THE Department of Energy (DoE) has issued a circular that will require half of the supply contracted as reserve power to be on a “firm” basis in which the grid operator has a binding agreement to source its requirement from a power generation plant.
“Signed na ang AS (ancillary services) policy. Ipa-publish na lang namin (The ancillary services policy has been signed. We will shortly publish it),” DoE Assistant Secretary Redentor E. Delola said.
“We’ll probably publish it in the next couple of weeks,” he told reporters.
Ancillary services, which generally refer to power reserves, are necessary to support the transmission of power capacity and energy from generation sources to consumption loads. These reserves maintain the reliable operation of the transmission system in line with good utility practice and the Philippine Grid Code.
The DoE posted in the first quarter the draft rules setting forth the process of procuring ancillary services, which is the task of system operator National Grid Corp. of the Philippines (NGCP).
“We also put contracting caps for the reserves. Inaayos lang natin ‘yung definition, kung ilang megawatts per type of reserve, ilang percent of that should be (on a) firm contract of NGCP,” Mr. Delola said. “Sa draft na nilagay natin, 50% of each reserve requirement should be with firm contract.”
(We also placed contracting caps for the reserves. We’re just finalizing the definition on how much megawatts per type of reserve and how many percent should be on a firm contract of NGCP. Under the draft, 50% of each reserve requirement should be with firm contract.)
With the new rules, all reserve energy categories — primary, secondary and tertiary reserves — are to be procured through contracts provided that a competitive selection process is undertaken for this purpose.
Reactive power support and black start ancillary services are to be procured only through contracts. Black start is the process of restoring a power system to recover from shutdown.
Mr. Delola said at present, many of NGCP’s power reserve contracts are on a non-firm basis, which may not be available when the system operator needs it.
“When you need it, because it’s non-firm, puwede n’ya sabihin na wala ako (the supplier can say that it’s not available),” he said.
Mr. Delola said the circular will also launch the reserves market where power generation companies can trade their output.
Once the reserve market starts operating, the procurement of ancillary services is to be done through contracts or through the market. All reserve categories are subject to the central scheduling and dispatch of the market operator.
“The new market management system is capable of handling the reserve market,” Mr. Delola said, referring to the information technology infrastructure that allows for the trading of electricity in the wholesale electricity spot market. — Victor V. Saulon
THE Department of Energy (DoE) has warned holders of renewable energy (RE) certificates not to hold on these tradable instruments once the trading market starts to operate next year as their life is limited only to three years.
“Ang buhay ng isang RE certificate is three years lang. So risk nya ‘yun kung mag-ipon siya ng marami at ‘di niya ma-dispose kasi mawawalan ng value siya after three years (RE certificates are only good for three years. It’s a risk to accumulate them because disposing of them is not certain),” said Mylene C. Capongcol, director of the DoE’s Renewable Energy Management Bureau, in an interview as the agency prepares for the commercial operation of the Philippine Renewable Energy Market System (PREMS).
Ms. Capongcol issued the warning as she called on the mandated participants in the RE market to sign up with the registry, which will be supervised by the Philippine Electricity Market Corp. (PEMC).
“Next year is the full determination of the criteria for the commercial operation of REM (renewable energy market). So (that includes) testing (and) registration of the members,” she said.
By January 2020, the RE registrar is expected to be able to use the PREMS as a tool to ensure that industry participants comply with the requirements of the Renewable Portfolio Standards (RPS) and other policy mechanisms provided for by Republic Act No. 9513 or the Renewable Energy Act of 2008.
RPS requires distribution utilities, including electric cooperatives and retail electricity suppliers, to source or produce a fraction of their electricity requirements from eligible RE resources.
The mechanism is meant to develop indigenous and environmentally friendly energy sources. It sets a minimum annual incremental requirement for the RPS participants, who can opt to buy RE certificates from the market as compliance to the law.
The RE registrar tracks the compliance of about 130 on-grid utilities out of the country’s 151 entities, Ms. Capongcol said. The PREMS, the online platform, will facilitate market competitiveness, efficiency and transparency in the trading of RE certificates.
Alberto R. Dalusung III, who served as a consultant for biomass projects and a member of Biomass Renewable Energy Alliance, Inc. (BREA), described the certificates as the “environmental attributes” of renewable energy generation.
“Every time you generate 1 megawatt-hour equivalent, (you have) one certificate,” he said. “(There are) mandated parties that will have to have the certificates to back up their own consumption of energy.”
The RE market gives biomass power plant developers another outlet to generate revenue aside from selling their output to the electricity market. The price of the RE certificate will be determined by the market as buyers and sellers negotiate.
“(There’s) another market for the certificates. It’s another market separate from the market for the power. This is the market for the environmental attributes of the power,” he said. “It’s a way for recognizing that renewable energy helps the environment.”
Joseph S. Yu, president and chief executive officer of SN Aboitiz Power (SNAP), said the company is awaiting the mechanics of the RE market.
“I think there is value in REMS (renewable energy market system) because we think there is a lot of value with the RPS, renewable portfolio standard. But for RPS to really take off, REMS must be done right and people must be comfortable and confident that those certificates can be traded easily and transparently. If we can get that piece right then RPS can take off and help us realize the promise of renewable energy,” he said.
SNAP is a joint venture of Norway’s SN Power AS and listed energy company Aboitiz Power Corp. It generates power mostly through hydroelectric plants. It also has a retail electricity supply business. — Victor V. Saulon
TRADE SECRETARY Ramon M. Lopez is studying an exporter-supported bill proposing to immediately reduce corporate income tax from 30%.
The Philippine Exporters Confederation, Inc. (Philexport) said in a statement that it supports Senate Bill No. 595 filed by Senator Ralph G. Recto. The bill applies segmented tax rates according to companies’ taxable income.
Companies with taxable income of P400,000 or less will be taxed 5% under the proposed bill. Companies that make over P8 million are taxed 25% of the excess over P400,000.
Mr. Lopez told reporters Friday that the proposed system might discourage higher income activities.
“Offhand, parang it might discourage mga new activities, the yearning (for) more. Importante naman kasi, if you apply the same corporate income tax rate on the (high) income, malaki ‘yung absolute value na rin — they pay more at the current system, (Offhand, it might discourage new activities, the yearning for more. That’s a significant point because if you apply the same corporate income tax rate on high earners, the absolute value will be big — they pay more under the current system),” he said.
However, he sees the positives of immediately applying higher taxes on high-income companies if the move is linked to the bill reducing corporate income tax and rationalizing incentives.
The proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) would reduce corporate income tax to 20% from 30% over 10 years.
Mr. Lopez noted that the immediate shift in taxation would improve government revenue.
“Kaysa matagal bumaba ‘yung 30 to 20 (percent corporate income tax in CITIRA). So in that context, I really have to study pa. Kasi kung ganun, it makes sense, kung gusto siguro makasingil agad sa high income, hindi magkakaroon ng revenue loss yung DoF (Department of Finance). (The 30 to 20% reduction takes a long time. So in that context, I really have to study this further. Because it makes sense — DoF will forego less revenue if it can charge high-income companies immediately),” Mr. Lopez said.
Philexport said that the immediate reduction of corporate income tax would put the country at par with other Southeast Asian countries, adding that the bill would also help small businesses.
“(This) will help MSMEs (micro, small and medium enterprises) enjoy even lower tax rates than the proposed 20% CIT,” Philexport President Sergio Ortiz-Luis said.
The average corporate income tax rate in Southeast Asia is 22.4%, Philexport said.
Mr. Lopez said that he will study the bill further before arriving at a final position. — Jenina P. Ibañez
THE Senate Committee on Trade, Commerce and Entrepreneurship has approved a bill institutionalizing the development of the Bamboo industry, a measure backed by the Department of Trade and Industry (DTI).
Senate Bill No. 1240, or the Philippine Bamboo Industry Development Act, firms up the legal standing of the Philippine Bamboo Industry Development Council (PBIDC) and include in its membership one representative each from bamboo farmers, manufacturers and processor associations.
Currently, the PBIDC is operating under Executive Order 879 s. 2010, issued during the administration of President Gloria Macapagal-Arroyo.
The DTI supported the proposal, noting in its Sept. 2019 position paper that the bill is “in line with DTI’s thrust to revive the manufacturing sector.”
The Council is primarily tasked to create the Philippine Bamboo Industry Development Road Map, which the National Economic and Development Authority should harmonize all existing programs aimed at improving the Bamboo Industry.
The NEDA noted that at present there are on-going programs implemented by the DTI, Department of Science and Technology-Forest Products Research and Development Institute and Department of Environment and Natural Resources-Ecosystems Research and Development Bureau.
It proposed in its September 2019 position paper that the harmonized program should consider “i) production and value chain of bamboo products; ii) research and development to address key challenges in the industry; and iii) establishment of enabling mechanisms to promote investments in bamboo industry.”
The measure will also incentivize investors in nursery and plantations, classifying such as a “pioneer” industry under the Bureau of Investments’ (BoI) Investment Priorities Plan for five years.
The bill also proposed to grant a ten-year exemption of nursery and plantation owners from payment of government share for use of public land; and exemption from other fees, such as forest charges and import duties for imported machines and equipment, among others.
The bill will appropriate P100 million annually for the Bamboo Industry Development Center, which will serve as the Council’s secretariat. — Charmaine A. Tadalan
December is indeed the most festive period of the year. For most, it is an opportunity to take a much-needed break from work and spend some quality time with loved ones to celebrate Christmas and New Year. However, for us accountants, this marks the start of the busy season as yearend approaches. And so, before taxpayers all go on hiatus this holiday season, here are a few important reminders to ponder in areas of tax and payroll compliance.
TAX COMPLIANCE
An annual Registration Fee must be paid by all businesses, including self-employed professionals, using BIR Form 0605 on or before Jan. 31.
Following RMC 82-2008, taxpayers who are maintaining manual books of account must register new books when the pages of the previously registered books have all been exhausted. In the case of computerized books of account, the deadline for registration and submission in CD-R or DVD-R format and other required documents for calendar year 2019, shall be Jan. 30. For loose-leaf bound books of account, the deadline is 15 days after the end of the calendar year, as stated in RMC 13-82.
The filing of the Annual Information Return of Income Payments Subjected to Final Withholding Tax (BIR Form 1604-F) and the corresponding Alphabetical List of Employees/Payees from Whom Taxes Were Withheld must be done on or before Feb. 28. The deadline was extended by the BIR from Jan. 31 to give way to the enhanced version of the module. Beginning calendar year 2019, the BIR requires filing of this tax return separate from the Annual Information Return for Income Taxes Withheld on Compensation (BIR Form 1604-C).
As for the Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax (BIR Form 1604-E), together with the Alphabetical List of Payees from Whom Taxes Were Withheld, the deadline for filing is on or before March 1.
The filing of withholding tax returns (BIR Form 1601-EQ for creditable withholding tax, Form 1602Q for final tax on interest on bank deposits, Form 1603Q for final tax withheld on fringe benefits, and 1601-FQ for all other final withholding taxes) and the remittance of taxes withheld at source must be done not later than the last day of the month following the close of the quarter during which the taxes were withheld. As such, for the quarter ending Dec. 31, the returns must be filed, and taxes withheld must be remitted on or before Jan. 31. The filing must be accompanied by the Quarterly Alphabetical List of Payees (QAP), reflecting the name of income payees, Taxpayer Identification Number (TIN), the income paid segregated per month with the total for the quarter (all income payments prescribed as subject to withholding tax under the regulations, whether actually subjected to withholding tax or not subjected due to exemption), and the total amount of taxes withheld, if any.
Effective Jan. 1, per RMC 136-2019, taxpayers who are classified as Top Withholding Agents (TWAs) under RR 7-2019 are to continue or commence deducting the 1% or 2% Creditable Withholding Tax (CWT) on their purchase of goods and services. Taxpayers who are eliminated from the updated list of TWAs will cease to deduct and remit the 1% or 2% CWT from their regular suppliers. Relative to this, the BIR also issued RMC 122-2019, stating that the submission of the Semestral List of Regular Suppliers (SRS) is no longer required.
PAYROLL COMPLIANCE
Under Sec. 2.79.6 of the Consolidated Withholding Tax Regulations, employers are required to compute for income tax on the annualized gross compensation income or the sum of the taxable regular and supplementary compensation paid to each employee for the entire year. The payroll process called annualization takes place on or before the end of the calendar year, and before the payment of the compensation for the last payroll period. Any excess withholding tax shall be refunded to the affected employees on or before Jan. 25 of the succeeding year. Failure to refund makes the employer liable to a penalty equal to the amount which was not refunded to the employee.
The employers, through the Certificate of Compensation Payment/Tax Withheld (BIR Form 2316) submitted by their newly hired employees, are required to consolidate the income from the previous employment with the current earnings to accurately determine the tax due on the employee.
The issuance of BIR Form 2316 to all active employees, whether qualified for substituted filing or not, should be done on or before Jan. 31. In the case of terminated employees, the form must be issued by the employer not later than the payment of the employee’s final pay. It should be noted that the BIR issued a revised BIR Form 2316 following the amendments under the TRAIN Law deleting the requirement to disclose qualified dependents and tax exemption status. The new form also allows the use of any valid identification (ID) of the employee instead of the Community Tax Certificate (CTC) under the conforme section.
Similar to BIR Form 1604-F, the BIR also extended the submission of the Annual Information Return of Income Taxes Withheld on Compensation (BIR Form 1604-C) and the Alphabetical List of Employees under RMC 124-2019. From Jan. 31, which previously coincided with the release of BIR Form 2316 to all active employees, the deadline has been moved to Feb. 28, for the taxable year 2019. Concerning the new Alphabetical List of Employees, the BIR has simplified the format into two schedules, which are “Alphalist of Employees” (Schedule 1) and “Alphalist of Minimum Wage Earners” (Schedule 2). The new format requires classification of the employee’s status as (1) Regular; (2) Casual; (3) Contractual/Project-Based; (4) Seasonal; (5) Probationary; or (6) Apprentices/Learners.
As to the filing and payment of the taxes withheld for December through BIR Form 1601-C, payment must be made on or before Jan. 15 for manual filers. For those using eFPS, electronic filing will be done based on the taxpayer’s industry classification following the schedule outlined in RR No. 26-2002. The remittance must be made on or before Jan. 20.
The BIR requires submission of the signed duplicate original copies of BIR Form 2316 for those employees covered by substituted filing on or before Feb. 28, with accompanying Certified List of Employees Qualified for Substituted Filing of Income Tax Return (ITR), reflecting the amount of income payment, tax due and tax withheld.
It is important to note that the list of year-end tax and payroll compliance requirements discussed above is not comprehensive. Other reportorial requirements include Submission of Annual Income Tax Returns, and Audited Financial Statements to the Bureau of Internal Revenue and Securities and Exchange Commission, among others.
And while most of us have already made vacation plans, we accountants need to plan in time for us to wrap up the year and end it right.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only and should not be used as a substitute for specific advice.
Marvin L. Madrigalejo is a Senior Manager with the Client Accounting Services group of Isla Lipana & Co., the Philippine member firm of the PwC network.
As I wrote this on Christmas Day, I couldn’t help but think about how technological advances particularly in communication have changed many of us, socially. I went simply by the number of Christmas greetings I had received these past few days: no greetings via telephone call or via e-mail; and, only one Christmas card via regular post/mail.
Greetings came mostly by mobile phone messaging or through social media. But nothing by voice, all by text, and definitely nothing written by hand and signed. We have become impersonal, it seems, choosing convenience and expediency over “personal touch.” We choose to “post” a greeting to everyone in general, shotgun-style.
I admit that I am just as guilty as everyone else. I haven’t sent out a Christmas card — or any greeting card, for that matter — in years. Neither can I recall the last time I wrote a letter to someone. And while I have made the occasional telephone call to say hello or to greet someone on their birthday, I haven’t done so yet for this Christmas.
How times have changed. About 30 years ago, for three Christmas seasons, I sold Christmas cards for UNICEF. It was considered volunteer work, actually. But, for every card sold, UNICEF Greeting Cards Operations gave a small commission. At the time, it was not a bad way to have coins jiggling in your pocket during the holidays.
I found myself becoming a newspaper reporter after the third Christmas season, and the rest — as they say — is history. The call of journalism ended that selling career, and I have been a newspaperman for almost 27 years now. And while I have begun to think that technological changes are about to make greetings cards — and perhaps newspapers — a thing of the past, I am pleasantly surprised that there still seems to be some hope for both.
Not too long ago, I chanced upon an online report by National Public Radio or NPR, a Washington-based non-profit media organization. The report quoted the US National Retail Federation as saying that revenues from US greeting cards sales were steadying, and that “the greeting card industry could bring in as much as $933 million this Valentine’s Day [2019], up a bit from last year’s estimated $894 million.”
“While e-mail, texts and social media companies from Facebook to Snapchat have made it easier than ever to send instant greetings, more people — especially younger people — are sending greeting cards,” the report noted. “Greeting card experts say it’s younger people and millennials, in particular, who have been keeping the industry afloat. And they’re buying fancier specialty cards, often with personal touches,” it added.
Unlike before, fewer cards are sold nowadays, but at higher prices, thus helping the industry remain profitable. Personalization and customization helped card makers charge a premium for what used to be ordinary cards sold in high volume and low margins. Numerous but smaller players have also emerged, changing the face of the industry.
NPR reported: “More young people are starting their own companies that make new kinds of cards that feature pop-up 3D images, hand-painted artwork, LED lights, sounds and even animated cartoons that can be accessed with a mobile phone.” Their goal was to “create a more personalized experience and make cards that are more relatable to younger people.”
The NPR report added, “[New] cards are more expensive. And so, millennials are buying fewer greeting cards as a whole compared with other generations. Basically, they’re not buying boxes of cards to send to 50 friends around the holidays. Instead, they’re spending more on each fancier, higher-quality card.”
Just as technological advances and social media have almost made greetings cards a thing of the past, the same advances are now apparently helping revive what I thought was already a dying industry. Electronics have helped the planet save on paper and trees. And while paper-based industries appear to have become less profitable, it seems there are still opportunities out there.
Perhaps there are lessons to be learned here, particularly for other paper-based industries. A large proportion of people used to get their news and information from newspapers and books. But more people now turn to electronic media. Television still has a big following, so does radio. But younger people now choose to get their information online, including news. Gone are the days of households owning volumes of encyclopedia, or students going to libraries to research.
Electronically disseminating information and personal communication is for the long haul. Things are unlikely to go back to the way they were, unless there is a catastrophic event that negatively and significantly impacts either power-generation or telecommunication — or both. Without power or bandwidth, electronic communication will be difficult if not impossible.
Not that I want humanity to go back to writing letters or making phone calls, or sending greeting cards. How I wish we can do that, if only to bring back the personal touch in more important social communication. But, obviously, we are beyond that point. However, the changes in the way we communicate with each other has also impacted on people’s communication skills. And this, to me, is the more worrying part in this situation.
But the experience of the greetings cards industry is giving me hope. They key to success is finding a niche, and personalizing and customizing content. Paper-based medium is simply one of the means to distribute or disseminate information. The challenge is to change that medium into one that is more appealing to a broader market that includes the younger generation.
As with greeting cards, recent experience shows that success can continue through low-volume, high-margin, and highly customized products from small businesses that are appealing to younger buyers. I find this trend encouraging. I believe we need to bring back the personal touch in this impersonal age.
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
These past few years, we have witnessed a renewed and resurging interest in Filipino history and heroism. This is most evident in popular culture, with the release of semi-autobiographical films such as Heneral Luna and Goyo, and works that depict the tumultuous 1970s and ’80s, such as Liway, ML, and Respeto. In many universities, theater productions such as Dekada ’70, Desaparesidos, Nana Rosa, and The Kundiman Party invite audiences to reflect and revisit our wellspring of memory as a nation.
Three years ago, the near-secret burial of former dictator Ferdinand Marcos in the Libingan ng mga Bayani rekindled the burning question of what and who a hero is within our national narrative. In a time when societies are being bombarded with fake news, alternative facts, and historical revisionism, the politics of institutionalizing national memory has become a pressing issue we all have to grapple with. It has deeply divided our people, and made us ask important questions, such as: Is this administration honoring the right heroes?
This year, we are commemorating the 70th anniversary of diplomatic relations between the Philippines and the Republic of Korea. Designated by President Duterte and President Moon Jae-inas a “Year of Mutual Exchange,” 2019 recalls how these two nations have journeyed together, working on various levels of cooperation (such as culture, trade, tourism, security, education, etc.), harnessing economic growth, and shaping future policy directions within the Asian region.
Amidst all of the celebrations, however, let us not forget the reason behind this close partnership and long-standing friendship: that almost 70 years ago, Filipino blood was offered on Korean soil in the name of brotherhood.
It is an unknown fact for many Filipinos that when the Korean War broke out on June 25, 1950, the Philippines was the first Asian country to send contingent forces to aid South Korea.
Under the leadership of then President Elpidio Quirino, the Philippine Expeditionary Forces to Korea (PEFTOK) was organized. A total of five Battalion Combat Teams (BCTs) were deployed to South Korea from 1950 to 1955. Enduring the rough terrain, harsh weather conditions, and homesickness, 7,420 Filipino soldiers fought side-by-side with combat forces from 15 other nations. The creation of PEFTOK was an unprecedented move on the part of our government, a powerful gesture from a Southeast Asian country which was still recovering from the destruction brought about by the horrors of the Second World War.
In 1955, the PEFTOK Veterans Association, Inc. (PVAI) was formed. Aside from leading annual commemorations, the organization aims to “uplift through self-reliance the economic well-being of all PEFTOK Veterans, their widows, orphans and dependents,” and improve the relationship between Filipinos and Korean communities in the Philippines.
Since its inception, the PVAI has been the recipient of financial assistance from various Korean government institutions, private businesses, and local communities in the Philippines. At present, it continues to reach out to more than 300 students through its scholarship program.
However, despite the existence of a veterans’ organization and a small museum in Taguig, one cannot deny how important events in history, such as the participation of the Philippines in the Korean War, are slowly being forgotten, slipping outside of the boundaries of national memory. This slow, painful process is continually being felt up to this very day.
Recently, we have seen a growing interest in hallyu among many Filipinos — especially teenagers. Now is the perfect opportunity to reintroduce this unfamiliar episode in Philippine and Korean history.
In the book Uses of Heritage, Laurajane Smith explores how the passing on and the receiving of memories helps us to “make sense of and understand not only who we ‘are,’ but also who we want to be.” As the last few remaining veterans face the sunset of their lives, the challenge of preserving and passing on their stories becomes more and more difficult. It becomes crucial then to ask: How is this important piece of ‘Philippine history’ reproduced in the everyday lives of Filipinos? What lessons can we learn from them? What can be the role of NGOs and private organizations in pushing forth this advocacy?
On Oct. 24, the City of Marikina and the PVAI led the restoring ceremony of the Marikorea War Memorial Monument in Marikina Heights. Built in 2005, the monument is the country’s first structure honoring Filipino Korean War veterans.
One of those who spearheaded the restoration project was Jong Sub Lee of the United Korean Community Association in the Philippines (UKCA). For three months, he sought help from various donors by posting announcements on newspapers and organizing fundraising events. After this, he reached out to Mayor Marcelino Teodoro of Marikina City to propose said project. The local government of Marikina agreed to collaborate by providing technical support and shouldering labor costs. The UKCA, on the other hand, donated materials such as cement, hollow blocks, paint, and tiles. According to Mr. Lee, local Korean communities wholeheartedly took part in these activities for one sole reason: it is their humble way of showing their gratitude for all the sacrifices made by Filipino soldiers during the Korean War.
As we enter a new decade in Philippine-Korean relations, the task of immortalizing the role of PEFTOK veterans in Korean history becomes a responsibility placed on everyone’s shoulders. Both Philippine and Korean governments must continue working together to ensure that this great Filipino legacy will never be forgotten. In a time when many Filipinos look up to self-proclaimed saviors who offer brutal and brazen solutions, perhaps it is time for us to remember and turn our gaze to real heroes who, in the face of death, championed freedom, peace, and democracy.
Oliver John C. Quintana is an Instructor at the Department of Political Science, Ateneo de Manila University. He is the grandson of Ret. Col. Melecio S. Quintana (+), Korean war veteran and member of the 14th BCT of the Philippine Expeditionary Forces to Korea.
Imagine these four cases of emotional hardships and social stigma in one island in the Philippines in the late 1930s.
One, an unwed mother who got pregnant — she wished that the life in her tummy be aborted, or that she would get a miscarriage, but the baby was born safely. Motherly love takes over but she cannot touch her daughter until it is a toddler, though she can see the child daily. Then the child is brought to Manila to live a “normal life” without her permission and she can only scream and cry in deep sadness.
Two, a sick lady who has not been visited by her family and her boyfriend for years — then the boyfriend appears to visit her, with flowers. They see each other but they cannot embrace, the guard handing the flower to her, and they can only stare at each other, in deep sadness and tears that they can not even hold each other’s hands.
Three, another sick lady who has a persistent admirer but does not love him back yet. She then develops a crush on a foreigner and when that foreigner escaped to the mountains ashamed of his disease, she follows him, tries to befriend him. The foreigner rape her. In deep sadness at what happened to her, she jumps from a cliff and dies.
Four, the father of the child who was brought to Manila, escapes the island to look for his daughter. On a bus, his fellow passengers see his disease, he is forced to get out and is verbally assaulted, his bag that contains his savings was thrown away leaving him penniless and deeply disappointed. He is forced to go back to the island.
These are the stories of Anna, Ditas, Doris, and Kanor. Different individuals, different stories, but they have a common experience — they all have Hansen’s disease or leprosy or ketong in Filipino, and they all live in the Culion Leper Colony in Palawan.
Theirs’ and other patients’ riveting stories and experiences were fantastically captured in the movie Culion, the first movie produced by iOptions Ventures Corp. owned by Palawan-based entrepreneurs Peter and Gilie Sing.
I saw the premier showing of Culion on Dec. 21 at SM Megamall cinema and I was stuck in my seat, cried two times in the scenes of Anna (Iza Calzado) and Ditas (Merryl Soriano). The scene between Ditas and her boyfriend Greg (John Lloyd Cruz) was so powerful — no words, no conversation, only tears, deep sadness, and music.
After the movie, I saw Peter and I jokingly told him, “F___ you Peter, you made me cry!” I was also happy to see that a friend, Upeng Galang-Fernandez, is one of the characters and actresses in the movie.
This is a “must see” movie in the Metro Manila Film Festival 2019, and is showing nationwide from Dec. 25 to Jan. 7. Kudos to the team — scriptwriter Ricky Lee, director Alvin Yapan, cinematographer Neil Daza, producer Mark Shandii Bacolod, actresses Iza, Merryl, Jasmine Curtis-Smith (Doris), and the many other cast and crew.
Fast forward to 2019, leprosy is now a curable disease since about two decades ago and only very few people have the disease. And now more people die of non-infectious or non-communicable diseases (NCDs) because infectious or communicable diseases are now largely curable and preventable (see Table).
And that is why people now are effectively living longer, healthier, wealthier. A good reminder this holiday season for us to be more hopeful about the future.
Merry Christmas, readers and friends.
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.
ECONOMISTS MAY be finally closing in on the reason for asset bubbles. How to pop them before they grow too large, however, is a much harder problem.
The study of bubbles has steadily gathered urgency during the past four decades as crashes became more spectacular and more damaging. The stock crash of 1987 was a wake-up call for those who had assumed that markets function efficiently; there was no obvious reason why rational investors would suddenly conclude that US companies were worth 23% less than the day before. The tech bubble was even more troubling because many observers had warned of a bubble for years before the crash, to no avail. The same thing happened with the housing bubble, only when that one burst it took the real economy with it — as tends to happen when rapid asset-price declines are combined with high levels of debt.
Researchers have developed a large and diverse array of theories about why asset prices suddenly rise and crash. The difficulty in identifying the cause of bubbles has made it hard to design policies to prevent them. But recently, a growing number of economists are zeroing in on the idea of what they call extrapolative expectations. For whatever reason, it seems, investors sometimes decide that a recent run of good returns represents some sort of deep structural trend.
A new paper by Zhenyu Gao, Michael Sockin and Wei Xiong supports this idea. Looking at housing prices during the bubble, they compared states based on how much they changed their capital gains tax rates. The states that raised taxes more saw less of a bubble and crash.
But even more tellingly, the authors found that in states with lower capital gains taxes, purchases of investment properties that the owners didn’t plan to live in tend to increase more in response to recent price gains. The simplest explanation for this pattern is that when prices go up and there aren’t tax hikes to make people expect a reversal, they start to think that the trend will continue for the foreseeable future. And they buy accordingly.
A recent study by researchers at the Bank of Canada provided different evidence that pointed in the same direction. In surveys, they found, most people expect that house prices will rise and fall during a five-year period. But when the researchers show people data on recent prices, they start to believe that current trends will continue for the next five years.
Other papers found the same pattern. Economists Theresa Kuchler and Basit Zafar found that in areas where local housing prices increased more, people tend to expect that prices will go up more nationwide in the years to come. And researchers Zhi Da, Xing Huang and Lawrence Jin found that extrapolative expectations are in full effect on crowdsourcing websites.
Obviously, investors don’t always expect recent trends to continue forever. So what makes them start to extrapolate? It may be that when a price trend gets big enough for people to notice, human psychology tends to assume that this is the new normal. If house prices in your neighborhood normally go up and down, but then they suddenly start going up by big amounts each year for several years, you might assume that the game has simply changed. In that case, the obvious thing to do is to buy, buy, buy.
Defenders of the idea of efficient markets might retort that if this happens, savvier investors — who think carefully about whether a price trend is justified by underlying fundamentals — would simply bet against the trend-followers and bring things back into line. But economic theorists have long understood that because rational investors have limited firepower to short a bubble, they often find it more worthwhile to ride the rising prices for a while. That just makes the bubble worse.
So economists are starting to get a picture of why bubbles happen. Some event — maybe an increased supply of credit to home buyers — increases demand for houses or stocks and pushes up prices for a few years. Speculators see that and decide that prices just go up now, so they buy in, increasing prices even more. Rational investors know there’s a bubble, but decide to buy in for a while and try to sell at the top. The crash only happens when speculators run out of money to keep buying.
If this unified theory of bubbles turns out to be right, the next question becomes: How can governments nip the process in the bud? Gao and his colleagues suggest that tax hikes could be an answer. If economists can figure out how many years of rising prices — say, three or five — is needed to create the impression of a permanent trend in speculators’ minds, then policy makers could adopt a rule where capital gains taxes temporarily go up whenever prices rise for that many years in a row.
This policy has very little downside. If there’s a sound fundamental reason prices are rising — for example, a surge in demand for housing — then the higher capital gains taxes would skim off some of the windfall. And if it really is the start of a bubble, the sudden tax increase would damp speculators’ expectation for eternally rising prices.
If this kind of automated tax system prevents bubbles from getting out of hand, it would be a huge victory for behavioral finance — and for everyone who would no longer have to fear the whims of out-of-control asset markets.
FOR ALL the flak the pharmaceutical industry has taken for its exorbitant pricing practices, there’s no getting around the fact that it’s been a pretty stunning decade for medical progress.
Multiple new categories of medicines have moved from dreams and lab benches into the market and people’s lives, and investors who came along for the ride often reaped extraordinary profits. The Nasdaq Biotech Index is up 360% over the last 10 years to the S&P 500’s 190%. And that’s without mentioning the hundreds of billions of dollars in takeovers that rewarded shareholders with windfalls.
As 2020 approaches, it’s worth highlighting how far we’ve come in the past 10 years in developing new therapies and approaches to treating disease, even as politicians grapple with how to rein in health-care costs without breaking an ecosystem that incentivizes the search for new discoveries. Here are some of the decade’s biggest medical breakthroughs:
Cell therapies: First approved in the US two years ago, these treatments still sound like science fiction. Drugmakers harvest immune cells from patients, engineer them to hunt tumors, grow them by the millions into a living drug, and reinfuse them. Yescarta from Gilead Siences Inc. and Novartis AG’s Kymriah — the two treatments approved so far — can put patients with deadly blood cancers into remission in some cases. At the beginning of the decade, academics were just beginning early patient tests.
It’s still early days for the technology, and some issues are holding these drugs back. There are significant side effects, and the bespoke manufacturing process is expensive and time-consuming. That has contributed to a bruising price tag: Both of the approved medicines cost over $350,000 for a single treatment. And for now, cell therapy is mostly limited to very sick patients who have exhausted all other alternatives.
Luckily, more options are on their way. Some drugmakers are focused on different types of blood cancers. Others hope to mitigate side effects or create treatments that can be grown from donor cells to reduce expenses and speed up treatment. In the longer run, companies are targeting trickier solid tumors. Scientists wouldn’t be looking so far into the future without this decade’s extraordinary progress.
Gene therapies: Researchers have spent years trying to figure out how to replace faulty DNA to cure genetic diseases, potentially with as little as one treatment. Scientific slip-ups and safety issues derailed a wave of initial excitement about these therapies starting in the 1990s; the first two such treatments to be approved in Europe turned out to be commercial flops.
This decade, the technology has come of age. Luxturna, a treatment developed by Spark Therapeutics Inc. for a rare eye disease, became the first gene therapy to get US approval in late 2017. Then in May came the approval of Novartis AG’s Zolgensma for a deadly muscle-wasting disease. The drugs have the potential to stave off blindness and death or significant disability with a single dose, and, unsurprisingly, Big Pharma has given them a substantial financial endorsement. Roche Holding AG paid $4.7 billion to acquire Spark this year, while Novartis spent $8.7 billion in 2018 to buy Zolgensma developer Avexis Inc.
Dozens of additional therapies are in development for a variety of other conditions and should hit the market in the next few years. They offer the tantalizing potential not just to cure diseases, but to replace years of wildly expensive alternative treatment. If drugmakers can resist the temptation to squeeze out every ounce of value by doing things like charging $2.1 million for Zolgensma, there’s potential for these treatments to save both lives and money.
RNA revolution: The above treatments modify DNA; this group uses the body’s messaging system to turn a patient’s cells into a drug factory or interrupt a harmful process. Two scientists won a Nobel Prize in 2006 for discoveries related to RNA interference (RNAi), one approach to making this type of drug, showing its potential to treat difficult diseases. That prompted an enormous amount of hype and investment, but a series of clinical failures and safety issues led large drugmakers to give up on the approach. Sticking with it into this decade paid off.
Alnylam Inc. has been working since 2002 to figure out the thorny problems plaguing this class of treatments. It brought two RNAi drugs for rare diseases to the market in the past two years and has more on the way. The technology is also moving from small markets to larger ones: Novartis just paid $9.7 billion to acquire Medicines Co. for its Alnylam-developed drug that can substantially lower cholesterol with two annual treatments.
Ionis Pharmaceuticals Inc. and Biogen Inc. collaborated on Spinraza, a so-called antisense drug that became the first effective treatment for a deadly rare disease. It was approved in late 2016 and had one of the most impressive drug launches of the decade. And Moderna Therapeutics rode a wave of promising messenger RNA-based medicines to the most lucrative biotechnology IPO of all time in 2018. From pharma abandonment to multiple approvals and blockbuster sales potential in under 10 years. Not bad!
Cancer immunotherapy: Scientists had been working on ways to unleash the human immune system on cancers well before the 2010s without much luck. Checkpoint inhibitors — drugs that release the brakes on the body’s defense mechanisms — have since produced outstanding results in a variety of cancers and are the decade’s most lucrative turnaround story.
Merck got a hold of Keytruda via its 2009 acquisition of Schering-Plough, but it was far from the focus of that deal. Once Bristol-Myers Squibb & Co. produced promising results for its similar drug, Opdivo, Merck started a smart development plan that has turned Keytruda into the world’s most valuable cancer medicine. It’s now available to treat more than 10 types of the disease, and has five direct competitors in the US alone. Analysts expect the category to exceed $25 billion in sales next year.
If anything, the drugs may have been too successful. Copycat efforts are pulling money that could fund more innovative research. There are thousands of trials underway attempting to extend the reach of these medicines by combining them with other drugs. Some are based more on wishful thinking than firm scientific footing. Still, the ability to shrink some previously intractable tumors is a considerable advance. If drugmakers finally figure out the right combinations and competition creates pricing pressure that boosts access, these medicines will do even more in the years to come.
Conquering hepatitis C: From a combined economic and public-health standpoint, a new group of highly effective hepatitis C medicines may outstrip just about anything else on this list so far. Cure rates for earlier treatments weren’t especially high; they took some time to work and had nasty side effects. The approval of Gilead’s Sovaldi in 2013, followed in time by successor drugs such as AbbVie Inc.’s Mavyret, have made hepatitis C pretty easily curable in a matter of weeks. For Gilead, getting to market rapidly with its drug proved enormously profitable; it raked in over $40 billion in revenue in just three years.
Hepatitis C causes liver damage over time that can lead to transplants or cancer. The existence of a rapid cure is a significant long-term boon even if the initial pricing on the drugs made them, in some cases, prohibitively expensive. Sovaldi notoriously cost $1,000 per pill at launch and over $80,000 for a course of treatment. The good new is, treatments have become a lot more affordable, which should allow this class of drugs to have a broad and lasting positive health impact.
Hepatitis C is one of the relatively few markets where the drug-pricing system has worked well. As competing medicines hit the market, the effective cost of these treatments plummeted. That, in turn, made the drugs more accessible to state Medicaid programs and prison systems, which operate on tight budgets and care for populations with higher rates of hepatitis C infection. Louisiana has pioneered the use of a “Netflix model,” under which the state paid an upfront fee for unlimited access to the drug. It’s an arrangement that will help cure thousands of patients, and other states are likely to follow its lead.
Many of the medicines highlighted in this column have list prices in the six figures, a trend that’s helped drive up America’s drug spending by more than $100 billion since 2009. Building on this decade’s medical advances is going to lead to even more effective medicines that will likely come with steeper prices. I’d like to hope that policymakers will come up with a solution that better balances the need to reward innovation with the need to keep medicines accessible. That would really be a breakthrough.
FOR the third time in the last four years the Barangay Ginebra San Miguel Kings and Meralco Bolts dispute the title for the season-ending Philippine Basketball Association tournament Governors’ Cup.
A best-of-seven affair, the finals series begins on Jan. 8 and to be played in four venues.
The Kings have had the number of the Bolts in the finals to date, taking the first two encounters, 4-2 and 4-3, in 2016 and 2017, respectively. But Meralco fortified its roster of late with solid acquisitions which it hopes could help it finally go over the hump and win its first-ever PBA crown.
Barangay Ginebra was the first to barge into the finals of this edition of the Governors’ Cup.
It fended off a spirited challenge from the upset-minded Northport Batang Pier, 3-1, in their best-of-five semifinal series. Prior to that, the fourth-seeded Kings eliminated and crushed the grand slam hopes of the San Miguel Beermen in the quarterfinals where they saw no need to use their twice-to-beat advantage.
In their last game against Northport, import Justin Brownlee led the Kings in securing the finals berth, finishing with 36 points, 19 rebounds and eight assists.
Japeth Aguilar had 20 points, nine boards and seven assists while LA Tenorio and Stanley Pringle had 19 and 18 points, respectively.
Scottie Thompson also had it solid, chalking up 14 points, 10 rebounds and four assists.
The Kings swept their last three games versus the Batang Pier after being routed by 34 points in the series opener.
“Hopefully this is our time again. In the previous three PBA season we always had a title to show for. Hopefully we win another one this year,” said Mr. Tenorio following their victory.
THIRD TIME’S A CHARM?
The Bolts, meanwhile, are looking to make it third time a charm after falling short in each of their two attempts at a PBA title. They acquired the services of guys like Raymond Almazan and Allein Maliksi in recent trades to help them in their championship push.
Meralco outlasted the TNT KaTropa in their best-of-five semifinals, 3-2, punctuated by an 89-78 victory in Game Five on Dec. 23.
Import Allen Durham had it all-around anew with 28 points, 10 rebounds and eight assists while Chris Newsome had 23 points, eight rebounds and four assists in the victory.
Rookie Bong Quinto exploded for 19 points with Mr. Maliksi adding 11.
In the quarterfinals, the second-seeded Bolts dispatched the Alaska Aces.
“It was a tough path but everybody was just focused on getting back to the finals,” said Meralco coach Norman Black.
In their lone game in the Governors’ Cup this year, the Bolts won over the Kings, 101-77.
Meanwhile, the finals series begins on Jan. 8, Wednesday, with Game One set for 7 p.m. at the Smart Araneta Coliseum.
Game Two will be on the road in Lucena City with the series going back to the Big Dome for Games 3 and 4.
Game Five will be played at the Mall of Asia Arena.
Games Six and Seven will be at the Philippine Arena in Bulacan.
THE 72nd edition of the National Basketball Association on Christmas Day will feature five games televised across ESPN and ABC in the United States and streamed on the ESPN App. The annual tradition will reach fans in 215 countries and territories in 46 languages.
The action tips off with the defending NBA Champion Toronto Raptors hosting a Christmas Day game for the first time when they meet the Boston Celtics at 12 p.m. ET on ESPN. In the Philippines it can be seen over the Facebook and Twitter accounts of NBA Philippines at 1 a.m. today (Dec. 26).
ABC’s coverage opens with reigning Kia NBA MVP Giannis Antetokounmpo and the Milwaukee Bucks visiting the Philadelphia 76ers at 2:30 p.m. ET, followed by NBA scoring leader James Harden and the Houston Rockets taking on the Golden State Warriors in San Francisco (5 p.m. ET).
ABC and ESPN will both air the Staples Center showdown between LeBron James and the Los Angeles Lakers and Kawhi Leonard and the LA Clippers at 8 p.m. ET. This game can be seen in the Philippines at 9 a.m. today over CNN Philippines.
The schedule concludes with the Denver Nuggets hosting their first Christmas Day game in 25 years when they play the New Orleans Pelicans at 10:30 p.m. ET on ESPN.
Here are some additional numbers highlighting the NBA on Christmas Day.
338 — James ranks third on the career Christmas Day scoring list with 338 points, behind No. 1 Kobe Bryant (395) and No. 2 Oscar Robertson (377).
140 — NBA teams have conducted 140 NBA Cares Season of Giving events this holiday season, serving more than 130,000 meals and distributing more than 10,000 gifts.
60 — Bernard King scored a Christmas Day-record 60 points for the New York Knicks against the New Jersey Nets in 1984.
31 — Philadelphia will host a Christmas Day game for the first time in 31 years.
30/17 — There are 30 international players from 17 countries on Christmas Day teams’ rosters.
28 — Christmas Day rosters feature 28 players who have been NBA All-Stars. NBA All-Star Voting presented by Google begins on Dec. 25 at 11 a.m. ET.
25 — This Christmas will mark the 25th anniversary of Scottie Pippen leading the Chicago Bulls to a 107-104 overtime win over the Knicks. Pippen had 36 points, 16 rebounds and five steals.
23 — The Lakers have the most wins on Christmas Day with 23.
15 — Clippers head coach Doc Rivers has been a part of 15 Christmas Day games — four as a player and 11 as a head coach.
14 — James will play his 14th Christmas Day game, moving into sole possession of second place in NBA history. Bryant holds the record with 16.
12 — The NBA will have five Christmas Day games for the 12th year in a row.
10 — Dwyane Wade has the most Christmas Day victories for a player with 10 — a record that James can match with a win this year.
6 — Six players have recorded a triple-double in a game on Christmas Day: Draymond Green (2017), Russell Westbrook (2013), James (2010), Billy Cunningham (1970), John Havlicek (1967) and Robertson (1960, 1961, 1963, 1967).
4 — Christmas Day will feature four Kia NBA MVPs: the Rockets’ Harden and Westbrook, the Lakers’ James and the Bucks’ Antetokounmpo.
3 — Three 2019 NBA All-Stars are set to make their Christmas Day debuts this year: Denver’s Nikola Jokić, Toronto’s Kyle Lowry and Boston’s Kemba Walker.
1 — The Jump’s new pregame show on ABC will air for the first time prior to the Lakers-Clippers game, while Hoop Streams, ESPN’s new digital onsite pregame, will make its debut on the ESPN App and ESPN’s Twitter and YouTube platforms.
