralco, adding that “this is the lowest in more than five years or since January 2010.”

The lower rate was mainly on account of a decline in generation costs from power sales agreements (PSAs) and independent power producers (IPPs) due to higher dispatch, Meralco said.

Generation charge, the largest component of a Meralco bill, decreased by P0.42 per kWh from last month. At P4.13 per kWh, this September’s generation charge is also the lowest since January 2010.

Several large generating units, namely, South Premiere Power (Ilijan), Sem-Calaca Power, Quezon

Power and Therma Luzon (Pagbilao) improved their dispatch levels in August after experiencing plant outages during the July 2015 supply month.

In particular, Ilijan increased dispatch level from only 48 percent in the July supply month to 81 percent in August. Ilijan 1 was on a scheduled maintenance in July, while Ilijan 2 was derated during the Malampaya gas restriction from July 13 to 16.

Meanwhile, lower fuel costs from Malampaya brought down prices from the First Gen plantsSanta Rita and San Lorenzo.

Apart from the lower generation costs, Meralco said there was an adjustment-cover cost deductions from Malampaya, following the supply restrictions from previous months from prior months that helped further bring down the generation charge for September.

Charges from the Wholesale Electricity Spot Market (WESM), on the other hand, registered a negligible increase of P0.006 per kWh.

As such, the share of PSAs, IPPs and WESM to Meralco’s total power requirements, meanwhile, were at 47 percent, 46 percent and 7 percent, from the previous month’s levels of 43 percent, 46 percent and 11 percent, respectively.

In addition to the generation charge, transmission charge also registered a reduction of P0.04 per kWh due to lower power delivery service and ancillary service charges. Taxes and other charges, likewise, went down by P0.05 per kWh and P0.06 per kWh, respectively.

Meralco’s distribution, supply and metering charges remain unchanged after registering reductions in July.

Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines.

DOE asks Congress to restore ₧8-B budget proposal for 2016

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he Department of Energy (DOE) asked the House Appropriations Committee on Monday to consider restoring its

original P8-billion budget proposal for 2016 so it could continue implementing the national-electrification program and address the threat of

climate change on the energy sector.

Energy Undersecretary and Officer in Charge Zenaida Monsada said that only P1.846 billion of its pro-

posed P8-billion budget for next year was approved by the Department of Budget and Management (DBM).

The DBM-approved budget was P2.767 billion lower than DOE’s current budget of P4.613 billion— a marked reduction of 60 percent.

“I am requesting Congress for the restoration of our proposed budget under Tier 2 of around P7 billion,” Monsada told lawmakers present during the budget deliberations.

She said the proposed budget under Tier 2 represents the funds the DOE needs for the implementation of new projects.

“Of the said amount, P6.6 billion would be for climate-change mitigation, while P53 million is for total electrification,” Monsada said.

The DOE executive said the additional budget would also be used on projects that will ensure international acceptance of testing capabilities (P119.3 million), institutional strengthening (P166.5 million), research and studies (P33.5 million), and international commitments (P26.6 million).

Enough power supply

AT the same time, Monsada assured that there will be no problem in power supply next year despite the El Niño phenomenon.

“We estimated that we will have 13,300 megawatts [MW] supply and 12,000 MW demand for 2016,” Monsada said. She added that of this 12,000- MW demand, 8,900 MW is for Luzon, 1,600 MW for the Visayas and 1,500 MW for Mindanao.

“However, the Mindanao portion, which is highly dependent on hydro [power plants] could be impacted by El Niño but we’re continuously monitoring the water levels and schedules of hydropower plants,” she said.

Monsada also said that there will be no brownout on election day in May next year as there are enough power supply for the anticipated election period.

Electricity is needed for the votecounting Precinct Count Optical Scan machines to function.

Electrification

Meanwhile, National Electrification Administration (NEA) Administrator Edita S. Bueno said that it has accomplished 80 percent of its target under the Sitio Electrification Program since 2011 to August 2015.

In the same budget hearing, Bueno told lawmakers that NEA spent P15.18 billion to energize a total of 26,081 sitios, or an average of P582,248 per sitio.

According to Bueno, the program is also expected to energize 6,360 more sitios until June 2016. Jovee Marie N. dela Cruz, Marvyn Benaning with PNA

ith water supply coming from Angat Dam significantly reduced starting this month, contingency plans have been put in place to minimize its impact to close to 12 million people living in the National Capital Region (NCR).

A total of 900 barangays in the west zone of the Greater Manila Area are expected to feel the brunt of El Niño’s effects, according Maynilad Water Services Inc. (Maynilad) due to reduced water supply from Angat Dam. The estimated 900 barangays to be affected represents 56 percent of Maynilad’s concenssion area, which include some portions of Manila, Quezon City and Makati City; Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon—all in Metro Manila; and the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario—all in Cavite Province.

Of the 900, 162 barangays will be severely affected, with water to the affected areas being served 12 hours a day from the usual 24-hour water service the company provides.

In a news statement, Maynilad said it is stepping up measures to mitigate El Niño’s impact.

Among Maynilad’s mitigating measures are system adjustments to manage the reduced supply, prompt repair of pipe leaks and extension of operating hours of pumping stations.

Maynilad said that the company is also ready to deploy its four portable water treatment plants to hard-to-reach areas, reactivate several deep wells, install stationary tanks, and send water tankers to severely affected areas.

The measures aim to manage the impact of a reduced water supply for Metro Manila after the National Water Resources Board (NWRB) reduced the Angat Dam supply allocation for Metro Manila from 41 cubic meters per second (cms) to 38 cms beginning this month.

According to Maynilad, to ensure that the limited supply will be maximized and that all affected customers will have some water at least at certain times of the day, Maynilad will be implementing rotating service interruptions.

The company will announce the date of the water-service interruptions two days before implementation to allow its would-be affected customers to take necessary measures, said Engr. Ronaldo Padua, head of Maynilad Water Supply Operations.

Maynilad is the biggest waterservice provider in terms of customer base. In 2012 Maynilad’s customer base breached the 1 million mark, with 1,129,497 households composed of an estimated 8 million people.

According to Maynilad, the enhancement of the company’s operational efficiencies since the last El Niño in 2010 made the company better prepared for such extremeweather event.

The company’s water-storage capacity has increased from 281 million liters to 561 MLD (million liters a day) with the construction of 11 new reservoirs in addition to its existing 14.

The company has also added 15 new pumping stations to its existing 11.

In addition Maynilad’s campaign to reduce water loss or nonrevenue water (NRW) has brought NRW in the west zone down from 53 percent in 2010 to 32 percent by June 2015.

This translates to over 400 MLD of recovered water that the company can deliver to its customers.

Last week the NWRB appealed to the public to conserve water in light of the alarming situation of the water level in Angat Dam after the water level in the water reservoir remained at 186 meters, still way below the year-end target level of 212 meters.

East zone concessionaire Manila Water Corp., said it has put in place contingency plans to cushion the impact of El Niño to its 6.3 million customers. According to Manila Water, 9 percent of its customers, or about 125,500 households, stand to be affected by the reduced water supply.

Instead of 24-hour water service, affected areas will only have 12- hour water service.

Manila Water Officer in Charge for Corporate Strategic Affairs Group and also Corporate Communications Head Jeric Sevilla said the company continues to work closely with other member-agencies of the Interagency Technical Working Group on El Niño to prepare for the dry spell.

Sevilla said that part of the east zone concessionaire’s mitigation plans include the intensification of leak-repair programs; ensuring all equipment and facilities, such as treatment plants, pump stations and reservoirs, are operable to avoid downtime; reactivation of deep wells for possible supply augmentation; deployment of mobile treatment plants; and implementation of supply and pressure management schemes, in case needed. Jonathan L. Mayuga

briefs not a single cent for ofw legal assistance A party-list lawmaker on Monday questioned the zero appropriation for the legal assistance of overseas Filipino workers (OFWs) in the 2016 budget.

Party-list Rep. Terry Ridon noted the “conspicuous absence” of any particular item of appropriation for the Legal Assistance Fund (LAF).

According to Ridon the LAF was created by virtue of Republic Act 10022, or the amended Migrant Workers Act. The lawmaker, citing the law, said the government is mandated to provide P100 million every year for legal assistance for OFWs, P30 million of which should be sourced directly from the national budget.

“However, no such allocation can be found under the DFA budget, nor is there a special provision that mentions the LAF,” Ridon said. “The practical consequence of this move is that there is no separate budget for OFW legal assistance. Instead, OFWs need to beg Philippine embassies and consulates for help each time they need legal assistance,” Ridon added. Jovee Marie N. dela Cruz

contractors told: comply with safety requisites The chief of the Department of Public Works and Highways (DPWH) warned contractors on Monday that they may face suspension of work should they fail to meet the safety requirements for project implementation.

Public Works Secretary Rogelio L. Singson ordered all field officers to “strictly implement the requirements on road works safety, traffic management, and construction safety and health during the project construction and maintenance works.”

“To minimize disruption and inconvenience to the citizens brought about by ongoing public works projects, contractors found not observing good housekeeping in their construction sites must be held liable, and that concerned project engineers supervising these projects are equally accountable,” he said.

Implementing officers are tasked to monitor compliance to the various roadworks safety requirements, such as the provision of warning signs and barricades, stockpiling of materials in proper places, removal from the project site of waste and excess materials including broken pavements and excavated debris.

Construction safety signages, which are also visible at night, and barricades, must be provided as a precaution and to advise the workers and the general public of the hazards existing in the worksite, Singson said. Lorenz S. Marasigan

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Tuesday, September 8, 2015 A5

Regulation key constraint to services sector growth–Balisacan

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By Cai U. Ordinario

EBU CITY—Restrictive regulation was identified as the key constraint of the services sector in the Philippines and other Asia Pacific Economic Cooperation (Apec)-member economies.

Quick fix

A maintenance worker assigned at the depot of the Light Rail Transit Line 1 in Pasay City performs a routine maintenance check on a commuter coach over the weekend. The worker says a regular maintenance check on all coaches is essential to forestall the possibility of train breakdowns, especially during commuter rush hours. Nonie Reyes

In his opening statement at the closing of the Regional Conference of Services Coalitions on Monday, Socioeconomic Planning Secretary Arsenio M. Balisacan said too much regulation will hinder innovation, a key factor for growth and development in the sector.

“The services sector faces unique and significant barriers that, in many cases, are regulatory in nature. If a regulation is too restrictive and prescriptive, then it will hinder innovation,” Balisacan said.

To attain effective services trade reform, Balisacan said Apec economies must ensure effective regulation to deal with market failures to promote efficiency.

Balisacan added that there is

‘Big time’ price hike at the pump for gas, diesel

By Lenie Lectura

O

il firms raised the price of petroleum products on Tuesday after a series of price rollbacks.

The price of gasoline shot up

by P1.75 per liter; diesel by P1.95 per liter; and kerosene by P1.85 per liter.

The price hike takes effect 12:01 a.m. of September 8, oil firms announced on Monday afternoon.

Seaoil Philippines said the adjustment was necessary to reflect the movements in the international petroleum market.

Later in the day, Petron Corp.,

Pilipinas Shell, Caltex Philippines, Total Philippines, PT T Philippines and Phoenix Petroleum announced their respective price adjustment.

E a ster n Pet roleu m Cor p., meanwhile, implemented its price adjustment at 6 a.m. of Tuesday. It raised gasoline and diesel prices

by P1.70 per liter and P1.90 per liter, respectively. It attributed the price hike to the cut in supply from oil-exporting countries in view of low demand.

“Analysts are hopeful that world oil prices have already seen its bottom price, while maintaining that the volatility in world oil prices would re-

main for the rest of the year,” Eastern Petroleum said.

Department of Energy Officer in Charge Zenaida Monsada said the price adjustment in local petroleum products was expected because prices in the world market rose by about $6 per barrel. She said this translates to an adjustment of about P2.

“The oil-price hike will be triggered by a reduction in US production and big spot demand from Malaysia,” Monsada added.

L a s t w e e k o i l f i r m s r e duced the price of gasoline and diesel by P1.40 per liter and P0.70 per liter, respectively.

DTI outlines targets to justify 2016 budget allocation

By Catherine N. Pillas

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he Department of Trade and Industry (DTI) has bared its performance targets for 2016 with a 7 percent increase in investments for the year.

This was revealed in last week’s committee hearing for the agency’s budget for 2016.

According to the DTI’s budget notes, in terms of investment increase, a 7-percent gain is expected for 2016.

Even as the Philippine Economic Zone Authority (Peza) has been pulling in negative growth numbers, registering a 20-percent decline in July, the Board of Investments (BOI) has been offsetting the decline.

From January to May, the BOI has seen a growth of 20 percent over the same period in 2014, documents show.

Trade Secretary Gregory L. Do-

mingo cautioned that the investments haul of both the BOI and the Peza are on an erratic trend, as a sharp decline was noticed from 2013 and 2014.

“The numbers are primarily driven by the power sector in terms of the value. If several big power projects were missed…then you will see a decline, opposite is true,” Domingo said.

In a recent interview, Peza spokesman Elmer San Pascual raised hopes of a positive growth for 2015 on the back of expected investments from American and Taiwanese firms.

Other expected outcomes, such as micro, small and medium enterprises (MSMEs) assistance, consumer welfare enhancement, and realizing the country’s industrialization policy, were also outlined in the budget.

A 15-percent increase in the number of MSMEs assisted, a 72 percent

level of consumer awareness, and 920,000 workers in the industry and services sectors are targeted for 2016.

On MSME assistance, Domingo expects the number to exceed 100,000 in 2015 due to the DTI’s various MSME assistance programs, such as the Small and Medium Enterprise Roving Academy, trade fairs for local goods promotions, and the Shared Services Facilities program.

The registration of business names have, likewise, been enjoying a 20-percent growth per year, reaching 360,315 registrants in 2014.

In the first seven months of 2015, total registrants stand at 255,342.

For 2015, the DTI also expects to resolve as much as 5,000 consumer complaints, as numbers on resolved cases has been increasing since 2011 when monitoring was begun.

Lina pushing for ‘paperless’ transactions at BOC

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ustoms Commissioner Alberto D. Lina will enforce a “paperless” transaction system that promotes ease of doing business with the government revenue agency.

Through Customs Memorandum Order 29-2015, the bureau would take concrete steps to eliminate unnecessary use of paper and expensive forms.

He also said the project aims to achieve the twin objectives of curbing inefficiency and combating corruption through the steady phase-in implementation of a “paperless transaction.”

“Eliminating red tape and

all the ills that go with it is an important step in improv ing the overall performance of Customs and in restoring the public’s confidence in the bureau,” Lina said.

The plan also includes electronic interchange of information with other government agencies, such as the Bureau of Internal Revenue, the Philippine Statistics Authority, the National Economic and Development Authority, and the Tariff Commission.

Deputy Commissioner Agaton Uvero said the important components of the paperless-transaction scheme included the discontinu-

ance of the Import Entry and Internal Revenue Declaration form and the Supplemental Declaration on Valuation and the acceptance of print outs of the electronic Airway Bill.

“Our aim is to reduce documentation and paper costs by as much as 70 percent. We will achieve this by doing away with expensive carbonized forms and costly airway bill forms. We will also lessen the number of documents required from seven sets to two sets,” he said.

Uvero noted that the reduction would cover around 50,000 transactions a month. PNA

a need to enhance competition or contestability of markets and attainment of social objectives to promote equity.

These reforms are necessary since the services sector plays a crucial role in generating employment and attaining high economic growth in the Philippines and in the region.

Balisacan said that in the country, the services sector accounts for 54 percent of total employment, or 21 million Filipinos. The services sector is also the main contributor to the country’s gross domestic product (GDP).

In the second quarter alone, services accounted for 3.5 percentage points of the country’s

5.6-percent economic growth rate. The services sector grew 6.2 percent in the April- to-June period this year.

In Apec, the services sector accounts for twothirds of the region’s GDP. From a global perspective, services growth accounts for 71 percent of the world’s GDP. “The increased level of engagement between Apec and the private sector during this year’s meetings has set a higher bar for multistakeholder partnership and participation. We hope that this will be the new normal as we face an increasingly challenging yet potentially rewarding environment for the services sector,” National Economic and Development Authority Deputy Director General Emmanuel Esguerra said.

Esguerra, who is also the convener of the Apec Group on Services, said Apec’s work in services is cross-cutting in nature and that Apec working groups and subcommittees will continue to work on the different areas concerning services.

He added that the Apec Services Cooperation Framework, which we expect will be adapted by Apec leaders in November, aims to make Apec’s work on services more focused and coherent.

A6 Tuesday, September 8, 2015

Opinion BusinessMirror

editorial

PSE and the PPP

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ike many ideas that come from the government, the Public-Private Partnership (PPP) Program was viewed only from the government’s perspective and that may be a reason it has not come anywhere near expectations.

The government may tout all of the successes of the PPP, but building even thousands of school classrooms and buildings is nothing compared to the scale of, say, the Laguna Lakeshore Expressway Dike.

Rehabilitating or even building new airports does not require either the funding or the planning and logistics of building the North-South Railway Project at a cost of P170 billion.

The government usually fails, as it has with the PPP, when it tries to move into the private sector of which it has little or no understanding.

From the BusinessMirror: “PSE [Philippine Stock Exchange] President and CEO Hans Sicat said the stock market can play a role on companies that bagged a ticket project under the initiative to raise capital, such as issuing PPP securities, among other ways. ‘We are working closely with our regulator, the PPP Center and other stakeholders to explore opening up the equities market for this purpose,’ Sicat said.”

These comments were made at a forum held at the Asian Development Bank headquarters on accessing the capital markets for PPP. The forum was a joint effort of the PSE and the government’s PPP Center. “The panelists, representing the Securities and Exchange Commission [SEC], listed firms, international and local legal counsels and investment advisors, talked about the requisites for successful PPP securities issuance, regulatory requirements and challenges, and the potential framework and mechanism to create a suitable environment for PPP investors.”

The vision of Sicat and the PSE is to find a way for the PPP project companies to issue securities to the public and financial institutions—like a corporation coming to the stock market with an initial public offering—to securitize and finance the project.

It is a win-win situation across-the-board. The PSE makes money on it. The PPP private companies raise funding and share the risk.

The public participates in future profits of the project by owning the stock. The government and the people get the project and all of this happens in the transparent framework of the capital markets under PSE and SEC regulation and oversight.

This idea should have been implemented at the very beginning of the PPP Program. Unfortunately, the government can only find the stock market when it wants to use it for political propaganda when private capital pushes the index to a historic high.

A businessman’s take on the economy Manny B. Villar

THE Entrepreneur Conclusion

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n the past seven weeks, I wrote about the numerous changes happening in the local business scene. The changes make the present different from the past, and future changes will relegate the present to the past.

So many changes are happening, such as the transformation of the retail business from a few square meters of a sari-sari store to hectares of shopping malls, the wave of global brands sweeping our shores, or the rise of the Philippines to star status in the investment community.

I have seen, and even participated in, these changes, so I am in a good position to analyze the developments that have happened in the past several decades.

In the Philippines, as well as in other countries, we saw the rise and fall of big companies. Enron, which began trading natural gas in the late 1980s, became the biggest in its business in the US and in the United Kingdom, until it went bankrupt in 2001.

Everybody knows about Sony, once the world’s electronics leader, which is currently trying just to survive. Nokia, once the biggest name in cell phones, has sold its handset business, overtaken by newcomers Samsung and iPhone.

During the mid-1950s, four out of five cars in the world were made in the US, and half of them (about 4 million)

by General Motors. Toyota, on the other hand, produced just 23,000 cars in 1955.

In 2013 Toyota sold more than 9.9 million cars, beating GM by more than 200,000, to keep the Japanese company’s title as the world’s No. 1 carmaker.

When I was young, the household names when it comes to retailing were Good Earth Emporium, Aguinaldo’s Department Store, Oceanic Commercial and Syvels, among others.

At that time, Shoe Mart was what its name suggests: a shoe store. Today, SM is the retail leader, and the other household names in shopping have been replaced

by Robinsons and Ayala, among others.

Acme Savings Bank, one of the smallest banks in the country with two branches in 1968, was bought by a certain Henry Sy. Acme became BDO Unibank, now the biggest in the country, dislodging traditional and much older leaders like

Bank of the Philippine Islands.

Ayala Land, which was untouchable as a leader in the real-estate industry, is now being challenged by SM Prime.

Compared to other countries like the US, the changes in business leadership in the Philippines have not been as dramatic. For a long, long while, the big business groups have been headed by the same names – Sy, Gokongwei, Consunji, Ayala, Yuchengco and Aboitiz. The biggest local banks are still controlled by the same families. Of course, time dictates the inevitable passing of the torch from the first to the second generation, which sometimes results in the partition of some groups, sometimes leading to decline, and in other cases, resulting to stronger companies.

During the 1950s, 1960s, 1980s and the 1990s, we saw sunrise industries that eventually became sunset industries, although some managed to be revived.

In a way, business is like politics: it will be the same and will be different at the same time, because of competition. New companies will rise, while others will fall.

This is the message I want to impart to would-be entrepreneurs, small businessmen wanting to become big, or even to the executives of mid-sized companies.

Sometimes, when people talk about business, the feeling that surfaces is that big business groups have gobbled up all the opportunities, leaving nothing for aspiring businessmen.

Seeing the numerous mergers, acquisitions being made by big business groups, one would think that the good opportunities have been depleted. But that’s not true, as history tells us. Based on the examples I cited earlier, we have seen in our lifetime very big companies

Don’t blame your stockbroker John Mangun

OUTSIDE THE BOX

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henever stock prices go down for a long period of time—as we are experiencing now—stockbrokers begin taking a lot of criticism and are subject to the moaning and wailing of investors.

The first complaint is that “stockbrokers are only in it for the commission.”

Yes, that is absolutely true because that is the business model. I want stockbrokers to make their money from commissions executing orders on the exchange.

The other choice to generate revenues and make profits is for brokers to trade for their own accounts and I do not like that. I have been in this business long enough to have been a stockbroker when the amount of commissions was regulated and when stock brokerage companies had to fully disclose their own trading.

I was also there when commissions were deregulated and brokers were allowed to trade through their “dummy”— I mean subsidiary—companies. It was better for the clients under the former system. If a broker was selling shares out of their own portfolio that a client was buying, the broker had to disclose

that fact. Now using the “dark pool” of stock-market trading, most of the time no one knows who is trading and that includes the brokers.

Another common complaint is that stockbrokers tell clients to “buy” in their recommendations much more often than they tell clients to “sell.” That is true also. The reason for that is self-serving for the brokers. Clients make money— particularly in a stock market like the Philippine Stock Exchange which does not allow short-selling—when prices go higher. While you may correctly think that brokers are in the business for the commission, they do not make money when clients lose money any more than SM can be a sustainable business if its products are constantly faulty or of low quality.

The other reason for the lack of “sells” is that stockbrokers are expected to be correct about their recommendations

and here it does get nasty. If a broker recommended a “buy” last month and changes that to a “sell” this month, clients tend to lose faith in their analysis very quickly. So brokers employ the worst of all strategies sometimes. They “hope” prices will go back up to help maintain their stock-picking credibility.

The fact is, most investors would do well to review the dialogue from the movie, A Few Good Men starring Tom Cruise and Jack Nicholson. Cruise: “I want the truth!” Nicholson: “You can’t handle the truth!”

No one likes or seeks out the opportunity to lose money in the stock market.

However, that is the reality and the possibility of losing is always greater than the probability of making profits. If you are going to invest in the stock market, you better have that idea firmly planted in your brain. More important, if as an investor you cannot handle that “truth,” you have absolutely no business in the stock market.

I am in the business of advising people with their investments. My recommendations are always exactly the same. “Buy ABC for a move to PXXX. But if the price goes down to PXXX, sell it immediately.

Do not wait. Do not hesitate. Do not think about it. Hit the Sell button.”

All the great stock-market analysis in the world means nothing if you do not understand this one concept: “You have to know when to hold them and when to fold them.”

that were seemingly untouchable being relegated to insignificance, or at least to minor roles in their industries.

Forbes magazine recently named the 12 Filipino billionaires who were included in the magazine’s list of the world’s richest people. The names on the top slots have been there for several years, but new billionaires have joined the list. Ten years or 20 years from now, we don’t know who will be No. 1 on Forbes’s list. It could well be someone just starting his own company right now. I firmly believe opportunities abound for entrepreneurs or small businessmen who want to become big.

Compared to developed countries, or even to some emerging economies, we still have few industries.

This is because the pace of change in the Philippines is much slower, because our development in the past 40 years has been slow. But I am confident that going forward, we will be moving faster.

Actually, I think we are in the faster stage now, we have started the momentum. Ten years from now we can have a new set of industries, and 20 years from now, another set. The number of big companies in the Philippines can double, triple, even quadruple moving forward.

Instead of being daunted, the success of today’s business leaders should inspire aspiring entrepreneurs to be keen in identifying opportunities and working hard to transform these into vehicles for their own success.

I did it, and I see no reason others can’t.

For comments, e-mail mbv.secretariat@gmail.com or visit www.mannyvillar.com.ph.

The advice you are getting from the stock-market experts who tell you that “now is a good time to avoid buying stocks” and “this downtrend is a buying opportunity” is dangerous to your wealth. It does not take any sort of a stock-market genius to know that the last five-and-a-half months have been a “selling opportunity” as the index fell about 15 percent.

However, these people say what they say and stay in business because that is what clients want to hear. Too many clients want to sleep at night knowing their “expert” told them, “Don’t worry, be happy.” If your stock market “guru” did not say “sell,” find a new one fast.

I gave a seminar last Saturday. I highlighted various issues that I believe are going to offer great profit opportunities in the months, perhaps even weeks, to come. But I also said that I would not buy them now if you gave me the money.

Buying opportunities come when prices stop going down and start going up. Only a raging fool would recommend taking a drive to the province during a supertyphoon because there won’t be much traffic on the roads. The same is true for the stock market.

E-mail me at mangun@gmail.com.

Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Mining should help improve people’s lives Ernesto M. Hilario

ABOUT TOWN

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f mining in the Philippines is to be competitive, then it should be allowed to grow to create more value and benefits for the Filipino people.

At the 106th Baguio Charter Day celebration last September 1, it was pointed out that “Baguio and Benguet were built on the back of miners.”

When the Americans came to Baguio at the turn of the century, they were intent not only in establishing a summer city, but also to pave the way for mining gold and other mineral resources in the area.

Among the mining firms in Benguet is Philex Mines, which has operated the Padcal mine site in Benguet since 1957.

The firm has worked closely with the indigenous peoples in developing its mine site. The president and chief executive officer of the mining firm is a Kankanaey.

The country’s mineral reserves should be tapped to make them work for the people’s benefit. It is true that responsible mining is not so much about delivering profits to shareholders as improving people’s lives. After all, the development of mineral resources, the protection of environment and the uplifting of communities are all connected.

Of the country’s 9-million hectares regarded as mineral-rich, only 1.5 percent or 35,000 hectares have actual mining permits. Thus, the contribution of the industry to our gross domestic product has stagnated at around 1 percent. In other countries, mining has been a significant engine of economic development. Mining in Australia contributes $142 billion a year; in Canada, $37.5 billion; in the US, $1.9 trillion; and in Brazil, $24 billion.

Mining can, therefore, contribute significantly to our own economic development. If we impose contraints on mining and choose not to participate in the global-supply chain for minerals by discouraging mining or shutting down our mines, then we will have to import the same minerals we need for our economic growth.

Philex’s experience in the Cordilleras by working with indigenous peoples has allowed it to extend help to the communities that play host to or are adjacent to its mine site. If the mining business is competitive, the community and people also benefit.

Meanwhile, the Chamber of Mines of the Philippines has expressed full support for House Bill (HB) 3586, filed as an alternative to the version of the government’s Mining Industry Coordinating Council (MICC).

Under HB 3586, the government’s total take from mining will be derived from three types of taxes: government royalty, which sets variable rates of 2 percent to 5 percent of net mining revenue from gold and copper depending on market prices; 7 percent for nickel and other metal ores extracted from proclaimed mineral reservations; and 4 percent for those extracted outside the reservations; the regular 30 percent corporate-income tax under the Tax Code; and a special mines tax equal to 5 percent of a contractor’s yearly taxable income.

On the other hand, the MICC version, filed as HB 5367, will collect either 10 percent of a miner’s gross revenue or 55 percent of “adjusted net mining revenues”, whichever is higher; and 60 percent of any windfall profit.

The mining consortium believes that the MICC bill would discourage mining investments as the steep rates are “absurd” and would have investors looking elsewhere. In fact a 2014 study showed that increasing the effective tax rates on mining could cut total investments by as much as 67 percent.

Finance Secretary Cesar V. Purisima is standing by the MICC bill as he argues that government had every right to be “aggressive” in collecting high taxes for extracting finite resources, a position that puts him in a collision course with the mining industry.

An end to Edsa traffic mess?

Will the deployment of the Highway Patrol Group (HPG) of the Philippine National Police (PNP) help alleviate

traffic congestion along Edsa?

We really hope so.

The HPG’s marching order from President Aquino is for them to lead the enforcement of traffic rules in close coordination with the Metropolitan Manila Development Authority (MMDA), Land Transportation Office (LTO) and the Land Transportation Franchising and Regulatory Board.

The HPG will be fielded in six major intersections: Balintawak, Cubao, Ortigas, Shaw Boulevard, Guadalupe and Taft Avenue. Initial reports said the HPG would deploy 150 police officers in two shifts with motorcycles and patrol cars to ensure orderly traffic along Edsa. At present, there are over 500 MMDA traffic constables assigned on the highway.

While the presence of armed cops could make motorists think twice about violating traffic rules, the public is understandably worried that the kotong cops could tarnish the image of the police force.

We certainly hope that the PNP leadership will monitor the behavior of their members to ensure that they take the straight and narrow path when they are deployed along Edsa.

At the same time, we urge the government to seek long-term solutions to the traffic problem. These should include upgrading the light rail system and building more road infrastructure in the metropolis. The long-term solutions are necessary since a study by the Japan International Cooperation Agency has shown that the country now loses up to P6 billion a day from traffic congestion.

LTO license plates deal is unconstitutional

Two lawmakers, Abakada Party-List Rep. Jonathan dela Cruz and Rep. Gus Tambunting of the Second District of Parañaque recently filed a petition before the Supreme Court to declare the P3.8 billion LTO Car Plates Modernization Program as null and void on constitutional grounds. In their 54-page petition for the issuance of a temporary restraining order and a writ of injunction, the petitioners, through their counsel, lawyer Leo C. Romero, asked the High Court to prohibit the respondents, Executive Secretary Paquito Ochoa, Budget Sec. Florencio Abad, Communications Sec. Joseph Emilio Abaya and National Treasurer Roberto Tan, to cease and desist from wasting the people’s money in implementing the project and collecting any amount for new plates and using public funds to pay the discredited project contractor Power Plates Development Concepts Inc./J. Knieriem B. V. Goes.

The petitioners noted that the project was publicly bidded out in 2013 with only the amount of P187 million appropriated under the item “Motor Vehicle Plate Making Project” in clear violation of the Constitution and the law requiring that sufficient funds be appropriated before any such bidding is undertaken.

They said this is an infringement of the doctrines of checks and balances and the separation of powers, specifically Section 29(1) of Article VI, which states that “No money shall be paid out of the Treasury except in pursuance of an appropriation made by law”.

The petition also noted the issuance by the Commission on Audit (COA) of a Notice of Disallowance on July 13 this year against the LTO project on the ground that it lacked a valid appropriation under either the General Appropriations Act (GAA) 2013 and/or GAA 2014.

The COA directed the erring officials of the Department of Trade and Industries (DOTC) and LTO and the supplier to return the initial amount of P477 million paid for the purchase of plates under the LTO project. Despite this Notice of Disallowance, the DOTC-LTO continues to require motor vehicle and motorcycle owners by pay for the license plates upon registration, which is illegal and a clear burden to the public.

E-mail: ernhil@yahoo.com.

Tuesday, September 8, 2015

A7

Lower income-tax rates broaden the tax base Edgardo J. Angara

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inance Secretary Cesar V. Purisima thumbed down proposals to adjust income-tax rates downward, his department arguing that up to P30 billion in revenues could be lost from the proposed reduced income tax rates’ first year of implementation.

Internal Revenue Commissioner Kim Jacinto-Henares stated we should keep the status quo so no new taxes will be levied and the government will instead focus on improving collection.

True, our tax system has long been hounded by inefficiency and maladministration. The World Bank’s 2015 Paying Taxes report notes that Filipino businesses on average take longer and more payments to fulfill their tax obligations than their peers in Brunei Darussalam, Malaysia, Singapor, even in Cambodia.

Because compliance is difficult, tax evasion becomes rampant— leading to an estimated P400 billion in lost revenue every year. In 2011, for instance, there were 1.82 million registered self-employed individuals, e.g. doctors, lawyers or entrepreneurs, who enjoy more leeway and discretion in paying their taxes.

Only 402,766 filed their tax returns and paid an average P25,295—totaling P13.4 billion only.

In stark contrast, 2.98 million compensation income earners paid an average P55,221.83 (more than twice what their high-earning self-employed counterparts paid in the same year), totaling to P158.86 billion. By law, their income taxes are automatically withheld.

Plugging leaks and loopholes will correct such an uneven revenue flow, but so will lowering tax rates.

In 2014 Dr. Stella Quimbo of the University of the Philippine School of Economics cited studies showing that the likelihood of tax evasion increases with higher tax rates.

Using merged data from the 2013 Labor Force Survey and the 2012 Family and Income Expenditures Survey, Quimbo argued that the inverse is also true, calculating that every percentage-point reduction in the marginal tax rate leads up to an

18.7 percentage-point increase in the likelihood of tax participation.

In other words, all things considered equal, lower tax rates could act as an incentive for more taxpayers to comply, resulting in a broader tax base.

Lower income tax rates also transfers money from the coffers of our perennially underspending government back to the pockets of Filipino families, who can spend more easily on goods and services. And that additional spending, in turn, attracts more taxes.

A 2014 Institute for Development and Econometric Analysis study showed that every peso decrease in income tax paid results in every Filipino family spending up to P50 more. The government can recoup the initial revenue losses through increased consumption tax collections, such as value-added tax.

E-mail: angara.ed@gmail.com.

Philippine Tax Academy: The envisioned center of learning for government tax collectors and CPAs

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By Joel L. Tan-Torres | Board of Accountancy Chairman

here is now a law that mandates the establishment of the Philippine Tax Academy. Republic Act (RA) 10143, or the Philippine Tax Academy Act, became law in July 31, 2010. In fact, this may have been the very first piece of legislation passed under the administration of President Aquino.

I was personally involved in the drafting of the bill for this law and in the swift approval of this bill in both the Senate and House of Representatives of the 14th Congress sometime in early 2010. Former Rep. Exequiel Javier of Antique sponsored the bill in the Lower House, while Sen. Panfilo Lacson sponsored the Senate bill.

Beginning with my appointment as senior deputy commissioner of the Bureau of Internal Revenue (BIR) in August 2009, I advocated for the creation of the Tax Academy. During the latter part of 2009, I worked with a group of BIR officials to conceptualize the Tax Academy structure. I was able to visit the National Tax College (NTC) of the National Tax Administration of Japan (NTAJ), observe the operations of such an institution and gain valuable insights.

When I was appointed commissioner of Internal Revenue in November 2010, I moved for the passage of a law that will create a learning center for the tax collectors of the land, including, of course, the BIR. In early 2010 I constituted a group of young Certified Public Accountant (CPA) and lawyers coming from the Junior Executive Development Program (JEDP) of the BIR to help draft a bill that will establish a Tax Training Academy. The idea then is to form a training organization that is separate from the tax-collecting agencies and that will be focused on providing training and learning to all tax-collecting officers. My JEDP group was able to draft a bill that became the basis for the passage of the Philippine Tax Academy Act. I was able to have this certified as urgent

by Malacañang, and the approval of the bill in the two chambers of Congress was expedited and fast tracked. RA 10143 was transmitted to Malacañang on July 1, 2010, and 30 days after, on July 31, 2010, this lapsed into law without the signature of the President in accordance with Article VI, Section 27(1) of the Constitution. Yes, this is probably the first law passed during the term of President Aquino. And this definitely is one piece of legislation that is much needed for the tax collecting agencies and officers, as well as the tax paying public. .

Tax academy models

The Tax Academy of the Philippines follows the model of similar dedicated learning institutions for tax authorities globally. Most tax authorities of the developed countries, including the United States, Great Britain, Germany, Australia, and others have training institutions catering to the learning requirements of their tax collectors. In Asia, such as countries Japan, China, Malaysia, Singapore and India have these tax academies training their tax collectors.

I visited the NTC of the NTAJ in 2009. My observations and findings of the way the NTC is operated greatly influenced the Philippine Tax Academy legislation that we drafted.

The NTC of Japan is an institution that provides training to Japan’s tax officials as national public employees. The NTC consists of the Central Institute—composed today of the

Kasumigaseki Office and the Wako Campus— and 12 Regional Training Centers throughout Japan. The Wako Campus is the ideal training facility, with its enviable resources of administration building, several training buildings, an auditorium, a student center, a gymnasium, several dormitory buildings with condominium like rooms, and even a tax museum.

The National Tax Agency employs a stafftraining system structured around the following three pillars: (1) group- training programs provided by NTC, (2) on-the-job training individually provided by supervisors and duty advisors in the course of everyday work, and (3) group-training courses held at the workplace. The NTC also trains new recruits from high school and universities so that they can carry out the duties expected of them as tax officials. The NTC provides regular job training and updated programs for tax officials who are already working in the field, enabling them to keep pace with the most recent changes.

Furthermore, the NTC engages in academic surveys and research on taxation while providing international training programs for overseas tax officials, mostly from Asia as part of international cooperation activities.

In fact, the NTC has regularly been providing training to BIR officials who go to Japan for these courses for several years already.

The Philippine Tax Academy can also follow the lead of other training institutes and academies in the Philippine bureaucracy, including the Department of Trade and Industries, Philippine Trade Training Center; Civil Service Institute; Philippine Military Academy; Philippine National Academy; Philippine Judicial Academy; Bangko Sentral ng Pilipinas Institute; Commission on Audit (COA) Professional Development Center; Department of the Interior and Local Government-Local Government Academy; National Education Academy; Foreign Service Institute; National Defense College, National Economic and Development Authority Statistical Research and Training Center; COA Professional Development Center; Development Academy of the Philippines; Technical Education and Skills Development Authority; and the Department of Science and Technology Resource Center.

Therefore, the Philippine Tax Academy has already several success stories that it can follow both on the local, as well as international area.

Status of the Philippine Tax Academy Act

THE RA 10143 provides that the secretary of Finance, in coordination with the commissioner of the Internal Revenue, commissioner of the Customs, and the executive director of the Local Government Finance, and in consultation with representatives from the academe, shall issue the implementing rules and regulations (IRR) within 90 days from the effectivity of the law. However, after more than five years from the passage of the law, the IRR have not yet been issued and, hence, the Philippine Tax

Academy unfortunately has not been established to date.

The Senate Tax Study and Research Office (STSRO), in its Tax Bits publication of JulyAugust 2013, published an article, entitled RA 10143: A Case of Law Impoundment? The article discussed the features of the law and cited that several stakeholders, including the STSRO, representatives from concerned sectors, such as the academe were active participants in the drafting of the IRR for the Philippine Tax Academy.

The group tasked to draft the IRR was chaired by Finance Undersecretary Carlo Carag, sometime in 2011. The article also disclosed that in February and April 2013, the STSRO, through Director General lawyer Rodelio Dascil, wrote a follow-up letter to Finance Sec. Cesar V. Purisima and Undersecretary Carag, inquiring on the status of the IRR of RA 10143.

The article raised the issue that several years have passed since the 15th Congress, which legislated the Philippine Tax Academy Act ended on June 30, 2013. The article raised two questions: Where is the IRR for the Tax Academy? Why have the Department of Finance (DOF), Bureau of Internal Revenue, Bureau of Customs and Bureau of Local Government Finance (BLGF) refused to implement RA 10143?

On September 29, 2014 and May 25, 2015, I, as chairman of the Board of Accountancy (BOA), wrote to Carag. I cited the interest of the BOA on the IRR of the Philippine Tax Academy Act since the academy, once established, will provide the training for the tax collectors of the BIR, BOC and local government units (LGU), including the CPAs in the aforementioned offices. As such, the BOA is interested in knowing and assisting in the immediate implementation of this law, which will benefit the government CPAs who are stakeholders of the BOA. In the said letters, I also indicated to Carag that I was previously involved in the drafting of the Philippine Tax Academy Act and the initial planning for the implementation of the same when I was the senior deputy commissioner and commissioner of Internal Revenue from November 2009 to December 2010. I also indicated that the implementation of the law will greatly benefit the government service of the three offices and should be implemented as soon as possible.

Though I still have to be given the IRR, I have since then been contacting the DOF to move forward the issuance of the IRR for the establishment of the academy.

Moving forward

I believe that it is a matter of time before we will have a Philippine Tax Academy that will redound to the benefit of both the tax collectors and the tax paying public. Once the IRR is issued by the DOF, the detailed planning for the implementation and establishment of the academy can proceed.

What are the requirements for this implementation?

Securing a budget appropriation for the Philippine Tax Academy must be included in the DOF budget. The DOF is the mother agency responsible for the BIR, BOC and BLGF. Thus, it is the DOF which should include in the department budget the funds for the initial implementation of the academy.

The Board of Trustees (BOT) must convene immediately. This will require appointments

by the President from a nominee list to be submitted by the secretary of Finance. The nominees shall include the three representatives from the academe. The representative of the DOF, who is designated as the chairman of the board, must call the seven-man BOT for an organizational meeting to discuss the initial implementation and policy issues for the establishment of the academy.

The secretary of Finance must appoint the executive officers of the academy consisting of the president and three chancellors and vice chancellors to administer the institutes for the BIR, the BOC and the BLGF. The executive officers must prepare the strategic and implementation plans for the academy and the three institutes. These shall include formulating the mission and vision of the academy, the venue for the academy and its facilities, the staffing pattern for the administration of the academy, the staffing pattern for the faculty and trainors of the academy, the training curriculum for the three institutes, which shall include a “ladderized” program for the entire career of tax collectors, the admission policies for new recruits of the three tax collecting agencies, linkages with external organizations to be established, and many other concerns.

A potential venue for the academy and its facilities can be the BIR Regional Office in San Pablo, Laguna. This is a relatively newly constructed facility of the BIR with a large land area for expansion. The site is appropriate for live-in training of tax officers that is somewhat secluded from the distractions of a metropolis. At the same time, the BIR Regional Office can relocate to a more proximate location in Calamba, Laguna where the regional government center for Region 4-A is located.

In formulating these policies, strategies and procedures, consultations with the various stakeholders should be done. These stakeholders include the tax experts from the various professional and private-sector organizations, including the Philippine Institute of Certified Public Accountants, the Tax Management Association of the Philippines, the Integrated Bar of the Philippines.

Consultations should also be made with the various government and private sector academic and training organizations.

The ongoing training and human- resource programs of the BIR, BOC and LGUs should be reviewed and integrated in the programs of the academy. The various studies conducted on the training requirements and programs of the three agencies should be retrieved and reviewed to determine its relevance.

Assistance in conducting this implementation planning can be secured from the various international developmental organizations, such as the International Monetary Fund, World Bank, United States Agency for International Development, Japan International Cooperation Agency, GTZ, Aus Aid, Asian Development Bank, United Nations Development Programme, Canadian International Development Agency, Organization for Economic Co-operation and Development, and others.

With all these in place, it will be a matter of time when the Philippine Tax Academy will be a reality and serving the needs of the tax collecting agencies and the tax paying public.

2nd Front Page BusinessMirror

A8 Tuesday, September 8, 2015

GIR fell anew in August T

By Bianca Cuaresma

he country’s foreign-currency reserves— used mainly as frontline defense against potential imbalances caused by external volatility—declined for the second consecutive month in August.

The Bangko Sentral ng Pilipinas (BSP) reported on Monday that the country’s gross international reserves (GIR) in August hit $80.26 billion, about $74 million lower than that of the previous month at $80.258 billion.

It was also $615 million lower

than the GIR seen in August last year at $80.87 billion.

The country’s GIR represent a pool of assets maintained by the central bank and are used to underwrite obligations from unexpected imbalances that stem from external pressures.

Gold reserves, special drawing rights

(SDR), foreign investments and foreign-exchange reserves comprise the countries GIR. A strong level of reserves means that the country is in a better position to repay its obligations. It serves as a stronger buffer against imbalances brought by external developments. The BSP attributed the decrease in reserves to the payments made by the national government for its maturing foreign-exchange obligations.

More evident in the data set was the decline in the value of the BSP’s foreign investments during the period. The value of the central bank’s foreign investments in August was only $70.58 billion, lower

than the $71.22 billion seen in the previous month.

Despite the decline, the central bank said the August GIR level is enough to cover 10.5 months’ worth of imported goods and payments for services and income.

It is also equivalent to 6.4 times the country’s short-term external debt based on original maturity and 4.5 times based on residual maturity.

Data from the BSP further showed that the GIR could have been lower for the month, if not for the increase in the value of the BSP’s gold holdings and inflows from foreignexchange operations.

The government projects GIR to hit $81.6 billion at the end of 2015.

Abac bares proposals for Cebu Action Plan Continued from A1

The Abac also recommended initiatives to promote enabling environments for trade and supply-chain finance, as well as the use of alternative financing mechanisms.

To expand financing inclusion, the Abac also proposed a new regional framework on financial inclusion, apart from supporting the proposal to use the Asia-Pacific Forum to further policy innovations.

The Abac said the regional model framework will help support Apec membereconomies design domestic financial-inclusion

strategies through public-private partnerships (PPP) and by discussing digital-finance issues.

The group also endorsed the proposal to use the Asia-Pacific Financial Forum (APFF) as a platform to expand the coverage of microinsurance in member-economies.

Apart from this, Abac said the APFF can also be used to develop sound financial and insurance markets to secure public trust in disaster-risk finance products. The APFF, Abac said, can also be used as a platform for sharing experiences in retirement-income reforms; improving capitalmarket depth and liquidity in the region; and regional public-private sector dialogue.

The Abac also supported the creation of a pipeline of bankable infrastructure projects. This pipeline will be developed through the Apec PPP Experts Advisory Panel, the Asia-Pacific Infrastructure Partnership; the Global Infrastructure Hub; and the Urban Infrastructure Network.

“In addition, we propose broad collaboration across Apec fora on cross-cutting initiatives that impact the financial sector. In particular, we suggest that finance ministers support the efforts of the Regional Investment Analytical Group in developing indicators to help enhance investment flows in the region, as well as Abac’s collaboration with the International Valuation

Standards Council to improve valuation practices across Apec economies,”the Abac said.

Abac’s report endorsed the Cebu Action Plan, a multiyear road map for reforms that finance ministers will announce at their annual meeting on September 10 and 11 in Cebu.

Abac was created by Apec leaders in 1995 to be the primary voice of business in Apec.

Each economy has three members who are appointed by their respective leaders. They meet four times a year in preparation for the presentation of their recommendations to the Leaders in a dialogue that is a key event in the annual Leaders’ Meeting.

www.businessmirror.com.ph

Govt posts deficit on better spending Continued from A1

The DOF said that alongside the growth in expenditures was the growth in revenue collection, the total of which, from January to July, amounted to P1.26 trillion, or a growth of 15 percent from total collections for the same period last year. The Bureau of Internal Revenue (BIR) collected P118.2 billion in July, bringing year-to date collection of the BIR to P824.1 billion, or growth of 8 percent from last year.

The Bureau of Customs (BOC) raised P30.0 billion in July, bringing the January-

Megaworld. . .

to-July collection to P208.7-billion. This represented growth of only 2 percent from collections made during the same period last year. The DOF said BOC collections grew despite the 32-percent drop in the average price of imported oil.

Meanwhile, the Bureau of the Treasury (BTr) contributed P14.2 billion in revenues in July, bringing its year-to-date contribution to P81.2 billion, or 15 percent higher than figures from a year ago. This means that the BTr already exceeded its P60.7-billion target for the full year.

Continued from A1

an urban township development,” Jericho Go, the company’s senior vice president, said.

The property is approximately 70 kilometers away from Manila and around 20 km away from Clark International Airport.

The company did not divulge the details of the project since the master plan is still being developed.

“Just like our other townships, we will integrate residential, office, commercial, retail and institutional components in this development.

As we see a potential pool of skilled talents for the BPO sector in the province, we are certain to build a cyberpark, bring in our partner-locators to the township and generate thousands of jobs for the people of

Pampanga,” Go said.

“This new township is also envisioned to expand and revitalize Pampanga’s provincial capitol district,” he said. The project is the fourth to be launched this year by the company, led by tycoon Andrew L. Tan. Earlier this year, the company launched two townships in Negros Occidental: the Northill Gateway, measuring about 50 hectares, and the Upper East, 34 hectares. It also has a township in Santa Barbara, Iloilo, called Santa Barbara Heights, at about 170 hectares. These new developments will add close to 400 hectares to Megaworld’s portfolio, bringing the total township land area of the company to around 3,100 hectares by the end of the year.