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BUSINESS HEADLINES THIS PAST WEEK...
(Mini Reads followed by Full Reports below)

BY GILBERT LLANTO (PIDS): STORMY SEAS AHEAD FOR THE PHILIPPINE ECONOMY?
[As the Philippine economy integrates more closely with the global and regional economy, external events will have a bigger impact on domestic growth prospects. Weak external demand will have negative impacts on the growth of trade and services. The Philippines had a trade deficit equivalent to $3.8 billion in October. China’s slowing growth and recession in Japan do not bode well for the economy. Weaknesses among ASEAN’s major trading partners will also have negative spillover effects on ASEAN member states like the Philippines. Because of this, there is a great risk that trade-led growth may not be a viable option for the Philippines in the immediate future.]


JANUARY 26 -By Gilbert Llanto,
President of the Philippine Institute of Development Studies -Can the Philippine economy sustain record growth performance amid very challenging times? Certain headwinds could make for rough sailing. Paulo Alcazaren
The Philippines has performed well in the past few years relative to its peers. It demonstrated great resilience to exogenous shocks that would have undone less capable economies. But will it be able to sustain its positive economic position? There are positive signs. Revised forecasts put gross domestic product growth in 2015 between 5.7–6 percent and forecasters expect a strong rebound in the coming year. The government has maintained an official forecast of 6–7 percent. It expects higher growth in 2016, even when the current administration ends its term of office in June. Policy reform efforts led to sound macroeconomic foundations and an improved governance framework. Both these factors encouraged investment and business activity as well as a consistent build-up of foreign exchange reserves. Foreign exchange reserves sat at $80.6 billion at the end of November — enough to cover over 10 months of imports and payments of services and income. And international credit rating agencies have upgraded the Philippines’ credit rating thanks to policy reform. The Philippines also sustained consumption growth due to substantial remittances from overseas Filipino workers (around $20 billion) and low inflation. The services sector — mainly the IT Business Process Outsourcing industry — has significantly contributed to output and employment. Strong internal demand will remain as a significant growth driver in the future. The government has successfully worked for the recent passage of critical reform laws: competition policy, liberalizing the banking system, as well as managing and improving transparency of tax incentives. It has strengthened universal health insurance and sustained its conditional cash transfer program which covers millions of poor families and has been designed to improve the education and health status of the poor. But the issue is whether the economy can sustain this record growth performance amid very challenging times. Certain headwinds could make for rough sailing. READ MORE...

ALSO: Economy grows 5.8% at a pace of 6.3% in 2015


JANUARY 28 -The skyline of Makati City, the heart of Manila's business district. Crissa Tenorio/CC BY-NC-ND
The domestic economy grew at a pace of 6.3 percent in the fourth quarter of 2015, bringing the full-year growth of 5.8 percent, the government announced Tuesday. Last year's economic expansion was slower than the 6.1-percent growth in 2014. It also fell short of the Aquino administration's target of 7 to 8 percent. The National Economic and Development Authority (NEDA) said the 2015 growth gave a six-year average of 6.2 percent, the highest since the late 1970s. The fourth quarter growth, meanwhile, was expectedly the highest quarterly growth for the year. Yet it is still slower than the 6.6 percent posted in the same period in 2014. The Philippines's growth in the past five years and trend. Trading Economics The country's growth—based on gross domestic product (GDP) or the total value of all goods and services produced—while slower than expected still outpaced most of its peers. The Philippines lagged behind Vietnam, which led Southeast Asia with a 6.68-percent growth last year due to strong exports and record foreign direct investments. China's economy, meanwhile, dipped to a 25-year low of 6.9 percent growth in 2015. Economic Planning Secretary Arsenio Balisacan, who recently resigned from the NEDA for another government post, said the Philippines has been "traversing the higher growth path, building on solid efforts by both public and private sectors." "For 2015, among the major developing countries, the Philippines [was] likely among the fastest next to India, the People's Republic of China and Vietnam," Balisacan said at a press conference. READ MORE...RELATED, Philippine aerospace industry set to take off...

ALSO: More jobs at Bataan freeport


JANUARY 31 -For last year, AFAB said the number of employees hired by registered locators and manpower agencies rose to 25,803, 29 percent higher compared to the 20,017 workers recorded in 2014. www.1bataan.com
The Authority of the Freeport Area of Bataan (AFAB) expects to generate more employment in the next few years as investors in the industrial zone continue to increase.
AFAB said the newly registered locators in the freeport are expected to create at least 4,900 jobs in the next three years. For last year, AFAB said the number of employees hired by registered locators and manpower agencies rose to 25,803, 29 percent higher compared to the 20,017 workers recorded in 2014. “The Authority of the Freeport Area of Bataan welcomed this new development. Since 2010, the administration has been working hard to bring more investors and big manufacturing corporations to the freeport,” AFAB chairman and administrator Deogracias Custodio said. “The investments pledged by the locators are felt by the people on the ground through the opening of more job opportunities. We assure the national government and the people that we will continue to work hard and bring more investments to contribute to the growth of the local economy,” Custodio added. Custodio said the employment rate in the freeport has increased as not only new companies started operating, but also as the existing locators have expanded their operations as well. READ MORE...

ALSO: BPI-led consortium pools $525 M for power project


JANUARY 28 -The new 330-megawatt (MW) super critical coal power plant is envisioned to supply power to at least seven electric cooperatives in northern Philippines for 20 years. Philstar.com/FIle
Ayala-led Bank of the Philippine Islands is spearheading a consortium of banks raising $525 million for AES Philippines to partially bankroll the construction of a power plant in Masinloc, Zambales. Reginaldo Cariaso, officer-in-charge and managing director of BPI Capital Corp., said the transaction underscores BPI’s commitment to finance and pursue projects that create a strong impact on sectors that are vital to the country’s economic growth. The new 330-megawatt (MW) super critical coal power plant is envisioned to supply power to at least seven electric cooperatives in northern Philippines for 20 years. “We are happy to enable private sector operators such as AES Philippines to play a bigger role in delivering high-quality energy installations to address the increasing demand for electricity in the country,” Cariaso said. BPI Capital acted as sole issue coordinator and one of the joint lead arrangers for the transaction. The facility is denominated in US dollars and has a tenor of 15 years, inclusive of an up to four-year grace period during construction and will be made available in fixed and floating interest rate tranches. READ MORE...

ALSO: BOC examiner commits diplomatic ‘faux pas,’ opens pouches meant for Japan Emperor’s visit


JANUARY 25 -A diplomatic faux pas has been committed at the Bureau of Customs (BOC) while the Japanese emperor and empress aren’t even here yet.
According to a report fron Manila Bulletin, a BOC examiner is in hot water after it was discovered that he opened a diplomatic pouch last month meant for Emperor Akihito and Empress Michiko’s upcoming state visit. The examiner, identified as Pompeo Manalo, opened the pouch which contained bottles of sake meant to toast the Japanese royals’ visit, official items of the Japanese Embassy and a photo album of President Benigno Aquino III and Japanese Prime Minister Shinzo Abe. The incident purportedly happened at the Pair Cargo Customs Bonded Warehouse in Pasay City. PHOTO POSTED AT KICKERDAILY.COM A serious diplomatic “faux pas” has apparently been committed by a Bureau of Customs (BOC) examiner at the Ninoy Aquino International Airport (NAIA) after he subjected to an unauthorized examination the diplomatic pouches consigned to the Japanese Embassy in Manila containing among others, the “sake” (Japanese wine) to be used for the welcome reception in honor of Their Majesties Emperor Akihito and Empress Michiko who are scheduled to arrive in the country for a five-day state visit tomorrow. The blunder, supposedly committed last month by NAIA Customs Examiner Pompeo Manalo who is assigned at the Pair Cargo Customs Bonded Warehouse in Pasay City, has prompted the office of Customs Commissioner Alberto Lina to order the NAIA-BOC District Office to undertake a probe on the said incident. A diplomatic pouch is any property identified and sealed package, pouch, bag, or other container that is used to transport official correspondence, documents, and other articles intended for official use of embassies, consulates, and the offices of public international organizations, among others. In accordance with Article 27.3 of the Vienna Convention on Diplomatic Relations (VCDR), properly designated diplomatic pouches “shall not be opened or detained.”  Under the same Convention, any search or inspection of a properly labeled diplomatic pouch constitutes a “serious breach.” In fact, international law does not even set any limits on the permissible size, weight and quantity of diplomatic pouches, it was learned.

ALSO: By Babe Romualdez - BOC: Stage 4 cancer of corruption
[One piece of good news, however, is the proposed Customs Modernization and Tariff Act (CMTA) has been approved on third and final reading at the Senate. The proposed bill will amend the existing Tariff and Customs Code that is no longer responsive to the changing needs of a modern world. Under the bill, the BOC will be brought to the 21st century with the help of modern equipment as well as information and communications technology that are in keeping with the standards set by the revised Kyoto Convention.]


JANUARY 28 -ROMUALDEZ
This latest embarrassing incident involving a Bureau of Customs examiner who opened a diplomatic pouch meant for the Embassy of Japan has renewed calls for the overhaul of the BOC.
Apologies have been made over this faux pas that the Customs bureau explained away as a “simple misunderstanding,” saying they will conduct a refresher course on how to handle diplomatic cargo. People are not happy the offending examiner is simply being given a warning and a reprimand, some say the man should have been suspended, if not fired, for not knowing his job. Despite being shown a certificate from the DFA allowing the release of the pouches, the examiner insisted on opening them, which should tell you that BOC people feel all powerful when they are inside their “turf.”  We all know the BOC is an important institution because it is a major source of revenue for the government – which also makes it a big source of corruption. By simply turning a blind eye to smuggling and drug trafficking, a Customs employee can enrich himself. The Philippines has very porous borders, which already makes it a challenge to apprehend smugglers, and the situation is exacerbated by the connivance of corrupt Customs examiners and port officials who give the green light to illicit cargo. Even if authorities (like the PDEA, the PNP or NBI) conduct operations to apprehend these smugglers, all the insiders from the BOC have to do is tip the target for the operation to go bust. Let’s face it, the BOC – which many Filipinos have renamed as the “Bureau of Corruption” – is perceived as one of the most corrupt agencies in the country, embroiled in a lot of controversies like the tanim bala/laglag bala which has given the country a black eye before the international community. This has made visitors and overseas Filipino workers paranoid to the point they now “mummify” their bags and luggage to prevent getting victimized by the laglag bala syndicates operating at the NAIA. If corruption were a disease, then the BOC would be suffering from Stage 4 cancer because corruption has become very deeply entrenched in the system to the point that amputation or surgery will no longer work. Aside from being systemic, the corruption is “systematic” with certain groups working as a team to put the squeeze on hapless brokers and businessmen. All these crooks have to do is sit on the documents and let the cargo freeze or worse, rot (if they are perishable goods and items) – until the owner has no choice but to give in to the Customs’ “tradition” – which is really a euphemism for a shakedown and the practice of “solicited bribery.”  READ MORE...


READ FULL MEDIA REPORTS HERE:

Stormy seas ahead for the Philippine economy?


Can the Philippine economy sustain record growth performance amid very challenging times? Certain headwinds could make for rough sailing. Paulo Alcazaren

MANILA, FEBRUARY 1, 2016 (PHILSTAR) By Gilbert Llanto, President of the Philippine Institute of Development Studies. | Updated January 26, 2016 -The Philippines has performed well in the past few years relative to its peers. It demonstrated great resilience to exogenous shocks that would have undone less capable economies. But will it be able to sustain its positive economic position?

There are positive signs. Revised forecasts put gross domestic product growth in 2015 between 5.7–6 percent and forecasters expect a strong rebound in the coming year. The government has maintained an official forecast of 6–7 percent. It expects higher growth in 2016, even when the current administration ends its term of office in June.

Policy reform efforts led to sound macroeconomic foundations and an improved governance framework. Both these factors encouraged investment and business activity as well as a consistent build-up of foreign exchange reserves.

Foreign exchange reserves sat at $80.6 billion at the end of November — enough to cover over 10 months of imports and payments of services and income. And international credit rating agencies have upgraded the Philippines’ credit rating thanks to policy reform.

The Philippines also sustained consumption growth due to substantial remittances from overseas Filipino workers (around $20 billion) and low inflation. The services sector — mainly the IT Business Process Outsourcing industry — has significantly contributed to output and employment. Strong internal demand will remain as a significant growth driver in the future.

The government has successfully worked for the recent passage of critical reform laws: competition policy, liberalizing the banking system, as well as managing and improving transparency of tax incentives. It has strengthened universal health insurance and sustained its conditional cash transfer program which covers millions of poor families and has been designed to improve the education and health status of the poor.

But the issue is whether the economy can sustain this record growth performance amid very challenging times. Certain headwinds could make for rough sailing.

READ MORE...

As the Philippine economy integrates more closely with the global and regional economy, external events will have a bigger impact on domestic growth prospects. Weak external demand will have negative impacts on the growth of trade and services. The Philippines had a trade deficit equivalent to $3.8 billion in October. China’s slowing growth and recession in Japan do not bode well for the economy. Weaknesses among ASEAN’s major trading partners will also have negative spillover effects on ASEAN member states like the Philippines.

Because of this, there is a great risk that trade-led growth may not be a viable option for the Philippines in the immediate future. The Philippines still suffers critical development constraints: infrastructure is inadequate and there are problems with connectivity. It does not help that government spending has been somewhat constricted by procurement processes and bureaucratic inefficiency. Populist legislators have also introduced revenue-eroding measures. The current Aquino administration created significant ‘fiscal space’ — a measure of the government’s room for policy maneuver — but this could eventually disappear, much to the regret of the new administration after the national elections in May 2016.

The Aquino administration ends on 30 June 2016 and, according to the Constitution, the current president cannot run for re-election. As in the past, there will be a peaceful and orderly transition to a new government, but the issue of succession provokes several questions. Will the next leader be as committed to policy reform and improved governance as Aquino?

Will there be policy reversals because of tremendous pressure from opportunistic politics? Will the next leadership be able to put together an able and responsible team who will stay the course and tackle the more difficult reforms in policies and institutions?

There will not be a lack of contenders in the political market who might put political expediency over difficult reform. This poses a danger to the economy because Philippine politics is already personalist and opportunistic.

Many voters don’t vote on issues but are mesmerized by personal charisma and (empty) promises made by political entrepreneurs.

The challenge to the electorate is to select a leader who will not flinch at the sight of difficult reforms. On the contrary, they should have the courage to make bold policy decisions and inspire the government machinery to implement them. The electorate needs to be better informed and educated. The Philippines’ recent growth experience was made possible by reforms in governance and policy.

This year’s success could serve as a reminder to the electorate to choose the right leaders. A rising middle class engendered by continuous growth, returning overseas Filipino workers who have experienced living in well-functioning societies, as well as better informed young voters who actively participate in social media could hopefully constitute the swing vote for a leader with the best interest of the country in mind.

Meanwhile, the current Philippine leadership must fully utilize its remaining political capital to pursue difficult reforms covering trade facilitation and regulatory frameworks. It must continue to invest in both human and physical capital that will raise productivity in the future.

Gilbert M. Llanto is the president of the Philippine Institute of Development Studies.


PHILSTAR

Economy grows 5.8% in 2015 (philstar.com) | Updated January 28, 2016 - 10:52am 9 120 googleplus0 3


The skyline of Makati City, the heart of Manila's business district. Crissa Tenorio/CC BY-NC-ND

MANILA, Philippines (UPDATED) — The domestic economy grew at a pace of 6.3 percent in the fourth quarter of 2015, bringing the full-year growth of 5.8 percent, the government announced Tuesday.

Last year's economic expansion was slower than the 6.1-percent growth in 2014. It also fell short of the Aquino administration's target of 7 to 8 percent.

The National Economic and Development Authority (NEDA) said the 2015 growth gave a six-year average of 6.2 percent, the highest since the late 1970s.

The fourth quarter growth, meanwhile, was expectedly the highest quarterly growth for the year. Yet it is still slower than the 6.6 percent posted in the same period in 2014.



The Philippines's growth in the past five years and trend. Trading Economics

The country's growth—based on gross domestic product (GDP) or the total value of all goods and services produced—while slower than expected still outpaced most of its peers.

The Philippines lagged behind Vietnam, which led Southeast Asia with a 6.68-percent growth last year due to strong exports and record foreign direct investments. China's economy, meanwhile, dipped to a 25-year low of 6.9 percent growth in 2015.

Economic Planning Secretary Arsenio Balisacan, who recently resigned from the NEDA for another government post, said the Philippines has been "traversing the higher growth path, building on solid efforts by both public and private sectors."

"For 2015, among the major developing countries, the Philippines [was] likely among the fastest next to India, the People's Republic of China and Vietnam," Balisacan said at a press conference.

READ MORE...

Despite failing below forecasts, Balisacan called the economy's performance "very encouraging."

"Ths growth is respectable, given the difficult fiscal environment, the onset of El Niño and the challenges in government spending in the first semester," he said.


The Philippines's quarterly growth. Trading Economics

The Philippine Statistics Authority said the fourth quarter GDP was driven by the services sector that grew by 7.4 percent from 5.6 percent, Industry followed as a major growth driver, decelerating to 6.8 percent from 9.1 percent.

Agriculture, meanwhile, contracted by 0.3 percent from a growth of 4.2 percent the previous year.

Services was also main driver of the full-year economy, accelerating by 6.7 percent from 5.9 percent the previous year.

Industry and the entire agriculture sectors decelerated with 6.0 percent and 0.2 percent, from 7.9 percent and 1.6 percent, respectively.

Budget Secretary Florencio Abad said late last year that the government is setting a 7.5- to 8.5-percent goal in 2016 for now.


PHILSTAR

More jobs at Bataan freeport By Richmond Mercurio (The Philippine Star) | Updated January 31, 2016 - 12:00am 0 2 googleplus0 0


For last year, AFAB said the number of employees hired by registered locators and manpower agencies rose to 25,803, 29 percent higher compared to the 20,017 workers recorded in 2014. www.1bataan.com

MANILA, Philippines – The Authority of the Freeport Area of Bataan (AFAB) expects to generate more employment in the next few years as investors in the industrial zone continue to increase.

AFAB said the newly registered locators in the freeport are expected to create at least 4,900 jobs in the next three years.

For last year, AFAB said the number of employees hired by registered locators and manpower agencies rose to 25,803, 29 percent higher compared to the 20,017 workers recorded in 2014.

“The Authority of the Freeport Area of Bataan welcomed this new development. Since 2010, the administration has been working hard to bring more investors and big manufacturing corporations to the freeport,” AFAB chairman and administrator Deogracias Custodio said.

“The investments pledged by the locators are felt by the people on the ground through the opening of more job opportunities. We assure the national government and the people that we will continue to work hard and bring more investments to contribute to the growth of the local economy,” Custodio added.

Custodio said the employment rate in the freeport has increased as not only new companies started operating, but also as the existing locators have expanded their operations as well.

READ MORE...

Aside from the newly-signed locators last year, AFAB said registered locators are currently in need of over 2,600 employees.

Among the locators hiring are Mitsumi Phils. Inc., Perpetual Prime Mfg. Inc., Essilor Mfg. Phils. Inc. and Dong-In Group of Companies’ Mountaineering Instruments Corp. and Edge Soft Good Solutions Inc.

AFAB said there are 114 registered locators in the freeport as of end December last year.

The enterprises include Korean, Taiwanese, Chinese, American, Japanese, British, Bahrainese, French and German businesses.

The Freeport Area of Bataan has been the country’s fastest growing freeport from 2012 to 2014.

It is seen to be an emerging fashion manufacturing hub of the Philippines as it has a cluster of companies producing high-end brands of garments, apparel, shoes and accessories.

-----------------------------------------

RELATED FROM PHILSTAR

Philippine aero industry set to take off By Richmond S. Mercurio (The Philippine Star) | Updated January 14, 2016 - 12:00am 1 1019 googleplus0 0


As of the third quarter of last year, the country's revenues from exports of aerospace products already reached $309 million. File photo

MANILA, Philippines - The Philippine aerospace industry is seen to post revenues of up to $1.5 billion in the next 10 years.

From only $5.9 million in 2008, the sector’s revenues surged to $226 million in 2014.

As of the third quarter of last year, revenues from exports of aerospace products already reached $309 million.

The Department of Trade and Industry (DTI) said Philippine key industry players composed of aviation parts and components manufacturers, maintenance, repair and overhaul providers, airlines, and aviation training organizations, would join the Singapore Airshow next month.

The Singapore Airshow is a premier event for the aerospace manufacturing and support industries within the Association of Southeast Asian Nations (ASEAN).

The local industries’ participation in the event is organized by the Board of Investments, the industry development and investments promotion arm of the DTI, in coordination with the Foreign Trade Service Corps and the Civil Aviation Authority of the Philippines.

READ MORE...

“Our participation in the Singapore Airshow affirms the confidence and competitiveness of the local aerospace manufacturing and aviation industries. These industries have charted significant growth and we see these maturing industries ready to compete in the global market,” Trade Undersecretary for Industry Development Ceferino Rodolfo said.

Rodolfo said the country’s participation in the Singapore Airshow implements one of the strategic initiatives outlined in the Philippine Aerospace Industry Roadmap.

“The growth of the aerospace and aviation industry will mean more export earnings for the country and more quality jobs for Filipinos particularly for the country’s graduates of aviation-related courses. We will take advantage of the airshow, and others of this nature, as an opportunity to create traction for our positioning to be the aerospace manufacturing hub for ASEAN, ” he said.

As of the third quarter of 2015, revenues from exports aerospace products already reached $309 million.

Meanwhile, the DTI noted the growing number of graduates of aviation-related programs in the country based on figures culled from the Commission on Higher Education.


PHILSTAR

BPI-led consortium pools $525 M for power project By Lawrence Agcaoili (The Philippine Star) | Updated January 28, 2016 - 12:00am


The new 330-megawatt (MW) super critical coal power plant is envisioned to supply power to at least seven electric cooperatives in northern Philippines for 20 years. Philstar.com/FIle

MANILA, Philippines – Ayala-led Bank of the Philippine Islands is spearheading a consortium of banks raising $525 million for AES Philippines to partially bankroll the construction of a power plant in Masinloc, Zambales.

Reginaldo Cariaso, officer-in-charge and managing director of BPI Capital Corp., said the transaction underscores BPI’s commitment to finance and pursue projects that create a strong impact on sectors that are vital to the country’s economic growth.

The new 330-megawatt (MW) super critical coal power plant is envisioned to supply power to at least seven electric cooperatives in northern Philippines for 20 years.

“We are happy to enable private sector operators such as AES Philippines to play a bigger role in delivering high-quality energy installations to address the increasing demand for electricity in the country,” Cariaso said.

BPI Capital acted as sole issue coordinator and one of the joint lead arrangers for the transaction.

The facility is denominated in US dollars and has a tenor of 15 years, inclusive of an up to four-year grace period during construction and will be made available in fixed and floating interest rate tranches.

READ MORE...

The fixed-interest rate tranche will be subject to a re-pricing on the eighth year anniversary to set the interest rate for the remaining seven years.

The other joint lead arrangers for the fund raising activity included SB Capital Investment Corp., RCBC Capital Corp., and PNB Capital Corp.

This facility followed a $500-million refinancing in 2013, also provided entirely by local banks, in support of the rehabilitation and modernization of the original 600-MW facility in Masinloc, Zambales.

American global power developer and operator at AES Corp. owns 50.55 percent of AES Philippines. Other shareholders are independent power producer Electricity Generating Public Co. Ltd. (EGCO) Group of Thailand with 41.35 percent and International Finance Corp. (IFC) with 8.1 percent.

The existing 600-MW power plant in Zambales is one of the largest base-load clean-coal power plants in the Philippines.

The partners intend to use the combined Masinloc platform as their vehicle for growth in the Philippines. — With Ted Torres


MANILA BULLETIN

BOC examiner commits diplomatic ‘faux pas,’ opens pouches meant for Japan Emperor’s visit by Genalyn D. Kabiling and Roy C. Mabasa January 25, 2016


A diplomatic faux pas has been committed at the Bureau of Customs (BOC) while the Japanese emperor and empress aren’t even here yet.
According to a report fron Manila Bulletin, a BOC examiner is in hot water after it was discovered that he opened a diplomatic pouch last month meant for Emperor Akihito and Empress Michiko’s upcoming state visit. The examiner, identified as Pompeo Manalo, opened the pouch which contained bottles of sake meant to toast the Japanese royals’ visit, official items of the Japanese Embassy and a photo album of President Benigno Aquino III and Japanese Prime Minister Shinzo Abe. The incident purportedly happened at the Pair Cargo Customs Bonded Warehouse in Pasay City. PHOTO POSTED AT KICKERDAILY.COM

A serious diplomatic “faux pas” has apparently been committed by a Bureau of Customs (BOC) examiner at the Ninoy Aquino International Airport (NAIA) after he subjected to an unauthorized examination the diplomatic pouches consigned to the Japanese Embassy in Manila containing among others, the “sake” (Japanese wine) to be used for the welcome reception in honor of Their Majesties Emperor Akihito and Empress Michiko who are scheduled to arrive in the country for a five-day state visit tomorrow.

The blunder, supposedly committed last month by NAIA Customs Examiner Pompeo Manalo who is assigned at the Pair Cargo Customs Bonded Warehouse in Pasay City, has prompted the office of Customs Commissioner Alberto Lina to order the NAIA-BOC District Office to undertake a probe on the said incident.

A diplomatic pouch is any property identified and sealed package, pouch, bag, or other container that is used to transport official correspondence, documents, and other articles intended for official use of embassies, consulates, and the offices of public international organizations, among others.

In accordance with Article 27.3 of the Vienna Convention on Diplomatic Relations (VCDR), properly designated diplomatic pouches “shall not be opened or detained.”

Under the same Convention, any search or inspection of a properly labeled diplomatic pouch constitutes a “serious breach.” In fact, international law does not even set any limits on the permissible size, weight and quantity of diplomatic pouches, it was learned.

READ MORE...

In the United States, the standard practice is that properly designated and handled diplomatic pouches, either physically or electronically and considers it a “serious breach” of the clear obligations of the VCDR for another country to do so, according to the website of the US State Department

Aside from the bottles of sake, which will be used at a reception to be hosted by the Japanese Ambassador to Manila in honor of Emperor Akihito and Empress Michiko on the evening of January 28, the said diplomatic pouches also reportedly contained several official items of the Japanese Embassy and a photo album collection of President Benigno Aquino III and Japanese Prime Minister Shinzo Abe.

It was not known if the Japanese Embassy has lodged a formal protest regarding the incident but a well-placed BOC source said the Embassy was “very disappointed” about the unwarranted examination of their cargo.


Alberto D. Lina, BOC Commissioner

This sentiment was reportedly expressed in a text message sent to the office of Commissioner Lina.

“This is the first time that it happened to them so the Embassy was very disappointed,” a source at the Customs told the Manila Bulletin.

Sources said a staff at the Japanese Embassy who was present during the incident reportedly tried to dissuade Manalo from opening the pouches as they were already covered by a certificate from the Department of Foreign Affairs (DFA) and other relevant documentation necessitated for the release.

According to DFA Spokesperson Assistant Secretary Charles Jose, aside from the DFA certificate, the other requirement needed for a cargo to be designated as a diplomatic pouch is a Customs clearance.

When asked by his superiors at the BOC-NAIA about the incident, Manalo reportedly claimed that he was merely acting on orders of his immediate boss Emily Balatbat, chief of the BOC Composite Unit at the Pair Cargo.

However, a Customs functionary who is privy to the incident dismissed Manalo’s claim that he merely acted on orders of his superiors. “Customs examiners and appraisers are aware of the standard procedure in handling diplomatic pouches,” the source explained.

The same source insisted that aside from its diplomatic nature, no examination is warranted for that particular cargo since “there was no prior alert, no extraordinary event or reason to justify the examination.”

As an offshoot, Lina ordered Balatbat to explain in writing as to how and why the embarrassing incident happened.

It was learned that the diplomatic pouch was later released.

HISTORIC VISIT

The Philippine government is looking forward to the historic five-day state visit of Japanese Emperor Akihito and Empress Michiko to the country this week.

Japan is considered one of the country’s steadfast partners and friends given its contributions to development and the Mindanao peace process, among others, according to Presidential Communications Operations Secretary Herminio Coloma Jr.

“President Aquino will lead the Filipino government and people in welcoming Their Majesties Emperor Akihito and Empress Michiko of Japan as they commence their visit to the Philippines on Tuesday, 26 January,” Coloma said.

The state visit of the royal couple from January 26 to 30 coincides with the 60th anniversary of the establishment of diplomatic relations between Japan and the Philippines this year, Coloma said.

“President Aquino has acknowledged that in Japan and its people ‘we have found steadfast partners and friends in the truest sense of the word’ as concretely manifested by its being the largest contributor of official development assistance (ODA) to the Philippines,” he said.

Coloma also cited that Japan is also one of the leading international advocates of the peace process in Mindanao.

“Moreover, Japan has provided significant assistance to the Philippines in terms of improving urban transportation and in providing relief to calamity victims,” he added.

Coloma also shared President Aquino’s personal encounter with the Emperor Akihito’s father, the late Emperor Showa.


Emperor Hirohito (Shōwa) welcomes Pres.Corazon Aquino at the Imperial Palace in Tokyo in 1986.

“The President recalls that when he accompanied his mother, then President Aquino, during her visit to Japan in 1986, Emperor Akihito’s father, the late Emperor Showa, even conversed with him and advised him to take care of his parents,” he said.

Japan, according to Aquino, was also one of the countries that provided robust support to the Philippines’ newly reclaimed democracy 30 years ago.

It will be the first official visit by a Japanese Emperor to the Philippines. The Emperor and Empress visited Manila in 1962 when they were still Crown Prince and Crown Princess.

PEACE PARADE


Relatives of Japanese Imperial Forces who died in the Philippines during WWII offer prayers at the Japanese Memorial Garden, a Japanese war memorial, after visiting Japan's Emperor Akihito and Empress Michiko paid homage in ceremony at Cavinti township, Laguna province southeast of Manila, Philippines Friday, Jan. 29, 2016. (AP Photo/Bullit Marquez)

Emperor Akihito travels to the Philippines this week to visit World War II memorials, his latest pacifist pilgrimage which appears increasingly at odds with the government’s rightward drift.

Akihito, 82, has made honoring Japanese and non-Japanese who died in the conflict a touchstone of his near three-decade reign – known as Heisei, or “achieving peace” – and now in its twilight.

Prime Minister Shinzo Abe, meanwhile, wants to revise Japan’s war-renouncing “peace constitution”, seeing it as an embarrassing remnant of its WWII defeat and occupation by the United States.

In the Philippines, which saw some of the war’s fiercest fighting, Akihito and Empress Michiko will visit the national Heroes’ Cemetery and a memorial for Japanese war dead during a five day visit starting Tuesday.

“The emperor has been very consistent with the fact that Japan is apologetic about their aggression,” said Richard Javad Heydarian, a political science professor at De La Salle University in Manila.

Such contrition, decades of Japanese economic aid and the Philippines’ search for allies in a maritime dispute with increasingly powerful China have made Abe’s nationalist lurch – which includes strengthening his military — palatable in Manila.


PHILSTAR

BOC: Stage 4 cancer of corruption SPY BITS By Babe G. Romualdez (The Philippine Star) | Updated January 28, 2016 - 12:00am


ROMUALDEZ

This latest embarrassing incident involving a Bureau of Customs examiner who opened a diplomatic pouch meant for the Embassy of Japan has renewed calls for the overhaul of the BOC.

Apologies have been made over this faux pas that the Customs bureau explained away as a “simple misunderstanding,” saying they will conduct a refresher course on how to handle diplomatic cargo. People are not happy the offending examiner is simply being given a warning and a reprimand, some say the man should have been suspended, if not fired, for not knowing his job.

Despite being shown a certificate from the DFA allowing the release of the pouches, the examiner insisted on opening them, which should tell you that BOC people feel all powerful when they are inside their “turf.”

We all know the BOC is an important institution because it is a major source of revenue for the government – which also makes it a big source of corruption.

By simply turning a blind eye to smuggling and drug trafficking, a Customs employee can enrich himself. The Philippines has very porous borders, which already makes it a challenge to apprehend smugglers, and the situation is exacerbated by the connivance of corrupt Customs examiners and port officials who give the green light to illicit cargo.

Even if authorities (like the PDEA, the PNP or NBI) conduct operations to apprehend these smugglers, all the insiders from the BOC have to do is tip the target for the operation to go bust.

Let’s face it, the BOC – which many Filipinos have renamed as the “Bureau of Corruption” – is perceived as one of the most corrupt agencies in the country, embroiled in a lot of controversies like the tanim bala/laglag bala which has given the country a black eye before the international community.

This has made visitors and overseas Filipino workers paranoid to the point they now “mummify” their bags and luggage to prevent getting victimized by the laglag bala syndicates operating at the NAIA.

If corruption were a disease, then the BOC would be suffering from Stage 4 cancer because corruption has become very deeply entrenched in the system to the point that amputation or surgery will no longer work.

Aside from being systemic, the corruption is “systematic” with certain groups working as a team to put the squeeze on hapless brokers and businessmen.

All these crooks have to do is sit on the documents and let the cargo freeze or worse, rot (if they are perishable goods and items) – until the owner has no choice but to give in to the Customs’ “tradition” – which is really a euphemism for a shakedown and the practice of “solicited bribery.”

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No wonder the Customs bureau keeps missing its target (five straight years in a row now) because the collections go in the pockets of these corrupt employees instead of government coffers. Imagine, trillions of pesos have been lost over the years due to technical smuggling.

The fact is, businessmen have been urging the President to overhaul the BOC and put in an oversight committee, with representatives from the private sector, to make it more transparent.

Others have suggested a top-to-bottom revamp to remove the collectors and examiners from their comfort zones and assign them elsewhere, but you can bet your bottom dollar that sooner than soon, the corrupt will find a way to monetize their new assignments.

For the longest time, many have proposed the privatization of the BOC to give it a clean slate.

No matter how straight the Customs chief is, his job will be made difficult by defiant old timers who we’re told deliberately underperform as far as collection is concerned to put the BOC chief under a negative light. Even if you put a clean person on top, weeding out corruption is still very challenging if the system is rotten at the core.

However, privatizing the BOC will make it easier to professionalize the operations and put the right people for the right job because meritocracy will be practiced instead of the padrino system where influential individuals – including politicians – have a say on who gets appointed to what position and where.


2015 PHOTO: PH Senate vows to approve Customs modernization act early next year; Leveraging a Global Compliance Network. SOURCE: PORTS OF CALL ASIA BLOG POSTED BY WEB EDITOR DECEMBER 21, 2015.

One piece of good news, however, is the proposed Customs Modernization and Tariff Act (CMTA) has been approved on third and final reading at the Senate.

The proposed bill will amend the existing Tariff and Customs Code that is no longer responsive to the changing needs of a modern world. Under the bill, the BOC will be brought to the 21st century with the help of modern equipment as well as information and communications technology that are in keeping with the standards set by the revised Kyoto Convention.

According to insiders, people can already make money just by putting in wrong entries for the quantity, weight or quality of the goods that pass through Customs that will result in lesser duties – with the difference pocketed by the crooks.

The proposed law will upgrade the processing system into an electronic one so that goods would be cleared faster and more efficiently to avoid the long wait especially during peak seasons like Christmas.

For sure, Filipinos especially the OFWs, will be happy to note there is also a proposal to raise the tax-exempt value of balikbayan boxes to P150,000 from the current P10,000, while donation and relief goods will be duty free and tax free during calamities. The latter is really important because we have heard so many stories about people wanting to donate clothes, food, medicines and even medical equipment but they could not afford the taxes slapped on the items so they end up not sending anything to victims of disasters and calamities.


Chief News Editor: Sol Jose Vanzi

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