Olongapo City . . . SubicBay . . . Zambales News

The Department of Labor and Employment Tuesday clarified that the country's private sector is not covered by President Gloria Arroyo's order mandating a four-day work week for all government departments, bureaus, agencies, and government-owned and controlled corporations (GOCCs).

Nonetheless, Labor chief Patricia Sto. Tomas said the exclusion of the private sector from the President's order does not preclude employers in the sector from utilizing the same scheme in line with energy conservation, and all existing labor laws.

Sto. Tomas said the President's administrative order, which was signed on her behalf by Executive Secretary Eduardo Ermita, noted the need to cushion the impact of the oil price increases on the government without prejudice to the maintenance and improvement of public services.

Pres. Arroyo had directed all departments, bureaus, offices, and other agencies of the Executive Branch of the government to adopt the four-day work week on the months of April and May.

Her order shall continue to be in force starting April until May, unless otherwise extended.

Accordingly, on these two months, all employees of the agencies covered shall report for work from Monday to Thursday of each week, except on holidays, and render services of 10 hours a day, exclusive of meal periods.

The order does not cover front line agencies involved in providing health, safety, security, protection, emergency, and other services that need to be provided on a continuous basis, Sto. Tomas said

87-year-old American sex tourist sentenced to 20 years jail

LOS ANGELES (AFP) - An 87-year-old American sex tourist who was arrested as he set off to have sex with two pre-teen girls in the Philippines was sentenced Monday to 20 years in jail.

Wheelchair-bound widower and grandfather John Seljan had faced up to 180 years in prison for the six counts on which he was convicted in November, prosecutors said earlier.

But US federal Judge Alicemarie Stotler said she had to take into account the reality that the minimum sentence she could impose -- 15 to 20 years -- would put Seljan behind bars for the rest of his life.

"When you're 87 years old, it is tantamount to a life sentence," Stotler told the court in Santa Ana, in California's Orange County.

Seljan, a former country singer, was the first person to be convicted at trial of violating the 2003 Protect Act that punishes US sex tourists irrespective of where the crime occurred.

He was arrested at Los Angeles International Airport in October 2003 as he prepared to board a flight to the Philippines, where prosecutors said he was planning to have sex with two girls aged nine and 12.

The suspect was armed with 45 kilograms (100 pounds) of chocolates, sex aids, pornographic pictures and sexually explicit letters written to the two young girls.

Many of the pictures show the old man with small girls who were often naked. Seljan is sometimes naked or has his underwear pulled down, while his letters to the girls are rife with references to their "love-making."

Seljan, who urged young girls to call him "Uncle Johnny," told FBI agents who arrested him that he had been "educating" young Filipinas for 20 years but did not know that his actions were illegal, his trial court had heard.

But the judge was sceptical: "To everyone else it is just so very difficult, if not downright hideous, to understand what Mr Seljan did, (and) to understand that he could really think that this was not wrong," she said.

Prosecutors say Seljan, who authorities began investigating in November 2002 after intercepting one of his letters, also had maps to the girls' homes in his luggage.

The conviction and 20-year sentence highlights a US crackdown on its citizens travelling abroad for sex tourism.

"The PROTECT Act criminalized conduct by Americans who travel abroad to molest children in foreign countries," said Assistant US Attorney Richard Lee said after the sentencing.

Seljan "is one example of an individual trying to do just that and I think his 20-year sentence reflects the seriousness of how Congress views the problem and what they're trying to do about it," he said.

Seljan was convicted in 1977 of first-degree sexual assault on an 11-year-old in the northeastern US state of Wisconsin.

Tuesday, March 29, 2005

4-day week saves P114M

The government expects to save some P144 million when its offices carry out the four-day workweek schedule on April 4.

Acting Budget Secretary Mario Relampagos said on Monday that the P144 million represents 10 percent of the government’s 2005 budget for electricity, water and fuel consumption.

Relampagos said the four-day schedule will take effect until May, but if it is successful, he will recommend its extension to President Arroyo.

Under the schedule, state employees will work 10 hours daily from Monday to Thursday.

But 30 percent, or 420,000, of 1.4 million state workers will not be covered by the new schedule, Relampagos said. Exempted are the military, police, firemen, Coast Guard, hospital and health services, emergency and calamity services, and the Bureaus of Customs and of Internal Revenue.

Officials from the energy and budget departments and the Office of the Executive Secretary met Monday to discuss the implementing rules of the reduced workweek.

Energy Secretary Raphael Lotilla and Relampagos said the salary of daily wage earners will not be affected by the new schedule.

“They will continue to be paid on the basis of a five-day workweek, so they do not lose their pay for the fifth day as long as they are able to render 10 hours of work a day for the rest of the four days,” Relampagos said.

The government urged private companies to come up with their own energy-saving measures.

Energy Undersecretary Peter Anthony A. Abaya said the shortened workweek will be carried out from April to May, when electricity consumption tends to rise because of the increased use of air conditioners, electric fans and other cooling appliances and devices.

“We also expect more savings through reduced traffic congestion due to one day-off and off-peak driving hours on regular days,” Abaya said.

Government employees are also expected to save an average of around P40 a day, he added.

Business groups supported the four-day workweek, saying the bill will bring relief to employers and workers alike.

In an interview Rene Soriano, president of the Employers’ Confederation of the Philippines, said the modified work schedule, besides reducing power use, will also result in other savings.

Workers, he said, will save on weekly transportation cost since they will be required to go to work for fewer days, but on longer work schedules.

They will also spend less for their personal allowance, which will include meals and other miscellaneous spending.

Sergio Ortiz-Luis of the Philippine Chamber of Commerce and Industry said the reduced workweek will also allow the government to save on other utilities.

Ortiz-Luis said a similar proposal was raised in 2004 by the private sector.

He said private companies, especially those in the electronics and semiconductor sectors, may also adopt a similar work schedule to cut expenses.

Ortiz-Luis said start-ups for electronics and semiconductors are very costly and doing it a day less would also give companies enough savings.

Soriano agreed with Ortiz-Luis that the private sector may adopt the four-day workweek.

He cautioned that amendments in the Labor Code must be made to allow more companies to adopt the shorter workweek.

Soriano said some provisions in the Labor Code specify that workers be paid for overtime if they exceed the normal 8-hour-a-day schedule.

He said the provisions should be amended to allow companies to offset the exceeding working hours, without having to pay overtime rates.

The Manila Electric Co. reminded consumers to use electricity wisely during the summer months.

Meralco said simple but often neglected energy saving tips are a big help in lowering electricity use most especially in households.

Tips such as using compact fluorescent lights instead of incandescent bulbs, doing the ironing at one time and opening refrigerators only when needed will help a household save electricity, Meralco said in a statement.

Appliances operate more efficiently and use less energy when they are in good working order

Transport strike grips Central Luzon

CITY OF SAN FERNANDO- The Samahan ng Tsuper at Operator sa Pilipinas (STOP) Monday said it crippled public transportation services in four of seven Central Luzon provinces when its members stopped plying their routes to protest the 500-percent increase in toll rates at the expressway.

Tom Talavera, STOP spokesperson, said the strike paralyzed 90 percent of the routes in Pampanga, 95 percent in Bataan, 60 percent in Zambales and 50 percent in Tarlac.

Jeepneys and Tamaraw FX vans also stopped plying their routes along the North Luzon Expressway (NLEx), he said.

Some 4,000 tricycle drivers in Mariveles, Bataan, launched a sympathy strike, Talavera said.

Picket

Some 500 protesters, led by the Alyansa ng Mamamayan at Transport Sector Laban sa NLEx (Aklas), picketed the San Fernando gates of the NLEx from 9 a.m. to 11 a.m.

Some 200 drivers who protested the 500-percent increase in rates at the 84-km highway, also marched from the University of Philippines-Diliman to the Toll Regulatory Board office in Quezon City to demand a rollback, Inquirer reports said.

A plan to file before the Supreme Court, a petition nullifying the contract of the Manila North Tollways Corp. (MNTC) to operate the NLEx for 30 years has been postponed, said Aurora Broquil, spokesperson of the Kilusan para sa Pambansang Demokrasya.

Broquil said lawyers were still finalizing the complaint that would focus on the supposed transfer of franchise to the MNTC from the state-owned Philippine National Construction Corp.

Police version

Chief Supt. Rowland Albano, Central Luzon police director, however, said the transport strike was a flop since it failed to affect most parts of the region.

Albano said the province most affected was Bataan.

Bataan Gov. Enrique Garcia suspended work in government offices and classes at all levels throughout the province.

Members of the Kapisanan ng mga Sasakyan sa Bataan (Kasakbayan) led the Bataan strike.

But at the Bataan Economic Zone, only a few factories were affected by the transport strike since many companies sent vehicles to fetch their employees in Balanga City and Orion and Limay towns.

Stranded commuters got free rides in trucks and buses fielded by the police, he said.

In Pampanga, work at government offices was suspended at noon Monday due to the strike

Monday, March 28, 2005

Palace mulls new anti-smuggling body

Malacañan on Sunday said it will study the proposal of Sen. Mar Roxas II to create an anti-smuggling superbody to determine whether it is needed to step up the fight against smugglers.

Palace Communications Director Silvestre Afable Jr. said the intention behind the proposal seems commendable but Malacañan will await for his "concrete recommendations" before deciding on the matter.

Afable said there are existing special bodies against smuggling, which have resulted in higher tax collection, "but if the sense of Sen. Roxas is we need a stronger anti-smuggling campaign with the creation of this task force, the government is very willing to consider this."

"We have not seen the scope or membership of the task force proposed by Sen. Roxas and if there are concrete recommendations as to membership, then it will be considered by the government," Afable said

He said Malacañan will also determine whether the creation of such a body would be "feasible" especially now that the government is bent on strengthening its anti-smuggling campaign.

Roxas, chairman of the Senate Committee on Economic Affairs, filed Senate Bill 1969 seeking to create an Antismuggling Commission composed of representatives of nine government agencies that would spearhead the investigation and prosecution of smuggling cases.

Roxas said the proposed commission is envisioned as a "potent and rigid enforcement alliance that shall proactively seek out and preemptively wear down big-time smugglers."

The body in charge of coordinating the government’s anti-smuggling drive is the Task Force Against Smuggling headed by Interior Secretary Angelo Reyes.

Reyes said the implementation of Republic Act 9280, otherwise known as the Customs Brokers Act, starting Monday will boost the anti-smuggling drive of the government.

Reyes said the enforcement of the new law would rid the Bureau of Customs of dishonest brokers who connive with importers in cheating the government of taxes through smuggling or misclassification or under-declaration of imported goods.

The implementation of the Customs Brokers Act was discussed during a meeting of the Cabinet Oversight Committee on Anti-Smuggling (COCAS) presided by Secretary Reyes last week.

During the meeting, newly-appointed Customs Commissioner Alberto Lina and lawyer Araceli Habaradas of the Department of Finance told Reyes that the new law would professionalize the practice of brokerage. It would also result in the purging of brokers who have been found conniving with unscrupulous importers in acts of smuggling or under-valuation or misclassification of imports.

Reyes told reporters that under the new law, brokers would have to sign import documents under oath, thus making them criminally liable for any false statements or misdeclarations. Reyes said the government has been losing P50 billion annually owing to pure and technical smuggling.

RA 9280 would also enable the government to close down and penalize customs bonded warehouses that are used for smuggling and also purge importers who have violated customs rules and regulations. It will also allow the government to quickly dispose of seized cargo through public auction to augment the coffers of government and prevent the confiscated items from getting spoiled while in storage.

RA 9280 was signed into law by President Arroyo in July 2003, but its implementation was deferred because some brokers expressed opposition to the implementing rules and regulations. The IRR was finalized by the Professional Regulation Commission and published only on March 15. The law becomes effective 15 days after publication.

President Arroyo created the TFAS last November 16 through Executive Order No. 385 to intensify the drive against smuggling

Thursday, March 24, 2005

Who are mangling the English language?

Did you think that Pinoys were the only folks mangling the English language?---Here are some signs and notices written in English that were discovered throughout the world:

In a Tokyo Hotel:
Is forbidden to steal hotel towels please. If you are not a person to do such a thing is please not to read notice.
In a Bucharest hotel lobby:
The lift is being fixed for the next day. During that time we regret that you will be unbearable.
In a Belgrade hotel elevator:
To move the cabin, push button for wishing floor. If the cabin should enter more persons, each one should press a number of wishing floor.
Driving is then going alphabetically by national order.
In a Paris hotel elevator:
Please leave your values at the front desk.
In a hotel in Athens:
Visitors are expected to complain at the office between the hours of 9 and 11 A.M. daily.
In a Yugoslavian hotel:
The flattening of underwear with pleasure is the job of the chambermaid.
In a Japanese hotel:
You are invited to take advantage of the chambermaid. (Tayo na sa Japan!!!)
In the lobby of a Moscow hotel across from Russian Orthodox monastery:
You are welcome to visit the cemetery where famous Russian and Soviet composers, artists, and writers are buried daily except Thursday.
In an Austrian hotel catering to skiers:
Not to perambulate the corridors during the hours of repose in the boots of ascension.
On the menu of a Swiss restaurant:
Our wines leave you nothing to hope for.
On the menu of a Polish hotel:
Salad a firm's own make; limpid red beet soup with cheesy dumplings in the form of a finger; roasted duck let loose; beef rashers beaten up in the country people's fashion.
In a Bangkok dry cleaners:
Drop your trousers here for best results.
In a Rhodes (Greece) tailor shop:
Order your summers suit. Because is big rush we will execute customers in strict rotation.
>From the Soviet Weekly:
There will be a Moscow Exhibition of Arts by 150,000 Soviet Republic painters and sculptors. These were executed over the past two years.
A sign posted in Germany's Black Forest:
It is strictly forbidden on our black forest camping site that people of different sex, for instance, men and women, live together in one tent unless they are married with each other for that purpose.
In a Zurich hotel:
Because of the impropriety of entertaining guests of the opposite sex in the bedroom, it is suggested that the lobby be used for this purpose.
In an advertisement by a Hong Kong dentist:
Teeth extracted by the latest Methodists.
In a Rome laundry:
Ladies, leave your clothes here and spend the afternoon having a good time.
In a Czechoslovakian tourist agency:
Take one of our horse-driven city tours - we guarantee no miscarriages.
Advertisement for donkey rides in Thailand:
Would you like to ride on your own ass?
In a Swiss mountain inn:
Special today -- no ice cream.
In a Bangkok temple:
It is forbidden to enter a woman even a foreigner if dressed as a man.
In a Tokyo bar:
Special cocktails for the ladies with nuts.
In a Copenhagen airline ticket office:
We take your bags and send them in all directions. (hindi kaya sa NAIA
ito?)
In a Norwegian cocktail lounge:
Ladies are requested not to have children in the bar.
In a Budapest zoo:
Please do not feed the animals. If you have any suitable food, give it to the guard on duty.
In the office of a Roman doctor:
Specialist in women and other diseases.
In an Acapulco hotel:
The manager has personally passed all the water served here.
>From a Japanese information booklet about using a hotel air conditioner:
Cooler and Heater: If you want just condition of warm in your room, please control yourself.
>From a brochure of a car rental firm in Tokyo:
When passenger of foot heave in sight, tootle the horn. Trumpet him melodiously at first, but if he still obstacles your passage then tootle him with vigor.
Two signs from a Majorcan (Spain) shop entrance:

English well speaking
Here speeching American.

Wednesday, March 23, 2005

Exporting labor through BPO

By Edgardo B. Espiritu

It’s graduation time once again. We put such a great value on education that this event usually represents the fulfillment of a big part of Filipino parents’ dreams for their children.

Graduations bring pride, happiness and hope to Filipino families. But the sobering reality after the graduation rites is that thousands of new entrants to the labor force will have to find jobs. And the perennial situation is that there are too few jobs to go around. Many of these young hopefuls end up as part of the unemployment statistics.

In the current situation in the Philippines, one sector that is counted on to provide jobs to new graduates, and others who have been scouring the job market for a longer period, is the business process outsourcing or BPO sector. This includes the most familiar type of BPO operation, the call centers, as well as a range of other activities, such as medical transcriptions, accounting and other back office operations, and higher value-added ones, such as animation and other creative services and software development. These services are provided either by local firms under contracts with the outsourcing global firms or by foreign firms that either use the outsourced services directly or also for sale to global firms. These BPO operations usually pay relatively higher salaries than other industries, and this is why job seekers, including graduates from the best schools, vie for the still limited number of jobs that they offer. But BPO operations definitely remain a growth area in the Philippine economy as the process of global economic integration proceeds.

I have already tried to show in a previous piece under this column that international outsourcing basically constitutes trade in services. It allows foreign firms to provide certain services to consumers or other producers in their home markets using our workers. Outsourcing is just a natural consequence of firms seeking greater efficiencies and bigger profits. It is an integral part of the global value chain systems that have been made possible by new technology and freer markets, the same forces behind the overall trend of globalization.

BPO operations in effect enable us to export our manpower services without our workers having to leave our shores. It is also changing the nature and structure of our labor exports. Before, and still currently although to a lesser extent, exporting workers at the lower end of the skills spectrum involved construction workers and machine operators to the Middle East. Now with BPO, we are able to sell the services of our accountants, programmers, other IT specialists, and so on in the world labor market while they remain in the country.

Moreover, like free trade in general, outsourcing brings the benefits of increased specialization and bigger markets, such as greater efficiencies and the so-called economies of scale and scope, increased employment, and lower prices of goods and services. The benefits accrue not only to the developing countries that provide the labor services but also to the developed countries that purchase them.

But just like free trade in general, outsourcing also gives rise to controversial political economy issues. Most of these revolve around the same protectionist opposition to free trade. Outsourcing is looked at as an increasingly important cause of lost jobs in developed countries. In fact, the protectionist lobbies seem to be scoring some points recently. For instance, it has been reported that in the US and Australia, new laws are currently being initiated to limit outsourcing activities by firms with government contracts.

Further, these protectionist views seem to ring truer in the case of outsourcing than in the case of the usual trade in goods. In the latter case, particularly as regards simple manufactured goods such as those currently massively imported by developed countries from China, the jobs affected are lower skilled ones, which, after all, the developed countries have long clearly lost any advantage in. But in the case of outsourcing, the jobs being lost are middle or higher skilled ones that still have a significant bearing in developed countries’ job markets.

But fighting this tide of global outsourcing activity seems to be a futile effort in the long term. This trend is a product of strong economic forces. Firms will always look for ways for reducing costs, improving efficiency, and increasing their profits. The developed countries from where outsourcing activity emanates are therefore sure to benefit from these advantages that are achieved by its firms, and in addition would realize second-round benefits from business expansion and increased trade with the labor services-exporting countries. Addressing the political and labor issues that outsourcing engenders, therefore, rests largely on the developed country governments, on how well they can redistribute the gains from this activity and re-tool and re-deploy the affected workers.

For the services exporting countries like the Philippines, on the other hand, the benefits seem to be more clear-cut. BPO operations in the country provides us the opportunity to export our labor without the negative social repercussions of actually deploying workers overseas, such as separated families and exposure to grave physical, emotional, moral and other types of risks. Further, since the skills required by these operations are often also those normally needed in rapidly developing economies, such activities do not create artificial and externally determined changes in the skills and career structure of our labor force. Thus, outsourcing does not, for instance lead to an oversupply of nurses when the external demand for such specific types of workers suddenly dries up.

With such clear and substantial benefits, we should therefore aim to attract as much BPO activities as possible to maximize our country’s potential gains from this global trend.

Gov’t borrowings overshoot 128%

The government stepped up the pace of its borrowings in the first two months, accumulating so much debt this surpassed the first-quarter quota by 128 percent to P99.7 billion instead of only P77.65 billion as planned.

This performance highlighted the fiscal concerns of such institutions as the International Monetary Fund (IMF) or the international rating agencies that would rather the government stepped up its revenue generation instead.

There is fear the weak revenue stream would aggravate further an already imperiled public sector and launch a cycle of borrowings that could bring the entire economy to perdition just a few short years from now.

The IMF wanted a front-loading or the stepping up of the fiscal consolidation program of government “so as to send a strong signal to markets about (its) commitment to tackling the fiscal problem” and bring this about, for instance, by raising the value-added tax (VAT) rate.

This year's two-month borrowings of P99.7 billion was 320 percent higher than year ago borrowings of only P23.7 billion.

Finance Secretary Cesar Purisima was forced to borrow this much money from foreign and local lenders because the main collection arms had revenues of only P113.149 billion even as public spending accelerated to P153.202 billion.

This compared with last year's spending totaling only P132.311 billion.

As a result, the government posted a P40.053-billion budget shortfall in the first two months, almost 16 percent higher than a year ago.

Purisima acknowledged financing goals were exceeded for the period on a net basis.

He said foreign borrowings for the period totaled P69.2 billion with the issuance of 25-year global bonds that raised $1.5 billion from overseas investors.

Locally, only P30.5 billion worth of IOUs, mostly in the form of Treasury bills (T-bills), helped them meet maturing debts during the period.

These activities resulted in a gross financing mix in which 56 percent represented foreign borrowings and only 44 percent were locally obtained.

Purisima provided an incomplete picture of the government's spending program for the period in which P56.862 billion represented interest payments while another P23.945 billion was the allotment to local government units.

Net lending for the period totaled P1.63 billion.

On the revenue side, the Bureau of Internal Revenue collected P73.694 billion, almost 13 percent higher than a year earlier.

The Bureau of Customs also surpassed last year's collection by more than 8 percent to P19.783 billion from P18.215 billion.

The Bureau of Treasury also collected P13.104 billion or nearly 55 percent higher than year ago level of only P8.475 billion.

Other offices of government collected P6.568 billion, 15 percent higher than year ago of only P5.5684 billion.

Napocor to offer personnel for outsourcing contracts

State-owned National Power Corp. plans to spin off its engineering and technical units in a bid to ensure continued employment for personnel who may be displaced with the privatization of the power firm’s generation assets.

Napocor president and chief executive Rogelio Murga said the definite selling of Napocor plants compelled officials of the power firm to explore opportunities outside the corporation that can benefit its workforce.

He added the Napocor would be offering the services of its engineers and technical personnel to new power plant owners as well as power generation companies outside the Philippines.

He added the technical and engineering services are potential money-making units since these personnel could easily offer their expertise for outsourcing even if Napocor is already fully privatized.

“We have decided to package our technical services for contracting, particularly to the buyers of hydro, thermal, geothermal, coal, natgas and diesel plants. Our people are more than capable of handling these services. It would be a waste to just let them go when the Napocor is finally privatized. This way, we can provide our employees a chance to engage in a more lucrative venture,” said Murga in a statement.

The Power Engineering Services (PES) being offered by Napocor include management and technical support in various fields related to the planning, building, operating and repair/rehabilitation of energy generation resources. They can also carry out fabrication work and special projects.

At present, the PES can mobilize over 3,000 current and former Napocor employees to service contracted agreements with local and foreign energy generation companies.

It is envisioned to become an independent group that provides manpower and engineering services for power generation projects.

“This service offering is available to all energy companies anywhere in the world, since the PES is able to ramp up manpower numbers quite easily from the abundant labor supply in the Philippines, and train new workers adequately before they are deployed,” Murga said.

Pursuant to R.A. 9136 (Electric Power Industry Reform Act of 2001), the Napocor has been trimming its pool of employees in preparation for the firm’s privatization. The most recent personnel movement affected 5 percent of its current manpower.

Apart from initiating the PES, the Napocor has been conducting a number of in-house seminars on capability-building and entrepreneurship that encourage employees to explore business opportunities once they leave Napocor

Tuesday, March 22, 2005

Investment Incentive Schemes

frequently asked questions• • • • • • • • • • • • • • • • • • • • • • • • • •
What requirements must be complied with before a foreign corporation can engage in business in the Philippines?
Is a foreign investor allowed to own 100% of a business entity?

LOOK FOR GOVERNMENT INCENTIVES Singapore
A number of government incentives are available to help startups. Find out how these incentives can help you to finance your new business.
http://www.business.gov.sg/start/incen-index.htm
Technopreneur Investment Incentive Scheme (TII)

Malaysian airline is set to start twice-a-day flights at Clark

CLARK ZONE, Pampanga — Malaysia’s second largest commercial airline will commence two flights a day daily at the Diosdado Macapagal International Airport (DMIA) starting on April 5.

Clark Development Corp. (CDC) Executive Vice President Victor Jose I. Luciano said the regular flights to be mounted by Air Asia here is a manifestation of the much-improved tourist and investment potentials of economic zone.

The scheduled regular flights of Air Asia came as an offshoot of the success of Asiana Airlines of South Korea since it mounted regular flights between Incheon and Clark in October 2003. Asiana is the second Korean flag carrier.

Luciano said the Air Asia flights would have two routes — from Malaysia via Kuala Lumpur to Macau to Clark, and Kota Kinabalu to Clark.

Kuala Lumpur and Kota Kinabalu are the two of the most frequented tourist destinations in Malaysia.

Air Asia, which provides the lowest airline fares, operates a fleet of modern Boeing 373-300 jets. The airline said that it will concentrate on just one type of aircraft in order to focus on and maintain efficient operations.

Air Asia airplanes are maintained by international world-class partners such as GE Engine Services for engine maintenance; Volvo-Aero for aircraft engine and aircraft frame parts; and ST Aero for heavy maintenance and engineering components.

The airlines fleet fully meets the conditions of international aviation safety standards and is regulated by the international reputed Department of Civil Aviation (DCA) Malaysia and is overseen by the Department of Civil Aviation.

Joyce Lai, regional director for Marketing and Communications of Air Asia, assured Filipinos who will visit Malaysia that the airline will provide the lowest airline fare so that more would be enticed to fly aboard Air Asia.

Lai said that although Air Asia is the second largest Malaysian airlines, but it’s very aggressive with its fares that’s why Air Asia was branded as the Ryan Air or Easy Jet of Malaysia

http://subicbay.ph

Friendship

A friend is one who knows us, but loves us anyway
- JEROME CUNNINGS -

http://subicbay.ph

Monday, March 21, 2005

Be An Encourager

A SPARK OF ENCOURAGEMENT
CAN REKINDLE WARMTH IN THE HEART!!!
The power in words can build up or tear down-
Create a big smile or produce a sad frown;
So in all your contacts with people each day,
Be sure to encourage in all that you say.
- Fitzhugh -

http://subicbay.ph

Friday, March 18, 2005

Tax implications of the Tourism Act of 2004

RECOGNIZING that tourism is one of the largest industries in the world that can bring in the much-needed dollars to fuel our economy, Senator Richard Gordon filed Senate Bill No. 1834, titled "The Tourism Act of 2004." This bill is pending in Congress but has already gone through several technical committee hearings.

The bill has three major objectives: (i) the reorganization of the Department of Tourism (DoT); (ii) the establishment of the Tourism Economic Zone Authority (TEZA) and tourism enterprise zones (TEZs); and (iii) the establishment of Tourism Philippines, which will merge the Philippine Tourism Authority (PTA) and the Philippine Convention and Visitors Corp. (PCVC) into one body. The proposed establishment of the TEZA and TEZs carries with it the proposed grant of tax incentives.

Income tax holidays

Similar to locators in special economic zones established under the Philippine Economic Zone Authority (PEZA), the Subic Bay Metropolitan Authority (SBMA) and the Clark Development Authority (CDA), investors in TEZs will be entitled to several tax incentives.

Section 51 of SB 1834 proposes to grant TEZ-registered enterprises an income tax holiday (ITH) of five years from the start of operations, extendible for another five years provided the TEZ-registered enterprises undertake a major expansion or upgrade of their facilities. The additional period will be computed in the proportion that the cost of the expansion or upgrade bears to the total assets of the TEZ-registered enterprise.

As the name implies, the income tax holiday will exempt the TEZ-registered enterprise only from the payment of income tax. Hence, such enterprise will not be exempt from the payment of other taxes, like value-added tax (VAT), documentary stamp tax (DST), excise tax, and other national internal revenue taxes.

Under existing laws, the income tax holiday granted by the Board of Investments (BoI) or the PEZA is either four or six years, depending on whether the enterprise is pioneer or non-pioneer, extendible for another two years for pioneer enterprises, depending on several factors such as ratio of capital equipment to labor, foreign exchange earnings or savings, or the use of indigenous raw materials. Investors registering with the BoI or the PEZA may avail of the above-mentioned ITH, including investors in tourism activities.

With the passage of the Tourism Act of 2004, the TEZA will now administer the ITH incentive for investors in tourism activities that locate in TEZs.

Preferential tax regime

Under SB 1834, after the ITH of the TEZ-registered enterprise expires, it shall be entitled to a preferential tax rate of 2-3 percent on gross income, in lieu of all national and local taxes, depending on the amount of investment and the number of persons employed. The secretary of tourism and the Bureau of Internal Revenue (BIR) are to prepare the implementing rules of this provision.

Unlike the ITH, the preferential tax regime will exempt the TEZ-registered enterprise from all national and local taxes including, but not limited to, VAT, DST, excise tax, local business tax and real property tax. This is similar to the PEZA incentives. However, under the RA 8748 amendment to the PEZA Law, the exemption from real property tax was removed since most local governments rely heavily on the same for their revenue sources. As currently worded, SB 1834 exempts the TEZ locators from the payment of real property tax.

The 2-3 percent tax on gross income shall be shared as follows: 1/3 to the local government unit concerned; 1/6 to Tourism Philippines; 1/6 to the TEZA; 1/6 to the national government; and 1/6 to a special fund for preservation of local culture, heritage sites and environment in and around the TEZs. Again, the rules governing this provision shall be drafted by the DoT and the BIR.

Exemption from customs duties/taxes

Unlike the special economic zones under the PEZA or the free ports created by law, like Subic Bay Freeport Zone, Zamboanga Freeport and Cagayan Freeport, the TEZ is not proposed to be treated as a separate customs territory but merely as a special designated area. As such, Section 51 of SB 1834 proposes to exempt all importations of capital goods into a TEZ for use by a TEZ-registered enterprise from the payment of customs duties and taxes. This means such importations will be exempted not only from customs duties, but also from VAT on importations.

However, this exemption applies only to capital goods, i.e. equipment, machinery, materials, and not to finished consumer products that are allowed to be imported by those located in the legislated free ports cited above.

Other tax incentives

TEZ-registered enterprises shall likewise be entitled to incentives provided for in other incentives laws, provided there is no conflict and double enjoyment.

If there is an overlapping of incentives, the TEZ-registered enterprise must choose only one incentive regime. This merely means that if the TEZ-registered enterprise desires to avail of incentives that are available under the PEZA or the BoI, but are not available under the draft bill, it may so avail of the same.

However, should there be an overlapping of the incentives being availed of, the TEZ-registered enterprise may only choose one incentive regime with respect to that incentive being sought.

In addition to these tax incentives, Section 54 of the bill allows TEZ-registered enterprises that shoulder the cost of restoring material cultural heritage within a TEZ in accordance with the rules and regulations issued by the National Historical Institute, to fully deduct said costs for income tax purposes.

Moreover, income derived by construction firms from such restoration works shall be exempt from tax.

Other tax implications

In connection with the proposed establishment of Tourism Philippines, SB 1834 proposes (i) to allow hotels and other accommodation establishments full deductibility from gross income of the cost of major expansions, renovations and upgrading of facilities, and (ii) a hospitality tax of 5-10 percent on the lease of rooms by accommodation establishments not located in TEZs.

While hotels and accommodation establishments welcome the deductibility of the cost of major expansions, renovations and upgrading of facilities from their gross income, they have expressed reservations about the hospitality tax, which they claim will drive up the cost of the rooms. There is light at the end of the tunnel, however, in that the bill's sponsor has expressed openness to a fee of $1 to $5 per head in lieu of this hospitality tax. The reaction of hotels and accommodation establishments to this possible change has not yet been elicited or discussed in any formal hearing. It would therefore be interesting to know their position given that the intent of the bill is to channel this tax, along with proceeds collected from travel taxes and operations of Duty Free Philippines, to Tourism Philippines.

SB 1834 clearly intends to harmonize and rationalize the tourism efforts of this country to spur economic growth. Given that tourism is the world's largest industry in terms of dollar earning capacity, and the recent events (albeit unfortunate) that have befallen our neighbors in the region, focus on tourism as the engine of growth is indeed timely.

The grant of tax incentives specifically for tourism-related investments may serve as the impetus to attract the much-needed capital to establish new tourist sites, enhance historical and cultural attractions, and improve existing accommodation establishments and basic tourism services. If the desired integration and rationalization of the tourism industry through the reorganization of the DoT, as well as the establishment of the TEZA, TEZs, and Tourism Philippines, comes to fruition, we may yet see, in the not too distant future, the kind of tourist visits that Malaysia (15 million tourists per year) and Thailand (12 million) are currently enjoying.

Finally, SB 1834 should be considered in the light of HB 3295, or the Omnibus Incentives Bill, which was filed in Congress by the Department of Trade and Industry to harmonize all incentives schemes currently in place

Thursday, March 17, 2005

Mountain Woods in Subic opens door to nature lovers

Mountain Woods, an idyllic mountain retreat located at West Kalayaan, SBMA, recently held an Open House where guests had a generous preview of the venue’s upgraded facilities and fantastic nature environs. Everyone marveled at the serene setting of the place, its breezy mountain air tempting guests to just relax the whole day.

The resort has just completed development efforts to enhance the charming ambiance of the place, with a welcoming lobby, upgraded rooms, and well-planned landscaping. Guests were treated to sumptuous food and drinks, which they enjoyed at Le Jardin, the resort’s flagship dining outlet. The open-air restaurant boasts of an experienced and well-versed culinary team that knows and cares what discriminating guests want on their dining tables: Good food, exquisite wine, and a unique al fresco romance, cum piano playing and serenading.

Aside from the food, the visitors raved about the resort’s eternity pool which has a commanding view of the mountains and the forests at the backdrop. A gazebo area was also pictured as a perfect venue for weddings and other events that can be celebrated in a romantic nature ambiance.

A sister company of popular White Rock Resort, Mountain Woods aims to attract a broader market which may avail of this secluded resort’s enticing amenities. The natural forest setting of this veritable "Garden of Eden" defines the word privacy and pleasure all over the place. The views alone, which consist of commanding views over the lush forests of Subic, are a sight to behold, which are much missed by weary Manileños. Here, the cool and crisp mountain breeze, and relaxing panoramas will virtually recharge and rejuvenate their stressed bodies and mind.

Guests may avail of the affordable accommodation packages, fit for families and groups. The package allows use of the resort’s vast facilities for their various needs and wants. Mountain Woods will also ensure that after all activities, guests are pampered with the resort’s health/ spa services, relaxing rooms, recreation facilities (billiards, ping pong, darts) and delightful banquets.

Set amidst the seemingly rustic environs are 28 very spacious rooms complete with world-class amenities offered for the conveniences of urban living: cable TV, telephone, air-conditioning and private T&B with hot & cold shower, and individual balconies facing the forest and Subic Bay. The resort also has function rooms that can accommodate various social banquets or business meetings.

As an added treat, guests may enjoy the facilities of White Rock for free, while they are billeted at Mountain Woods. A two-in-one VIP Privilege Card also applies here, for members to enjoy both White Rock and Mountain Woods with benefits, discounts and special treats on room accommodations, dining amenities and leisure activities that have real value for money.

Mountain Woods is located on Entemador Street, West Kalayaan, inside SBMA. For inquiries, call Manila Sales Office at 421-2781