Philippine telecom regulations below international standards – PIDS

Related imageThe 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).

PIDS 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 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).

“Based on international standards, the first step is no longer necessary,” the authors explained, arguing that “Congress should no longer be involved in granting franchises as the regulator should have the sole authority for licensing.”

The authors also noted that while the NTC can revoke licenses and impose fines, still, it implements weak penalties.  “On the one end, revocation of a license will only happen in extreme cases, and the decision can be challenged in [the] courts since the NTC is a quasi-judicial body,” they posited.

Ortiz and her co-authors also took note of the NTC’s implementation of ‘unrealistically low fines’ prescribed by old laws like the Public Services Act of 1936 (Commonwealth Act 146) that sets a fine of not more than PHP 200 per day.

To improve the efficiency of Philippine telcos, the authors proposed the restructuring of the NTC to ensure its independence, diversifying its sources of funding, and allowing the NTC to set higher, more appropriate fines to deter bad behavior.

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Philippine inflation rate eases to 3.1% in May

 

downloadThe Philippine headline inflation eased to 3.1 percent in May 2017 from 3.4 percent in the previous month.

The National Economic and Development Authority (NEDA) says that the slower inflation rate in May 2017 bodes well for the country’s economy in the near term.

This is lower than market expectations of 3.3 percent and is within government’s target of 2.0-4.0 percent for 2017.

Slower price adjustments in both food and non-food commodities contributed to slower inflation in May 2017.

Inflation for the food and non-alcoholic beverages subgroup eased to 3.8 percent from the previous month’s 4.2 percent. This is due to slower price adjustments in vegetables, fish, oils and fats, as well as sugar, jam, honey, chocolate and confectionery.

Slowdown in the prices of vegetables, in particular, was attributed to the resilience of crops in northern Philippines that withstood unfavorable weather and frost earlier this year.

However, other food commodities like fruits, meat and rice recorded faster price increases in May 2017. Rice inflation accelerated further to 2.4 percent.

“These trends bear watching, given the significant impact of food prices on the poor. The amendment of domestic laws to reflect the expiry of the WTO waiver on rice quotas should also be pursued,” said Socioeconomic Planning Secretary Ernesto M. Pernia.

Meanwhile, non-food inflation also slowed to 2.5 percent in May 2017 from 2.7 percent in April. This was driven by slower price adjustments for clothing and footwear, furnishing, household equipment, health, transport, communication, and recreation and culture.

This follows the slower year-on-year increase in domestic petrol prices during the period.

Slower inflation was also recorded for unleaded gasoline, diesel, kerosene, and LPG in May 2017 relative to the previous month.

Pernia says that the country’s overall economic outlook remains optimistic considering recent international and domestic developments.

“On the external front, growth prospects for the global economy have improved, and the expected recovery of international trade should provide ample supply of commodities to support domestic production,” said Pernia.

He added that, on the domestic front, neutral weather conditions are likely to prevail over potential recurrences of El Niño or La Niña, based on the latest outlook of PAGASA and the International Research Institute for Climate and Society.

This could lead to increased production of agricultural products, especially palay and corn.

76 countries sign multilateral tax treaty

Seventy-six countries and jurisdictions have signed an innovative multilateral convention that will swiftly implement a series of tax treaty measures to update the existing network of bilateral tax treaties and reduce opportunities for tax avoidance by multinational enterprises.The new convention will also strengthen provisions to resolve treaty disputes, including through mandatory binding arbitration, thereby reducing double taxation and increasing tax certainty.

The new convention will also strengthen provisions to resolve treaty disputes, including through mandatory binding arbitration, thereby reducing double taxation and increasing tax certainty.

“The signing of this multilateral convention marks a turning point in tax treaty history,” said OECD Secretary-General Angel Gurría.

“We are moving towards rapid implementation of the far-reaching reforms agreed under the BEPS Project in more than 1,100 tax treaties worldwide, and radically transforming the way that tax treaties are modified.”

“Beyond saving signatories from the burden of re-negotiating these treaties bilaterally, the new convention will result in more certainty and predictability for businesses and a better functioning international tax system for the benefit of our citizens. Today’s signing also shows that when the international community comes together there is no issue or challenge we cannot effectively tackle.”

The signing ceremony for the  Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS took place during the annual OECD Week, which brings together government officials and members of civil society from OECD and partner countries to debate the most pressing social and economic challenges confronting society.

In addition to those signing today, a number of other jurisdictions are actively working towards signature of the convention and more are expected to follow by the end of 2017.

Today’s signing ceremony marks an important milestone in the international tax agenda, which is moving closer to the goal of preventing base erosion and profit shifting (BEPS) by multinational enterprises.

 

The new convention, which is the first multilateral treaty of its kind, allows jurisdictions to transpose results from the OECD/G20 BEPS Project into their existing networks of bilateral tax treaties. It was developed through inclusive negotiations involving more than 100 countries and jurisdictions, under a mandate delivered by G20 Finance Ministers and Central Bank Governors at their February 2015 meeting.

 

PAL resumes daily service to Kuala Lumpur

Displaying PAL Kuala flight ribbon cutting.jpg

Philippine Airlines Chairman Dr. Lucio C. Tan (3rd from left) led the traditional ribbon cutting ceremony to mark the reopening of PAL’s daily flight to Kuala Lumpur. PAL last flew to the Malaysian capital in 2014. Others in photo are, from left, Marianne Raymundo, PAL Chief Finance Officer; Fazdila Mansor, Tourism Attache of the Malaysian Embassy; Dr. Tan; Irene Montalbo, NAIA Terminal 2 Manager; Stewart Lim, PAL Exec. VP & Treasurer; Ismael Augusto Gozon, PAL Senior VP for Airline Operations; and Emilio Yu, special asst. to the PAL Chairman.

 

Philippine flag carrier Philippine Airlines (PAL) has resumed its daily service to Kuala Lumpur, Malaysia after three years of absence.

PAL president and COO Jaime Bautista said the resumption of PAL flights between Manila and Kuala Lumpur will help foster economic and cultural ties between the two countries. “Most importantly, it addresses the clamor for a direct service between the two capital cities,” said Bautista.

“Through PAL flights and code-share partners, we can carry passenger traffic from Kuala Lumpur to China, Japan, South Pacific and North America and thus enhance our ASEAN network,” he added.

Malaysia Airports Senior General Manager Zainol Mohd Isa said: “We are always committed towards building a strong relationship with our partner airlines to support its growth, not only in Malaysia but globally.”

“Our mission at Malaysia Airports is to create joyful experiences for all our stakeholders. Therefore, we will ensure that Philippines Airlines operations will receive Malaysia Airports’ fullest support for any airport facilities and services needed at the terminal,” said Isa.

Malaysia is a profit center in the ASEAN region, providing a favorable investment climate to individuals and organizations.

With investment opportunities in Malaysia’s service and manufacturing sectors, the PAL route will provide direct access to new business opportunities. Close to 800,000 Overseas Filipino Workers are employed in Malaysia.

The decision to return to Kuala Lumpur comes after PAL and Malaysia Airlines expanded their code-share arrangement. The enhancements include code-sharing on 12 domestic Malaysian destinations and nine domestic Philippine destinations.

The points are:

Malaysia – Alor Setar, Johor Bahru, Kota Bharu, Kota Kinabalu, Kuala Terengganu, Kuching, Labuan (Sabah), Langkawi, Miri (Sarawak), Penang, Sibu (Sarawak), Tawau (Sabah).

Philippines – Bacolod, Cagayan de Oro, Cebu, Davao, General Santos, Iloilo, Kalibo, Puerto Princesa, Caticlan.

Passengers may book on Business Class or Economy Class to any of these destinations. Lounge access is also available to Business Class passengers.

Current frequent flyer baggage benefits of Mabuhay Miles and Enrich members are also extended.

Code-share passengers traveling between terminals in Manila can avail of PAL’s free transfer services.

Passengers can choose from any of the daily Manila-Kuala Lumpur flight timings.

  • PR 525 departs Manila every Monday, Wednesday, Friday and Sunday at 7:25 AM and arrives in Kuala Lumpur at 11:00 AM local time; the return flight – PR526 – leaves Kuala Lumpur on the same days at 12:10 PM local time, and touches down in Manila at 3:50 PM.
  • PR 527 leaves Manila on Tuesday, Thursday and Saturday at 11:30 AM and arrives in Kuala Lumpur at 3:00 PM local time; the return service – PR528 – departs Kuala Lumpur on the same days at 4:00 PM local time and touches down in Manila at 7:30 PM.

PAL is deploying the Airbus A321 on the route. The 199-seater aircraft has 12 seats in business class, 18 in premium economy and 169 in regular economy.

Wireless inflight entertainment can be enjoyed while flying onboard the A321 by downloading the myPAL Player app for free. This will allow passengers to stream movies, TV shows and music from their personal electronic devices. Passengers also have meal options – Asian, Western or Halal meals. Generous free baggage allowance form part of the flight offerings.

The PAL service enables travelers from KL to enjoy Manila for several days and connect to any of PAL’s 28 domestic and 42 international destinations.

 

Philippines urged to address growing population, traffic and access to basic services

WB logoThe World Bank (WB) has urged the Philippines to address three major challenges that would benefit the country from urbanization.

These challenges include density, distance and division.  Density refers to the growing population is  not matched by key infrastructure investments. Distance is the connectivity issues that would increase transportation cost and impede labor mobility.

Division is the limited access to basic services and economic opportunities especially among informal settlers.

WB has proposed a two-pronged approach to building competitive, sustainable and inclusive cities: In Metro Manila: address critical issues such as congestion, flooding, and slums. In secondary cities: balance spatial development, increase productivity, and create jobs.

WB presented key recommendations in four priority areas – city competitiveness, inclusive urbanization, urban governance and institutions and land administration and management.

To be more competitive, cities should simplify tax regime and business regulations, address infrastructure gridlock, improve access to global markets, strengthen economic local governance and strengthen innovation and address skills mismatch.

To achieve inclusive urbanization, the Philippines should help the urban poor access formal jobs, expand formal sector employment through reinvigoration of manufacturing sector, close the gap in affordable housing and basic service delivery, empower communities and involve them in development process and strengthen institutions that underpin affordable housing especially the local governments.

On urban governance and institutions, the Philippine government should adopt a national urban policy, establish a lead agency for urban development, strengthen institutions and metropolitan governance and strengthen accountability through fiscal decentralization.

Costs of services trade, investment barriers remain high – OECD

The costs of services trade and investment barriers remain high, largely exceeding the average tariff on traded goods.

An OECD report noted that consumers and business pay for these restrictions. In sectors such as transport, logistics and construction, the cost of services are estimated to be about 20% higher on average than they would be in the absence of restrictions, and in some countries are nearly 80% higher than otherwise, imposing substantial additional burdens on manufacturing enterprises and eventually on final customers.

Red tape across services markets also creates additional costs for exporters seeking to enter multiple markets – the ad valorem tariff equivalent of regulatory differences is estimated at about 40%.

Small and medium-sized enterprises (SMEs) would benefit from more open and better regulated services markets. SMEs often find that identifying the regulatory requirements of each country and documenting compliance is beyond their capacity.

Reducing the costs of market entry would help improve the inclusiveness of services trade by allowing more SMEs to take up global opportunities.

“Open and well-regulated services markets are the gateway to global value chains,” said OECD Secretary-General Angel Gurría.  “Services trade policy reform can boost SMEs, reduce trade costs, strengthen the digital economy and help make globalisation work for all.”

The report recommends that countries pursue co-ordinated services trade policy and regulatory reforms by scaling back restrictions on foreign entry and barriers to the movement of professionals that discriminate against foreign services providers.

Countries should adopt strategic reforms across a spectrum of trade, investment and competition policies to facilitate trade in services, targeting bottlenecks in transportation and logistics services to reduce trade costs.

PAL ties up with Uber

Philippine flag carrier Philippine Airlines (PAL) has forged a partnership agreement with Uber  to provide employees a safe, reliable and cost -friendly transportation service.

PAL engaged the Uber service called uberHOP, a ride-sharing option which will enable employees heading in the same direction to share a ride during rush hour for a fixed fare.

The partnership, initiated by the Employee Welfare and Communication Group of PAL’s Human Capital Department, will provide PALers an alternative mode of transport that is both affordable and convenient. UberHOP is a fixed point and fixed price product that will be available in select locations.

“With this partnership, employees of the PAL group will have a convenient transport / car-pooling option at their fingertips. Transport safety and reduction in traffic rush – hour stress will be highly beneficial to employee welfare,” stressed PAL VP for Human Capital Maria Antonia Llamzon.

The uberHOP service is available to registered Uber users and PAL / PALex employees based in PNB Financial Center, Nichols, and PAL infight Center.

Those who are still unregistered may download the app through the Android Play or iOS App Store. From the Uber App, click Register, and provide the necessary information and payment details. UberHOP users may pay in cash or may add one’s credit or debit card in the app for non-cash transactions.

The PAL-uberHOP service is available during morning and evening rush hours on weekdays, excluding holidays. Rates reflect a 40% – 70% reduction off regular prices.

Cebu Pacific orders 7 A321CEO aircraft

Cebu Pacific

Leading Philippine carrier Cebu Pacific (CEB) has ordered an additional seven A321CEO (Current Engine Option) aircraft for delivery from March 2018.

“We are very excited about adding the A321 to our fleet,” said Lance Gokongwei, President and CEO of Cebu Pacific.

“The aircraft will enable us to increase capacity on popular routes, while at the same time benefiting from the lowest operating costs in this size category. This will mean more low fares for more customers flying across our domestic and regional network,” said Gokongwei.

The new aircraft will meet the airline’s increased capacity requirements pending the start of delivery of 32 A321NEO aircraft. CEB has deferred the A321NEO deliveries due to delays with the Pratt & Whitney engines selected to power the aircraft.

CEB Chief Finance Officer Andrew Huang said CEB has taken a conservative approach to the introduction of the A321NEO.

“We remain confident that Pratt & Whitney will address all issues on the GTF (Geared Turbo Fan) engine. There is, however, the need to increase our current capacity to meet growing domestic and regional network demand, thus the A321CEO order,” said Huang.

The seven Airbus A321CEO planes will cost US$812 million based on current price  and will be on top of the existing order of the 32 Airbus A321NEO aircraft for delivery beginning the fourth quarter of 2018.

John Leahy, Airbus Chief Operating Officer – Customers said: “We are pleased to sign this additional order with one of the most successful airlines in the Asian region. With the A321, Cebu Pacific will be able to respond to growing demand with the highest levels of efficiency. Carrying more passengers further, and at lower cost, the A321 is the perfect solution to meet the requirements of airlines worldwide in the middle of the market segment.”

CEB recently took delivery of two brand-new aircraft: an Airbus A330; and an ATR 72-600, to bring its current fleet to 61.

CEB fleet is comprised of four Airbus A319, 36 Airbus A320, eight Airbus A330, eight ATR 72-500, and five ATR 72-600 aircraft. CEB flies to 37 domestic and 26 international destinations, operating over 100 routes spanning across Asia, Australia, the Middle East, and USA.

Pruce is new British Ambassador to the Philippines

Daniel Pruce

Mr. Daniel Robert Pruce is the new British Ambassador to the Philippines and non-resident Ambassador to the Republic of Palau.

Ambassador Pruce succeeded Ambassador Asif Ahmad who will be transferring to another diplomatic service. Pruce will assume his post in August 2017.

Pruce was deputy head mission in Madrid from 2012 to 2016, deputy head mission in Bangkok from 2008 to 2012 and head of the Economic and Central Europe Group of the Foreign and Commonwealth Office (CFO) from 2006 to 2008.

Philippines okays P35.2-B Mindanao railway project

The Philippine government has approved the P35.26 billion Mindanao railway project and two other rail projects of the Department of Transportation (DOTr).

The National Economic and Development Authority (NEDA said the rail project aims to provide a more efficient, reliable, and affordable transportation to boost tourism, industry, and overall economic development in the area by connecting existing and emerging growth centers in the Davao Region.

The first phase of the proposed 830-kilometer railway involved a 102.28-kilometer commuter project that will run from Tagum City, Davao del Norte, to Digos City, Davao del Sur, with 7 stations, one terminal in Davao City, and one depot in Tagum City.

Construction of the project is targeted to begin in the first quarter of 2018 and is expected to be completed by the third quarter of 2022.

NEDA has also approved the North South Railway Projects (NSRP) – South Line, which will revive the Philippine National Railways (PNR) south railway with an estimated project cost of PhP285 billion and will be financed through Official Development Assistance (ODA).

The NSRP-South Line will consist of three tracks that will run from Tutuban to Los Baños for the commuter line (72 km), and Los Baños to Sorsogon for the long haul (581 km), terminating at the Port of Manila—via FTI in Taguig—through the connecting third track.

The Malolos-Clark Railway Project (MCRP) was likewise approved, which will be connecting with the ongoing Tutuban-Malolos portion of the North South Commuter Railway.  It will run from Malolos, Bulacan, to Clark International Airport (Phase I), and from Clark International Airport to Clark Green City (Phase II) with an estimated cost of PhP211.43 billion. Construction will be financed through ODA, while the operations and maintenance will be through Public-Private Partnership (PPP).

The construction for Phase I will begin on the second quarter of 2019 and is expected to be completed by the second quarter of 2022. Phase II will be implemented from 2022 to 2024.

NEDA has approved the Cavite Industrial Area Flood Risk Management Project that will mitigate flooding of 45,000 homes due to the overflowing water from the San Juan River, Ylang-Ylang River, and Rio Grande River, and the poor drainage of Maalimango Creek with an estimated project cost of PhP9.89 billion. Construction is targeted to begin in October 2019 and is expected to be completed by April 2024.

NEDA has also extended the OPEC Fund for International Development loan for the Road Improvement and Institutional Development Project of the Department of Public Works and Highways.