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News and Features June 2, 2017

1.  Small entrepreneurs only need a purchaser's license to buy controlled chemicals 

Micro and small enterprises certified by the Department of Trade and Industry (DTI) are advised to apply for a Purchaser's License from the explosives unit of the Philippine National Police (PNP) as the fastest and simplest way to acquire regulated chemicals used in production.

2.  PHILEXPORT welcomes "enhanced VAT refund system" for export sales

The Philippine Exporters Confederation, Inc. (PHILEXPORT) welcomed the implementation of an "enhanced VAT refund system" for export sales as proposed in the Lower House-approved comprehensive tax reform package.

3.  Food exporters urged to tap multibillion-dollar global kosher market

Filipino food exporters are urged to seek kosher certification to capture the lucrative multibillion-dollar global kosher market, which is growing by eight to 10 percent a year.

4.  Infrastructure, measures to enhance connectivity crucial to achieving seamless integrated ASEAN 

Association of Southeast Asian Nations (ASEAN) member states need to invest in infrastructure and adopt measures to enhance connectivity in order to facilitate a seamless integration process crucial to achieving high income status.

5.  PCC to issue draft rules of procedure for public feedback

The Philippine Competition Commission (PCC), the main implementing agency of the Philippine Competition Act (PCA), said it will be releasing soon its draft rules of procedure for filing and investigating complaints against anti-competitive deals and practices.

6.  Senate approves Tulong-Trabaho Bill on third and final reading

The Senate passed today on third and final reading a bill which sought to narrow the gap of unemployment in the country by providing free tech-voc training and improving the skills of Filipinos who chose not to pursue tertiary education.

7.  DOE Set To Launch WESM Mindanao

The Department of Energy (DOE) under the helm of Secretary Alfonso Cusi has been laying the groundwork in Mindanao in order to deliver quality, reliable, secure and affordable electricity to the region through the Wholesale Electricity Spot Market (WESM

8.  Removal of restriction on free patents for agri lands gets Senate nod  

The Senate today passed on third and final reading a bill that would remove restrictions on agricultural free patents issued to farmers and make agricultural land titles immediately available for trade to help spur development in the agricultural sector.  

9.  PH telcos' regulatory systems are below international standards - PIDS study

The quality of the Philippine telecommunication regulatory environment is significantly below international standards, according to a recent study of state think tank Philippine Institute for Development Studies (PIDS). 


FULL STORIES

1.  Small entrepreneurs only need a purchaser's license to buy controlled chemicals 

Micro and small enterprises certified by the Department of Trade and Industry (DTI) are advised to apply for a Purchaser's License from the explosives unit of the Philippine National Police (PNP) as the fastest and simplest way to acquire regulated chemicals used in production.

Emmarita Mijares, deputy executive director of the Export Development Council (EDC) issued the advice after consulting May 26 with Col. Conrado Gongon, chief of the Explosives Management Division (EMD) of the PNP-Firearms and Explosives Office (PNP-FEO).

In an email to the Philippine Exporters Confederation, Inc. (PHILEXPORT), Mijares said that by applying as a DTI-accredited purchaser, micro and small enterprises wishing to buy controlled chemicals will only need to meet "minimal documentary requirements" from the PNP-FEO.

To file for this license, an enterprise just has to submit a duly accomplished application form, a DTI certification that the company is a micro or a small enterprise, and proof of payment for the license from the Land Bank of the Philippines.

Under PNP-FEO provisions, the scope of the purchaser's license for DTI-certified micro and small enterprises includes the authority to purchase certain controlled chemicals "within the maximum allowable quantity without the necessary permit." 

The license also authorizes the "use and process of controlled chemicals to produce [the] desired product; except the manufacture of another controlled chemical." 

The advisory came after PHILEXPORT Bicol chapter sought help from EDC and PHILEXPORT national chapter regarding difficulties by the regional chapter's micro and small handicraft exporter-members in buying hydrogen peroxide, a common ingredient in production regulated by the police.

Earlier, many other exporters and manufacturers of handicrafts have complained of similar challenges that have led to cancelled orders or delivery delays. 

Mijares added that a forum will be organized with resource persons from PNP to enlighten small firms about this topic.

 EDC said enterprises may get in touch with the Explosives Management Division at 732-0401 loc. 4498/4268; (0929) 214-6468; or (0906) 259-8822. They may also send inquiries to emd.feo.csg@pnp.gov.ph


2.  PHILEXPORT welcomes "enhanced VAT refund system" for export sales

The Philippine Exporters Confederation, Inc. (PHILEXPORT) welcomed the implementation of an "enhanced VAT refund system" for export sales as proposed in the Lower House-approved comprehensive tax reform package.

PHILEXPORT, the umbrella organization of Philippine exporters, said it was pleased with the system as provided under House Bill (HB) No. 5636. The tax reform bill was approved on third and final in the House of Representatives on May 31. 

Under this refund scheme, exporters must be given their actual refund or informed of the denial of their application for refund within 90 days of the filing of the VAT refund application. 

In earlier position papers submitted to legislators, PHILEXPORT relayed the hardships exporters encounter in getting VAT refunds for their export sales, with some reportedly unable to get back the accumulated VAT they had paid for years.

At the same time in the same paper, PHILEXPORT expressed disappointment that indirect export sales were not included in the zero VAT rate and refund system, saying this will have an adverse effect on local suppliers to export processing zones in the Philippines. 

In appealing to retain zero VAT exemption for indirect exporters, PHILEXPORT said it helps direct exporters to be price competitive while easing their cash flow, as they do not have to advance payments of VAT for locally sourced raw materials and services. 

It likewise encourages exporters to source from domestic producers of goods and services; thus, increasing the overall local trade, creating inclusive growth, and expanding value-added of industries.

Moreover, it motivates domestic industry to upgrade quality and develop upscale products for international market, while helping to diversify local industries to serve both local and foreign markets and promote job creation to help reduce poverty.

The tax reform bill wants to do away with the zero VAT rate for indirect exporters due to perceived leakages. 

But PHILEXPORT is suggesting concrete measures to stem leakages from the supposed recycling of VAT certificates. One is for the government to set up a track-and-trace system that will identify legitimate transactions that qualify as zero-rated VAT.

At the same time, the trade association said it is opposed to the imposition of an excise tax on sweetened beverages as recommended under HB No. 5636. 

The umbrella organization of domestic exporters said an excise tax of P10 per liter of sugar-sweetened beverage will raise the prices of certain goods including coffee, powdered concentrate, and tea drinks.

Aside from hurting the beverage industry, the tax will also result in reduced government revenues, economic contraction, and job losses.

It is also expected to affect the income of sari-sari stores, which make up 91% of retail stores in the country, as 31% of sari-sari store sales come from carbonated beverages.


3.  Food exporters urged to tap multibillion-dollar global kosher market

Filipino food exporters are urged to seek kosher certification to capture the lucrative multibillion-dollar global kosher market, which is growing by eight to 10 percent a year.

"Kosher certification (is) your global marketing toolÂ… As perceived, kosher is a high-level third-party certification process," said Joel Weinberger, head of operations in India and Southeast Asia of Star K Certification Inc., one of the premier certifying companies based in the United States (US). 

Weinberger stressed that kosher certification boosts export sales of a food company by making them more marketable and more international in scope.

He identified snacks food and ingredients that can be certified and the Philippine products which have huge potentials in the global kosher market.

Weinberger said the acceptability by a wide consumer base and strong loyal core of buyers are driving the projected growing demand for kosher products.

He cited the US and Israel currently as the biggest markets for kosher foods.

Weinberger noted kosher is important to sales in Judaism and significant Muslim population.

"The Jewish market is a faithful, small market that will continually demand and support Kosher certified food. But because their number is small (likely 15 million or a bit more Jews worldwide), they will not burden your supply chain very much," he added.

For her part, PS Kosher Food Philippines Country Manager Tonette Salazar said only 20 percent are Jewish consumers, the others are 7th Day Adventist and even Muslims those with certain allergies such as to gluten, mainstream consumers. 

"Kosher appears a unique sector with very special religious and cultural requirements, similar to Halal but not quite the same except for both refusing to eat or use pork," she said.

Meanwhile, Star-K has successfully assisted large companies with dozens of plants implement a unified kosher program across all of their plant types in all of their locations with uniform standards, global acceptability, label sharing across platforms and competitive pricing, among others.

"We always remind kosher certified companies to heed instructions and guidelines so as not to risk suspension and refusal of renewal. Star K is very strict. Kosher buyers also verify with the Star K head office if the Philippine companies are still certified and to be sure, they request for updated Kosher Letters of Certification for confirmation," Salazar added.


4.  Infrastructure, measures to enhance connectivity crucial to achieving seamless integrated ASEAN 

Association of Southeast Asian Nations (ASEAN) member states need to invest in infrastructure and adopt measures to enhance connectivity in order to facilitate a seamless integration process crucial to achieving high income status.

Stratbase ADR Institute (ADRi) Special Study titled "ASEAN's Golden Opportunity: The Future of Southeast Asia" said spending on countries' respective human and physical capital will enable Southeast Asia to surpass the "middle income trap" and maximize its demographic window of opportunity.

"ASEAN's continuing economic integration should accelerate the returns on those investments. If existing potentials are harnessed properly and in time, more ASEAN members may approach, or even achieve, high income status within a generation," the study said, written by Angelica Mangahas and Weslene Irish Uy of the Stratbase ADR Institute (ADRi) team.

It identified inadequate infrastructure connecting continental ASEAN member states among the hurdles ASEAN needs to pass before a seamless economic union can be realized.

The study said archipelagic countries likewise are facing problems with connectivity within their borders.

Other obstacles include varying regulatory regimes and financial arrangements, the lack of financial market integration, as well as domestic restrictions on the movement of labor and capital across member states.

ASEAN economies are still only partially integrated, preventing ASEAN members from reaping more extensive benefits from the ASEAN Economic Community (AEC), even after the adoption of sectoral work plans and implementation of initiatives for trade facilitation.

The AEC, which was launched at the end of 2015, aims to create a single market and production base to facilitate the free movement of goods, services, investment, labor and capital.

"Economic integration has so far been driven by the production networks of multinational corporations (MNCs) and the rise of free trade and investment agreements between ASEAN and its external partners," the study said.

To further integration in the AEC, it added member states must continue to work together to reduce non-tariff barriers, liberalize trade in services, and facilitate foreign direct investments (FDI).


5.  PCC to issue draft rules of procedure for public feedback

The Philippine Competition Commission (PCC), the main implementing agency of the Philippine Competition Act (PCA), said it will be releasing soon its draft rules of procedure for filing and investigating complaints against anti-competitive deals and practices.

"We will be issuing our rules of procedure very soon-we are finalizing the rules and we will be releasing it for public comment in the next month," said Commissioner Annabelle Asuncion during a briefing on the PCA before the business and legal community May 31 in Makati City.

Asuncion gave an overview of the key provisions of PCA, including those on who it covers, what constitutes anti-competitive actions, and what the fines and penalties are for violations.

Asuncion said that a key and welcome provision of the PCA is the inclusion of government-owned and controlled corporations (GOCCs) under its mandate. 

"GOCCs are not exempt and we know that most of the time, under their regulations, it's the GOCCs who tend to take advantage of their dominant position," she said.

To questions on how the PCC expects to withstand pressure from large corporations, Asuncion said the commission is currently engaged in capacity building. 

"First we are investing a lot in capacity building of our staff. We are trying to hire the best and the brightest so that we scale up our capacity," said Asuncion. 

She added that they are also working to educate decision-makers in the business and in legal circles. "So we're reaching out to business to make them understand and embrace this competition culture," said Asuncion.

"And we're already starting our capacity building efforts in the prosecution and the courts because ultimately-yes, businesses will have large resources, but if the courts are educated and they also embrace this culture of competition-if a business goes to court then the court who already has that competition mindsetÂ… will appreciate the competition concerns."

The executive likewise talked about the jurisdiction of the PCC. Under the PCA, the PCC has "original and primary jurisdiction in all competition issues," but she acknowledged that there are other sector regulators with competition mandates as well. 


She said that under the PCA, the PCC is supposed to work with sector regulators to promote competition and protect consumers while still carrying out its mandate. 

To questions raised regarding primary jurisdiction being with PCC, Asuncion said, "Of course, the position of PCC is yes," but admitted that "if you ask the other sectoral regulators I'm sure they will have a different answer." 

"Well that's something again to watch out for," she said.


6.  Senate approves Tulong-Trabaho Bill on third and final reading

The Senate passed today on third and final reading a bill which sought to narrow the gap of unemployment in the country by providing free tech-voc training and improving the skills of Filipinos who chose not to pursue tertiary education.

Senator Joel Villanueva, author and sponsor of Senate Bill No. 1431 or the Tulong Trabaho Act of 2017, said the measure sought to increase the funding for technical and vocational trainings by providing for a Tulong-Trabaho Fund.

The fund would be administered by the Technical Education and Skills Development Authority (TESDA).

Villanueva was director-general of TESDA from 2010 to 2015 before he was elected to the Senate in 2016.

"We believe that increasing the allocation of TESDA scholarship programs will lead to greater output and productivity of workers. The measure also seeks to address the job skills mismatch of our workers," Villanueva said.

According to Villanueva, TESDA received P2.2 billion for its Training for Work Scholarship Program (TWSP) last year. However, he said, the amount for TWSP funding remained the same for this year despite the increasing demand for tech-voc courses.

TESDA records showed enrollees of tech-voc courses increased sharply by 45 percent or 2.3 million in 2015 from 1.6 million enrollees in 2010. 

Villanueva said the Tulong-Trabaho Fund would shoulder the fees of selected training programs for qualified recipients as well as the possibility of providing additional financial assistance such as transportation allowance and laboratory fees.

"We also propose a Philippine Labor Force Competencies Competitiveness Program which will be established based on our Labor Market Intelligence Reports. The measure also guarantees industry participation and incentives and engagement of local governments," Villanueva said.

"Consistent with the UniFAST Act of 2015, the Tulong-Trabaho fund would pave the way for productivity enhancement and to complement technological change in the workplace," Villanueva said.

The Unified Financial Assistance System for Tertiary Education Act or UniFAST Act of 2015 aims to provide scholarships to qualified students who want to go to study but could not afford to go to college. 

Under the Tulong-Trabaho bill, the TESDA Board would approve the list of eligible applications based on the recommendation of the TESDA secretariat. The recipients of the Tulong-Trabahofund would be evaluated periodically to ensure that at least 80 percent of the beneficiaries would be certified after the training program.

Failure to meet the passing rate would subject the recipient industry board to performance review and be audited by the TESDA board, according to the bill.

"The passage of this bill will make tech-voc accessible to all, boost our workers' confidence to face the world of work and ensure that the youth who are ready to work hard with the right skill sets to obtain in-demand jobs," Villanueva said. -- Senate Press Release


7.  DOE Set To Launch WESM Mindanao

The Department of Energy (DOE) under the helm of Secretary Alfonso Cusi has been laying the groundwork in Mindanao in order to deliver quality, reliable, secure and affordable electricity to the region through the Wholesale Electricity Spot Market (WESM). 

Energy Undersecretary Wimpy Fuentebella revealed this today during a presentation on WESM in this city. "Sec. Cusi sends his message that WESM is not only for Luzon or Visayas but also for Mindanao," said Fuentebella.

Fuentebella likened the spot market to "a dating place" to determine compatibility among potential energy partners.  

"The spot market is where the demand and the supply of electricity meet so that there will be an increased efficiency in the use of energy. Fairness and transparency. That is the bedrock of the rules to have a level playing field for the good energy participants to shine," he said during the forum.

"The WESM mechanism will also bring more flexibility, progress and, most importantly, enhance the power of choice for the consumers," he added.  

Fuentebella revealed that Cusi has been spearheading the DOE's activities in Mindanao since last January because he aims for the island to level up. "We are geared to launch the WESM Mindanao this June," Fuentebella said.

The DOE official said they have already conducted consultations on the launch of WESM in Mindanao through trial operations. 

"The real commercial operations will depend on the readiness criteria of the industry players here in Mindanao," said Fuentebella.

Meanwhile, Cusi has assigned Usec. Benito Ranque and Asec. Redentor Delola to oversee the energy situation in Mindanao during the duration of martial law. 

"Sec. Cusi tasked the DOE to monitor the Mindanao situation 24/7, to ensure the uninterrupted delivery of quality energy services for Mindanao," Fuentebella said.

The DOE is enforcing a price freeze for kerosene and household liquefied petroleum gas (LPG) to last until June 7. -- DOE News Release


8.  Removal of restriction on free patents for agri lands gets Senate nod  

The Senate today passed on third and final reading a bill that would remove restrictions on agricultural free patents issued to farmers and make agricultural land titles immediately available for trade to help spur development in the agricultural sector.   
Senate Bill No. 1454 or the "Agricultural Free Patent Reform Act of 2017" was approved with 21 affirmative votes, no negative vote, and no abstention. 

Senator Richard Gordon, chair of the Senate Committee on Justice and Human Rights, sponsored and authored the measure, while Senators Paolo Benigno Aquino IV and Cynthia Villar served as the bill's co-authors. 

Gordon said that the bill sought to "make agricultural land titles immediately tradeable and bankable, provide farmer entrepreneurs the much-needed access to credit, and create capital to make investments, create jobs, increase productivity, and reduce poverty in rural areas."

"This bill will do much to address our unbalanced development and give agriculture a much-needed shot in the arm. Trillions in dead capital will be unleashed in the market in the form of credit and livelier investments," he said. 

Gordon said that the bill would primarily amend the Commonwealth-era Public Land Use Act and "abolish provisions that prevent banks from lending to farmers against agricultural patents."

Enacted in 1936, the Public Land Use Act entitles any Filipino who have "continuously occupied and cultivated, either by himself or through his predecessors in interest, a tract or tracts of agricultural public lands subject to disposition" to have an agricultural free patent issued to him, for the same land not exceeding 24 hectares.  

However, Gordon said that under the said act, agricultural patent holders are "prohibited from mortgaging or selling their land within five years from the issuance of the patent, and given the right to repurchase the patents within five years from transfer or conveyances."

Under the bill, Gordon said that the agricultural free patent "shall now be considered as title in fee simple and shall not be subject to any restriction against encumbrance or alienation."

"Removing these restrictions will unleash the power of freer land markets. It will make agricultural patents bankable to improve the economy, because right now, nobody will want to buy it because of the restrictions," he stressed. 

Gordon said that the bill would help boost development in the agricultural sector, as it is expected to "unleash about two to three million agri-free patents, equivalent to at least P387 billion up to P1 trillion worth of agricultural land."

"More importantly, we will empower the farmer. We will give him options about what he can do with the land-options such as borrowing against the land to develop it, or selling the land to a more productive farmer," he said.

Gordon said that the bill could also help attract younger generations of Filipinos into back farming, noting that according to the Department of Agriculture, the average age of farmers now is 57 years of age. 

"Young people are turning away from farming because they do not see any future in it. It is not hard to see why. It is so hard for farmers to obtain credit. It is also hard for them to expand and buy more land if they are successful. If enacted into law, this bill will help solve the problems our young generations face with farming," Gordon concluded. -- Senate Press Release


9.  PH telcos' regulatory systems are below international standards - PIDS study

The quality of the Philippine telecommunication regulatory environment is significantly below international standards, according to a recent study of state think tank Philippine Institute for Development Studies (PIDS). 

Authors Ma. Kristina Ortiz, Ramonette Serafica, and Jose Carlos Alexis Bairan, in their discussion paper, explained that the Philippines has an overall rating of 52.50, which is midway of the ideal level in the scoring system set by the International Telecommunications Union. 

This makes the Philippines the second lowest among seven Southeast Asian countries assessed. The other six are Singapore, Malaysia, Thailand, Vietnam, Myanmar, and Cambodia.

The seven countries were assessed in four clusters: regulatory authority, regulatory mandate, regulatory regime, and the competition framework. 

Of the four clusters, the Philippines scored lowest in the regulatory regime with only 7 out of 30 points (23%).  Regulatory regime reviews specific regulatory interventions and covers the kind of targeted regulation needed to promote a healthy competitive environment.

For one, the Philippines does not issue global/unified licenses, which is considered optimal and reflects increased market liberalization in the global market.

Like Myanmar, it does not compel operators to make publicly available information about interconnection.  Myanmar, however, requires quality of service monitoring but not the Philippines.

The absence of number portability, or the ability of mobile phone users to retain their mobile number when changing from one mobile network carrier to another, is also considered a weakness of Philippine telcos. 

"Policies that will reduce customer switching and search costs, as well as the promotion of the efficient use of facilities, embedding adequate monitoring and data reporting, and clearly specifying obligations or rules of conduct of various market players are seen as possible interventions to improve telcos in the country," the authors pointed out.

Another flaw of Philippine telcos is on regulatory mandate, which evaluates the various regulatory functions of the regulator based on its thrusts. 

In this cluster, the Philippines ranks second lowest with 10.5 next to Myanmar with 7.5 out of a possible 22 points. 

The low score of the Philippines can be attributed to a number of factors such as the lack of regulatory mandate over interconnection rates and universal access/service. 

In the Philippines, acquiring the necessary authorization to provide telecommunications services is done in two levels. One is a license obtained from Congress and the other is a certificate from the National Telecommunications Commission (NTC). 


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