PIDS in the News Archived (July 2016)

HIGH rice prices have caused infants in the country to be introduced to other food sources earlier, a study released by the Philippine Institute for Development Studies (PIDS) said.

In a study, titled Who Weans with Commodity Price Shocks? Rice Prices and Breastfeeding in the Philippines, PIDS research specialist Michael RM Abrigo said high rice prices caused reductions in households real income.

If rice prices are high, hunger increases and causes the health of Filipinos, especially breast-feeding mothers, to deteriorate.

While we find no evidence that infants from agricultural households are completely weaned earlier or later because of rice-price shocks, we see they are introduced to other food sources earlier by about eight days for every one standard-deviation increase in rice prices at birth, Abrigo said. Infants from nonagricultural households are, likewise, introduced earlier to other food sources by about five days for every one standard deviation increase in rice prices at birth.

In general, the study stated, an increase in rice prices results in lower consumption. This is due to lower real incomes and substitution of common food items with cheaper alternatives.
However, in the case of rice, the countrys staple, it has no close substitute in the local diet. This causes households, especially among the poor, to go hungry.

For breast-feeding mothers, this means not being able to produce enough milk for infants. It also means they need to work to supplement the family income.

Working mothers now have to stop breast-feeding and introduce their infants to other food sources to prevent them from going hungry.

This is also the case even among agriculture-based households, despite the misconception that when rice prices are high, farm-based households see their incomes rise.

The study stated net-crop producers declined to 47 percent by 2009, from 62 percent in 1991. With this, more than three-quarters of Filipino households are considered net consumers.

Being net consumers, these households are usually the ones negatively affected by higher prices.

With rice inflation going above 50 percent during the 1995 and 2008 crises, the net benefit ratio distribution implies that about a third of all households in the Philippines experienced at least 10-percent reduction in real income, Abrigo said.//

Author: Cai Ordinario
Date: July 11, 2016
Source: Business Mirror

The services sector dominates the Philippine economy. In 2015, it accounted for 59 per cent of GDP and 54.5 per cent of employment. In recent years the industry sector " which includes manufacturing and construction " has started to recover, growing faster than services. But given its size, the services sector remains the key driver of the economy contributing more to GDP growth than all other sectors combined.

A Filipino trader blows a new year horn during celebrations marking the last trading day of the year 2014 at the Philippine Stock Exchange in Manila. Key reforms of the services sector, including the liberalisation of financial services, are driving growth in the Philippines. (Photo: AAP).

The services sector consists of a wide range of industries with varying capital and skill intensities. Although retail trade continues to lead in terms of size, the rise of business activities as the next biggest industry illustrates the importance of information technology and business process management (IT-BPM) as the new source of dynamism in the economy. The Philippines comparative advantage in these activities explains the significant improvement in commercial services exports from 47th in 2005 to 34th largest in the world in 2015.

The success of the country in this space has been attributed to various factors, including a large pool of young, English-speaking talent; an affinity with western culture; previous telecom reforms; investment incentives and government support for training. The leadership of industry associations and effective public"private partnerships likewise contributed to its sustained growth.

In addition to supporting the IT-BPM industry, key economic reforms under the administration of President Benigno Aquino III include the opening up of air services, banking and shipping services. A range of financial services is also set to be fully liberalised.

Equally important are recent reforms that will help improve the competitiveness of the services sector, which relies heavily on the quality of human capital and increasingly on digital infrastructure (in terms of both the physical and policy environment). These include the Enhanced Basic Education Act of 2013, the Data Privacy Act of 2012 and the Department of Information and Communications Technology Act of 2015.

Perhaps the most significant structural reform is the 2015 Philippine Competition Act. This is especially relevant in the services sector given the presence of a few dominant firms in network industries. Already, all eyes are on the Philippine Competition Commission as it goes through its baptism of fire with the review of a major telecommunications deal.

The incoming government has stated that its development priorities will have a bias toward agriculture and manufacturing and away from Metropolitan Manila. Fortunately, this policy direction augurs well for services too as demand by firms for better logistics, research and development, finance and other business services will be heightened with the revitalisation of the goods sector. Household consumption of services from recreation, amusements and cultural services to health and education will increase as well with improved incomes and a growing middle class.

Of the 10-point socioeconomic agenda of President-elect Rodrigo Duterte, relaxing the restrictive economic provisions in the Philippine Constitution " which affects a range of services including telecommunications, transport services, advertising, mass media and education " will have the most direct and immediate impact on the sector. The liberalisation of these industries particularly infrastructure services will have a profound effect on other sectors, boosting productivity in agriculture and manufacturing.

With these policy reforms, both in the recent past and as proposed, services will likely continue to be the main driver of the Philippine economy. What will really improve this services-led economy is if it is able to transform from one where low-skilled activities abound to one that is increasingly knowledge-based with more high value-added activities.

Ramonette B. Serafica is a Senior Research Fellow at the Philippine Institute for Development Studies.

Author: Ramonette B. Serafica
Date: July 05, 2016
Source: East Asia Forum

The full implementation of the National Greening Program (NGP) could result in faster poverty reduction nationwide, according to researchers from the Philippine Institute for Development Studies (PIDS).
In a Policy Note, titled Economic and poverty impacts of the National Greening Program, PIDS researchers said poverty reduction nationwide could be reduced by 2.55 percent in 2030 and 5.93 percent in 2050.
This means that the poverty rate of 24.85 in 2012 could be reduced to 24.22 percent in 2030 and 23.38 percent in 2050.
The simulation results indicate that a full implementation of the NGP generates notable poverty reduction effects in the long run as factor payments improve and consumer prices decline, the report read.
Poverty incidence in urban and rural areas nationwide could also go down from the 2012 levels.
In urban areas, poverty incidence could decline by 2.75 percent in 2030 and 6.7 percent in 2050.
This will result in the decline of poverty incidence to 11.25 percent in 2030 and 10.8 percent in 2050, from 11.57 percent in 2012.
In rural areas, poverty incidence is expected to decrease by 2.49 percent in 2030 and 5.72 percent in 2050.
This means poverty incidence could go down to 34.7 percent in 2030 and 33.55 percent in 2050 from 35.58 percent in 2012.
However, the report noted that implementing the NGP in full will prove to be difficult and that it will be more realistic to expect only a partial implementation of the program.
A full implementation of a reforestation program may be difficult to achieve, as the previous reforestation efforts in the country would indicate, the report read.
This implies that the results under a partial NGP are more realistic and are likely to be achieved, unless the government exerts extra effort to significantly push for a full implementation of the reforestation program, it added.
Under a partial implementation of the NGP, poverty incidence is expected to decline by 0.64 percent in 2030 and 1.63 percent in 2050.
This means the poverty incidence rate will drop by 24.69 percent in 2030 and 24.44 percent in 2050, from 24.85 percent in 2012.
Urban and rural poverty are also expected to go down under a partial NGP implementation.
Urban-poverty incidence is expected to decline 0.58 percent in 2030 and 1.7 percent in 2050. Rural poverty, meanwhile, is expected to decline 0.66 percent in 2030 and 1.61 percent in 2050.
This means urban poverty will decline to 11.50 percent in 2030 and 11.37 percent in 2050, from 11.57 percent in 2012.
Rural poverty is expected to decline to 35.35 percent in 2030 and 35.01 percent in 2050, from 35.58 percent in 2012.
The report was based on a PIDS study by a research team led by Caesar B. Cororaton that assessed the economic impact of the NGP of the Department of Environment and Natural Resources.
The study was part of the economic component of a bigger impact assessment of the NGP that also included three other areas of concern: environmental, social and institutional.
The study carried out policy simulations to establish impacts complementing the economic components assessment.//

Author: Cai Ordinario
Date: July 14, 2016
Source: Business Mirror

If Trade Secretary Ramon Lopezs thrust to establish a P1-billion regional credit access for micro, small, and medium enterprises (MSMEs) would push through, then this would benefit more small businessmen who would usually turn to loan sharks to borrow capital to expand their business.
Melanie Ng, Cebu Chamber of Commerce and Industry (CCCI) president, said that with a bigger budget set up for regional credit access, more MSMEs would gain from this initiative.
This is a much-needed boost to give opportunities to our MSMEs especially in the countryside, Ng said in a text message.
In an interview with the Inquirer, Trade Secretary Lopez said he would still have to ask President Rodrigo Duterte about this initiative and would hope the Department of Trade and Industry (DTI) would get the executives support.
Lopez was referring to his P1-B regional credit access for MSMEs proposal.
Lopez said the additional amount would also help fund more shared services facilities (SSF), a flagship program of the DTI providing MSMEs with equipment or infrastructure that could be used by a number of beneficiaries, including cooperatives, institutions and communities.
He said a portion of the fund could also be used for the Negosyo Centers for productivity enhancement programs, further trainings, seminars and mentoring activities.
Programs for MSMEs
For Ng, credit access, training and business set-up support provided by the Negosyo Centers and SSFs in various localities would help boost entrepreneurship.
The Duterte camp promised during the campaign period that MSMEs would be able to borrow capital from the government to expand their business.
Today, most small businessmen would turn to loan sharks while rich businessmen could get capital from their family, from banks or by selling their properties.
CCCI past President Ma. Teresa Chan said that the SSFs had been effective in improving skills and the productivity of communities.
Expansion of this program is a must to achieve inclusive growth, said Chan.
Credit access
Glenn Soco, Mandaue Chamber of Commerce and Industry (MCCI) incoming president, said this move by the trade secretary would help level the playing field in business.
I noticed in the past that it is not easy for micro and small entrepreneurs to have access to the funds and facilities available because of stringent requirements, Soco said.
He cited how it would be difficult for micro enterprises to prepare a business plan and submit audited financial statements.
He said he was hoping that there would be a more rational and equitable distribution of the funds available for MSMEs.
Likewise, we need to make it easier for MSMEs to access these funds and facilities, Soco added.
According to the Philippine Institute for Development Studies (PIDS), financing obstacles posed as one of the top four serious problems for the growth of businesses.
In a survey conducted by the PIDS in 2011, firms cited the following financing problems: shortage of working capital to finance new business plan, difficulties in obtaining credit from suppliers and financial institutions, insufficient equity, and expensive credit cost.//

Author: Victor Anthony V. Silva,
Date: July 14, 2016
Source: Cebu Daily News

THE DUST has yet to settle over PLDT Inc.s and Globe telcos joint acquisition of the telecommunication assets of San Miguel Corp. and uncertainties still hang over the deal as the government antitrust body conducts its review.
But beyond the merits of the P70-billion transaction"there are plenty of arguments for and against it"a senior research fellow at think tank Philippine Institute for Development Studies said this was also a wake-up call to regulators to revisit and update decades-old laws and strengthen weak regulation.
Greater role
In an interview, PIDS senior research fellow Ramonette Serafica said the review was needed given the role the information and communications technology sector played in the growth of any modern economy.
This really is the perfect time to review the enabling law, to do a policy review, Serafica told the Inquirer.
Its so critical. If we want to shift to a higher growth trajectory, its really telco and ICT in general. It will solve a lot of education, health and social issues. Theres also competitiveness in manufacturing, and in agriculture, she added.
President Duterte has made few statements on how to improve the ICT sector since he assumed the presidency. Prior to this, he had threatened PLDT and Globe he would open up the sector to wider foreign participation if they would not improve services.
Slow and expensive
Both PLDT and Globe, backed by Japans NTT DoCoMo and Singapore telcomunications, respectively, have been dodging criticism over slow and expensive internet.
For Serafica, leaving the telco market in the hands of too few players, or in the case of the Philippines, just two players, could come at the expense of innovation.
We should be concerned with what this deal means in promoting innovation among the existing telcos (beyond aggressive marketing promotions) and other industries that will depend on telcomunications to deliver their services, Serafica said in an e-mail to the Inquirer.
My own research in PIDS indicates that younger firms are more likely to introduce new or significantly improved services than older firms so an environment conducive to creating startups is important, she added.
Lower entry barriers
Serafica is not alone in her call for a revamp of telco sector regulations. The points were also raised by independent researcher Mary Grace Mirandilla Santos in a comprehensive policy brief presented to the Joint Foreign Chambers of the Philippines last February.
It included moves to lower entry barriers such as the constitutional limit on foreign ownership, adoption of open access, infrastructure sharing and implementation of the necessary spectrum management.
Vital technology
The two decades-old Public telcomunications Act also needed revision, since it did not consider a future where intent services would be a vital technology.
The issues are tied to the PLDT-Globe joint acquisition of SMCs Vega telco on May 30 this year since it was viewed as the result of an environment that favored powerful incumbents. In a April note, the Fitch Groups BMI Research tagged weak regulation as a key factor that discouraged SMCs potential foreign partner, Telstra Corp. Ltd. of Australia, to enter the country and push through with the joint venture with one of the countrys biggest conglomerates.
PLDT, Globe and SMC officials admitted that talks for the sale of SMCs Vega started shortly after the Telstra deal collapsed in March 2016.
The companies were mum on how their negotiations started, however, a day after the transaction was sealed, SMC president Ramon Ang said the conglomerate was worried about legal challenges from the duopoly had it pursued its telco ambitions.
Ang also shared his personal assessment that no foreign telco player would dare enter the Philippines, unless the government would certain measures of protection or guarantees.
Despite criticism from consumer advocates, and concerns raised by the Joint Foreign Chambers, officials from the telco duopoly said the main objective of the transaction was to free up SMCs unused radio frequencies to deliver better mobile internet services.
Acquired frequencies
That included SMCs near-monopoly of frequencies in the 700 Megahertz (MHz) band, among its most coveted assets since it could cover wide areas and penetrate building walls efficiently. PLDT and Globe, to appease the government, said it returned some of the acquired frequencies to allow the entry of a third player.
According to PLDT chair and CEO Manuel Pangilinan, the move to return frequencies was a lesson learned from PLDTs 2011 acquisition of the Gokongwei familys Digital telcomunications Philippines (Sun Cellular), when it was forced to also give up 3G frequencies.//
In the meantime, acquired frequencies from SMC were now being deployed: PLDT said it would outfit 360 cell sites with the 700 MHz equipment this year, while Globe was poised to equip 200 cell sites.
That was possible since both telcos, before sealing the acquisition, secured the approval of the National telcomunications Commission for a co-use deal with the SMC unit holding those spectrum assets.
There are varying views on what the deal means in terms of competition in the Philippines.
Globe CEO Ernest Cu said in an interview on May 30 that a third player was not the solution to address concerns about poor internet services.
Prohibitive
For instance, Cu said capital spending requirements were prohibitive, apart from bottlenecks in the permitting process by local government units. This was stifling the expansion of physical infrastructure like cell sites. With the current permitting process, it might take a telco startup more than a decade to reach the scale PLDT and Globe have, Cu said.
Not all experts agree with the assessment that new competition would lead to market inefficiencies.
Since San Miguel was planning to launch a rival service, it may be reasonable to conclude that a third service provider was viable. Many smaller telco markets have been able to support three or even more telcos providers, Kulwant Singh, deputy dean at the National University of Singapore Business School, said in an e-mail to the Inquirer.
Singh, who specializes in business strategy and policy, said the transaction should be the subject of detailed investigation by antitrust authorities.
Deficiencies
This is where the newly-created Philippine Competition Commission stepped in. It is led by Arsenio Balisacan, who used to head the National Economic and Development Authority before he assumed the role of first PCC chair in January this year.
The PCC is now conducting a comprehensive review of the deal, after first citing deficiencies in the transaction notice that PLDT and Globe filed.
Under the PCCs own transitory rules, the PCC should be notified of all acquisitions worth over P1 billion. That notice should contain all relevant and truthful information about the deal. Globe and PLDT said they did just that last May 30 regarding the Vega acquisition.
Public exchange
Since the deal was launched before the implementing rules were released on June 3 (the rules eventually took effect on June 20), the deal should be automatically approved, PLDT and Globe argued.
The PCC disagreed and a public exchange followed.
Balisacan told the Inquirer last month the SMC acquisition was not an ordinary transaction and the law was very much in effect despite its transitory rules, contained in a circular issued last Feb. 16, 2016.
There was also their mandate to look into the deal, based on the Competition Law, which came into effect last year, since there would be long-term industry repercussions for a deal of this scale, he said.
While the PCC reviews the deal, a broader review of the existing regulatory framework that governed the sector still remains up in the air.
Some of the low-hanging fruit mentioned in the February telco policy brief have already been addressed.
A Department of Information and Communications Technology was already created. It is led by Rodolfo Salalima, former regulatory affairs head of Globe and an ex-schoolmate of Duterte.
Show of cooperation
Moreover, weeks after their rare show of cooperation in the SMC acquisition, PLDT and Globe sealed a bilateral IP Peering agreement with the aim of rapidly improving the quality of fixed-line and mobile internet services in the country.
The Duterte administration also announced a crackdown on bureaucratic red tape, a move that would help telcos rollout internet infrastructure faster.
Still, more can be done to resolve other immediate issues, like a broader review on how spectrum is allocated in the Philippines. Senator Bam Aquino, a visible figure on slow internet issues, told the Inquirer in an e-mail that he had backed a broader spectrum review.
NTC should not focus on reviewing just the 700 MHz band alone, but all spectrum that is assigned, available and in use, Sen. Aquino said, while adding the review should require regular assessments on the use and valuation of frequencies.
Without government intervention, the allocation of valuable spectrum"a state-controlled property"would be left in the hands of the private sector. That was on full display when the SMC acquisition was launched, and PLDT and Globe decided which and how much frequencies to keep, and which to return to the government for the latter to allocate as it sees fit.
Improvements
All eyes are on PLDT and Globe now on how soon they can deliver better services. Officials from both companies said improvements will be seen in as little as six months.
While the PCC weighs the issue, both are already rolling out SMCs acquired frequencies, which they said was a key solution to bringing up mobile internet speed quality. Separately, both are investing in fixed-line services.
Even then, some consumer advocates worry about costs; PLDT and Globe gave zero guarantees these would come down and data caps are very much an industry reality. The telcos said prices would eventually come down as data usage widens. Consumers will just have to take their word for it.//

Author: Miguel R. Camus
Date: July 20, 2016
Source: Philippine Center for Investigative Journalism

The Philippines new President Rodrigo Duterte has indicated that China could play a key role in developing the Philippines infrastructure. Even before the election, Duterte announced that he is willing to back down on the South China Sea dispute with China if it can build railway systems in the Philippines within his six-year term. So could infrastructure investment offer a way forward for the China"Philippines relationship?
On 12 June, the Permanent Court of Arbitration (PCA) ruled in favour of the Philippines case in the South China Sea. The PCA ruled that, among other matters, Chinas claims to historic rights within the so-called nine-dash line are legally incompatible with the United Nations Convention on the Law of the Sea and that China violated the Philippines rights in its exclusive economic zone.
But Chinas unequivocal response is to reject the ruling. In its released statement, Chinas Ministry of Foreign Affairs said that China neither accepts nor recognises the ruling and that the Chinese government will continue to work with states directly concerned to resolve the relevant disputes in the South China Sea through negotiations and consultations on the basis of respecting historical facts and in accordance with international law. It is clear that what are historical facts for China are not interpreted in the same way by the PCA.
How is the PCA ruling likely to affect bilateral negotiations with China for infrastructure financing under Dutertes administration?
It is difficult to speculate at this point how the situation will evolve. But the Duterte administration may decide to look beyond bilateral negotiations to the multilateral Asian Infrastructure Investment Bank (AIIB) as another option for infrastructure financing. The AIIB can provide improved transparency and ameliorate other governance concerns surrounding Chinese investment. Past attempts to fund projects using bilateral loans from China have been marred by allegations of corruption, such as the North Rail controversy. While China holds almost 30 per centof the voting power within the AIIB, the rest is divided among the other members which already have subscriptions. The no political interference clause in the AIIB Articles of Agreement is expected to provide comfort to both the Filipino and Chinese public.
To access AIIB financing, the Philippines should ratify AIIB membership, allocate a budget for the capital contribution, prepare the project pipeline and, for the first project, negotiate co-financing between the AIIB and another multilateral bank.
The Philippines officially signed up as the 57th founding member of the AIIB on 31 December 2015. The Philippine constitution requires that certain types of treaties and international agreements, such as membership in the AIIB, be ratified by at least two-thirds of the Philippine Senate. The senate in the 16th Congress deferred the ratification of membership to the AIIB, citing lack of time because of preparations for the May 2016 national elections, where half of the senate were up for re-election. The 17th Congress is expected to start on 25 July and thus far, there are no indications of any impediments to the ratification.
As a founding member of the AIIB, the Philippines capital contribution is US$196 million, payable in five years or US$39 million per year, and it must pay the initial tranche in 2016. The budget for the initial tranche has not yet been specifically carved out in the governments national budget. There are two ways to deal with this: either allocate some of the unprogrammed funds in the national budget for it, or ask Congress to enact a supplemental appropriation.
Decisions on which projects the Philippines will seek AIIB financing for, as opposed to other options including national government financing, public"private partnerships and other official development assistance sources, should be made quickly. Project feasibility studies should also commence soon. The Philippines Public Investment Program (PIP), which was last validated in October 2014, must incorporate new needs and re-validate projects that have not yet been implemented. The pet project of the new president, a railway system for Mindanao, for example, is not yet in the PIP.
Since the AIIB is new and its institutional capacity is still being developed, most of its early projects have been co-financed with other multilateral banks such as the Asian Development Bank, the European Bank for Reconstruction and Development, and the World Bank. It is prudent for the Philippines to also seek a co-financing agreement. This will promote collaboration, complementation and cooperation among the multilateral banks and help ensure that the AIIB adopts the perspective and discipline fitting for a 21st century multilateral institution, especially in addressing environmental and governance concerns.//
Adoracion M. Navarro is a Senior Research Fellow at the Philippine Institute for Development Studies.

Author: Adoracion Navarro
Date: July 20, 2016
Source: East Asia Forum

THE DUST has yet to settle over PLDT Inc.s and Globe telcos joint acquisition of the telecommunication assets of San Miguel Corp. and uncertainties still hang over the deal as the government antitrust body conducts its review.
But beyond the merits of the P70-billion transaction"there are plenty of arguments for and against it"a senior research fellow at think tank Philippine Institute for Development Studies said this was also a wake-up call to regulators to revisit and update decades-old laws and strengthen weak regulation.
Greater role
In an interview, PIDS senior research fellow Ramonette Serafica said the review was needed given the role the information and communications technology sector played in the growth of any modern economy.
This really is the perfect time to review the enabling law, to do a policy review, Serafica told the Inquirer.
Its so critical. If we want to shift to a higher growth trajectory, its really telco and ICT in general. It will solve a lot of education, health and social issues. Theres also competitiveness in manufacturing, and in agriculture, she added.
President Duterte has made few statements on how to improve the ICT sector since he assumed the presidency. Prior to this, he had threatened PLDT and Globe he would open up the sector to wider foreign participation if they would not improve services.
Slow and expensive
Both PLDT and Globe, backed by Japans NTT DoCoMo and Singapore telcomunications, respectively, have been dodging criticism over slow and expensive internet.
For Serafica, leaving the telco market in the hands of too few players, or in the case of the Philippines, just two players, could come at the expense of innovation.
We should be concerned with what this deal means in promoting innovation among the existing telcos (beyond aggressive marketing promotions) and other industries that will depend on telcomunications to deliver their services, Serafica said in an e-mail to the Inquirer.
My own research in PIDS indicates that younger firms are more likely to introduce new or significantly improved services than older firms so an environment conducive to creating startups is important, she added.
Lower entry barriers
Serafica is not alone in her call for a revamp of telco sector regulations. The points were also raised by independent researcher Mary Grace Mirandilla Santos in a comprehensive policy brief presented to the Joint Foreign Chambers of the Philippines last February.
It included moves to lower entry barriers such as the constitutional limit on foreign ownership, adoption of open access, infrastructure sharing and implementation of the necessary spectrum management.
Vital technology
The two decades-old Public telcomunications Act also needed revision, since it did not consider a future where intent services would be a vital technology.
The issues are tied to the PLDT-Globe joint acquisition of SMCs Vega telco on May 30 this year since it was viewed as the result of an environment that favored powerful incumbents. In a April note, the Fitch Groups BMI Research tagged weak regulation as a key factor that discouraged SMCs potential foreign partner, Telstra Corp. Ltd. of Australia, to enter the country and push through with the joint venture with one of the countrys biggest conglomerates.
PLDT, Globe and SMC officials admitted that talks for the sale of SMCs Vega started shortly after the Telstra deal collapsed in March 2016.
The companies were mum on how their negotiations started, however, a day after the transaction was sealed, SMC president Ramon Ang said the conglomerate was worried about legal challenges from the duopoly had it pursued its telco ambitions.
Ang also shared his personal assessment that no foreign telco player would dare enter the Philippines, unless the government would certain measures of protection or guarantees.
Despite criticism from consumer advocates, and concerns raised by the Joint Foreign Chambers, officials from the telco duopoly said the main objective of the transaction was to free up SMCs unused radio frequencies to deliver better mobile internet services.
Acquired frequencies
That included SMCs near-monopoly of frequencies in the 700 Megahertz (MHz) band, among its most coveted assets since it could cover wide areas and penetrate building walls efficiently. PLDT and Globe, to appease the government, said it returned some of the acquired frequencies to allow the entry of a third player.
According to PLDT chair and CEO Manuel Pangilinan, the move to return frequencies was a lesson learned from PLDTs 2011 acquisition of the Gokongwei familys Digital telcomunications Philippines (Sun Cellular), when it was forced to also give up 3G frequencies.//
In the meantime, acquired frequencies from SMC were now being deployed: PLDT said it would outfit 360 cell sites with the 700 MHz equipment this year, while Globe was poised to equip 200 cell sites.
That was possible since both telcos, before sealing the acquisition, secured the approval of the National telcomunications Commission for a co-use deal with the SMC unit holding those spectrum assets.
There are varying views on what the deal means in terms of competition in the Philippines.
Globe CEO Ernest Cu said in an interview on May 30 that a third player was not the solution to address concerns about poor internet services.
Prohibitive
For instance, Cu said capital spending requirements were prohibitive, apart from bottlenecks in the permitting process by local government units. This was stifling the expansion of physical infrastructure like cell sites. With the current permitting process, it might take a telco startup more than a decade to reach the scale PLDT and Globe have, Cu said.
Not all experts agree with the assessment that new competition would lead to market inefficiencies.
Since San Miguel was planning to launch a rival service, it may be reasonable to conclude that a third service provider was viable. Many smaller telco markets have been able to support three or even more telcos providers, Kulwant Singh, deputy dean at the National University of Singapore Business School, said in an e-mail to the Inquirer.
Singh, who specializes in business strategy and policy, said the transaction should be the subject of detailed investigation by antitrust authorities.
Deficiencies
This is where the newly-created Philippine Competition Commission stepped in. It is led by Arsenio Balisacan, who used to head the National Economic and Development Authority before he assumed the role of first PCC chair in January this year.
The PCC is now conducting a comprehensive review of the deal, after first citing deficiencies in the transaction notice that PLDT and Globe filed.
Under the PCCs own transitory rules, the PCC should be notified of all acquisitions worth over P1 billion. That notice should contain all relevant and truthful information about the deal. Globe and PLDT said they did just that last May 30 regarding the Vega acquisition.
Public exchange
Since the deal was launched before the implementing rules were released on June 3 (the rules eventually took effect on June 20), the deal should be automatically approved, PLDT and Globe argued.
The PCC disagreed and a public exchange followed.
Balisacan told the Inquirer last month the SMC acquisition was not an ordinary transaction and the law was very much in effect despite its transitory rules, contained in a circular issued last Feb. 16, 2016.
There was also their mandate to look into the deal, based on the Competition Law, which came into effect last year, since there would be long-term industry repercussions for a deal of this scale, he said.
While the PCC reviews the deal, a broader review of the existing regulatory framework that governed the sector still remains up in the air.
Some of the low-hanging fruit mentioned in the February telco policy brief have already been addressed.
A Department of Information and Communications Technology was already created. It is led by Rodolfo Salalima, former regulatory affairs head of Globe and an ex-schoolmate of Duterte.
Show of cooperation
Moreover, weeks after their rare show of cooperation in the SMC acquisition, PLDT and Globe sealed a bilateral IP Peering agreement with the aim of rapidly improving the quality of fixed-line and mobile internet services in the country.
The Duterte administration also announced a crackdown on bureaucratic red tape, a move that would help telcos rollout internet infrastructure faster.
Still, more can be done to resolve other immediate issues, like a broader review on how spectrum is allocated in the Philippines. Senator Bam Aquino, a visible figure on slow internet issues, told the Inquirer in an e-mail that he had backed a broader spectrum review.
NTC should not focus on reviewing just the 700 MHz band alone, but all spectrum that is assigned, available and in use, Sen. Aquino said, while adding the review should require regular assessments on the use and valuation of frequencies.
Without government intervention, the allocation of valuable spectrum"a state-controlled property"would be left in the hands of the private sector. That was on full display when the SMC acquisition was launched, and PLDT and Globe decided which and how much frequencies to keep, and which to return to the government for the latter to allocate as it sees fit.
Improvements
All eyes are on PLDT and Globe now on how soon they can deliver better services. Officials from both companies said improvements will be seen in as little as six months.
While the PCC weighs the issue, both are already rolling out SMCs acquired frequencies, which they said was a key solution to bringing up mobile internet speed quality. Separately, both are investing in fixed-line services.
Even then, some consumer advocates worry about costs; PLDT and Globe gave zero guarantees these would come down and data caps are very much an industry reality. The telcos said prices would eventually come down as data usage widens. Consumers will just have to take their word for it.//

Author: Miguel R. Camus
Date: July 20, 2016
Source: Philippine Center for Investigative Journalism

PART OF the Duterte administrations 10-point socioeconomic agenda, ultimately aimed at significantly reducing poverty, is the plan to ease the almost three-decades old restrictions on foreign investors.
According to President Rodrigo R. Dutertes economic managers, this administration will pursue the relaxation of the constitutional restrictions on foreign ownership, except with regards land ownership, in order to attract foreign direct investments (FDI).
In a speech on June 29 at a forum hosted by Yuchengco-led Rizal Commercial Banking Corp., Finance Secretary Carlos G. Dominguez also noted of the pros of shifting to a federal form of government, another reason why the Duterte administration wants Charter change.
We will have to address the need for constitutional renovation. This will help facilitate growth dispersal by empowering governments. It will alter the system of representation, enabling our marginalized sectors to more meaningfully participate in policymaking. It will clear all the obsolete economic orthodoxies enshrined in the existing charter, Dominguez said.
Calls for amendments
Multilateral institutions have long been advising the Philippine government to revisit the foreign investment restrictions enshrined in the 1987 Constitution.
For one, the Organization for Economic Cooperation and Development (OECD) last May urged a further easing of investment restrictions, as it noted that the Philippines had great potential to attract FDI, but has been hampered by the legacy of nationalist policies from the 1980s and earlier.
In its first investment policy review of the Philippines, the OECD grouping of developed countries pointed out that the country remained one of the countries with the most statutory restrictions on foreign investment.
Nationalist provisions restricting investment arose in an era when the Philippine government was keen to assert its economic sovereignty. They are now considered by many as outdated and damaging protectionist measures that discourage foreign investments and facilitate rent-seeking by local oligopolists, the OECD said.
In a more conducive policy environment, the Philippines offers tremendous advantages to potential investors which are well-known: its location in East Asia, which is the worlds most dynamic region, a large and fast growing market, knowledge of English, abundant natural resources, a young population, and political stability, it added.
The OECD hence recommended the lifting of major restrictions on FDI, which besides those in the Constitution, also include the high minimum capital requirement for foreign investors as contained in the Foreign Investment Act and the Retail Trade Liberalization Act.
However, the preceding administration of Benigno Aquino III did not dare touch the existing supreme law of the land, mostly in reverence to his mother Cory, under whose watch it was formed.
Most business leaders, especially from the Joint Foreign Chambers, whom the Inquirer sought to give their thoughts on the plan to tweak the economic provisions of the Constitution, welcomed such moves.
Amending the economic provisions is super high on the agenda of local and foreign business groups. In other words: we are happy about these initiatives, said Henry J. Schumacher, vice president for external affairs at the European Chamber of Commerce of the Philippines.
AmCham has long favored making the FINL [foreign investment negative list] less negative by reducing restrictions on foreign investment. The US is a very open economy and the largest recipient of FDI in the world. Relaxing restrictions on services, for example, should attract more FDI in such businesses and result in more competition and benefits for consumers, John D. Forbes, senior advisor at the American Chamber of Commerce of the Philippines, said.
Adapt or be left behind
Even Filipino business leaders agree to Charter change.
Yes, we are in favor of amending our Constitution. In todays globalized situation, if we do not adapt then we will be left behind. FDI for sure will be dramatically improved if we relax the restrictions on foreign investments. We are already committed to Asean integration. No turning back. We have to be ready for Trans-Pacific Partnership [free trade agreement led by the US]. There is a plan even to join the China-led Asian Infrastructure Investment Bank, noted Management Association of the Philippines president Perry L. Pe.
The Makati Business Club (MBC) has been calling for the removal of economic restrictions in the Constitution to give the country more flexibility to join high level multilateral trade agreements since early in the past Aquino administration. We supported [former House speaker Feliciano] Belmontes formula of constitutional change by inserting the phrase unless otherwise provided for by law in the specific constitutional restrictions to allow Congress to consider lifting of these restrictions, MBC executive director Peter Angelo V. Perfecto said.
Moving forward, under the new administration, we would like to pursue amendments to the economic restrictions and are open to studying other proposed changes like the shift to federalism. However, we hope that such additional amendments be carefully studied and be based on multistakeholder and multisectoral consultations. There are various ways to do this and we are confident that the executive and legislative branches can craft some proposals forward that the people can consider, Perfecto said.
Economist and Foundation for Economic Freedom (FEF) vice chair Romeo L. Bernardo said easing constitutional restrictions on foreign businesses would bring in more foreign investors in public utilities and other infrastructure that require huge capital investments.
I hope Congress finds a way to upfront the Charter change to open up to FDI in advance of the more sweeping Charter amendments like shifting to a federal system, Bernardo said.
The importance of relaxing the foreign ownership restrictions is in attracting foreign investments in strategic industries, where they are now presently barred from entering and providing competition, FEF president Calixto V. Chikiamco said.
Chikiamco cited the more practical reasons, as reflected in recent developments, why there was a need to open up the economy to more foreign participation.
I believe that if there were no 60-40 rule, Telstra would have come in without San Miguel Corp. to provide competition, Chikiamco said, referring to the Australian telecommunications giant whose talks with the Philippine diversified conglomerate for a joint venture to form a third force in the local telco industry fell through.
Relaxing restrictions
Also, in PPP, we should see more competition, rather than the same Philippine conglomerates, which sometimes partner with each other, he added, citing that foreigners are barred from operating airports and seaports because at present, they are classified as public utilities.
Adoracion M. Navarro, senior research fellow at state-run think tank Philippine Institute for Development Studies, said she believes that relaxing restrictions on foreign investments will help us catch up in FDI generation.
Regional economic integration is increasing, such as in the Asean, and one of the ways we benefit from that is through participation in global production networks. Relaxing restrictions on foreign ownership of corporations can help attract investors who are looking at global markets for goods and services, Navarro noted.
With respect to local markets, clarifications on what are public utilities and relaxing foreign ownership restrictions on physical infrastructure assets would help us achieve our goal to improve the quantity and quality of our infrastructure, she added.
For political analyst Victor Andres C. Manhit, a review of the Constitution is needed to make it attuned to the changes in the past three decades and the challenges to be faced by the nation moving forward, amid globalization.
One of the biggest challenges is to create more jobs. What we have now is jobless economic growth, because the investment climate is not as good as that of our neighbors due to the restrictive Constitution, said Manhit, president at think-tank ADR Institute.
Manhit also noted the few investments in manufacturing, where high capitalization requirements will entail foreign money.
Trinh D. Nguyen, economist at French corporate and investment bank Natixis, said that should Duterte become successful at repealing the 40-percent ownership limit on foreign investors, the Philippines may attract a lot of necessary funding to build infrastructure and more FDI inflows.
Not enough jobs
The Philippines may have plenty of domestic demand but not enough jobs. While overall economic growth and external balances have improved, the poverty rate actually worsened. The incidence of poverty was 21.1 percent of the population in 2009. And by 2015, it rose to 22.9 percent. This divergence between economic growth and poverty incidence reflects a worsening labor market for the poor. While educated Filipinos have options to work in the business process outsourcing (BPO) sector or leave the country for foreign work, the unskilled are left to fend for themselves. Social programs such as cash conditional transfers address the symptom but not the disease"the Philippines is seeing its manufacturing sector declining. And this is a sector that provides steady wages for the unskilled, Nguyen noted.
Both total exports and manufacturing exports have declined in the past two years. This is partly explained by declining structural competitiveness, exacerbated by weak infrastructure and wage rigidity. While total population and the increase of working age population rose, whats interesting is that the labor force remains stagnant. This will need to change. Under [former President] Aquino, the labor force actually stagnated due to weak low-skill job growth.
While Aquino stated that he will liberalize FDI, a few actually thought he would repeal the very limit his mother imposed, (although he did liberalize banking from 40 percent to 100 percent ownership allowable).
Investment flows
The sectors that the Philippines need and underperform are also the ones that are restricted to only 40 percent. The global ranking of Philippine infrastructure is not great. Of the 144 countries, the Philippines ranked 108 for air transport. And considering that it is an archipelago, boosting tourism is about improving air infrastructure, Nguyen pointed out.
Kevin Sanker, Asia-Pacific associate economist at Washington-based Institute of International Finance, agreed that relaxing restrictions on foreign ownership should benefit FDI inflows, which have risen in recent years but still lag regional peers as a percent of the gross domestic product (GDP).
A weak infrastructure system has also been a headwind for foreign investment. The new administrations plan to increase infrastructure spending and speed up the public-private partnership (PPP) process should help ease some foreign investors concerns on policy continuity in these areas, Sanker said.
For DBS Bank Ltd. economist Gundy Cahyadi, a more open economy would complement the increasing interest in the Philippines as an investment destination. Interest from foreign investors has been on the rise in recent years and I wouldnt be surprised if more will be keen to expand their foothold in the economy, Cahyadi said.
In a recent report titled Philippines: Dutertes game plan, Cahyadi lauded the Duterte administrations earlier announcement that it planned to further liberalize the economy by raising the cap on foreign ownership of local firms to up to 70 percent from about 40 percent at present, while also lifting limits on land lease to 40 years from 25 years.
This is potentially significant. While FDI increased several-fold during Aquinos term, it remains low compared to the rest of the region. Easing restrictions on foreign ownership is likely to encourage more inflows in the medium-term. About 60 percent of FDI applications over the past five years have been directed in the manufacturing sector. We reckon this high interest in the sector will continue.
Manufacturing is a key sector that the Duterte administration will focus on to absorb the growth in labor force. It would also fulfill the ambition to diversify the economy from an over-dependency on services, Cahyadi noted.
Corruption, red tape
University of the Philippines political science professor Clarita R. Carlos, however, also pointed out that even if the economy will be opened further to foreigners, the country would still not attract as much FDI inflows if corruption and concerns of the ease of doing business persist.
Per survey after survey, businesses"both domestic and foreign"have indicated that it is the corruption and the bureaucratic maze that deter them from doing business here, noted Carlos, who is also the executive director of the Center for Scientific Research and Strategic Development.
Even allowing foreign ownership and not lease is not desired by foreign investors, she added.
Carlos nonetheless said opening up restricted industries like telecommunications and power may be done through constitutional changes, referring to two sectors plagued by the existence of very few players that leave consumers with no choice but deal with poor services at high costs.
Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight, agreed that wider access for foreign investors need to be coupled with reforms in the ease of doing business.
Liberalization
While liberalization of foreign direct investment rules will be an important factor that will help to boost long-term FDI flows to Philippines, there are also other important reforms needed to improve foreign investment inflows. A key area where further reforms are needed is to improve the business climate for investment, with Philippines currently ranked 103 out of 189 countries in the world in terms of the World Banks Ease of Doing Business Index. This is far below the ranking for some other Asean countries, notably Singapore, Malaysia and Thailand, he noted.
Some key areas where the Philippines needs to improve are in reducing red tape for starting a business, processes for registering a property, complexity of tax bureaucracy and improving legal systems for contract enforcement. Another important reform that is needed to encourage foreign investment is to significantly boost infrastructure investment in key areas such as power, roads, ports and airports over the medium term, to boost industrial productivity and efficiency and lower industrial costs, Biswas added.
Jose Enrique A. Africa, executive director at IBON Foundation, said the think tank has long had a position on relaxing the constitutional restrictions on foreign ownership including through the subterfuge of supposedly merely inserting the phrase unless otherwise provided by law.
But for Africa, it is not FDI generation thats more important, but a less liberalized economy protecting domestic industries.
Foreign investors like to say that they will invest more without the restrictions so we can take their word on this. The more important question though is if more foreign investment is necessarily a good thing, Africa said.
For instance, domestic manufacturing in the sense of real Filipino industry continues to decline despite quite a lot of FDI especially in manufacturing. After decades of FDI, the share of manufacturing employment continues to fall and were not developing the indigenous manufacturing science and technology needed for a modern economy, he noted.
This is because the government gives everything to attract foreign investors and doesnt require more solid contributions to the local economy beyond the few direct jobs generated. Removing the nationality restrictions takes away the last bit of leverage we have over foreign capital to ensure that they contribute to national development. The Duterte administration should protect this and use it as leverage against investors. For instance, they can be attracted to come here to sell to a domestic market made bigger by a more equitable distribution of wealth, according to Africa.
Nearly four decades of trade and investment liberalization has weakened local agriculture and Filipino industry, limited job creation, repressed incomes, and worsened poverty. Its about time to make a break from this, Africa said.
As for the plan to shift into a federal form of government, most business leaders were amenable, as long as the government will thoroughly prepare for the process.
The Philippine Chamber of Commerce and Industry (PCCI) last month invited former constitutional convention members headed by Dr. Jose V. Abueva and other Constitution experts to discuss the issue to gain insight regarding this serious issue. We have no objections to federalism of government but must be structured with objectivity and prudence, said PCCI president George T. Barcelon.
Were hoping this will bring equitable sharing of revenues and with clear responsibility and accountability of the states formed. Its not an easy task as we already have local autonomy law and the BBL [Bangsamoro Basic Law] proposal. It must be able to bring about political stability and clear rule of engagements. As such, business confidence will definitely improve to attract more investments from both local and foreign, Barcelon said.
Ultimately, we hope that this will propel a well-balanced national growth, in particular for the micro, small and medium enterprises (MSMEs) to create more jobs and bolster inclusive growth, he added.
Region-based federalism
For Pe, federalism is feasible and desirable for us as such will spur growth in the countryside and take away business concentration in Metro Manila which is already choking.
The best is a region-based federal system, the MAP executive said.
Moving to federalism is a major political change, with a number of intermediate steps and the creation of a policy framework that will achieve what President Duterte has in mind. Business will have to assess the effect of federalism carefully, Schumacher, for his part, said.
Among political observers, Carlos agreed that federalism is the way to go, as highly centralized systems even with the Local Government Code were a throwback to colonialism where the central government controls the sub-national units.
Federalism may be feasible so long as we design it to respond to our specific culture, geography and resources, she said.
For Biswas, the proposals for greater federalism in the Philippines have the potential to improve regional political and economic stability, and therefore this is an important and potentially positive new initiative from the Duterte administration.
But for Neri, while the long-overdue easing of foreign ownership restrictions will clearly help boost FDI, were not too sure about the benefits of federalism.
Evidence on the effectiveness of decentralization and devolution both here and abroad is mixed. The United Kingdom is the most recent example of the cons and complexities of federalism, Neri pointed out.
Bernardo said the shift to federalism needs to be studied in greater depth to ascertain impact on fiscal self-reliance and sustainability of the regions, considering that likely only three or four regions can stand on their own without receiving large transfers from the national government.
Complexity
Also should be carefully considered is whether federalism may lead to even greater unevenness in development as the central government powers are weakened in their redistributive role and providing basic services evenly (like education and health) and provision of strategic infrastructure, Bernardo added.
Also, federalism introduces greater unease of doing business with multiplicity and greater complexity in rules, and thus discourages investment to the Philippines as a whole at a time when we are already FDI cellar dwellers, according to Bernardo.
Chikiamco said he was agnostic at this stage about federalism, citing some problems about such type of government.
How will states be delineated? Will we follow the same region classification? However, Ilocos Sur and Ilocos Norte are different in many respects. Will they be able to live together in one state? The same with Negros Occidental and Negros Oriental, Chikiamco noted.
Former Senator [Sergio] Osmena pointed out that Region 7 encompasses Cebu, Siquijor and Bohol. If Cebu City is the capital of the state, legislators coming from Siquijor and Bohol may have more difficulty traveling from their respective places to the state capital of Cebu City. In other words, the infrastructure must be present to allow for states to function properly, Chikiamco added.
Also, since most of the countrys GDP is concentrated in Metro Manila and Regions 3 and 4A, Chikiamco asked: How will tax revenues be divided and shared?
Federalism might exacerbate the problem of regional inequality, he said.
Expand the provinces
In other countries, states were already existing when they decided to federalize. Here, we are going in the opposite direction"dividing a unitary state into states, which had not been functioning as state governments before. It might be better to expand the provinces and municipalities existing powers under the Local Government Code rather than experimenting with new and untested political forms, according to Chikiamco.
We can address some of the inequalities in political representation without resorting to a federalist system, say allowing senators to be elected by regions rather than nationwide, he said.
Africa said IBON was concerned about the possible centrifugal effect of fiscal resources going to local political dynasties and of greater discretion over local economic activity.
[Federalism] may just worsen divisions between regions and compromise the national-level development planning we need. Regional discrepancies have to be addressed but were not sure if greater regionalism is the solution to national underdevelopment, Africa said.
For its part, The Economist Intelligence Unit (EIU) noted that among the reasons why Duterte won over the Filipino electorate was his pledge to amend the Constitution to devolve more power and funds to local governments through federalism.
However, constitutional reforms are notoriously difficult to pass in the Philippines. Whether Duterte will make real progress on this front remains to be seen, the EIU said in its recent report titled Strongman rising: What a Rodrigo Duterte presidency will mean for the Philippines.//

Author: Ben O. de Vera
Date: July 20, 2016
Source: Philippine Daily Inquirer

BUTUAN CITY, July 18 (PIA) " The Department of Trade and Industry (DTI) Caraga is set to hold the 13th of a series of regional conference entitled Industry Roadmaps and the ASEAN Economic Community (AEC) Game Plan: Roadmap Localization for Competitiveness on August 4, 2016 at Almont Hotels Inland Resort, this city.

In her written statement, Industry Development Group assistant secretary Rafaelita Aldaba, bared that the Board of Investments under the DTI is conducting a series of multi-stakeholder conferences in various regions of the country to communicate to stakeholders the opportunities and challenges for the Philippines in the ASEAN Economic Community.

We hoped to deepen the stakeholders awareness of the importance of industry roadmaps in the context of regional integration, and encourage them to formulate regional roadmaps that are aligned with the national industry maps, added Aldaba.

Also, during the set regional conference, Dr. Cielito Habito, chief of party of United States Agency for International Development " Trade-Related Assistance for Development Project is expected to share about the Regional Integration and the National Development Agenda, while Dr. Roehlano Briones, senior research fellow from the Philippine Institute for Development Studies will discuss the Agribusiness in relation to the six National Industry Clusters.

Meanwhile, National Economic Development Authority (NEDA) Caraga regional director Mylah Faye Aurora Carino will also reveal the potentials and challenges in the region. Guest speakers from Philippine Rubber Industries Association Incorporated; DTI-Caraga; and Bureau of Fisheries and Aquatic Resources will brief the participants on Rubber, Palm Oil, Processed Fish, and Mining. (JPG/PIA-Caraga)

Author: Jennifer P. Gaitano
Date: July 18, 2016
Source: PIA

CEBU, Philippines - The Philippine Institute for Development Studies and Institute of Developing Economies are set to conduct a socioeconomic survey of persons with disabilities (PWDs) in Cebu province.
In a statement, the Philippine Statistics Authority said this is in line with the global effort to achieve the Sustainable Development Goals, one of which aims to address disability issues.
"This is the third PIDS survey that focuses on the socioeconomic activities of PWDs. The first survey was conducted in selected areas in Metro Manila in 2008 while the second was conducted in Rosario, Batangas in 2010," PSA said.
The survey seeks to understand the disability-poverty relationship in the Philippines by comparing situations of women and children with disabilities in one rural and one urban area.
PSA said the survey will be conducted in Mandaue City and municipality of San Remegio in Cebu.
"A total of 200 respondents will be selected and will be asked about their economic activities, personal and household income, membership in disability self-help organizations, and awareness of the various policies intended for PWDs," the statistics agency noted.
In March 2013, a PIDS discussion paper by Christian D. Mina revealed that the proportion of employed PWDs in the urban area was slightly higher than that in rural area.
Among PWD groups, those who were hearing-impaired recorded the highest employment rate in the rural area, followed closely by those who were mobility-impaired, that study further said.
It also revealed the leading occupation among PWDs in the urban area was being a masseur while in the rural area, PWDs were more engaged in farming and livestock and poultry raising.
The Cebu survey will cost P 1.2 million to cover personal, travel, communication and training expenses. Survey results are expected to be released in September this year.
PWD residents of Mandaue City and San Remegio town are urged to respond accordingly and support the conduct of the survey to improve the accuracy of disability statistics in the country. (FREEMAN)

Author: Carlo S. Lorenciana
Date: July 25, 2016
Source: Sun Star Cebu

DIRECTOR'S Cut: (This portion features the thoughts of lawyer Alberto Escobarte, Ceso IV, regional director, DepEd-Davao to all stakeholders and recipients of the efforts to improve the basic education). "Let me assure you that in the performance of my official duties and even my private acts will be guided and guarded by my Oath of Office, The Panunumpa ng Kawani ng Gobyerno, the Philippine Constitution and all the laws that govern our actions.
***
ON JULY 13, 2016, DepEd Planning Service Director Roger Masapol went to NEAP XI, Davao City to personally oversee the conduct of the Research Caravan as an offshoot to the newly launched Basic Education Research Agenda (Bera).
The caravan was attended by DepEd leaders and personnel from the regional down to school level, agency partners and public and private tertiary institutions in Davao Region.
Prior to the holding of the said activity in the Region where Regional Director Alberto Escobarte and Assistant Regional Director Teresita G. Tambagan actively supported, the nationwide launch was held on July 11 at the Benitez Theatre, University of the Philippines, Diliman, Quezon City.
Both activities aimed to provide guidance to DepEd and its stakeholders in the conduct of education research and in the utilization of research results to inform the Departments planning, policy, and program development.
The DepEd Bera revolves around four (4) main themes, namely: teaching and learning, child protection, human resource development, and governance.
In the national level, the attendees in the event were DepEd Assistant Secretary for Governance and Operations Jesus Mateo, Southeast Asian Ministers of Education Organization (SEAMEO) Executive Director Ramon Bacani, Philippine Institute of Development Studies President Dr. Gilbert Llanto, UP College of Education Dean Dr. Marie Therese Bustos, Basic Education Sector Transformation (BEST) Team Leader Greg Ryan-Gadsden, and Director Masapol.
In his speech, Escobarte stressed on the need to come out with well thought of and experience based classroom research to answer the various indicators that mattered most in the lives of the Filipino learners particularly the dropout and survival rates. Policy, Planning and Research Division Chief Marilyn Madrazo, meanwhile, presented the regions research initiatives and future plans.
It was emphasized in both activities that the Research Agenda shall build on gains from existing research, generate new knowledge on priority research areas, focus DepEds attention on relevant education issues, and maximize available resources for research within and outside the Department.
In his message during the national launch, Assistant Secretary Mateo mentioned the accomplishments of former DepEd Secretary Armin Luistro FSC, especially the K to 12 program, and enjoined everyone to contribute to educational reforms by participating in the Departments research agenda.
Action research advocates Honeylyn Boyles and Gervacio Salinas shared their testimonies on how research helps address various education related issues in their respective schools and Division Offices.
Stated through DepEd Order No. 39 s. 2016, the adoption of the Basic Education Research Agenda hopes to inspire and guide its external stakeholders to undertake empirical studies to better understand and advance basic education in the country.
In line with this activity, DepEds Policy Research and Development Division spearheaded a nationwide Research Caravan like the one conducted in Davao Region to help disseminate the goals and objectives of the agenda to its field offices and regional stakeholders.
This corner hopes that various indicators that are significant in improving the welfare of the teachers, non-teaching staff and the learners will be addressed through these scientific researches aimed at giving the right cure for a particular illness in the DepED organizations and systems.
***
You can access DepEd Updates, latest issuances, photos and other relevant information through our website: http://www.deped.gov.ph and our Facebook Page:http://www.facebook.com/deped.regionxi. For comments, suggestions and/or contributions, send your email to region11@deped.gov.ph. For queries, complains and other concerns for the different schools divisions email them davao.city@deped.gov.ph, davao.delsur@deped.gov.ph,davao.delnorte@deped.gov.ph, tagum.city@deped.gov.ph, panabo.city@deped.gov.ph,igacos@deped.gov.ph, davao.oriental@deped.gov.ph, digos.city@deped.gov.ph,mati.city@deped.gov.ph and compostela.valley@deped.gov.ph.

Author: Lorenzo E. Mendoza
Date: July 24, 2016
Source: Sun Star Cebu

THE government think tank will conduct a socieconomic survey of persons with disability (PWDs) in Cebu province, the Philippine Statistics Authority (PSA) said Friday.
The survey to be spearheaded by the Philippine Institute for Development Studies, in cooperation with the Institute of Developing Economies, is in line with the worldwide effort to achieve the Sustainable Development Goals, one of which aims to address disability issues.
"The survey seeks to understand the disability-poverty relationship in the Philippines by comparing situations of women and children with disabilities in one rural and one urban area," PSA said.
The poll will be conducted specifically in Mandaue City and municipality of San Remegio in Cebu among 200 respondents, who will be asked about their economic activities, personal and household income, membership in disability self-help organizations, and awareness of the various policies intended for PWDs.
"To improve the accuracy of disability statistics in the country, PWD residents of Mandaue City and municipality of San Remegio are thus enjoined to respond accordingly and support the conduct of the survey," the PSA said.
The government has earmarked P1.2 million for the survey to cover personal, travel, communication and training expenses.
Results of the survey is expected to be released in September.
This is the third PIDS survey that focuses on the socioeconomic activities of PWDs. The first survey was conducted in selected areas in Metro Manila in 2008 while the second was conducted in Rosario, Batangas in 2010. (SDR/Sunnex)

Author:
Date: July 22, 2016
Source: Sun Star Cebu

The Asian Infrastructure Investment Bank (AIIB) can help foster cooperation between the Philippines and China in the wake of the recent ruling on the South China Sea by an arbitral tribunal, according to a local economist.
In a post at the East Asia Forum, Philippine Institute for Development Studies (PIDS) senior research fellow Adoracion M. Navarro said a multilateral approach through the AIIB can help mend relations between Manila and Beijing.
Last month the International Tribunal for the Law of the Sea upheld the countrys rights in the South China Sea. China, however, rejected the ruling.
It is difficult to speculate at this point how the situation will evolve. But the Duterte administration may decide to look beyond bilateral negotiations to the multilateral AIIB as another option for infrastructure financing, Navarro said.
The AIIB can provide improved transparency and ameliorate other governance concerns surrounding Chinese investment, she added.
The AIIB can also help the Duterte administration finance the countrys infrastructure needs, particularly the Presidents proposal to create the Mindanao rail.
The Mindanao rail project has not been included in the Public Investment Program, which is the governments medium-term public-investment blueprint.
Navarro said AIIBs improved transparency policies can assure the government that issues concerning Chinese investment in the past will be repeated.
She said some of these investments resulted in controversial projects, such as the North rail.
While China holds almost 30 percent of the voting power within the AIIB, the rest is divided among the other members, which already have subscriptions. The no political interference clause in the AIIB Articles of Agreement is expected to provide comfort to both the Filipino and Chinese public, she added.
Navarro said the Philippines can also explore cofinancing with the AIIB, similar to the cofinancing agreements it signed with multilateral banks.
The AIIB has cofinancing agreements with the Asian Development Bank, the European Bank for Reconstruction and Development, and the World Bank.
The Philippines officially signed up as the 57th founding member of the AIIB on December 31, 2015.
As a founding member of the AIIB, Navarro said, the Philippiness capital contribution is $196 million, payable in five years or $39 million per year, and it must pay the initial tranche in 2016. In February, Difference Group Founder and CEO Dan Steinbock said the Philippines must pursue greater economic cooperation with China to insulate the economy from global uncertainties.
Steinbock added that for one, Chinese capital can do a lot to help rebalance growth in the Philippines.
He said countries like Vietnam, which also has territorial disputes with China, is able to explore greater economic cooperation with Beijing.
This, Steinbock said, makes it possible for Manila to strike the same kind of partnership with Beijing, given that China is one of the Philippiness major trade partners.//

Author: Cai Ordinario
Date: July 28, 2016
Source: Business Mirror


MANILA, July 28 - A study by state think tank Philippine Institute for Development Studies (PIDS) revealed that the funds collected through the motor vehicle users charge (MVUC), popularly known as road users' tax, is underutilized due to the lack of a definitive operating procedure system on how to identify and prioritize projects.

The authors of the study"PIDS Consultants Sheilah Napalang and Pia May Agatep, PIDS Senior Research Fellow Adoracion Navarro, and Research Associate Keith Detros"underscored that the processes of identification, approval, and implementation of proposed projects are problematic.

"Project identification does not follow the prescribed procedures. The approach is bottom up, rather than top down, [thereby] failing to incorporate a network perspective of accident blackspots, and leading to projects that are not of the highest priority being approved and implemented," the authors explained.

The MVUC, which is imposed through the registration fees of vehicles and penalties for overloading and collected by the Land Transportation Office (LTO), is envisioned as a new source of funding to finance road maintenance and minimize air pollution. MVUC is considered the third biggest source of tax revenue for the government, contributing an additional 40 percent of available funds for maintenance of national roads.

According to Republic Act (RA) 8794, funds collected from the MVUC should be placed in four special accounts in the National Treasury: Special Road Support Fund (80%), Special Local Road Fund (5%), Special Vehicle Pollution Control Fund (7.5%) and Special Road Safety Fund (7.5 %). The tax forms the bulk of the annual motor vehicle registration.

The PIDS study pointed out that project approval and fund release under the Special Local Road Fund requires the prerogative of the city mayor, leaving the process open to politicking.

Project implementation is, ideally, a coordinated effort among several government agencies and the Road Board. However, in reality, there is evidently a real potential of overlaps of functions, especially between the DPWH and the Road Board Secretariat, the authors added.

They also cited the lack of transparency, given the absence of a clear schedule for proposal submission and approval of the projects. They maintained that this setup leaves the process open to political interference.

Aside from underutilization, the study also enumerated potential sources of discrepancy in fund collection, such as for the funds deposited as General Fund, due to incorrect agency and transaction codes and the lack of a list of deposited collections.

To solve these problems, the PIDS study recommended that MVUC collection be automated to efficiently track collections and deposits.

Implementing agencies should make the effort to adhere to RA 8794s Implementing Rules and Regulations, especially concerning the steps of proposing projects to the Central Office, and prioritizing selections using the Highway Development and management (HDM-4) model, which makes sure that the projects are economically viable and ascertains that road users benefit the most, the study suggested.

Similarly, the guidelines for identifying and prioritizing projects that will be funded through the Special Vehicle Pollution Control Fund should be approved and implemented.

To improve monitoring, the authors suggested that project proposals and current projects as well as those undertaken for the past five years be published online, thereby establishing a clear timeline following proposal to the final decision of the Road Board.

The study argued that institutionalizing impact evaluation and monitoring will help transparency issues, and, at the same time, improve the decisionmaking process. Using performance indicators during monitoring and evaluation of projects is highly encouraged as well.

The authors also enumerated further institutional reforms. They recommended setting up an oversight committee for the MVUC to ensure adherence to the RA 8794. Secondly, they encouraged the Road Board Secretary to focus their time on monitoring and evaluation of project implementation and outcomes, and leave the procurement and project implementation to other agencies such as the Department of Public Works and Highways.

Lastly, the authors underscored capitalizing on the potential of a community-based labor approach on road maintenance. Highlighting the performance of Bantay Lansangan project and the details of the Road Sector Status Report Card, the authors suggested strengthening community-based employment in road maintenance projects and encouraging the participation of civil society organizations in monitoring and increasing transparency in road projects. (PIDS)//

Author:
Date: July 28, 2016
Source: PIA

The funds collected through the motor vehicle users charge (MVUC) is underutilized, mismanaged and not transparent enough according to a study done by the Philippine Institute for Development Studies (PIDS).

The government has collected P112.5 billion of the road use tax from 2001 to 2014, but it is not clear where all the funds went, PIDS said.

The government think tank likewise said the use of the tax at the local government level is subject to politicking.

PIDS pointed out the lack of a definitive operating procedure system on how to identify and prioritize projects funded by the tax.

The discussion paper " Results of the Assessment of the Utilization and Impacts of MVUC in the Philippines " underscored that the processes of identification, approval, and implementation of proposed projects are problematic.

Project identification does not follow the prescribed procedures. The approach is bottom up, rather than top down, (thereby) failing to incorporate a network perspective of accident blackspots, and leading to projects that are not of the highest priority being approved and implemented, the report said.

The MVUC, which is imposed through the registration fees of vehicles and penalties for overloading, is envisioned as a source of funding to finance road maintenance and minimize air pollution.

According to Republic Act (RA) 8794, funds collected from the MVUC should be placed in four special accounts in the National Treasury: Special Road Support Fund (80 percent), Special Local Road Fund (5 percent), Special Vehicle Pollution Control Fund (7.5 percent), and Special Road Safety Fund (7.5 percent).

Specifically, the MVUC is intended for road maintenance and improvement of drainage of national, primary, and secondary roads; maintenance of local roads, traffic management, and road safety devices; installation of traffic signs, pavement markings, and safety devices; and for air pollution control.

The report said the total collections generated from the MVUC fund in 2001 to 2014 stood at P112.5 billion.

The PIDS study pointed out that project approval and fund release under the Special Local Road Fund requires the prerogative of the city mayor, leaving the process open to politicking.

Project implementation is, ideally, a coordinated effort among several government agencies and the Road Board, the paper said.

However, in reality, there is evidently a real potential of overlaps of functions, especially between the Department of Public Works and Highways (DPWH) and the Road Board Secretariat, it added.
The report also cited the lack of transparency, given the absence of a clear schedule for proposal submission and approval of the projects.

It pointed out that this setup leaves the process open to political interference.

Aside from underutilization, the study also enumerated potential sources of discrepancy in fund collection due to incorrect agency and transaction codes and the lack of a list of deposited collections.

To solve these problems, the PIDS study recommended that MVUC collection be automated to efficiently track collections and deposits.

Implementing agencies should make the effort to adhere to RA 8794s Implementing Rules and Regulations, especially concerning the steps of proposing projects to the Central Office, and prioritizing selections using the Highway Development and management model, which makes sure that the projects are economically viable and ascertains that road users benefit the most, the study said.

To improve monitoring, the report suggested that project proposals and current projects, as well as those undertaken for the past five years, be published online, thereby establishing a clear timeline following proposal to the final decision of the Road Board.

The study said institutionalizing impact evaluation and monitoring will help transparency issues and also improve the decision-making process.

Using performance indicators during monitoring and evaluation of projects is highly encouraged as well, it said.

The report further recommended setting up an oversight committee for the MVUC to ensure adherence to the RA 8794.

The authors also encouraged the Road Board Secretary to focus their time on monitoring and evaluation of project implementation and outcomes, and leave the procurement and project implementation to other agencies such as the DPWH.

Lastly, the report underscored capitalizing on the potential of a community-based labor approach on road maintenance.

The paper suggested strengthening community-based employment in road maintenance projects and encouraging the participation of civil society organizations in monitoring and increasing transparency in road projects.//

Author: Angela Celis
Date: July 28, 2016
Source: Malaya

QUEZON CITY, July 30 (PIA)--A study by state think tank Philippine Institute for Development Studies (PIDS) revealed that the funds collected through the motor vehicle users charge (MVUC), popularly known as road users' tax, is underutilized due to the lack of a definitive operating procedure system on how to identify and prioritize projects.

The authors of the study"PIDS Consultants Sheilah Napalang and Pia May Agatep, PIDS Senior Research Fellow Adoracion Navarro, and Research Associate Keith Detros"underscored that the processes of identification, approval, and implementation of proposed projects are problematic.

"Project identification does not follow the prescribed procedures. The approach is bottom up, rather than top down, [thereby] failing to incorporate a network perspective of accident blackspots, and leading to projects that are not of the highest priority being approved and implemented," the authors explained.

The MVUC, which is imposed through the registration fees of vehicles and penalties for overloading and collected by the Land Transportation Office (LTO), is envisioned as a new source of funding to finance road maintenance and minimize air pollution. MVUC is considered the third biggest source of tax revenue for the government, contributing an additional 40 percent of available funds for maintenance of national roads.

According to Republic Act (RA) 8794, funds collected from the MVUC should be placed in four special accounts in the National Treasury: Special Road Support Fund (80%), Special Local Road Fund (5%), Special Vehicle Pollution Control Fund (7.5%) and Special Road Safety Fund (7.5 %). The tax forms the bulk of the annual motor vehicle registration.

The PIDS study pointed out that project approval and fund release under the Special Local Road Fund requires the prerogative of the city mayor, leaving the process open to politicking.

Project implementation is, ideally, a coordinated effort among several government agencies and the Road Board. However, in reality, there is evidently a real potential of overlaps of functions, especially between the DPWH and the Road Board Secretariat, the authors added.

They also cited the lack of transparency, given the absence of a clear schedule for proposal submission and approval of the projects. They maintained that this setup leaves the process open to political interference.

Aside from underutilization, the study also enumerated potential sources of discrepancy in fund collection, such as for the funds deposited as General Fund, due to incorrect agency and transaction codes and the lack of a list of deposited collections.

To solve these problems, the PIDS study recommended that MVUC collection be automated to efficiently track collections and deposits.

Implementing agencies should make the effort to adhere to RA 8794s Implementing Rules and Regulations, especially concerning the steps of proposing projects to the Central Office, and prioritizing selections using the Highway Development and management (HDM-4) model, which makes sure that the projects are economically viable and ascertains that road users benefit the most, the study suggested.

Similarly, the guidelines for identifying and prioritizing projects that will be funded through the Special Vehicle Pollution Control Fund should be approved and implemented.

To improve monitoring, the authors suggested that project proposals and current projects as well as those undertaken for the past five years be published online, thereby establishing a clear timeline following proposal to the final decision of the Road Board.

The study argued that institutionalizing impact evaluation and monitoring will help transparency issues, and, at the same time, improve the decisionmaking process. Using performance indicators during monitoring and evaluation of projects is highly encouraged as well.

The authors also enumerated further institutional reforms. They recommended setting up an oversight committee for the MVUC to ensure adherence to the RA 8794. Secondly, they encouraged the Road Board Secretary to focus their time on monitoring and evaluation of project implementation and outcomes, and leave the procurement and project implementation to other agencies such as the Department of Public Works and Highways.

Lastly, the authors underscored capitalizing on the potential of a community-based labor approach on road maintenance. Highlighting the performance of Bantay Lansangan project and the details of the Road Sector Status Report Card, the authors suggested strengthening community-based employment in road maintenance projects and encouraging the participation of civil society organizations in monitoring and increasing transparency in road projects. (PIDS/RJB/SDL/PIA-NCR)//

Author:
Date: July 30, 2016
Source: PIA

Infra pump priming, 24/7 construction, unsolicited proposals
MANILA, Philippines - The new administrations fiscal plan, which entails an aggressive infrastructure spending, around the clock public construction, unsolicited project proposals and presidential emergency powers underscores President Dutertes resolve to hit the ground running early in his term.
Observers hailed the apparent fiscal pump priming after six years of cautious spending program under the administration of former president Benigno Aquino III. Yet this early, red flags are already being raised.
Their methods mark an innovation, but a little bit complex, said Emilio Neri Jr., lead economist at Bank of the Philippine Islands.
For her part, Rosario Manasan, research fellow at the Philippine Institute for Development Studies, said it will all be a matter of projects to be prioritized, while contractor Ibarra Paulino said execution will be crucial.
From here, they listed three vital challenges facing Dutertes fiscal plan.
Absorptive capacity
Topping the list is government agencies absorptive capacity. Manasan said this pertains to the capability of agencies to utilize funds through the completion of projects such that their budgets are consumed by the end of each year.
Such was not the case, however, since 1992, data from the Department of Budget and Management showed. Since then, allocations were not completely used and that deficits are more a result of low revenues than high spending.
Agencies are being choked with funds. They are not used to having so much money to spend, Manasan said.
This could hit even President Dutertes plan to get emergency powers from Congress to address what is already deemed a traffic crisis in Metro Manila.
Former president and now Pampanga Rep. Gloria Arroyo is set to file a bill that would grant Duterte additional powers to deal with the deteriorating traffic situation in Metro Manila.
Under her proposal, the President may enter into negotiated contracts for the construction, repair, rehabilitation, improvement or maintenance of critical infrastructure, projects and facilities, subject to certain conditions.
That will help, but as far as public spending is concerned, the bottleneck is not really in the procurement side but on the agencies, Manasan said in a phone interview.
You can increase the budget as much as you want, but if agencies cannot absorb it or spend it because projects are not ready, it will be useless, she said.
Neri had a different concern. He said while fasttracking spending is always welcome, this should not come at the expense of misusing public funds.
He echoed Melissa Yan, deputy executive director of the Government Procurement Policy Board, who earlier said the procurement laws, no matter how tedious, are created as an anti-corruption measure.
If special powers are used to the extent of resorting to bending the rules, thats a sign of wanting to take short cuts and thats not good, Neri said separately.
Finance Secretary Carlos Dominguez, however assured: We will make sure that projects will undergo enough scrutiny.
Revenues
The plan is to widen the budget gap"which indicates government spent more than earned " to three percent of economic output from just 0.9 percent last year.
This will be done through additional funds for infrastructure, programmed to corner at least five percent of gross domestic product (GDP) under Duterte. Last year, it hit a record high of 3.3 percent.
While Budget Secretary Benjamin Diokno said the figure is sustainable, Manasan said it would depend on where the deficit would come from. What is the context of increased deficit?
They have plans to have tax reform and reduce income taxes. It remains to be seen if they can offset that, but I dont think tweaking VAT exemptions would do it, Manasan said.
They should be careful because we might go back to a situation where we lack money, she added.
So far, details were scarce as to the contents of Dutertes tax reform. Former Finance secretary Cesar Purisima left Dominguez a tax package that would generate as much as P77 billion in the first year, but the latter said he will not use it.
He would, however, embarked on tax administration measures similar to Purisimas such as filing of tax evasion and smuggling cases, rationalizing fiscal incentives, relaxing bank secrecy law, and making tax evasion a predicate crime to money laundering.
The impact would really depend on the timing when these measures are rolled out. If they come in later than lowering income taxes, that could be revenue eroding, Neri said.
At 14.7 percent of GDP as of the first quarter, the Philippines revenues are one of the lowest in Southeast Asia. Considering only taxes, the ratio of 13 percent was also among the worst.
Before this period, revenues and taxes, as a proportion of GDP, underwent a decline since 1997, finance data showed. This contributed to an increase in deficit to five percent in 2002.
I think their appetite for risks is high would be willing to take a credit downgrade if it means pushing with their programs, Neri said. Dominguez had long criticized the past administration for focusing too much on credit ratings.
But Alvin Ang, economist at Ateneo de Manila University, believes there should be no problem with it.
Your economy is liquid and we have not really taken advantage of our investment grade. Besides, Im sure Dr. Diokno knows what he is doing and will not let that happen, Ang said by phone.
Diokno, whose first term as budget chief saw the deficit at 3.7 percent of GDP in 2000, only had this to say: The fear of higher deficit is misplaced.
Private sector woes
Paulino, executive director of Philippine Constructors Association, said another factor to consider would be the capacity of contractors to cope with the spending push.
While he welcomed plans to undertake a non-stop, 24 hours contruction of major infrastructure projects initially in Metro Manila, Paulino said there might not be enough willing contractors in the provinces, particularly Mindanao.
There are not much qualified contractors who would want to go to Mindanao because of the peace and order situation there. Most of them are here (in Manila) and Cebu, he said by phone.
Cosette Canilao, former executive director of Public-Private Partnership (PPP) Center, meanwhile said projects should also be scrutinized carefully, especially those coming from the private sector.
Unsolicited PPPs -- such as the Metro Rail Transit 3 and Ninoy Aquino International Airport Terminal 3 -- are so prone to corruption that the government should hire good consultants to evaluate them as well as improve Swiss challenges.
The challenge process should be clear. The challenge period should also be increased, but that can only be done via amendment of the BOT (build-operate-transfer) law, Canilao said in an e-mail.
But Neri said this would seem have to wait for a while.
What (Duterte administration) is doing is contrary to institutional reforms. We have not seen that yet, he said.
I think they are trying to put out fires first. Focus on very urgent matters that need attention. Hopefully after, they would go on long-term reform, which is much more important, he added.//

Author: Prinz Magtulis
Date: July 29, 2016
Source: Philippine Star