The Chinese EV industry and us

July 29, 2024 | 12:03 am

I have been fascinated by the rise of the Chinese EV (electric vehicle) industry. From being the butt of Elon Musk jokes a decade ago, the Chinese EV industry, led by BYD, is poised to conquer the world.

Chinese manufacturer BYD, or Build Your Dreams, has outstripped Tesla in global sales and is producing product after product, from full EVs to hybrids, that are technologically advanced and, most importantly, affordable. So worried are Western governments about the Chinese EV invasion that they are erecting tariff walls against Chinese cars in a retreat from free trade principles they had been espousing.

The rise of the Chinese EV industry is a testament to the competence and foresight of Chinese bureaucrats who used the transition to EVs to leapfrog Japanese, Korean, European, and American manufacturers. Knowing that carving market share from entrenched ICE (internal combustion engine) producers like Toyota and Ford would be an uphill climb, the Chinese government bet big on the nascent EV industry instead.

From seeding demand through subsidies and tax breaks for consumers to using government procurement contracts for the public transportation system and investing in scientific research and development into batteries, the Chinese government nurtured a fledgling industry into a powerhouse that now accounts for nearly 37% of all new car sales in China.

While the Germans are good at mechanical engineering, I have read that the Chinese poured resources into chemical engineering because the heart of EVs is batteries. Making better and longer-lasting batteries requires chemical manipulation rather than mechanical invention.

However, more importantly, the rise of the Chinese EV industry is also a product of foreign talent, foreign capital, and capitalistic competition.

Many foreign car designers work for Chinese firms. One such designer is Wolfgang Egger, a Director of Design at BYD who previously worked for Alfa Romeo and Lamborghini. Chinese car manufacturer FAW, which produces the luxury brand Hongqi, poached Giles Taylor, a chief designer from Jaguar and Rolls Royce. Other European designers like him work for Chery, NIO, GAC, Dongfeng, Great Wall Motors, and other Chinese brands. This shows that the Chinese are not xenophobic when it comes to business. They don’t see foreigners as displacing local talent but as a source of new technology and knowledge. Here, hiring foreign managers is a pain (except if you are a POGO).

Chinese car manufacturers are open not only to foreign talent but also to foreign capital. It’s well-known that Warren Buffet invested $230 million in Shenzen-based BYD in 2008, which has become highly profitable. However, the second biggest foreign shareholder in BYD after Berkshire Hathaway is BlackRock, one of the world’s biggest asset managers.

We can learn more about how the Chinese handle foreign investment in the automotive industry to boost their local industries. Previously, the Chinese government had a policy that foreign car manufacturers had to have joint ventures to enter the Chinese domestic market. However, it made an exception for Tesla. It allowed Tesla, a 100% foreign-owned EV manufacturer, to set up a Shanghai factory and sell in the Chinese domestic market. Elon Musk didn’t know that the Chinese were learning from the supply chain ecosystem that Tesla set up in China. The know-how and EV supply chain ecosystem then spread to other Chinese EV manufacturers.
Imagine if that policy against 100% foreign investment were here. It would probably be in the Constitution, and there would be no way to change that policy and learn from foreign know-how.

Another primary reason why the Chinese EV industry developed so fast, marked by rapid innovations from battery technology to design, is because the Chinese government use Schumpterian-style fierce capitalistic competition to drive change. There are hundreds of car manufacturers in China, from state-owned enterprises and privately owned companies to joint ventures. Even if some manufacturers are state-owned or owned by a local government unit, the government doesn’t choose and protect winners.

Nio, for example, a luxury EV manufacturer founded by entrepreneur Bin Li, innovated battery swap technology to stand out from the competition. The company had been losing money for years and nearly went bankrupt due to fierce competition. The Hefei municipal government threw Nio a lifeline by investing in it. Then, after it faced bankruptcy a second time, the Abu Dhabi Investment Fund came to its rescue and injected $2 billion into the company. Nio is listed on the Hong Kong and Singapore stock exchanges and expects to be profitable soon.

We should be as open to foreign talent and capital as the Chinese, but we are not. For example, our Constitutional restrictions on the practice of professions make it hard to hire foreign managers and use foreign talent. Just teaching is considered an exercise of a profession, which is prohibited in the Constitution unless provided by law, so it isn’t easy to hire foreign professors. Our universities will never become world-class if we continue to have this policy.

We seem to have a different attitude when it comes to sports. Our Congress rushes citizenship for foreign basketball players so that they can play for the Philippine team. We allow foreign volleyball players to play regularly in our professional leagues.

There’s a global war for talent, even if we don’t seem to realize it. Other countries, such as the US, provide secure pathways for talented individuals toward citizenship. Indonesia just launched a Golden Visa program wherein investors and talented individuals can get to stay for five to 10 years. Some give permanent residency to entrepreneurs, scientists, and artists. In contrast, we discourage foreign capital from coming here, encourage our talented professionals to seek greener pastures abroad, and make it difficult for foreign professionals to practice here. (Presently, even Indian graduates of our medical schools aren’t allowed to practice here.)

It’s too bad that talk of Constitutional change is dying down. (President Bongbong Marcos didn’t mention it in his SONA.) We need to remove all those Filipino First and Filipino Only provisions in the Constitution. Even RBH No. 7, passed by the House, opens only public utilities, advertising, and educational institutions to foreign investment.

Watching the rise of the Chinese EV industry, we can only sigh. The Chinese keep doing things right, while our false sense of economic nationalism keeps holding us back.

Calixto V. Chikiamco is a member of the board of IDEA (Institute for Development and Econometric Analysis).

totivchiki@yahoo.com

Rings of Power cast unveils first look into Season 2 at Comic-Con

July 29, 2024 | 12:02 am

SAN DIEGO — Lord of the Rings: Rings of Power unveiled the first look at Season 2 on Friday as the cast shared insights into what is coming next in the fantasy series at San Diego Comic-Con.

The fantasy series is based on appendices in J.R.R. Tolkien’s original The Lord of the Rings novels and is set thousands of years before the events of The Hobbit and The Lord of the Rings novels and films.

Although the show is called Rings of Power, the first season did not include any of the franchise’s coveted rings, but they will appear at the beginning of the second season.

The cast of the Amazon Prime Video series is led by Morfydd Clark, who plays the almost immortal elf named Galadriel and Ismael Cruz Cordova, who plays the elf named Arondir along with showrunners Patrick McKay and J.D. Payne.

For Ms. Clark, wearing one of the iconic rings with conviction for Season 2 was a more arduous task than she initially expected.

“Weirdly, putting on a ring in an elegant way without looking like you’re trying too hard was much harder than I expected,” she told Reuters in an interview at San Diego Comic-Con.

The upcoming season, which premieres on Aug. 29, will reunite friends as they work together in a war against the corruption of the rings.

At the end of the first season the character, Halbrand, played by Charlie Vickers, was revealed to be the biggest villain in the Lord of the Rings franchise named Sauron, who wishes to rule Middle-Earth. This reveal, according to Mr. Vickers, brings chaos into the second season.

“I think chaos is a good word to describe it, especially towards the latter episodes,” he said.

“A lot of things start happening at once and there are huge battles. There is a battle that lasts for three episodes, I think. It is chaotic, that’s a good word. Sauron is a trigger for a lot of the chaos, I suppose, through his manipulations of people,” he added.

Stars have returned to the San Diego Comic-Con after the 2023 dual writers’ and actors’ strikes led to a subdued Comic-Con last year with no A-list celebrities or Hall H panels, which are known for delivering some of the biggest industry news. — Reuters

Zeekr wants you to rethink electrified luxury

July 29, 2024 | 12:02 am

VELO_PAGE1_image1 — Zeekr Philippines is initially offering the Zeekr 001 and X. — PHOTO BY KAP MACEDA AGUILA

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Autohub Group grows portfolio with ‘intelligent premium’ EV brand

IT’S TRULY an automobile buyer’s market. Even if you drill down the various segments, they’re all being saturated with marques and models. And everyone knows that when there are more choices, that’s good news for browsers. There’s a bigger chance of getting best value for our money — features that we want at the pricing we’re comfortable with. And, surprisingly, even the once burgeoning electrified (in all its forms) vehicle space is nicely filling up with challengers and contenders to compete for a spot in your garage.

The Autohub Group recently added to its growing empire with the formal introduction of Zeekr, positioned as a “global intelligent premium electric mobility technology brand.” Under the aegis of the Geely Auto Group, Zeekr was established in 2021 in Ningbo, Zhejiang, China to enshrine the group’s aspiration to compete in the premium electrified space.

Even as the first showroom of Zeekr in the Philippines is set to rise in Bonifacio Global City, Taguig this September, Autohub is already making available two variants of the Zeekr 001 (Long Range and Privilege), and another two grades of the Zeekr X (Premium and Privilege). The 001 is priced from P3.625 million, while the X starts at P2.6 million.

They are decidedly more upscale and luxe than your average EV in both execution and accoutrements, that’s for sure. But that’s not all, says Zeekr Philippines. The Zeekr vehicles can attain, “lightning-fast charging times and feature safety functions, positioning it as a premier sustainable mobility solution. For instance, the Zeekr 001’s charging port boasts a capacity of up to 200kW, allowing (the user) to charge the vehicle from 10% to 80% in just 30 minutes.”

In an exclusive interview with this writer, Autohub Group President Willy Tee Ten said he first heard of the brand through Chinese expats who work for Geely (the Autohub Group is among Geely’s dealers here). “They told me that they have another brand under the group — a brand that’s the favorite of the Geely Holdings owner. That brand is Zeekr,” he revealed.

It piqued his curiosity enough to want to take a closer look at the Zeekr cars himself, and so off to China Mr. Tee Ten went. “Normally, when you choose a brand, you choose the most popular, the most sellable — the one that’s easiest to market,” he insisted. “I thought it might be hard because it’s a Chinese brand that not many people know about. I went to the factory and saw for myself the beauty of the vehicles. It’s what struck me first, after that is the technology behind it. I thought to myself, this is so good. This is one of the few brands that I could say I wanted even if it’s not popular yet.”

The addition of Zeekr to the Autohub portfolio is doubly significant because it is the group’s first all-electric marque. We asked Mr. Tee Ten about the confidence to go this route. “Of course, the interest in EVs has been there since way back. It became even more evident when the President last year signed EO 12, exempting duties for EVs.”

The market that Zeekr is aiming for here, he continued, is the mid-to-luxe segment. Based on pricing, there’s obviously that aspiration to undermine the traditional — and more expensive — premium players. “The good thing about this is that even if we’re in the premium segment, our price is much better than the (present competition) in this space. Yes, we’re going to target the premium segment buyers so that they look for a lower-priced vehicle like ours with the same or even better quality and technology.”

There are also mass-market brands playing in the high-end space, he insisted. “Those are the customers we’d like to capture also. We’re hitting two birds.”

For now, there is no immediate plan for growing the dealership footprint of Zeekr Philippines beyond the aforementioned BGC location (the Autohub Group showroom is getting a renovation to accommodate Zeekr). “We’re doing things deliberately. We also need to wait for our country’s charging infrastructure to grow first before looking at other areas. But since Zeekr is in the premium segment, we’re in the most premium area that is BGC. So, I think this is the best way to start the Zeekr brand,” concluded Mr. Tee Ten.

Lowering cap on credit card charges to support consumption, analysts say

July 29, 2024 | 12:02 am

By Luisa Maria Jacinta C. Jocson, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) can begin lowering the cap on credit card charges amid easing inflation, analysts said, as this would also provide support for private consumption.

“The increased interest rate was a measure to control inflationary expectations. Its main purpose was to decrease aggregate demand that can arise as certain sectors — and the government — might try to cope with increased prices by raising expenditures,” Leonardo A. Lanzona, Jr., an economics professor at the Ateneo de Manila University, said in an e-mail.

“Thus, inflation has indeed been controlled, [so] it will be alright to reduce the interest rates. Otherwise, the lower interest rates can raise expenditures that can aggravate inflation,” he added.

BSP Deputy Governor Chuchi G. Fonacier said in May that they are finalizing their review of the current interest rate cap on credit card transactions. The central bank reviews the rate ceilings every six months.

In August 2023, the BSP kept the maximum interest rate on unpaid outstanding card balance at 3% per month or 36% a year. The existing ceiling on the monthly add-on rate that credit card issuers can charge on installment loans was also maintained at 1%.

The maximum processing fee on the availment of credit card cash advances was likewise retained at P200 per transaction.

The BSP last increased the cap by 100 basis points (bps) in January 2023 from 2% previously following the rate hikes delivered by the Monetary Board amid elevated inflation.

The higher cap was also meant to mitigate the impact of inflation on banks and credit card issuers.

The central bank raised borrowing costs by a cumulative 450 bps from May 2022 to October 2023, bringing its policy rate to a 17-year high of 6.5%.

Mr. Lanzona noted that any decrease in the interest rate cap will “ultimately depend on how much inflation is expected.”

“If some inflation still exists, the decline in interest rates should be low,” he said.

Headline inflation averaged 6% in 2023, above the central bank’s 2-4% goal, but has since eased amid the lagged impact of the BSP’s rate hikes and despite the El Niño weather phenomenon.

In the first six months of 2024, inflation averaged 3.5%, slightly higher than the central bank’s 3.3% full-year forecast but within its 2-4% annual target range.

“When BSP acquiesced to (the) industry proposal to raise the cap the last time, there was at least some macroeconomic basis as BSP itself raised its rate in response to inflation,” Enrico P. Villanueva, a senior lecturer at the University of the Philippines Los Baños Economics Department, said via Messenger.

“Lowering the credit card rate cap now will naturally give retail borrowers some reprieve, but BSP lacks moral anchor to lower the cap now if it has not cut its own rates,” he added.

Mr. Villanueva said that the revision to the credit card rate cap can also be based on the extent of the BSP’s rate cuts.

BSP Governor Eli M. Remolona, Jr. has signaled that the central bank can begin easing its policy stance by next month.

NO NEED TO LOWER RATE CAP

On the other hand, EastWest Bank Chief Executive Officer Jerry G. Ngo said the BSP does not need to lower the credit card rate cap.

“We believe that there should be no downward adjustment in the interest rate cap for credit cards as this is contrary to BSP’s objective of financial inclusion,” Mr. Ngo said in an e-mail.

“Lowering the cap would make it harder for some segments of the population, especially those with low income or poor credit history, to access credit cards.”

Mr. Ngo said this would potentially “limit their options for financing their needs and aspirations, and potentially push them to informal and unregulated lenders that charge exorbitant fees and interest rates.”

“While the proposal’s goal is to alleviate some debt burden, lowering the cap now might limit formal credit availability for vulnerable groups, potentially pushing them towards predatory informal lenders,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

“As a result, it could undermine the central bank’s goals of fostering a regulated and inclusive financial system,” Mr. Roces added.

Mr. Ngo instead recommended that the central bank should increase and diversify the competition in the credit card market.

“This would encourage more players to enter the market and offer better products and services to consumers. It would also promote better price discovery, as consumers would be able to compare and choose the best deals for their needs and preferences,” he said.

“A more competitive market would also incentivize credit card issuers to lower their interest rates and fees voluntarily, as they seek to attract and retain customers,” he added.

He said the BSP must “work on addressing some of the institutional deficiencies that hamper the development of the credit card market and the financial sector in general.”

“These include the lack of a single ID system, a comprehensive credit bureau, and an effective anti-mule law. These measures would help improve the identification, verification, and screening of credit card applicants, reduce the risks of fraud and default, and enhance the transparency and accountability of the financial system,” Mr. Ngo said.

Megawide’s Saavedra says gov’t push, education key to construction growth

July 29, 2024 | 12:02 am

By Revin Mikhael D. Ochave, Reporter

EDGAR B. SAAVEDRA, chairman of Megawide Construction Corp., said that targeted government policies and overhauls in the education system are crucial to addressing the Philippine construction sector’s decades-long lag behind global standards.

“If you compare the construction sector of the Philippines to other countries, we are far behind, by about 30 years. If compared to Japan, we’re behind by over 40 years, same with Germany,” the 49-year-old Mr. Saavedra, who also serves as the company’s chief executive officer and president, said in an interview with BusinessWorld.

“If compared to the United States, the Philippines is maybe behind by 20 years. Germany and Japan are more advanced,” he added.

To bridge this gap, Mr. Saavedra said there has to be a push from the government to improve the construction sector.

“It is more on the macro side. There should be a push from the government. We can be like Singapore, which has criteria and (the Building and Construction Authority). They have qualifiers, incentives, and penalties. There is a system,” he said.

According to its website, the Building and Construction Authority oversees the safety, quality, inclusiveness, sustainability, and productivity of Singapore’s built environment sector, which includes structures that provide people with living, working, and recreational spaces.

Mr. Saavedra also emphasized the need for efforts to improve the Philippine education sector, pointing out a disconnect between academia and the local construction industry.

“There’s no program being implemented to force the industry and the universities to work together. The curriculum is disconnected. It’s a multiplier effect,” he said.

“We need to have changes in the programs of schools, as well as the curriculum,” he added.

Mr. Saavedra earned his engineering degree from De La Salle University and pursued special studies in foundation formworks in Germany. He has over 20 years of engineering experience.

Mr. Saavedra and co-founder Michael C. Cosiquien established Megawide in 1997, and it became a publicly listed company in February 2011.

Years later, Mr. Saavedra now has three publicly listed companies engaged in the construction and renewable energy sectors: Megawide, Citicore Energy REIT Corp., and Citicore Renewable Energy Corp. (CREC).

Despite being a civil engineer by profession, Mr. Saavedra said he is an entrepreneur “at heart,” attributing this to his mother.

Mr. Saavedra hails from Margosatubig town in Zamboanga del Sur.

“We have a family-run shipping business in the province. I grew up in the province. My mother was strict. During summer, she would tell us to help with the business,” he said.

Regarding his goals for his companies, Mr. Saavedra said he aims for Megawide to grow further independently, supported by its real estate unit, PH1 World Developers, Inc.

Megawide acquired PH1 from Citicore Holdings Investment, Inc. in July 2023 for P5.2 billion, as the conglomerate eyes expansion in the below-middle-income and middle-income segments of the real estate market.

“Before, we were contractors only constructing for others. Now, we want to construct also for our own projects. It should be a balance. The impact is larger if the equipment is ours and we are the ones designing the project. The design will be better,” he said.

Megawide’s project portfolio includes the Parañaque Integrated Transport Exchange, Mactan-Cebu International Airport, and portions of the Metro Manila Subway Project.

PH1 World’s projects include the Modan Lofts Ortigas Hills condominium project in Taytay, My Ensō Lofts in Quezon City, The Hive Residences condominium in Taytay, and The Northscapes housing development in Bulacan.

Regarding his renewable energy ventures, Mr. Saavedra believes these have a different approach compared to other players in the sector. “We are purely focused on renewable energy. We have a different approach compared to other companies. We believe that this technology will help us grow,” he said.

CREC officially became the second publicly listed company this year on June 7, raising approximately P5.3 billion from its initial public offering. It aims to become the largest power producer within the next five years.

Meanwhile, Mr. Saavedra said he is not closing his doors to the possibility of having business ventures in other sectors.

“It depends. You will never know. It depends on the market. We need to look at our surroundings and find out the needs of society,” he said.

“I still have five- and ten-year roadmaps. Those are still clear. But I want to give importance to the journey also,” he added.

Innovation competition looks for solutions to combat food insecurity

July 29, 2024 | 12:02 am

The United Nations World Food Programme (WFP) and the United States Agency for International Development (USAID), in collaboration with WFP’s Innovation Accelerator, launched the first in-country innovation competition in search of local solutions to tackle food insecurity in the Philippines.

This initiative is part of the Preparedness and Response Excellence in the Philippines (PREP) program, supported by USAID, the Australian Government’s Department of Foreign Affairs and Trade (DFAT) and others. PREP aims to enhance the Philippines’ emergency response and management capacities, supporting vulnerable Filipinos during disasters.

The PREP Innovation Challenge invites local innovators to propose low- and high-tech solutions that will help combat food insecurity in disaster-prone areas of the Philippines. Innovators may apply to one or both of two priority areas: enhancing emergency preparedness to build resilience or increasing efficiency and effectiveness in humanitarian response.

Selected innovations will be showcased at the 2024 PREP Forum in Manila this September.

“At WFP we are asking, ‘Prep ka na ba (Are you ready) to innovate to end hunger in the Philippines?’ This is an opportune time for the PREP Innovation Challenge in the Philippines. It marks WFP’s commitment to help pilot and scale existing innovative approaches to end hunger in the Philippines, in close partnership and support of the government, donors and partners,” said WFP Philippines Country Director Regis Chapman.

All entities, including government (regional, provincial and local government units), local organizations, foundations, academia and others are encouraged to apply. The innovation proposal must target at least one of these provinces: Maguindanao del Sur, Maguindanao del Norte, Surigao del Norte, Dinagat Islands, Albay, Catanduanes, Cagayan and Isabela. The proposal must also align with national, provincial and local plans, as well as with the Sustainable Development Goals.

Learn more about the PREP Innovation Challenge at https://innovation.wfp.org/prep-innovation-challenge and WFP Philippines Facebook Events Page. Interested and eligible innovators may apply at https://airtable.com/appVBhZJ5M40KXWXL/shrdsU21E2tASoQTC by July 31.

KADIWA store network to tap more suppliers

July 29, 2024 | 12:02 am

f-Kadiwa-Pasko-OPS-PHOTO — OFFICE OF THE PRESS SECRETARY PHOTO

THE Department of Agriculture (DA) said it is seeking out more farmer cooperatives and food manufacturers to supply its KADIWA centers.

“Aside from helping consumers, farmer cooperatives will have a rent-free venue to sell their produce while food manufacturers can do this as their corporate social responsibility project,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said in a statement.

The department said the ‘KADIWA sa BayanAnihan’ program makes available lower-priced basic goods by allowing suppliers to sell directly to the public, bypassing middlemen.

The goods being sought for sale at KADIWA stores include vegetables, eggs, chicken, pork, fish, sugar, spices, canned goods, cooking oil, soy sauce, vinegar and noodles at wholesale prices.

Mr. Laurel said proceeds from KADIWA will help finance the DA’s subsidized rice program for the poor and vulnerable.

“Whatever funds KADIWA centers and the Food Terminal, Inc. make from this ‘Kabayani’ initiative will be utilized to help sustain the P29 rice program,” he added, referring to the intended selling price under the subsidized program.

The target market is estimated at about 34 million vulnerable individuals, including persons with disabilities, solo parents, and senior citizens, as well as those below the poverty line.

The DA has started a large-scale trial of the program to gather data on demand, supply, and logistics, with the trial expected to run for another year.

During the first two weeks of implementation, the subsidized-rice program sold 12.7 metric tons of cheap rice to about 25,000 households.

The KADIWA centers will seek to sell rice at between P45 and P48 per kilo to the general public.

Mr. Laurel has disclosed plans to expand the KADIWA network to 1,500 locations in the next three years. — Adrian H. Halili

Lame arguments to justify the transfer of PhilHealth funds

July 29, 2024 | 12:02 am

The people are angry over the transfer of PhilHealth funds to the National Government. Here is a sample of the furious, fighting words that form public opinion.

Veteran Jarius Bondoc wrote a Philippine Star column (July 17), which he titled “Now they’re stealing our PhilHealth contributions.”

In an interview with Storycon on One News (July 17), Former Finance Undersecretary Cielo Magno said that the provision in the budget law enabling the transfer of funds of government-owned or -controlled corporations (GOCCs) like PhilHealth is “illegal.”

In his July 22 BusinessWorld column (“The P89.9 billion taken from PhilHealth are member contributions, not government subsidies”), Juan A. Perez III asked a rhetorical question: “Pickpockets?”

The July 17 editorial of the Philippine Daily Inquirer was titled: “Immoral fund transfer.”

And on Twitter, economist JC Punongbayan said “nagsimula na ang Marcos admin na mag-extort ng pera mula sa (The Marcos administration has started to extort money from) GOCCs, including PhilHealth and PDIC.” (PDIC stands for the Philippine Deposit Insurance Corp.)

A more sober but still determined call comes from the medical associations and the alliance of health professionals. They have urged the President to “immediately issue a directive to return the entirety of the P89.9 billion in unused funds to PhilHealth.”

Despite the outrage, the administration is digging in. And the Department of Finance (DoF) is the most active in defending the transfer of the PhilHealth funds. It was the DoF that issued the guidelines to implement the controversial provision in the 2024 General Appropriations Act (GAA), leading to the remittance of PhilHealth’s reserve funds to the National Government.

We summarize the DoF’s main arguments, drawn from a statement titled “Mobilizing Unused GOCC Funds for Public Programs,” posted on July 15. And we show how weak the arguments are.

The DoF uses the PhilHealth example, arguing that it and other GOCCs have “billions in unused and idle funds,” which “are being marshalled for projects in health, social services, and infrastructure.” With respect to PhilHealth, the DoF says that the remittances (i.e., what government is taking away) “do not come from their member contributions.” These remittances are the “unutilized National Government subsidies,” and for DoF, “we cannot afford to have excess money sleeping in GOCCs.”

The DoF also takes pride in saying that the remittances from PhilHealth have been used “to pay the 5.04 million claims of COVID pandemic era service allowances of frontliners.”

The DoF likewise assures us that its “move complies with all laws, specifically the General Appropriations Act of 2024.”

The statement of the DoF betrays its ignorance of PhilHealth and the National Health Insurance Program.

PhilHealth is a social health insurance program that pools the resources and risks of the population so that everyone is financially protected from unanticipated, extraordinary, or disruptive expenses arising from sickness, accident, or disability. This kind of financial insurance is about solidarity. My premium or contribution to the fund is not just for my own benefit when I get sick, but it is also for the benefit of others, rich or poor, who get sick. The funds are used not just to cover the medical expenses of the sick but likewise to finance benefits to prevent people from getting sick.

The principles of solidarity and the pooling of resources and risks mean that the program is universal. The whole population is covered. Filipinos above 21 years old are all members of PhilHealth, and they and their dependents are all entitled to PhilHealth benefits. The spectrum of healthcare to be insured by PhilHealth, though constrained by budget or financial resources and the health technology assessment, must be as wide as possible. The goal is to significantly reduce out-of-pocket expenses. Services must be expanding, and the financial benefit package must be increasing.

To be sure, there’s no free lunch. Someone must finance Universal Health Care (UHC) and social insurance. PhilHealth is thus financed through taxes, defined as compulsory contribution to state revenue.

For those with the ability to pay, including minimum wage workers, the contribution takes the form of premiums. Those who pay the premiums, sourced from their own wealth or income, are PhilHealth’s “direct contributors.”

But what about the poor, those without the ability to pay? They also contribute to the pooling of resources and risks by becoming “indirect contributors.” Government provides the indirect contributors the subsidy, so they get enrolled at PhilHealth, become PhilHealth members, and thus claim PhilHealth benefits.

But in essence, the subsidy is still taxpayer’s money, and the poor also pay taxes. Let’s not forget that a substantial part of the subsidy for indirect contributors comes from the earmarking of sin taxes, the burden of which is mainly shouldered by the poor themselves.

To be clear, the government subsidy sourced from the taxpayers becomes the premium of the indirect contributors. This premium is their contribution to the pooling of resources to make the social insurance program work. The pooling of resources from the premiums of both the direct contributors and indirect contributors enables the benefits for all PhilHealth members and dependents.

It follows that the PhilHealth funds are meant to be exclusively used for the benefit of all its members and dependents. The resources, including the excess reserves, cannot be taken away from PhilHealth.

Removing the amount of approximately P90 billion (the premium from the indirect contributors) from the pool of PhilHealth resources destroys the very foundation of the health insurance program and undermines the solidarity of all — the direct and indirect contributors. The removal or transfer of part of the insurance fund impairs the PhilHealth mandate. And it diminishes the benefits for all its members: the Filipino people.

The discussion above is reflected in the Act Instituting Universal Health Care for all Filipinos (Republic Act No. 11223).

Section 8 is about Program Membership. Members consist of the direct contributors and indirect contributors. Under Section 4, the term “indirect contributors” is defined: “Indirect contributors refer to all others not included as direct contributors, as well as their qualified dependents, whose premium [emphasis mine] shall be subsidized by the National Government including those who are subsidized as a result of special laws.”

The law is clear that the subsidy becomes the premium of the indirect contributors. Thus, the DoF is utterly wrong to say that the unused funds are continuing subsidies that government can transfer and use for other purposes. And Juan A. Perez III is spot-on when he said that “The P89.9 billion taken from PhilHealth are member contributions”; they are no longer government subsidies.

In effect, the 2024 GAA and the DoF circular are taking away (or diminishing) the premium and membership of the PhilHealth indirect contributors. Hence, it insults and degrades the poor members of PhilHealth.

But this is also insulting and damaging to the direct contributors. The effect is that the direct contributors now carry the additional burden of supporting the whole PhilHealth membership. (Recently, PhilHealth increased the premium of direct contributors from 4% to 5% and the maximum monthly salary ceiling from P80,000 to P100,000, even as government demanded the transfer of PhilHealth excess reserve funds!) All told, the transfer of PhilHealth reserve funds to the National Government has made every PhilHealth member worse off.

Let’s be clear about this, one more time: The erstwhile subsidy for the indirect contributors becomes their premium. This is treated as an entitlement for the poor. An entitlement cannot be taken away from them, considering that such is an expression of the right to health, which is enshrined in the Constitution. Review the dictionary definition of entitlement: “A government program that guarantees [emphasis supplied] and provides benefits to a particular group.”

Other examples of entitlement are the land reform program and 4Ps (Pantawid Pamilyang Pilipino Program). The government subsidizes the distribution of land for the tiller. Once that subsidy for land is given, government cannot take back the land, lest it be confiscatory. For the 4Ps, once the cash transfers are done, the government cannot reclaim the grants given to the beneficiaries.

But the DoF says it’s better to transfer the PhilHealth’s “idle” or “hibernating” funds to the National Government so they could be used productively.

But this completely ignores the point that PhilHealth funds are for PhilHealth members. The funds must be used to expand the benefits and services and reduce the premiums.

The law is likewise categorical on this. Section 11 of RA 11223 states:

“Reserve Funds: PhilHealth shall set aside a portion of its accumulated revenues not needed to meet the cost of the current year’s expenditures as reserve funds. Provided, that the total amount of reserves shall not exceed a ceiling equivalent to the amount actuarially estimated for two years’ projected Program expenditures: Provided, further, that whenever actual reserves exceed the required ceiling at the end of the fiscal year, the excess of the PhilHealth reserve fund shall be used to increase the program’s benefits and to decrease the amount of members’ contributions.” [Emphasis mine.]

In addition, Section 11 declares that: “No portion of the reserve fund or income thereof shall accrue to the general fund of the National Government or to any of its agencies or instrumentalities, including government-owned or -controlled corporations.”

In truth, increasing the programs benefits can be done immediately. The slogan is “Just do it.” The policies, defined by the law on Universal Health Care, are in place. It is a matter of having the political determination to implement the policies. The bottlenecks relating to registration of members for outpatient benefits, actuarial estimation, and information system are challenging but surmountable.

The excess reserve funds can also be spent immediately. The experts in health financing among the health professionals estimate that for outpatient care alone, an annual budget of P120 billion is needed.

Moreover, the mandate of Philippine universal healthcare is expressed in the globally recognized three dimensions of UHC, namely:

• coverage of the whole population,

•expansion of services or inclusion of other services not covered by existing packages, and,

•continuous reduction of household out-of-pocket expenses (OOP).

Regarding the reduction of OOP, the late Quasi Romualdez envisioned that every Filipino would pay P2 for every P10 on quality healthcare. We are still far from attaining that. In 2022, the household OOP payment stood at 44.61% of total current health expenditure.

The implication of all this is that UHC is a continuous, uninterrupted, and progressive undertaking. Of course, fulfilling this mandate is constrained by resources. But whatever resources are available, they must be used to progressively realize the UHC’s three dimensions. Thus, for UHC and PhilHealth, the concept of “idle” or “hibernating” funds is inapplicable.

Running out of good arguments, the DoF tries to wiggle out of this by invoking the law. It claims that the 2024 GAA allows imposition of “appropriations in excess of what the executive branch has originally proposed.”

But the GAA of 2024 blatantly contradicts and violates the Act Instituting Universal Health Care for all Filipinos. The DoF is using a bad law as a weapon to defeat and knock down another law.

Also abominable is the ploy of the administration to divide and rule, to pit PhilHealth members (well, they are the Filipino people) against others. The DoF is saying that the idle funds from PhilHealth would be used to fund the long-overdue service allowances of health workers or frontliners during the pandemic. For that matter, the DoF is arguing that the “hibernating funds” are better used for worthwhile programs like lands for individual titling, the Comprehensive Automotive Resurgence Strategy, the Nutrition Program, etc.

These programs are worthy of support, but they should be funded not from PhilHealth’s insurance fund but from the budget of the relevant agencies, from the funds that these agencies obtain from the GAA. Shouldn’t the allowances of medical workers be funded from the Department of Health budget? Shouldn’t the nutrition program be funded by the Department of Social Welfare and Development? Shouldn’t the automotive resurgence strategy be funded by the Department of Trade and Industry?

But how come the administration dismissed the appropriations for such worthy programs when the 2024 GAA was passed? Obviously, they were not the government’s priority.

The priority was giving appropriations to the pork insertions of legislators in the budget. In the process, Congress bumped off the good programs. Because of the appropriations for huge pork insertions, previously programmed were tossed out and moved to the unprogrammed appropriations.

In conclusion, we ask: Is this just a matter of the administration being ignorant of what PhilHealth is all about? Or is the administration engaged in deception to cover up other sin?

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph

The Boys prequel Vought Rising announced at Comic-Con

July 29, 2024 | 12:01 am

SAN DIEGO — A prequel of the Prime Video series The Boys, called Vought Rising, was announced at San Diego Comic-Con on Friday and will star Jensen Ackles and Aya Cash.

The Boys series executive producer Paul Grellong will be both executive producer and showrunner for Vought Rising.

Mr. Ackles also said he will return as his character Soldier Boy for Season 5 of The Boys.

Superhero show The Boys follows a team of misfit vigilantes who fight corrupt super-powered people called Supes.

The show’s panel had a lively start with a comedic live musical performance of songs from the show, actor Jeffrey Dean Morgan throwing up his middle finger on stage, and a teaser trailer for Season 2 of the spin-off Gen V at the annual pop culture convention.

Jessie T. Usher, who plays the speedster named A-Train, joined performers briefly on stage to perform a rap.

Clips were projected on screen while performers sang, including the Season 4 song “Let’s Put the Christ Back in Christmas” from The Boys’ parody of Disney on Ice.

“In case you didn’t know these guys, (they are) world-class Broadway performers,” said Mr. Morgan, who moderated the panel and stars as CIA analyst Joe Kessler in Season 4.

He playfully honored the musical composer with a middle-finger gesture, echoing the show’s crude humor.

The Season 4 main cast took the stage, including Antony Starr, who plays Homelander, the petty leader of the Supes, Jack Quaid, Erin Moriarty, Chace Crawford, Laz Alonso, Tomer Capone, Usher, and Karen Fukuhara.

The show’s creator Eric Kripke was also on the panel.

Season 5, which premieres in 2026, will be the series’ last season as part of show director Kripke’s vision for the comic-book adaptation.

The popular series also spawned the animated series The Boys Presents: Diabolical.

Stars have returned to the San Diego Comic-Con after the 2023 writers and actors strikes led to a subdued event last year, with no A-list celebrities or Hall H panels, which are known for delivering some of the biggest industry news. — Reuters

A people-centered transformation

July 29, 2024 | 12:01 am

VELO_PAGE2_image1 — The company, a joint venture by Inchcape and CATS Group of Companies, now has a number of mobility brands under its wing. — PHOTO FROM INCHCAPE PHILIPPINES

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Inchcape Philippines flexes a Great Place to Work certification as it nears its first anniversary

By Joyce Reyes-Aguila

ASIDE FROM marking its first anniversary in the country next month, automotive distributor Inchcape Philippines is highlighting another achievement: a Great Place to Work (GPTW) certification. The recognition is given to “employers who create an outstanding employee experience,” according to Great Place to Work, the firm that hands out the recognition to deserving companies.

“We’re talking so much about the cars, but we’re not talking enough about the people behind the vehicles that we showcase,” says Inchcape Philippines Head of People Lyn Cyril Palle, in an exclusive interview with “Velocity.” “We want to make sure that our team is really together in these initiatives to strengthen the brand, and we always rally them for support. This is the core family that we have when we bring our brands forward.”

The company, a joint venture by Inchcape and CATS Group of Companies, started on its GPTW application six months after the integration in August last year, according to the executive. Ms. Palle reveals that the culture of the two entities aligns with the “One Inchcape” culture — which the company says is a “big part of (the firm’s) ongoing success.”

“Then, CATS as a legacy brand already has 34 years in the industry as a family business,” she explains. “The immediate conversations were really to understand the people behind the existing organization. There was a big exercise to map out and understand the culture, values, and behaviors that we want to carry forward to the Inchcape dynamics. Inchcape has an established global reputation. Having to understand who gets the superiority was really an interesting journey. We tried to map out the existing CATS culture and core values against the One Inchcape values and behavior. Apparently, everything matched but it was just verbalized in a different way in CATS and in Inchcape. But all in all, it’s really focusing on our desire to be customer-centric, to be able to deliver to the people we serve, and we just used different words.”

Ms. Palle shares that an initial survey was fielded in the company to gain insights from its over 500 employees. “In the beginning, there will be a lot of questions. The beauty of how we did this transformation is that we really had a lot of individual conversations to make our people comfortable. The intention from the beginning is to make sure that everybody jumps over to the joint venture. We did not want to clean it up before doing it. The story that we told everyone is that we are all being invited.”

The executive, who led the CATS Group of Companies’ People Team prior to the merger, reveals that the conversations revolved around how people can benefit from the move, including opportunities from globalization and access to international resources. “Having that reassurance that we’re all in this together in this journey, I think, allowed most of our employees to be really convinced to jump over. I’m happy to say that everyone jumped over.”

Ms. Palle continues that the organization’s confidence comes from the solutions it already made available to its people. The reforms include new technology for its after-sales and backend processes, and a “very professional” body and paint facility in their location in C5. “They could not imagine (these) could happen, but they were delivered.” She adds, “In the area of health and safety, we’ve been aggressively making sure that our teams are well-protected. We have revamped a lot of our lifts and replaced them with new ones to make sure that our people see action in what we say. We are making sure that our teams go back to their families healthy and well.”

Inchcape Philippines is also taking care of its talent through upskilling, and eventually plans to offer international career opportunities within the company. “Most of our cars really churn different models every so often. Your skillset needs to be up to speed. Now, our technicians will be trained in electronic diagnosis, special tools, and equipment. They all need to learn that very fast because the things that they use in servicing always change, and there are different brands that we cater to.

“Because we are a house of brands, we also want our team to move around the environment, not just to grow old vertically with a certain brand.” She adds, “I think that Inchcape brought in (initiatives) to make sure that our teams will be ready for that scale-up to digitalization. It’s really to support the entire journey of their career and the aspirations of our employees. Most of the time, our technicians fly out of the business to join international companies. The aspiration is to really make sure that we move our talent to the businesses that we also own abroad.”

The executive shares that the management wants to understand employee aspirations and then strengthen their skillset, and move them to “accommodate new talents to develop,” talents who display passion in vehicles and services.

“In the future, we want our local talent to be part of that pool who can go around the region,” Ms. Palle explains.

Inchcape Philippines is strengthening its inclusion and diversity thrust to support the brand’s international presence. “It is very, very important for us because, from a family business, we started to open our doors to all markets. We break those silos of grouping, and not knowing who are in the other brands. We started staging activities and learning sessions that have representation from all our brands. The Philippines is being seen as a spot where we can really grow certain areas in terms of shared services. The more we create a diverse thinking pot, the smarter we get, the better we get, and the faster we can move the business to achieve its goal.”

Ms. Palle says changes, such as implementing a uniform software in all brands to centralize data, aligned all their brands (Mercedes-Benz, Chrysler, Dodge, Jeep, Ram, Jaguar Land Rover, and Changan Auto, as well as dealerships for Mazda, Harley-Davidson Motorcycles, and Fuso) to the requirements of Inchcape’s unified transformation approach. The GPTW certification the firm received last April had high marks for making people feel welcome and having competent leaders to take the company into the future. On the other hand, the HR head reports that respondents identified well-being as an area of focus, and a wellness program is available to support the company’s goal of having people that are “sound, healthy, and well.”

“We want to make sure that people really like waking up and coming to work,” Ms. Palle insists. “We want to make sure that we continue to excite our teams because we know we ask so much from them. All these changes that we have accelerated and pilot for the Philippines helped our people really feel that this organization is really vested to grow and bring us together on that growth.

“While we want to still be identified for the brands we represent, at the backend, there’s a bigger Inchcape family supporting all. I think that’s the strength in the scale of resources that we have at Inchcape. That’s something that we want to promise to our employees — that these (changes) are not just for this phase because it’s for integration.”

She concludes, “We always aim for our true north to be consistently recognized. There are things that you feel you only need to think about as the people or human resources team. But these are things that can also be thrown back to the team so that they define what they really like in order to be engaged. You just need to give them a platform.”

DigiPlus shares decline amid POGO ban news

July 29, 2024 | 12:01 am

DIGIPLUS Interactive Corp. emerged as one of the most actively traded stocks last week following the government’s announcement of a ban on online gaming operators, which caused investors to sell shares.

Data from the Philippine Stock Exchange showed that a total of 32.44 million shares worth P482.95 million were traded from July 22 to 26, positioning DigiPlus as the 10^th most active stock in the local market during that period.

The listed digital gambling company’s shares decreased by 1.8% week on week, closing at P15.52 per share, down from P15.80 per share on July 19.

Year to date, DigiPlus’ share price has increased almost 100% from P8 per share.

Trading was suspended on July 24 due to heavy rains brought by Typhoon Carina.

The recent ban on Philippine offshore gaming operators (POGOs) and internet gaming licensees (IGLs) has caused a decline in the company’s stock this week, as investors believed DigiPlus would be affected by the ban, said Philstocks Financial, Inc. Research Analyst Claire T. Alviar in an e-mail.

“On a positive note, it was immediately clarified that the license of Digi-Plus is different from those of POGOs and IGLs. This means that DigiPlus is not negatively affected by this ban in any way,” Ms. Alviar said.

“Since it was not cleared up at first, many thought it would be affected and sold shares, causing a nearly 7% drop during intraday trading last Tuesday from Monday’s closing price. As it was clarified that it would not be affected, investors returned to buy shares. It slowly regained momentum, however, it still failed to post gain last week, losing 1.77% week on week,” Ms. Alviar said.

During President Ferdinand R. Marcos, Jr.’s third State of the Nation Address last week, he announced the ban on all POGOs, saying that they have been linked to money laundering and financial scams.

DigiPlus issued a statement saying that the company is not a POGO or an IGL as defined by Philippine laws and assured local gaming enthusiasts that they need not worry.

“Fans of DigiPlus’ products will be glad to know that their top-of-the-line platforms will continue running without interruption, unaffected by the recent presidential announcement,” DigiPlus President Andy Tsui said in a statement.

DigiPlus said that it is a localized digital gaming company, serving customers based in the Philippines and operating physical branches across the country.

DigiPlus saw its first-quarter attributable net income rise by more than four times to P2 billion from P436.77 million posted in the same period last year, driven by better revenues and higher user traffic.

Meanwhile, its revenues soared by more than two times to P13.63 billion from P4.18 billion in the first quarter of 2023, led by growing user traffic in its flagship platforms BingoPlus and ArenaPlus digital sportsbook, as well as fresh contributions from new game offerings.

“Given the strong first-quarter performance of DigiPlus, we expect it to continue its momentum this year particularly with the launch of new game offerings. The possibility that it may sustain revenue growth of around 200% year on year is high,” added Ms. Alviar.

Ms. Alviar saw the stock immediate support at P14.80 per share, while the second support was pegged at P13.80 per share. The resistance was pegged at its 52-week high, P15.90 per share. — Lourdes O. Pilar

Greenhouses for high-value crops to be built via tie-up with SKorea

July 29, 2024 | 12:01 am

THE Bureau of Plant Industry (BPI) said that it is planning to expand its greenhouse network for high-value crops through a tie-up with the Korea Partnership for Innovation of Agriculture (KOPIA).

“We are trying to expand it further in terms of numbers and in areas covered, hopefully in areas where there are BPI centers,” BPI Director Gerald Glenn F. Panganiban said on the sidelines of a KOPIA event last week.

He added that the BPI was evaluating potential sites in Baguio, Davao, Guimaras, Los Baños, Laguna and La Granja, Negros Occidental, with building to start next year or in 2026.

KOPIA Philippine Center has two pilot greenhouse projects in Laguna, Quezon province, and Nueva Ecija.

Lee Kyu-seong, director of KOPIA Philippine Center, said that it is planning to scale up its pilot projects starting in 2026.

“(We) are also trying to find other projects (like) transferring our technology to communities here in the Philippines.

KOPIA and the BPI have agreed to expand the pilot project to about 10 sites near BPI centers.

“The vision is to have shared facilities that could be used by farmers, similar to what we did with KOPIA,” Mr. Panganiban added.

He said that the BPI will also partnering with private parties to take up the products produced in the greenhouses.

Separately, Agriculture Undersecretary Jerome V. Oliveros said that KOPIA’s pilot farms have reported superior yields compared with open farming methods.

“The yields are very high, more than about 30% compared to normal methods,” Mr. Oliveros added.

KOPIA is an official development assistance program of the Rural Development Administration, which is South Korea’s largest agricultural research and development organization. — Adrian H. Halili