VICTORIA, KIM PATRICK C.

BA 510 – Decision Making and Business Policy

Formulation
Master in Business Administration Dr. Jose Antonio Lee

GOOD OR BAD: DISSECTING GOVERNMENT DECISIONS

K to 12 Program

Introduction

Republic Act No. 10553, entitled “An Act Enhancing the Philippine Basic Education System by
Strengthening Its Curriculum and Increasing the Number of Years for Basic Education, Appropriating
Funds Therefor and for Other Purposes,” otherwise known as the “Enhanced Basic Education Act of
2013, approved on May 15, 2013, and which took effect on June 8, 2013 seeks to provide for a quality
12-year basic education program that each Filipino is entitled to. This is incognizance with Article IV
Section 2 of the 1987 Constitution which states that: “The state shall establish, maintain, and support a
complete, adequate, and integrated system of education relevant to the needs of the people and
society”.

The new program was patterned from the K – 6 – 4 – 2 Model. This means that basic education
involves kindergarten, six years of elementary education, four years of junior high school (Grades 7-10)
and two years of senior high school (Grades 11-12). Those who go through the 12-year program will get
an elementary diploma (6 years), a junior high school diploma (4 years) and a senior high school diploma
(2 years). A full 12 year of basic education will be required for entry into tertiary level education. The
universal kindergarten was offered during the school year 2011-2012, while the new curriculum for the
Grade I and Junior High School students was implemented a year after.

The goal of the enhanced K to 12 Basic Education is to create a functional basic education
system that will produce productive and responsible citizens equipped with the essential competencies
and skills for both life-long learning and employment. The program will enhance the basic learning
needs of the students. In order to achieve the goals, the program must first meet its objectives namely:
(a) To give every student an opportunity to receive quality education based on an enhanced and
decongested curriculum that is internationally recognized and comparable; and (b) To change the public
perception that high school education is just a preparation for college; rather than, it should allow one
to take advantage of opportunities for gainful career or employment and/or self-employment in a
rapidly changing and increasingly globalized environment.

Impacts of the K to 12 Program

Positive

 Strengthening education. One of the main reasons of migrating to the K to 12 Program was is
for the betterment of the overall education system. Having better educated citizens will lead to
more innovative and competitive Filipinos. As technology progressed, the education system
must cope up with these advancements.

 Cognitive Development. K- 12 is tailored to follow our understanding of cognitive development

as closely as possible. New concepts and ideas are gradually introduced over the thirteen-year
period. The younger years are the period where learning is the easiest, this is how children are
seamlessly learning to read in Kindergarten to advanced algebra in high school.

 Social Skills. The program also serves to socialize young people. It let them go out of their
comfort zones and enable them to meet new people and understand new beliefs. Diversity to
more empathy and emotional intelligence. It also teaches students to navigate society as
whole once they leave the school.

Negative

 Cost. Good education is expensive and that’s an understatement; so, an additional two years
will mean additional burden to the parents, most especially for families living below the
poverty line. One of the disadvantages is that most countries who implemented the K to 12
program did so suddenly and in the process, forcing parents to pay excessive fees for the
additional two years of education.
  Preparation. While the additional two years to provide these students with various
advantages, there seems to be little or no focus on careers or what they should opt for. The K
to 12 program promises employability after graduating from Senior High School yet most of
the business establishments still search for college graduates. Lack of preparation is also
manifested in the inefficiency of some teachers, insufficient learning resources and lapses in
the curriculum.

 Equality of Education. Though K to 12 education has improved the education system overall,
this hasn’t happened equally for all communities. This is especially true among minority and
impoverished populations. Children in affluent neighborhood’s attend safer, newer and better
staffed schools. On the other hand, schools in poor neighborhood are often underfunded,
more dangerous and understaffed.

Conclusion

Reforms in the educational system are very much needed in the country. Although difficulties
and inadequacies may arise, its benefits, in the long run, are more significant for the country as a whole.
The country has already produced the first batch of K to 12 graduates, yet no visible impact has been
manifested. In achieving its success, cooperation and support of all involved are important. Granted the
solution is not perfect and comes with its own flaws but with more effort, we should able to provide the
kids with quality education. Based on the arguments presented I believe, that it is high time for a reform
in our education system in order to make our citizens at par with our neighboring countries. In order to
fully achieve its potential, clear-cut measures and guidelines must be observed by our government like
trainings for the teachers handling the Senior Highschool especially those under core competencies like
Accountancy, Engineering and Social Sciences, updates on the text books and other learning materials
used, and classrooms to cater the growing number of students.
TRAIN Law

Introduction

The Tax Reform Acceleration and Inclusion (TRAIN), otherwise known as RA 10963, is the first
package of the Comprehensive Tax Reform Program (CTRP) which seeks to propose major changes in the
Philippine Tax System. The TRAIN aims to make the tax system simpler, fairer, and more efficient to
promote investments, create jobs and reduce poverty.

It also addresses several weakness of the outdated National Internal Revenue Code (NIRC) which
was adopted 20 years ago. Some problems encountered with the old tax law were (a) unfair and
inequitable individual income tax; (b) uncompetitive corporate taxation; (c) redundancy of non-
transparent fiscal incentives resulting in incalculable revenues forgone; (d) specific excise taxes that are
not adjusted to inflation leading to revenue erosion; (e) low taxes for goods that impose a higher cost to
society that what their prices show; (f) well-intended laws that ironically abet tax evasion; and (g)
complex rules that enable avoidance and make tax compliance difficult (Sta. Ana III, 2016).

Impacts of TRAIN Law

Positive

 Simpler, fairer, equitable and more efficient tax system. The following were the significant
reforms introduced by the TRAIN Law (complete list of highlights can be seen in the National
Tax Research Council - Tax Research Journal):
 Restructured the personal income tax schedule, with separate schedules for
compensation income earners (CIEs), pure self-employed individuals and/or
professionals (SEPs) whose gross sales or gross receipts and other non-operating
income do not exceed the value-added tax (VAT) threshold and mixed income
earners;
 Reduced the number of tax brackets from (7) to six (6);
  Exempted from the tax the first P250,000.00 annual taxable income of taxpayers;
 Set the highest amount of taxable income at more than P8 million and subjecting it to
a higher marginal rate of 35%;
 Simplified the PIT system by integrating the basic personal and additional exemptions
and premiums paid on health and/or hospitalization insurance into the P250,000
exempt threshold;
 Increased the amount of tax-exempt benefits from P82,000 to P90,000;
 Imposed a 20% final tax on PCSO and Lotto winnings exceeding P10,000.00
 Removed exemption allowed to income of estates and trusts amounting to P20,000;
 Simplified the estate tax schedule, from a six-bracket schedule with rates ranging
from 5% to 20%, to a single rate of 6% based on the value of the net share;
 Extended the period within which the estate tax should be filed, from six (6) months
to one (1) year of the decedent’s death;
 Simplified the donor’s tax schedule from eight-bracket schedules with rates ranging
from 2% to 15% to a single rate of 6% of total gifts in excess of P250,000; and
 Increased the VAT threshold from P1.5million to P3million which is adjusted to
inflation not later than January 31, 2021 and every three (3) years thereafter.

 More government income. In 2018 the estimated revenue yield of TRAIN law is about P130
billion. Once all the revenue-enhancing measures have kicked in, the additional revenue intake
will steadily rise to as much as P220 billion annually. In total, TRAIN will generate close to P1
trillion in revenues from 2018 to 2022. Consequently, 70% of the revenue from the TRAIN law
will be earmarked for the “Build, Build, Build” program while the balance will be allotted for
social services (Diokno, 2018).

 Health. This is an indirect impact of TRAIN law, with the increase excise tax on cigars and
cigarettes and on sweetened beverages, consumers will be having a difficult time in purchasing
the abovementioned commodities. According to the World Health Organization (2016) , fiscal
policies that cause the price of sugary drinks to increase by 20 percent can discourage
consumption, helping reduce obesity, type 2 diabetes and tooth decay.

Negative
  Inflationary concerns. In light of the soaring consumer prices, the TRAIN law had faced
skepticism and criticism since the first wave of excise taxes were implemented. After all, the
proposed tranches of excise taxes will make it more difficult for the poorest Filipinos to
adequately cope and adjust to rising commodity prices.

In August 2018, the poorest households in the National Capital Region (NCR) alone felt
inflation at an alarming 8% - far heavier than the headlined national inflation rate of 6.4%.
Moreover, households whose income were at the bottom 30% experienced food inflation of
8.8% in August, a 3.7% increase from January’s 5.1% (Ocampo-Tan, 2019). Though TRAIN Law
is not the sole cause of these higher prices, some believe that its implementation is a
contributing factor.

 Anti-poor. The revenue loss owing to the lower tax rates for the personal income tax is huge
and must be recouped. And it will be recouped with the broadening of the VAT base and
higher excise taxes on petroleum products and vehicles, cigarettes, and sugar-sweetened
beverages (SSBs). In effect, those who are already exempted from tax as minimum wage
earners will be greatly affected because there will be no additional income generation but
additional tax imposition on their part. However, the government has allotted P24.5 billion for
the unconditional cash transfer to compensate for the temporary price increases with TRAIN.

Conclusion

Tax reform is not a walk in the park. There will be winners and losers. While certain groups are
against TRAIN’s implementation, one should appreciate its immediate benefits like tax exemptions, and
look forward to long-term profits in the form of lower morbidity and mortality cases, and higher GDP and
tax revenue numbers. To ascertain the validity and confirm the benefits of TRAIN, the importance of
monitoring and evaluating its impact must be underscored, too. Judging on the abovementioned
premises, the TRAIN is somewhat a breakeven move from the government, in order for the government
to function smoothly, the tax lost from decreased personal income tax must be recovered. In effect the
supposed additional take home pay were being taxed and collected in other forms like VAT and excise
tax. The problem lies not in the imposition and collection of taxes but the safe-keeping and
implementation of the projects. We must employ honest and persons with integrity in the bureaucracy
in order that funds will be utilize accordingly.

Philippines pivot to China

Introduction

Formal diplomatic and trade relations were established between the Philippines and China in
1975. For 39 years since then, relations between the two countries were marked by healthy trade
relations as well as economic development cooperation which was particularly in favor of the
Philippines. Of late, however, relations between the two countries have been troubled by territorial
disputes in South China Sea (or West Philippine Sea) involving both countries as well as claimant-
countries from Southeast Asia.

In October 2016, President Rodrigo Duterte surprised the nation when he announced during a
state visit to China that he has “separated” from the United States to be “dependent” on China “for a
long time.” The President’s cultivation of friendly ties with Beijing has strong economic, security and
strategic underpinnings. The rise of China and other regional powers is stirring geopolitical shifts with
profound implications on the world. The fast-growing economies of Southeast Asia, including the
Philippines, are in the fault line of a major power rivalry between the traditional dominant power, the
United States, and a rising challenger, China (Pitlo III, 2019)

Impacts of Philippine’s pivot to China

Positive

 Golden Era of Infrastructure. In 2018, during the inauguration of the Belt and Road Initiative,
China has pledged around $3.74 billion in soft loans and grants for the Philippines over the
next two years, the amount of which the Duterte administration is counting on to finance the
“Build, build, build” infrastructure program that needs some P8 trillion until 2022. The
Philippines also sign six agreements at the Boao Forum in China, which include a $62-million
 credit line for the Chico River Pump Irrigation Project and a 500-million renminbi economic and
technical cooperation grant to finance infrastructure and other projects. Other big-ticket
projects eyed for Chinese funding are the P10.9-billion New Centennial Water Source-Kaliwa
Dam Project and the P151.3-billion Philippine National Railway South Commuter Line to name
a few. Foreign direct investments from China nearly tripled to $28.79 million in 2017 from
2016’s $10.77 million. The figure soared to $151.27 million in January alone to account for 16%
of the $919.22-million inflows that month (Lopez, 2018).

 Economic benefits. Arguably, the country’s rapprochement with China has drawn more
Chinese nationals to the Philippines. As a matter of fact, from August 2015 to August 2016,
there was a marked surge by about 79% in Chinese tourist arrivals. This has been followed by
33% and 42% growth in the years following. At present, China is now the second largest source
of tourists, registering about 645,000 arrivals in the first 8 months of 2018 and only behind
Korea which has the largest tourist arrivals. The Philippines-China trade has also grown
appreciably, rising from $11.355- billion in the first half of 2017 to $14.077-billion in 2018— a
24.0 percent increase. Nonetheless, closer scrutiny of these trade volumes reveals that the
new trade flows have not reduced the country’s yawning trade deficit with China (the largest
among any trade partner in terms of actual volume), which hovered around 42% of total trade
during the same period (Mendoza, et al. 2018).

Negative

 One-sided economic growth. Shadowing the increase in tourism is a reported increase in the
number of Chinese workers in the country. Accordingly, at least 41,000 foreign workers were
given alien employment permits (AEPs) - a remarkable leap by almost 47% from the 2018
registering only about 28,000 working permits (Mendoza, et al. 2018). This pose a threat to
Filipino employability as mentioned by Senator Joel Villanueva. Consequently, Philippine-China
trade trends have been particularly worrisome with regards to high dependency on certain
imported materials from China. This is most notably the case with iron and steel, which are
crucial to Philippine industrial and infrastructural development. While declining somewhat
from its levels in 2017, roughly half of the Philippines’ iron and steel imports were still sourced
from China alone for the earlier half of 2018 (Mendoza, et al. 2018). China became our biggest
 source of imports in June 2019, making it our top trading partner. But imports from China
overtook Philippine exports, resulting in a wide trade gap.

 Assertion of the right of the West Philippine Sea. Philippines-China relations have lately been
dominated by the territorial disputes in the West Philippine Sea, which has escalated since the
naval standoff over the Scarborough Shoal in April 2012 and aggravated by issues of Chinese
illegal occupation, unlawful establishment of infrastructures, and incidents of incursions and
encroachment within the Philippines’ exclusive economic zone (EEZ). Bilateral ties took a
downturn when the Philippine government filed an arbitration case against China under the
United National Convention on the Law of the Sea (UNCLOS) in January 2013 challenging the
legality of China’s nine-dash line claim over the contested waters. Benigno S. Aquino III, sued
China before an international arbitration tribunal over its territorial claims and won. But some
fear that the grants and funds given by the Chinese government will serve as leverage in
asserting the Philippine right on the West Philippine Sea.

Conclusion

While protecting territorial sovereignty is paramount, a country must also work with other
countries for other benefits and mutual gains. It is thus indispensable for the Philippines, as neighbors,
to engage with other nations despite having diverging geopolitical and security concerns. There is
seemingly no consensus on the Philippines’ foreign policy shift to China. The President’s rapprochement
with China will certainly run up against internal limits as the Philippines are essentially a US-friendly
society, and many military leaders and politicians are suspicious of China’s intentions. Nevertheless, the
growth of Chinese FDI can work in Duterte’s favor, not only by improving infrastructure, but also by
increasing the flow of businessmen, the strengthening of tourism, and investment in renewable energy.
Taking into consideration all points presented, I believe it is unwise for the government to cling onto
China for economic growth and stability. We, as a nation, must continue to develop to its full potential
our own resources – human, capital, industrial and natural to improve the life of its citizen and jump
start the economic growth. It is true that no man is an island, and we need the help of other countries
when it comes to technological breakthroughs, but we must be cautious on who we are dealing with
because they might be wolf in sheep’s clothing.
References

Lopez, M. (2018). Philippines has most to gain from China’s ‘Belt’. Retrieved from
https://www.bworldonline.com/philippines-has-most-to-gain-from-chinas-belt/

Mendoza et, al. (2018) The Philippines’ China Pivot: Yield and Risks.

National Tax Research Council (2017). Tax Research Journal Vol. XXIX. Retrieved from
https://www.academia.edu/36853597/Highlights_of_Republic_Act_No._10963_or_the_Tax_Ref
orm_for_Acceleration_and_Inclusion_TRAIN

Ocampo-Tan, M. (2019). TRAIN Law: A year in review. Retrieved from

http://www.theguidon.com/1112/main/2019/03/train-law-year-review/

Official Gazette (2013). Implementing Rules and Regulations of the Enhanced Basic Education
Act of 2013. Retrieved from https://www.officialgazette.gov.ph/2013/09/04/irr-republic-act-no-
10533/

Pitlo III, L. (2019). Duterte’s pivot to China: Gains, challenges, promises. Retrieved from
https://opinion.inquirer.net/122680/dutertes-pivot-to-china-gains-challenges-promises

Sta. Ana III, F. (2016). Significance of the Comprehensive Tax Reform Program aka TRAIN.
Retrieved from http://aer.ph/significance-of-the-comprehensive-tax-reform-program-aka-train/

World Health Organization (2016). WHO urges global action to curtail consumption and health
impacts of sugary drinks. Retrieved from https://www.who.int/en/news-room/detail/11-10-
2016-who-urges-global-action-to-curtail-consumption-and-health-impacts-of-sugary-drinks