Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 5550

Feeling pinch of Russia-Ukraine conflict, bakery looks to wheat alternatives

WIKIMEDIA COMMONS

By Patricia B. Mirasol, Reporter

A bakery in Quezon City is feeling the pinch of disrupted raw material flows as a result of the Russia-Ukraine crisis.

Since the price of wheat rose, Kamuning Bakery Café has been studying alternatives to imported wheat, flour, and sugar, the prices of which are “too high,” said owner Wilson Lee Flores in an SMS message to BusinessWorld. 

Among the alternative ingredients considered by its cooks and bakers arekamote (sweet potato), cassava, monggo (mung bean), rice, and corn. 

Based on Mr. Flores’s research, early Filipinos baked using rice before the Chinese brought wheat to the Philippines. He noted that Filipinos could, perhaps, go back to rice cakes like biko, suman, palitaw, kutsinta, and maja blanca. 

The price of Kamuning Bakery Café’s pan de sal has not gone up, and is still at P3 per piece.

“It’s still the same quality and taste,” Mr. Flores told BusinessWorld. “We do not want to adjust. We will just absorb the higher costs and try to find ways to cope.”

The price of wheat rose 48.03% between Feb. 7 and March 7. Russia, which supplied 77,000,000 metric tons of wheat in 2020, is the third top producer of wheat worldwide, per geography resource World Atlas. Ukraine, known as Europe’s bread basket, is sixth. 

The country can minimize the effects of any possible economic fallout from the Russia-Ukraine crisis by maintaining its Alert Level 1 status, continuing to vaccinate its population, and keeping businesses open, according to José Maria A. Concepcion III, presidential adviser for entrepreneurship. 

“Keeping businesses open will help contribute to revenue generation for the government and help pay back its debt,” he said in a press statement. 

The country’s debt, which stands at P11.73 trillion as of end-December, increased by almost P4 trillion since the start of the pandemic. 

“We were able to hit 7.7 GDP [Gross Domestic Product] growth in the fourth quarter, better than most had expected, when we reopened the economy,” Mr. Concepcion added. “We have addressed the public health situation, and now we have to keep on track with the economy.” 

MSMEs (micro, small, and medium enterprises) generated 63.2% of the country’s total employment in 2020. They make up 99.51% of all business enterprises operating in the Philippines.

Beyond their numbers: The youth vote, their concerns and aspirations

LOOKSTUDIO-FREEPIK

“No one is born a good citizen, no nation is born a democracy. Rather, both are processes that continue to evolve over a lifetime. Young people must be included from birth. A society that cuts itself off from its youth severs, its lifeline, it is condemned to bleed to death.”

— Kofi Annan, former Secretary-General of the UN

At a political camp held last summer by Ped Xing, a student organization based at the University of the Philippines in Diliman, Quezon City, this writer was invited to talk about youth political participation in Asia. This talk with students from different schools in Metro Manila came on the heels of recent political activism across the region that included the Hong Kong protests from 2019 to 2020, a political crisis built on the people’s opposition to a controversial move that would amend their extradition bill and would infringe on their civil rights, and the Myanmar crisis of 2021, born out of the people’s opposition to Tatmadaw’s deposing democratically elected members of the ruling party.

In the Philippines, what stood out at that time as a strong form of involvement or civic engagement by young people, was the establishment of community pantries across the country. What began as one community pantry aimed at extending help to others left economically vulnerable due to the COVID-19 pandemic, eventually ballooned to about 80 more scattered from Luzon to Mindanao. And while established essentially as a spontaneous and organic act of compassion that offered free food and other necessities to those who needed them, these community pantries were eventually seen by some quarters as a form of political statement in response to the difficulties and unmet needs that many Filipinos faced at the height of the pandemic.

At the heart of all these political and civic activities from Hong Kong to Myanmar to the Philippines, is the involvement of young people — from student volunteers to advocate groups and the working class alike. This is not an isolated example of the active involvement of the youth in socio-political issues around them throughout history. According to the UNDP (2013), “youth are often the driving forces behind reform movements and the youth also tend to get involved in civic, service-oriented activities, such as volunteering for a social cause.” It is not surprising then, that questions on the power of youth vote come to the fore. Is there a youth vote and can it turn the tide during elections?

This question weighs heavily on the Philippines, now just roughly two months away from the national elections in May. According to the Commission on Elections (Comelec), 52% of the total number of registered voters for the May 2022 elections are aged 18-40, falling under the youth vote category (CNN, 2021). The majority of the voters will be the youth, which means the outcome of the elections would or could be determined by this group’s voter turnout. This assumption does not deviate from the voter turnout during the 2010 presidential elections. Pulse Asia exit poll data back then showed that 36% of the votes came from the youth.

It does not categorically mean, though, that there is a youth vote. They are a force to reckon with in terms of numbers, but the experiences and diverse concerns of the youth contribute to differing attitudes during elections, making it difficult, if not impossible to assume that they share a homogenous set of standards in determining their political choices. In an interview with Rappler (Paris, 2019), sociologist Jayeel Cornelio said that “young people remain fragmented and their local experiences matter… these experiences affect their voting preferences based on whom they think can meet their needs.” Following Cornelio’s argument, there is more to understanding the strength of the youth beyond their turnout in the elections.

Given the sheer number of young voters expected to participate in the 2022 elections, it is imperative to understand how their aspirations and concerns find space in the platforms of candidates.

Significant findings from a 2021 project led by the UNDP, Youth Co:Lab Philippines, and Citi Foundation showed what young Filipinos hope or aspire for. Topping the list are “good governance, post-COVID recovery, and education.”

“Good governance” as a top answer on what the youth hope for resonates with what is most discussed on various platforms in the last few months of 2021 leading to the start of the campaign this February. With the election campaign now in full swing, good governance becomes an important yardstick for youth and adult voters alike as they decide on who to vote for. The campaign period offers an avenue for the public to hear candidates’ specific plans for reforms to address issues of corruption, transparency, and accountability, among others. The youth will resonate with candidates whose platforms include institutionalizing reforms that would prioritize good governance.

Education, on the other hand, has been challenging for many students who have had to endure learning disruptions since March 2020. Less privileged students had overwhelming difficulty with the online mode of learning because of poor connectivity, lack of gadgets, and poor learning environments (mainly due to lack of enough space for studying). With more of the population now having received their vaccines against COVID-19, face-to-face learning opportunities are slowly and sparsely being offered in low-risk areas across the country. This is a welcome development not only for the affected students but also for parents and educators. Candidates who champion more inclusive education for students regardless of their economic backgrounds, and whose concrete plans of action include mechanisms that would capacitate the education sector so as to be insulated from any more disruptions in a post-COVID world, will draw positive attention from the youth.

From the same UNDP study, the top of the list of what worries young Filipinos are “climate emergency, conflicts and disasters, and access to primary healthcare and social services.” Disasters that hit the Philippines, such as typhoons Rolly and Ulysses in 2020 and typhoon Odette in 2021, validate these concerns on climate change-enhanced disasters. While the country is not immune to disasters and we have systems in place to address most, having to deal with the pandemic made it more difficult to extend help to communities affected by typhoons during the first two years of COVID, especially in terms of emergency relief as well as in providing healthcare. Disasters disproportionately affect different sectors and among those that are highly vulnerable are the younger population. In the new normal where COVID is endemic, the youth will be looking for innovative solutions that will put us in a better position to deal with complex disasters that may happen successively, or worse, at the same time.

While the aspirations and concerns presented here are not exhaustive, they offer a good indicator of what matters to many of our youth: good governance, sustainability and inclusion, education, healthcare, and social services. Those who are “applying” for government positions must commit to these diverse needs in order to foster deeper political and civic involvement from them.

 

Pilar Preciousa Pajayon-Berse, Ph.D. is an assistant professor of the Ateneo de Manila University Department of Political Science.

Sanctions test faith in the power of economics

THE European-American response to Russia’s invasion of Ukraine represents a watershed in the contemporary understanding of how nation-states behave and what motivates their leaders to act. It pits two leading theories of international affairs against each other. The difference between the two theories may even explain why there is a war going on at all.

The post-Cold War belief prevalent especially in Western Europe is that states and leaders are motivated by rational economic self-interest. By this reasoning, squeezing Russia economically will bring Russian President Vladimir Putin to a breaking point. Either he will back down and leave Ukraine, or Russia will collapse. In other words, economic warfare is a form of warfare as effective as bombs and guns.

Putin’s apparent faith in military force represents the other theory, associated with old-school international affairs ideas like realpolitik and machtpolitik (realist politics and power politics). According to that perspective, if a country’s troops can occupy another nation and no one can push them out by force, the occupier wins, sanctions or no sanctions.

These worldviews overlap. Advocates of economic warfare admit that missiles and tanks also send a message. Proponents of military power must acknowledge that wars can be won and lost because of one country’s greater capacity to pay for and manufacture arms. Both agree that before going to war, rational state actors try to weigh the costs and benefits of fighting, including its economic consequences. And both agree that costs and benefits include the well-being of citizens and the domestic prestige of leaders.

The divergence between the worldviews comes down to their answers to whether states and leaders can be sufficiently motivated by economic pressure alone to give up on a war of invasion that they otherwise would choose to pursue.

Europe says yes. It bases its logic on the interconnectedness of the contemporary economic world. Eventually, it thinks, economic pressure will win. Its evidence is the remarkable period of peace and prosperity in Western Europe since World War II (if you leave out the Balkan debacle of the 1990s).

Putin says no. His historical evidence is that it’s difficult to name even a single example of a country that occupied another and withdrew because of sanctions alone. The basic intuition, going back to antiquity, is that force wins. Deploying economic sanctions without the threat of force is, for him, a signal of weakness.

Put another way, Europe thinks of economic sanctions as a tool of warfare like a siege or a blockade. Putin thinks a siege is only a siege if you back it up with an army, and a blockade is only a blockade if a navy makes it real.

And both sides know that, for the time being at least, Germany is dependent on Russian gas, oil, and coal for its energy needs. That means even economic pressure cannot be total.

This disparity of worldviews goes a long way to explaining the run-up to the war. Even as the US government made public its intelligence assessments that Russia had decided to invade Ukraine, many skeptics in Europe and the US continued to believe that war could be averted. They reasoned that Putin couldn’t possibly think the economic costs would be small enough to justify the gains he might make by invading.

Putin had already determined that no power outside Ukraine would be willing to use force to oppose the invasion. From this premise he surely reasoned that the costs of economic sanctions would not displace Russian troops. From there he seems to have concluded that the gain to Russia and himself in prestige and power would outweigh the costs of sanctions.

The same thinking gap may help explain why the fighting is happening. According to one influential theory, wars happen when the two sides either have different information about each other’s power or have radically different understandings of the likely consequences of their conduct.

This idea is a form of rational-actor theory. It assumes that, if both sides knew who would win a war, neither would have to fight it. The certain winner would just take what it wanted, and the certain loser would give in without a fight. Wars happen, according to this account, when no one can be sure what will happen next.

The Ukraine war fits this description. Most militarily informed observers are fairly sure that Russia can occupy Ukraine, albeit not as quickly as it probably expected and not without quite a few casualties. But can economic sanctions suffice to make Putin leave or otherwise defeat Russia? That question awaits an answer.

The only way to know is by fighting the war, imposing the sanctions and seeing what happens. Europe sees it one way, Putin another. Their interpretation of their relative strengths may not differ much. Their predictions about what will happen when the dice are rolled differ markedly — because of their different theories of war and economic power.

Rational-actor theories, whether economic or militaristic, oversimplify reality. Leaders make mistakes. Political ideology shapes self-interest. And sometimes, there are no facts, just competing predictions based on competing theories.

BLOOMBERG OPINION

The law of unintended consequences in the US-Russia economic war

While the shooting war is limited to Russia and Ukraine, the US-led economic war against Russia is unlimited in its impact on the global economy, especially in energy products, crops, and mining products.

Take the TTF/EU gas. It was only €15.9 per megawatt-hour (MWH) on March 4, 2021, it went up to €204/MWH on March 4, 2022, for a year-on-year (YoY) 1,152% increase. The same for UK gas — only £39.8/MWH in March 4, 2021, it went up to £486/MWH a year later for a YoY 1,100% increase. This is mainly because many European countries — especially Germany, Italy, Finland, Poland, Netherlands, Moldova, etc. — are highly dependent on Russian gas.

The UK is not too dependent on Russia gas but since many Europeans shifted to buy more gas from Qatar, Norway, Algeria, US LNG, etc., the prices of these countries’ products also rose. So, while the target of economic and financial sanctions by the US and allies is Russia, there is collateral damage to US allies like Germany and the UK. The law of unintended consequences.

And then there is coal. The benchmark Newcastle (Australia) coal was only $87.5/ton in March 4, 2021, it went up to $419/ton a year after, for a YoY 377% increase.

Then there is a food product — wheat. High wheat prices mean high food prices for many countries in the world. And aluminum, nickel, tin, and a few other mining or metal products. These are used in various gadgets, automotive products, even renewable products like solar-wind. High metal prices mean high prices for electronics, autos, RE infrastructure. Prices in Feb. 24, the first day of Russia invasion of Ukraine, are included here in Table 1.

The dependence of many European countries on Russia gas has been mentioned above. If Russia is not paid or paid very late due to the removal of its many banks from the international SWIFT bank messaging system, then Russia will reduce its gas-oil exports to Europe. Supply goes down, prices go up.

In 2020, Russia was the world’s second largest crude oil exporter next to Saudi Arabia. Russia was the world’s sixth largest natural gas exporter, the third largest coal exporter, the number one wheat exporter, and the third largest aluminum exporter (Table 2). Russia is not a major exporter of nickel and tin but it is a major producer.

The Philippines gets the bulk of its coal from Indonesia, not Australia, but Indonesia prices follow the Newcastle prices with a lag of a few days or weeks. And coal provided 57% of total power generation in the Philippines in 2020 and 2021.

With all these unintended consequences of the US-led economic war against Russia, smaller economies like the Philippines have to prepare more economically because things will worsen before they get better. How should we prepare, especially in cushioning the impact of high inflation and its effect on household consumption?

One, Congress should consider amending the (1.) TRAIN law of 2017 (RA 10963) to suspend the excise tax on energy products: P10/liter for gasoline, P6/liter for diesel, P3/kilo for LPG, P150/ton for coal, and so on, and (2.) the General Appropriations Act (GAA) 2022 and cut some spending commensurate with the tax cut. If the tax cut cannot be done, they should still amend the GAA law and realign some budget items for selective subsidies to certain sectors, especially in transportation and energy.

This will not be easy because it is officially the election campaign period already but Senators and Congressmen/women running for re-election can earn political points if they go back to their respective chambers and quickly make this legislation within a few days.

Two, government should never entertain the idea of price controls for oil and electricity prices. Consumers understand that these energy price hikes are beyond our control, not the fault of the gasoline stations or the gas and coal power plants. Malampaya gas prices are pegged on Dubai crude prices and since Dubai crude has also reached $100+ a barrel, then generation prices from the four gas plants in Batangas will also rise.

Good thing for us, the current Department of Energy (DoE) leadership fully understands the dynamics of business and has zero appetite for any energy price controls on companies which will require government financial remedies which will come from taxes.

Three, energy conservation. We may have to voluntarily limit our mobility to reduce our gasoline/diesel consumption and save money. As electricity prices will soon rise, we have to conserve our electricity usage too, and use more energy-efficient lights, appliances, and gadgets.

Four, at the international foreign diplomacy level, the Philippines and many other countries now affected by the economic war should encourage (a.) the US and other big NATO member countries to make a categorical and explicit statement that Ukraine should not be invited, should not be accepted, as NATO member, and (b.) Russia should immediately pull out of Ukraine when this statement is made. The war must end soon.

Recall that NATO expansion to include Ukraine — proposed by the US in 2008 or 14 years ago — is an important source of the conflict. Ukraine is the second biggest country in Europe in land area after Russia. Missiles on the Ukraine border can reach Moscow in just three minutes or so, so it was a “red line” for Russia. The Russian invasion is wrong. The planned NATO expansion to Ukraine is equally wrong. Both should not have happened or been entertained in the first place.

Five, consider long-term projects to further explore and develop our oil-gas potentials in Philippine territories now. And nuclear power development, at least for small modular reactors (SMRs).

Six, increase agricultural productivity. Rice and corn are close substitutes for wheat, and slowly rice and corn prices are rising in the international market. Our cheap rice imports from Vietnam and Thailand will soon be diverted to other countries at higher prices. So, we have to raise domestic output of rice and corn here.

Finally, recognize that fossil fuels for baseload, 24/7 electricity needs can never be substituted by intermittent, unstable, unreliable, non-dispatchable solar-wind. Insisting on the latter will mean declaring an economic war on ourselves. Leave the solar-wind to contestable customers who want it, and corporations that want to look good on ESG publicity.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Navigating the criminalized corporate governance provisions of the Revised Corporation Code

Although both the old and Revised Corporation Codes are derived from the American common law system, nevertheless, it has been long held by our Supreme Court (SC) that the so-called “common law crimes” known in the United States and England as the body of principles, usages and rules of action, which do not rest for their authority upon any express and positive declaration of the will of the legislature, are not recognized in Philippine Criminal Law. The rule in Philippine jurisdiction is that unless there is a particular provision in the penal code or special penal law that defines and punishes the act, even if it be socially or morally wrong, no criminal liability is incurred by its commission.

A fundamental rule of construction in Philippine Criminal Law is that penal laws are strictly construed against the State and liberally in favor of the accused. However, it has also been held that such a construction rule may be invoked only where the law is ambiguous and there is doubt as to its interpretation; where the law is clear and unambiguous, there is no room for the application of the rule. Nevertheless, the SC has equally held that the rule of strict construction of criminal law is subordinate to the rule of reasonable, sensible construction, having in view the legislative purpose and intent, and given effect to the same; the rule should not be unreasonably applied as to defeat the true intent and meaning of the enactment found in the language actually used.

The prevailing rule in Philippine jurisdiction is that penal statutes shall not be extended to offenses other than those which are specifically and clearly described and provided for, under the rationale that the law will not allow constructive offenses or arbitrary punishments.

ALL OTHER VIOLATIONS OF ANY PROVISION OF THE REVISED CORPORATION CODE ‘NOT SPECIFICALLY PUNISHED’
Background: Section 144 of the old Corporation Code provided for the criminal penalties of fines and/or imprisonment for “violations of any provisions of this Code or its amendments not otherwise specifically penalized therein.” More importantly, only Section 74 of old Corporation Code expressly provided a criminal penalty for a director, trustee, or officer who refused to allow a director, trustee, shareholder or member from exercising the right to inspect and/or copy corporate records, and it referred to Section 144 for the penal sanctions that could be imposed.

In-depth analysis on the proper coverage of Section 144 of the old Corporation Code was essential since it provided for criminal penalties for “any violation of the provisions of the old Corporation Code not otherwise specifically penalized therein,” and therefore seemed to criminalize all provisions of the old Code which provided for directives, rules, and compliance. The broad language of Section 144 presented a statutory land mine that could maim or harm the actors in the corporate setting, whether they acted with criminal intent or not. At the very least, it tended to put at risk many of the actuations and decisions of the directors, trustees, and corporate officers, as to unnecessarily cramp the exercise of their business judgment in pursuing the commercial affairs of the companies they served. Worse, practitioners began to rely upon the seemingly all-encompassing provisions of Section 144 of the old Corporation Code to effectively obtain results on their demands or claims against the corporation, by dangling a threat of a criminal suit against members of the Board and Management.

Section 170 of the Revised Corporation Code (RCC) has replicated Section 144 of the old Corporation Code, imposing a general criminal penalty limited to the imposition of a fine for any violation of the provisions of the Code not particularly penalized, thus:

SEC. 170. Other Violations of the Code; Separate Liability. — Violations of any of the other provisions of this Code or its amendments not otherwise specifically penalized therein shall be punished by a fine of not less than P10,000 but not more than P1 million. If the violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before the Commission: Provided that such dissolution shall not preclude the institution of appropriate action against the director, trustee, or officer of the corporation responsible for said violation: Provided, further, that nothing in this section shall be construed to repeal the other causes for dissolution of a corporation provided in this Code.

Liability for any of the foregoing offenses shall be separate from any other administrative, civil, or criminal liability under this Code and other laws.

The second paragraph of Section 170 is a new addition and clearly shows the intent to provide multiple penalties, whenever available, for the same act that constitutes a violation of the RCC.

In addition, the RCC has introduced a host of corporate acts and practices for which specific criminal penalties are imposable.

To better appreciate this fundamental shift in what we term as the “criminalization of corporate governance practice,” it would be useful to study existing jurisprudence that had ruled upon the original text as found in Section 140 of the old Corporation Code.

MEANING OF ‘VIOLATION OF ANY PROVISIONS OF THE CORPORATION CODE’ UNDER SECTION 144
In our earlier writings, we had posited that it was difficult to construe Section 144 of the old Corporation Code to mean that all non-compliance with its provisions would be criminally punishable. For example, under Section 26 of the old Corporation Code, it was provided that within 30 days after the election of the directors, trustees and officers, the secretary, or any other officer of the corporation, shall submit to the SEC (Securities and Exchange Commission), the names, nationalities and residences of the directors, trustees and officers elected. If the Corporate Secretary fails to comply with this provision, would he then be subject to a criminal penalty under Section 144 of the old Corporation Code?

Such a construction would seem unreasonably harsh, and effectively discourages competent and well-meaning individuals from accepting positions within the corporate setting. It would then make the corporation a very unattractive medium for commerce. The proper and reasonable interpretation of the coverage of the term “violation of any provision of this Code,” which should cover only those provisions of the old Corporation Code which were expressly mandatory in nature to show the true intent of legislature to impose a penal sanction for non-compliance therewith.

In addition, we wrote that there were provisions in the old Corporation Code which clearly intended to impose only a civil sanction for damages for their violation, and which could not come within the coverage Section 144 thereof.

For example, under Section 31 of the old Corporation Code, directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation, or who are guilty of gross negligence or bad faith in directing the affairs of the corporation, or who acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees, shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its shareholders or members and other persons. Under Section 32, where a director, by virtue of his office, acquires for himself a business opportunity that should belong to the corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the corporation for all such profits by refunding the same.

Under Section 65 of the old Code, any director or officer of a corporation consenting to the issuance of stocks for a consideration less than its par or issued value or for a consideration in any form other than cash, valued in excess of its fair value, or who, having knowledge thereof, does not forthwith express his objection in writing and file the same with the corporate secretary, shall be solidarily liable with the shareholder concerned to the corporation and its creditors for the difference between the fair value received at the time of issuance of the stock and the par or issued value of the same.

In all the foregoing, we took the position that it would be improper to subject erring directors, trustees, or officers to criminal penalty under Section 144 since the specific provisions themselves provide for the proper remedies in each case. This we thought was the reasonable interpretation of the phrase in Section 144 “not otherwise specifically penalized therein” to mean that even when the provisions seems to be mandatory and the violation thereof is a serious breach, when the particular provision already provides for a specific penalty or sanction, the criminal penalty under Section 144 should not be made to apply.

In fact, we noted that there was only one provision in the old Corporation Code where the legislature has made it clear or apparent that it seeks to impose penal sanctions under Section 144 for non-compliance therewith. Under Section 74, any officer or agent of the corporation who shall refuse to allow any director, trustee, shareholder or member to examine or copy excerpts from its records and minutes “shall be liable to such director, trustee, stockholder or member for damages, and in addition, shall be guilty of an offense which shall be punishable under Section 144 of this Code.”

ABSENCE OF MALICE OR DEFENSE OF GOOD FAITH
We also posited in our earlier work that even if Section 144 of the old Corporation Code were intended by legislature to encompass every violation of the provisions of the old Code, it would be extremely difficult to obtain a conviction under said section, except for the specific violation under Section 74 thereof. Since violations of the old Corporation Code were not simply mala prohibita, then the evil intent or malice of the accused was an essential element for a crime punishable under Section 144; otherwise, there is no manner by which to prove the guilt of the accused beyond a reasonable doubt. This was demonstrated by no less than Section 74 which provided good faith as a defense: “That it shall be a defense to any action under this section that the person demanding to examine and copy excerpts from the corporation’s records and minutes has improperly used any information secured through any prior examination or the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making his demand.”

We came to the position that in cases of prosecutions under Section 144 of the old Corporation Code, the accused director, trustee or officer would have more than enough legal basis to claim good faith because of the varied interpretations and applications of the principles of Corporate Law. There was therefore every leeway for the defense in a criminal suit based on Section 144 of the old Corporation Code, to show that the element of malice does not pertain to an act or a transaction upon which the criminal imputation is based upon.

OBITER DICTUM IN HOME INSURANCE CO.
We took note of the obiter expressed in Home Insurance Company v. Eastern Shipping Lines. In that case, Home Insurance Co., a foreign corporation, which admittedly had engaged in business in the Philippines, had issued insurance contracts in the Philippines without obtaining the necessary license. Subsequently, it obtained the license before filing the cases for collection under the insurance contracts. The lower court dismissed the complaint and declared that pursuant to its understanding of the basic public policy reflected in the old Corporation Law, the insurance contracts executed before a license was secured must be held null and void, and the subsequent procurement of the license did not validate the contracts.

Although the question of imposing criminal sanction was not at issue, Home Insurance Co. held that Section 133 of the old Corporation Code, which provided that a foreign corporation should not engage in business in the Philippine prior to obtaining a license to do business, should be deemed to have a penal sanction by virtue of Section 144 of the old Corporation Code, thus: “The prohibition against doing business without first securing a license is now given penal sanction which is also applicable to other violations of the Corporation Code under the general provisions of Section 144 of the Code. It is, therefore, not necessary to declare the contract null and void even as against the erring foreign corporation. The penal sanction for the violation and the denial of access to our courts and administrative bodies are sufficient from the viewpoint of legislative policy.”

We posited then that in dealing with the scope and reach of Section 144 of the old Corporation Code, Home Insurance Co. had not only expressed an obiter, but, more importantly, had not looked into the implications of such broad pronouncements on the basis of Criminal Law principles, since such principles have not been raised, discussed, nor focused into appropriately in the rendering of the decision. We wrote then that when the appropriate case is brought before the SC, and the proper factual basis and principles of Criminal Law are discussed and detailed, that the Court will take a contrary position on ratio decidendi considerations.

TEXTUAL AMBIGUITY OF SECTION 144 OF THE OLD CORPORATION CODE
The promulgation in 2017 of the decision in Ient v. Tullett Prebon (Phils.), Inc., had to a great extent affirmed our position regarding the criminal viability to sustain conviction of Section 144 of the old Corporation Code.

Ient v. Tullett Prebon presented to the SC the primary issue of whether Section 144 of the old Corporation Code could be applied to impose penal sanctions on directors, trustees or officers who violate their fiduciaries duties under Sections 31 to 34 of the old Corporation Code. The Court examined both the language and the legislative history of Section 144 and found that “there is textual ambiguity in Section 144; moreover, such ambiguity remains even after an examination of its legislative history and the use of other aids to statutory construction, necessitating the application of the rule of lenity in the case at bar,” based on the following premise:

As Section 144 speaks, among others, of the imposition of criminal penalties, the Court is guided by the elementary rules of statutory construction of penal provisions. First, in all criminal prosecution, the existence of criminal liability for which the accused is made answerable must be clear and certain. We have consistently held that “penal statutes are construed strictly against the Sate and liberally in favor of the accused. When there is doubt on the interpretation of the criminal laws, all must be resolved in favor of the accused. Since penal laws should not be applied mechanically, the Court must determine whether their application is consistent with the purpose and reason of the law.”

After looking at the language of Section 74 of the old Corporation Code that expressly referred to the penalties provided under Section 144 as being imposable for denying the right of inspection of a shareholder or member, the SC went on to hold that “There is no provision in the Corporation Code using similarly emphatic language that evinces a categorical legislative intent to treat as a criminal offense each and every violation of that law. Consequently, there is no compelling reason for the Court to construe Section 144 as similarly employing the term ‘penalized” or ‘penalty’ solely in terms of criminal liability.” After quoting various provisions of the old Corporation Code that provided for civil or administrative consequences for violations thereof, the Court held:

“… The rest of the above-quoted provisions, like Section 31 and 34, provide for civil or pecuniary liabilities for the acts covered therein but what is significant is the fact that, of all these provisions that provided for consequences other than penal, only Section 74 expressly state that a violation thereof is likewise considered an offense under Section 144. If … Section 144 automatically imposes penal sanctions on violations of provisions for which no criminal penalty was imposed, then such language in Section 74 defining a violation thereof as an offense would have been superfluous. … We agree with petitioners that the lack of specific language imposing criminal liability in Sections 31 and 34 shows legislative intent to limit the consequences of their violation to the civil liabilities mentioned therein. Had it been the intention of the drafters of the law to define Sections 31 and 34 as offenses, they could have easily included similar language as that found in Section 74.”

Ient v. Tullett Prebon held that the old Corporation Code “was intended as a regulatory measure, not primarily as a penal statute. Sections 31 to 34 of the [old] Corporation Code in particular [were] intended to impose exacting standards of fidelity on corporate officers and directors but without unduly impeding them in the discharge of their work with concerns of litigation. Considering the object and policy of the [old] Corporation Code to encourage the use of the corporate entity as a vehicle for economic growth, we cannot espouse a strict construction of Section 31 and 34 as penal offenses in relation to Section 144  in the absence of unambiguous statutory language and legislative intent to that effect.”

Finally, Ient v. Tullett Prebon held that the declaration in Home Insurance Co. that the “prohibition against doing business conducted without first securing a license [under Section 133 of the old Corporation Code] is now given penal sanction which is also applicable to other violations of the [old] Corporation Code under the general provisions of Section 144 of the Code’ is unmistakably obiter dictum,” since the “statement regarding the supposed penal sanction for violation of Section 133 of the [old] Corporation Code was not essential to the resolution of the case as none of the parties was being made criminally liable under Section 133.”

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.

 

Atty. Cesar L. Villanueva is co-chair for Governance in the MAP Committee on ESG, chair of Institute of Corporate Directors (ICD), the first chair of Governance Commission for GOCCs (GCG), the former dean of the Ateneo Law School, and a founding partner of Villanueva Gabionza & Dy Law Offices.

map@map.org.ph

cvillanueva@vgslaw.com

Stakes rise as Russia’s Putin says his war in Ukraine will continue

Russian President Vladimir Putin

AS RUSSIA’S invasion of Ukraine heads toward the two-week mark, the stakes for both sides in the ground war look set to rise, with potentially catastrophic implications for Ukrainian civilians and greater challenges for the country’s so far remarkably successful defense.

President Vladimir Putin said again on Sunday the war will continue until Ukraine accepts his demands and halts resistance, dimming hopes for a negotiated settlement. Mr. Putin says Ukraine must “demilitarize” and he has made clear his goal is to remove the current government.

In a call with Turkey’s President Recep Tayyip Erdogan, Mr. Putin also repeated his assertion that the “special military operation” he launched in Ukraine on Feb. 24 is going to plan, according to a Kremlin statement.

Another failed attempt on Sunday to create safe passage for some 200,000 civilians trapped in the besieged eastern port city of Mariupol only underscored the humanitarian disaster that’s unfolding in Ukraine. In both cases, Ukraine accused Russian forces of violating a pause in fighting. The United Nations said more than 1.5 million people have fled the country since hostilities began.

Russia said early Monday there was fresh agreement for a temporary cease-fire to enable a humanitarian corridor in several cities.

Israel’s Prime Minister Naftali Bennett spoke with Mr. Putin in Moscow on Saturday, then flew onto Berlin to see German Chancellor Olaf Scholz. Mr. Bennett spoke again with Mr. Putin on Sunday amid a flurry of phone calls by leaders to Mr. Putin and to Ukrainian President Volodymyr Zelensky in the effort to de-escalate a conflict that promises to exact heavy costs for Europe and the global economy, as well as for Ukraine and Russia.

French President Emmanuel Macron also spoke with the Russian leader on Sunday to discuss the safety of Ukraine’s nuclear power plants.

While Russia has committed almost all of the ground forces it assembled for the attack on Ukraine, it has been hobbled by poor planning and logistics. Still, it has yet to bring a fraction of its artillery, electronic warfare, drone and combat aircraft capabilities to bear.

During a pause to regroup, Russian forces launched no new major offensives for much of the weekend, while Ukraine’s military launched counter attacks near the northern city of Kharkiv and near Mariupol, according to the Institute for the Study of War, a Washington-based non-profit.

In its daily report it said major Russian assaults on Kyiv and Kharkiv, as well as Mykolayiv and possibly Odesa in the south, were likely to resume. Ukraine’s state emergency service said Monday that residential areas of Mykolayiv were shelled overnight, causing fires to break out.

On Sunday, Ukraine’s defense ministry reported that eight cruise missiles hit Vinnytsia, about 250 km (155 miles) south west of the capital. Residents also fled Irpin, a Kyiv suburb, as it came under ground attack.

After a week in which Mr. Putin raised the alert status of his nuclear forces and his troops showed a willingness to risk radiation spillage by seizing nuclear power stations in live firefights, the stakes in the conflict only appear to be rising for both sides.

Russia has increasingly brought indiscriminate weaponry to bear in its attempts to capture Kharkiv and Mariupol, in what some military analysts see as a likely warning to other cities not to resist. The widespread use of artillery and multiple launch rockets by an army that has the world’s most fearsome arsenal of such weapons would see civilian casualties soar. There has also been evidence of cluster bomb use, banned by most countries in civilian environments. Moscow says it is only targeting military assets.

Mr. Putin warned on the weekend that any attempt to impose a no-fly zone over Ukraine — as Zelensky has asked of the US and Europe — would be seen as joining the conflict. He described Western sanctions as “akin to a declaration of war,” while adding “but thank God it has not come to that.”

NATO has repeatedly ruled out a no-fly zone despite the Ukrainian pleas, saying it risked bringing the alliance’s aircraft into direct confrontation with Russian planes, and thus setting off a broader war in Europe.

Still, US Secretary of State Antony Blinken said America was looking at whether Poland could supply Ukraine with more combat aircraft.

A Polish official with direct knowledge of the matter said this could only potentially happen in the event the US expedited replacement fighter jets to Warsaw, adding the government was also cautious of any action that could draw it into direct conflict with Moscow. Sending US-made fighters to other countries is a process that can take years. It would require planes to be retrofitted for Poland and its pilots trained in flying them.

Mr. Blinken also said the US was discussing with allies ways to impose an embargo on the purchase of Russian oil — a major component of Russian budget revenues — without disrupting global oil markets.

For Russia, its campaign faces growing risks should Ukrainian resistance continue. Logistical and operational “exhaustion” is likely to set in within three weeks, demanding a major resupply of Russian units, Michael Kofman, a specialist on the Russian armed forces at the Washington security think tank CNA, said in a Twitter thread.

Speaking on a West Point Modern War Institute webinar, Mr. Kofman also said the initial Russian operation had been “shambolic.” Rather than follow doctrine and training, Russian commanders had broken up their forces into small detachments “to do thunder runs” into towns and cities that were expected to fall without a fight.

As a result they had little artillery, no air cover and overran the ability of logistics chains to resupply themselves. Putting all that back together to maximize Russian military power will take time, according to Mr. Kofman.

Still, he cautioned against dismissing the Russian campaign as a failure. “It’s clear that this war will get a lot uglier and that the worst is yet to come,” Mr. Kofman said.

Russia has deployed 90% of its available ground forces, according to the US, but has taken only a small part of Ukrainian territory.

“This suggests there is not much spare capacity for the western parts of the country, which is where Ukrainian forces, commanded from Lviv, could regroup with supplies coming in from Poland, Slovakia and possibly Hungary, if Kyiv were to fall,” Lawrence Freedman, emeritus professor of war studies at King’s College London, wrote in a blog post on Sunday.

In a further challenge, emerging videos of protests in the few cities Russian troops have captured so far, such as Kherson in the south and Konotop in the north, suggest holding territory will demand resources that Russia may struggle to find, according to Freedman.

Given the initial logistical and operational failures the Russian military is now having to untangle, plus an estimated $1 billion per day spent on pursuing the war and with an economy under attack from unprecedented sanctions, “the Kremlin should be worried,” Freedman wrote. — Bloomberg

Oil traders betting prices may pass $200 a barrel this month

MODELS of oil barrels and a pump jack are displayed in this illustration photo taken on Feb. 24, 2022. — REUTERS

TRADERS piled into options that oil could surge even further after rising to the highest since 2008, with some even placing low-cost bets that futures will rise above $200 before the end of March.

Prices to buy call options for higher crude prices surged Monday as the market assessed the possibility of a supply cut-off from Russia, one of the world’s biggest exporters. At least 200 contracts for the option to buy May Brent futures at $200 a barrel traded on Monday, according to ICE Futures Europe data. The options expire March 28, three days before the contract settles. The price to buy them jumped 152% to $2.39 a barrel.

A $150-a-barrel call option for the June Brent contract doubled from Friday, according to ICE, while the cost of $180 call options jumped 110%. The front-month May contract for Brent surged dramatically early on Monday as traders panicked over talks of a Russian crude ban amid Libyan supply disruptions and delays to expected progress in Iranian nuclear talks.

JPMorgan Chase & Co said last week that Brent crude could end the year at $185 a barrel should Russian supplies continue to be disrupted, while Australia & New Zealand Banking Group Ltd. saw around 5 million barrels a day of pipeline and seaborne oil supplies being impacted by new sanctions.

Russia is the world’s third-largest oil producer behind the US and Saudi Arabia. The OPEC+ member exported 7.8 million barrels a day of crude, condensate and oil products in December last year, according to the International Energy Agency, supplying key fuels such as diesel, fuel oil, vacuum gas oil and a petrochemical feedstock known as naphtha to buyers across Europe, the US and Asia. — Bloomberg

South Korea candidates woo young voters with ‘deepfakes,’ hair insurance

MEN talk beneath an installation to encourage people to vote for the upcoming March 9 presidential election in Seoul, South Korea, March 7. — REUTERS

SEOUL — South Korean presidential candidate Yoon Suk-yeol got a boost on Thursday when a rival dropped out, but if the conservative former prosecutor wins next week, it may also be thanks to “deepfake” avatars and viral short videos.

Opposition leader Mr. Yoon and the top liberal contender have gone to unusual lengths in the nation’s tradition-bound politics to shed the image of grumpy old men, courting young voters who could prove decisive in what has been a close race.

The candidates are vying to replace liberal President Moon Jae-in, who came to power five years ago with help from voters in their 20s and 30s. They have since deserted his party in droves.

Mr. Yoon, 61, who has been narrowly ahead of Lee Jae-myung, 57, from Moon’s governing party, won the backing on Thursday of a fellow conservative running a distant third, who joined with Mr. Yoon in a combined ticket. Mr. Moon is barred by terms limits from seeking reelection.

A former top prosecutor, Mr. Yoon has enjoyed steadfast support from people over 60, while Lee leads with those in their 40s and 50s, leaving a battleground for younger voters. Their support has swung dramatically toward some conservative challengers, but disapproval ratings are high for both top contenders amid scandal and mud-slinging.

Mr. Yoon and Lee both established campaign task forces aimed at capturing or winning back young voters.

A digital avatar of Mr. Yoon, his campaign says, is the world’s first “deepfake candidate”, explaining policy ideas and taking digs at his rival. Lee’s team responded with its own AI-powered character. Mr. Yoon’s slogan “OK, Let’s go!” — shouted at rallies with his signature uppercut gesture — has gone went viral on social media, creating endless memes and video spoofs.

NO MORE ‘GGONDAE’
Kim Dong-wook, a 30-year-old adviser on Mr. Yoon’s social media campaign, is trying to shake the candidate’s image as “ggondae” — a bossy old person stubbornly insisting on his opinion.

“I’ve found him to be more open to change,” said Kim, a former think tank researcher. “He was portrayed as passive and at times lacking confidence in the media, so I wanted to help change that and add young voices to his policies.”

Mr. Yoon’s youth team, selected by public audition, comprises people aged 23 to 38, including a start-up founder, a former professional gamer, a psychiatrist and a home shopping executive.

The team got off to a rocky start with clashes and resignations. When Mr. Yoon finally met with the team, Mr. Kim says he pointed out the candidate’s ggondae image while others urged him to listen more to young voters and sack “political parasites.”

“His face turned darker” after the criticism, Mr. Kim said, but “there was no censorship and he listened carefully and took notes. And in the end, he accepted most of our suggestions.”

The team created 29 YouTube short videos on Mr. Yoon’s and the party’s pages, discussing policy ideas and generating more than 14.5 million views, in a country of 52 million people.

The strategy has helped lift Mr. Yoon’s popularity with 20-somethings above 40% from around 30% in early January, according to Realmeter.

“There was a lesson that brief yet strong messages could have a massive impact, especially on young generations and people who are apathetic about politics,” said Park Min-young, a Yoon adviser who has written about generational political shifts.

A FIGHT FOR HAIR
Liberal contender Lee, after meeting with young men and mothers, proposed allowing public healthcare insurance to cover hair loss treatment.

In an appearance-obsessed country where plastic surgery is common, many young men believe baldness can harm career and marriage prospects, but uninsured treatments are expensive.

A 15-second video clip in which Mr. Lee did a spoof of a hair-loss commercial sparked explosive reaction on social media as well as complaints from some experts and rival candidates that he was pushing a populist agenda.

He courted younger voters in January by calling for legalizing the estimated $1 billion tattoo industry, which operates underground because South Korean law allows only doctors to perform the procedure. Mr. Lee is especially targeting young people who joined candlelight vigils leading up to the 2017 impeachment and ouster of conservative then-president Park Geun-hye.

Lee Jung-in, 19, a candlelight protester who now heads a group of some 30 youth campaigners for candidate Lee, steered a successful movement to lower South Korea’s voting age by a year to 18 in 2019.

“It is extremely rare that teenagers would have a chance to speak at rallies during any presidential elections, and political parties are generally not good at embracing young people,” said Mr. Lee, who is not related to the candidate.

“We’re aiming to persuade other young voters to join us, which I believe would bring a big change in further democratizing the country’s politics.” — Reuters

Thailand bids to avert ‘population crisis’ as birth rate crashes

PIXABAY

BANGKOK —  Thailand is scrambling to encourage its people to have more babies to arrest a slumping birth rate, offering parents childcare and fertility centers, while also tapping social media influencers to showcase the joys of family life. 

The campaign comes as the number of births has dropped by nearly a third since 2013, when they started declining. Last year saw 544,000 births, the lowest in at least six decades and below the 563,000 deaths, which were also swelled by coronavirus-related fatalities. 

While Thailand’s demographic path is similar to other Asian economies like Japan or Singapore, as an emerging market relying on cheap labor and a growing middle class the implications for Southeast Asia’s second-biggest economy are far more profound. 

“The data reflects a population crisis … where the mindset towards having children has changed,” said Teera Sindecharak, an expert on demography at Thammasat University. 

Senior health official Suwannachai Wattanayingcharoenchai told Reuters the government recognized a need to intervene. 

“We are trying to slow down the decline in births and reverse the trend by getting families that are ready to have children faster,” he said, describing plans to introduce policies so that newborns get the full support of the state. 

The plans include opening fertility centers, currently limited to Bangkok and other major cities, in 76 provinces and also using social media influencers to back up the message, officials said. 

Such policies may come too late for people like Chinthathip Nantavong, 44, who decided with her partner of 14 years not to have children. 

“Raising one child costs a lot. A semester for kindergarten is already 50,000 to 60,000 baht ($1,520 to $1,850) and then it reaches millions later,” she said, adding that other countries have better care facilities and welfare policies. 

‘SUPER-AGED SOCIETY’
Thailand is not alone in the region struggling with low fertility rates, but is less wealthy than some more developed countries that have been forced to rely on migrant workers to support their economies. 

Experts said it is hard to reverse a situation where social conditions have changed and attitudes towards having children are now colored by concerns over rising debt and elderly care. 

Thailand is heading towards becoming a “super-aged society” where the number of people over 60 will account for more than a fifth of the population, Thammasat University’s Mr. Teera said. About 18% of Thailand’s population is aged over 60. 

The ratio of working-aged to elderly people last year was 3.4, but by 2040 officials forecast it could be 1.7. 

“The manufacturing sector will face productivity slumps … so we have to develop skilled labor and adopt the use of automated technologies,” the head of the state-planning agency, Danucha Pichayanan, told a recent business forum. Thailand is a major regional manufacturing sector for automotive and electronics. 

Mr. Danucha also noted the demographic trend could also strain government finances and experts have said welfare for the elderly is not seen as sufficient even today, with monthly allowances of 600 to 1,000 baht. 

‘WE HAVE A CAT’
“It’s become more difficult in deciding to have children,” said Mr. Teera, noting in the last decade the economy had been sluggish, while living costs increased and income growth slowed. 

Political division, rising debt, and education costs were also major factors determining attitudes towards having children, and short-term remedies may not be enough, experts said. 

Household debt has grown to nearly 90% of gross domestic product, from 59% in 2010, Bank of Thailand data showed. 

Thailand has also been rocked by political instability over most of the past two decades, with two military coups and large anti-government protests. 

But for many like Ms. Chinthathip, who has chosen not to have children, the expense remains the main issue. 

“The middle class, office workers or people that are trying to make ends meet think the same way,” said Ms. Chinthathip. 

“Right now we have a cat and it’s not as costly as a child.” — Chayut Setboonsarng and Panarat Thepgumpanat/Reuters

Duterte approves bill raising sex consent age from 12 to 16

President Rodrigo R. Duterte has signed into law a bill that raises the minimum age of sexual consent from 12 to 16, his office said on Monday, in a bid to protect minors from rape and sexual abuse. 

The Philippines until now has had one of the world’s lowest minimum ages of sexual consent, behind Nigeria’s age of 11, according to the United Nations Children’s Fund (UNICEF). 

A joint 2015 study by UNICEF and the Center for Women’s Resources, a local non-governmental group, showed seven of 10 rape victims in the Philippines were children. 

One in five respondents age 13 to 17 reported experiencing sexual violence, while one in 25 experienced forced consummated sex during childhood, the study said. 

Under the bill endorsed by Mr. Duterte, which is gender-neutral, any adult engaging in sexual contact with anyone 16 or under would be committing statutory rape, unless the age difference between them was three years or less and sex was proven to be consensual, and neither abusive nor exploitative. 

The exemption does not apply if one of those involved was under 13. 

“We welcome this legal development and hope that it will help protect young girls from rape and sexual abuse,” said Josalee Deinla, spokesperson of the National Union of Peoples’ Lawyers, which provides legal help to poor and marginalized people in the Philippines. 

Lawrence Fortun, one of the bill’s main sponsors, described it as “a major step forward.” 

“I am elated that our collective efforts at pushing for stronger protection against rape and other forms of sexual abuse are advancing,” he said in a statement. — Reuters

Asian workers pushed to upskill as pandemic quickens digital shift

STOCK PHOTO

BANGKOK — Jaya Latchmi Mutusammy had worked several years in customer service and finance in Singapore, when caring for her ailing parents and demand for healthcare workers during the coronavirus pandemic led her to change track, with help from the government. 

Ms. Mutusammy, 47, is among tens of thousands who have tapped the city-state’s SkillsFuture Singapore program, an education and training initiative for adults that has been rejigged to prepare workers for the pandemic environment. 

“With my mom and dad in and out of hospital, I saw how critical healthcare professionals were, and did a certificate course in healthcare support through SkillsFuture and got a job as a clinical assistant,” Ms. Mutusammy said. 

“Then the pandemic hit, and healthcare workers became even more key. So I did another course in phlebotomy, as I saw drawing blood was a much-needed skill, and I didn’t want to be left behind,” she told the Thomson Reuters Foundation. 

The coronavirus pandemic upended jobs globally, with unemployment worldwide forecast to be 207 million in 2022 — compared to 186 million in 2019 before the coronavirus hit, according to the International Labour Organization (ILO). 

About half of all workers will need reskilling in the next five years, the World Economic Forum (WEF) said in a 2020 report, and governments and corporations are crucial in ensuring low-wage workers are not forgotten. 

In Asia, countries including India, Singapore and Malaysia set up skilling programs and offered tax incentives and cash subsidies to boost learning in sectors such as information technology, healthcare, and the so-called green economy. 

Technology firms including Microsoft, Google, Amazon, and IBM also launched global initiatives to train workers for tech jobs. 

But while there was a sharp rise in people seeking online learning, particularly digital skills, during the pandemic, there is a risk of widening inequality as large sections of the population remain unable to access them, WEF noted. 

“If governments and corporations do not focus on skilling the workforce and making them employable, it will lead to an unprecedented increase in social and economic inequality,” said Rituparna Chakraborty at TeamLease, a staffing firm in India. 

PRIORITY PILLARS
The coronavirus pandemic and the lockdowns to control its spread affected a wide range of industries, from aviation to tourism and hospitality to retail, with millions of workers furloughed or laid off worldwide. 

Many of these jobs are not coming back, as firms have deployed automation and artificial intelligence (AI) in warehouses, grocery stores, call centers, and manufacturing plants to reduce congestion and meet stricter health rules. 

By 2025, some 85 million jobs may be displaced by a shift to machines, while 97 million new roles related to machines and algorithms may emerge, WEF noted. 

Malaysia last year launched its digital economy blueprint, and allocated 1 billion ringgit ($240,000) in its budget this year for upskilling and reskilling programs, while a skills pledge in New Zealand requires companies to double their on-the-job training and reskilling by 2025. 

Singapore’s SkillsFuture uses big data and machine learning to monitor trends in global, regional, and local jobs and skills to help workers “stay relevant and employable” with training, career coaching, webinars, and subsidies for course fees. 

About 540,000 Singaporeans participated in SkillsFuture initiatives in 2020, compared to 500,000 the previous year. In 2021, that figure rose to about 660,000 — the highest number since the launch of the program in 2015, official data showed. 

In December, the agency’s first skills report named the digital sector, the green economy, and the care sector as the three “priority economic growth pillars” that can create tens of thousands of jobs in the country. 

With disruptions brought about by the COVID-19 pandemic, “knowing which skills are in demand has never been more important,” said a spokesperson at SkillsFuture Singapore. 

A wealthy country like Singapore, with a population of only 5.7 million, can better afford to invest in skills programs than larger and poorer nations, said Ayesha Khanna, chief executive of ADDO AI, a Singaporean technology services firm. 

“We are going to be an increasingly digital environment, and countries have to proactively help workers upskill,” said Ms. Khanna, who was on the steering committee of SkillsFuture Singapore. 

“The pandemic is the nudge to governments to do it.” 

GIG WORK
Worldwide, one of the effects of the coronavirus disease 2019 (COVID-19) pandemic was the explosive growth in the gig economy, as the shift to digital transactions triggered a surge in delivery, transportation, and warehouse jobs, largely filled by informal and contract workers. 

In India alone, the number of gig jobs could rise to 90 million in 8–10 years from about 3 million now, according to a study by Boston Consulting Group and the Michael and Susan Dell Foundation. 

With adequate protections, the gig economy can create opportunities for women and older adults, and make jobs more accessible and inclusive for low-income communities, it said. 

“The numbers of gig workers surged during the pandemic because people lost jobs or needed additional incomes because of medical emergencies,” said Shaik Salauddin, national general secretary of the Indian Federation of App-based Transport Workers (IFAT), an advocacy group. 

“Many of the delivery workers have Bachelor’s, even Master’s degrees — but there are no jobs, so they are continuing with gig work despite the tough conditions,” he said. 

India has introduced several initiatives to tackle the skills gap, but critics say they are inadequate for the large number of people who need reskilling, and do not address the issue of fewer jobs being created for hundreds of millions of the working-age population. 

National unemployment peaked at 23.5% in 2020 and has remained well above 7% since, higher than the global average. 

“I don’t think enough is being done to enable workers to reskill and transition,” said Amit Basole, associate professor of economics at Azim Premji University. 

“The potential consequences are very serious: we may be looking at long-term structural unemployment for certain kinds of workers. Combined with low-quality education during the pandemic, it can mean a large mismatch of labor supply and demand.” 

For Sarah Mokhtar in Singapore, reskilling for a technology job with her SkillsFuture credits was relatively easy. 

The 35-year-old, who had worked in the consumer goods industry for nearly 15 years, went to a three-month tech bootcamp run by Generation Singapore, a non-profit that prepares and places workers in jobs. 

She is now training as an application developer. 

“There is some risk in making a career switch at this stage,” she said. “But I wanted to join an industry that is future-proof.” — Rina Chandran/Thomson Reuters Foundation

Japan Inc. feels the heat over Russia ties as rivals shun Moscow

Sakhalin-2 LNG project in Russia. MITSUBISHICORP.COM

TOKYO — Japanese firms are under deepening pressure over their ties to Russia and are scrambling to assess their operations, company and government insiders say, after Western rivals halted businesses and condemned Moscow for invading Ukraine.

While environmental, social and governance (ESG) investors have previously targeted Japan Inc. for use of fossil fuels, scrutiny over Russia could become intense. Executives say privately they are worried about reputational damage, a sign corporate Japan is — however reluctantly — becoming more responsive to pressure on social issues.

Japan’s trading houses, commodities giants long seen as quasi-governmental arms integral to Japan’s energy supply, have big ties to Russia. Last year Russia was Japan’s second-biggest supplier of thermal coal and its fifth-largest of both crude oil and liquefied natural gas (LNG).

“The energy issue has implications for national and public interest, so it has to be discussed properly with the government,” said one trading house insider, who like others spoke on condition of anonymity.

“But we also have to think about our corporate value and about how we explain this to our shareholders. It’s a difficult position.”

Mitsui & Co. and Mitsubishi Corp. have stakes in the giant Sakhalin-2 LNG project Shell is now exiting. Itochu Corp. and Marubeni Corp. have invested in the Sakhalin-1 oil project that Exxon Mobil is pulling out of.

Mitsui and Mitsubishi said they would consider the situation, together with the Japanese government and partners. Itochu and Marubeni declined to comment on their plans related to Sakhalin-1.

Japanese firms have largely said they are watching the situation. Those that have halted activity have tended to cite supply-chain disruption rather than human rights.

A senior executive at an automaker said management at his company was holding daily meetings to gauge the impact of financial sanctions and the implication for parts supply.

“We’re also discussing reputational risk and how to deal with the news from the point of view of human rights and ESG — of course we’re aware of that,” said the executive.

“But we can’t just immediately decide we’re going to pull out because we can’t tell how long the Ukraine crisis will continue.”

Japanese firms typically do not face the same level of scrutiny from shareholders, customers, regulators, and even their own employees that Western companies now confront, said Jana Jevcakova, the international head of ESG at shareholder services firm Morrow Sodali.

“Most Japanese companies still don’t have a majority of international institutional investors. Those that do will very shortly, or already are, feel the pressure.”

RELIANT ON RUSSIA

A manufacturing executive said his company felt a responsibility to local staff in Russia but was also concerned about the risk of saying nothing.

“Japanese companies have been slow to react. Too slow. And I can’t agree with that,” he said. “If we keep quiet and just continue manufacturing and selling, we will likely face a risk to our reputation.”

Prime Minister Fumio Kishida has unveiled steps to help cushion the blow from higher oil prices, but it is unclear what the government will do about broader dependence on Russia. Japan’s imports from Russia totaled around $11 billion in 2020.

Government officials say privately Japan cannot just walk away from Russian energy, even as they acknowledge the peril.

“If Japan remains invested in Russia, that itself runs the risk of drawing criticism” should the conflict be prolonged, said an official close to Mr. Kishida.

In a moment of rare outspokenness for the leader of a state-owned lender, the head of the Japan Bank for International Cooperation said last week that “it would not be right” for companies to stick to business as usual in Russia.

Toyota Motor Corp. and Nissan Motor Co. have stopped exports to Russia, citing logistics issues, with Toyota halting local production.

Nissan, Mazda Motor Corp., and Mitsubishi Motors Corp. are all likely to stop local production when parts inventories run out, they say.

Japan’s most prominent companies will likely feel more heat as Western investors themselves pare back ties to Russia.

“We believe good corporate citizenship includes support of governmental sanctions, as well as closing down activities that might fall outside the current sanctions,” said Anders Schelde, chief investment officer at Danish pension fund AkademikerPension, which has $21.3 billion of assets under management and $342 million exposure to Japanese equities.

“From a financial point of view this might mean companies suffer short-term losses, but given the long-term stigmatization of Russia that is likely, the long-term cost will not change much.” — Yuka Obayashi, Maki Shiraki, and Yoshifumi Takemoto/Reuters

1...5,5495,5505,551...13,076Page 5,550 of 13,076
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube