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Tropical depression may intensify into typhoon 

A LOW-pressure area spotted off Mindanao had become a tropical depression and could soon intensify into a typhoon in the next 24 hours, the local weather bureau said on Sunday. 

The tropical depression was seen 1,955 kilometers east of Mindanao at about 3 p.m., the agency said in a 4 p.m. weather forecast posted on its website. 

It had maximum sustained winds of 55 kilometers per hour (kph) near the center, and gustiness of up to 70 kph. It was moving westward at 15 kph, it added. 

“The tropical depression is forecast to gradually intensify and may reach tropical storm category within the next 24 hours,” the agency earlier said in a separate bulletin. 

The cyclone is expected to enter the Philippine areas on Tuesday, after which it will be assigned named Odette, it added. 

“By Wednesday evening or Thursday morning, the tropical cyclone will begin to move westward and may make landfall over the Eastern Visayas-Caraga area,” it said. “Due to favorable environmental conditions, the tropical cyclone will likely continue to intensify and may reach typhoon category by Tuesday evening or Wednesday early morning.” 

The public and disaster risk reduction and management offices should continue monitoring for updates related to the tropical cyclone. — Norman P. Aquino 

Shellfish banned in several provinces due to red tide 

PHILSTAR

THE BUREAU of Fisheries and Aquatic Resources (BFAR) has banned shellfish from coastal waters of several provinces in central and southern Philippines due to red tide. 

The waters of Leyte, Bataan, Masbate, Bohol, Eastern Samar, Zamboanga del Sur, Surigao del Norte and Surigao del Sur tested positive for paralytic shellfish poison (PSP) or toxic red tide beyond the regulatory limit, it said in a Dec. 10 bulletin, citing laboratory results. 

All shellfish and krill harvested from these areas are considered unsafe for eating. Other seafood such fish, squid, shrimp and crabs are safe after these are cleaned and their internal organs are removed. 

The specific areas affected by red tide are Milagros, Masbate; Dauis and Tagbilaran City, Bohol; Dumanquillas Bay, Zamboanga del Sur;  Carigara Bay, Leyte; Matarinao Bay and Guiuan, Eastern Samar; San Benito and Litalit Bay, Surigao del Norte; and Lianga Bay in Surigao del Sur. 

The waters of Baroy in Lanao del Norte were free of red tide. 

PSP is a naturally occurring marine biotoxin. Consuming an infected shellfish can affect the nervous system, cause severe illness and in extreme cases, death. — Luisa Maria Jacinta C. Jocson 

Foreigners to be monitored for labor activities 

THE LABOR department on Sunday said it would monitor the economic activities of foreigners in the Philippines, after relaxing border controls amid a coronavirus pandemic. 

The agency earlier signed an agreement with the Philippine Retirement Authority on data sharing involving foreign nationals. 

The deal would allow both agencies to improve services, coordination and monitoring of foreigners within their purview, Labor Secretary Silvestre H. Bello III said in a statement. 

Under the agreement, the retirement agency can verify the employment information of foreigners who chose to retire in the Philippines through the Labor department’s alien employment permit database. 

“The pressing challenges of the pandemic impel us to forge solidarity and cooperation in promoting and monitoring the employment activities of foreign nationals in our country,” Bienvenido K. Chy, general manager and chief executive officer at the retirement agency, said in the statement. 

The exchange of data will be done quarterly via e-mail and other forms of data transmission, the Labor agency said. 

Meanwhile, Mr. Bello said in a separate statement the agency had suspended all labor inspections this month to dispose of all pending labor standard cases and prepare the inspection program for 2022. 

Regional directors have been ordered to temporarily cease all labor inspections starting Dec. 1, he said. 

The suspension does not cover occupational safety and health COVID-19 monitoring under a memo issued by the Labor and Trade departments. Also not covered are occupational safety and health standard investigations; technical safety inspections, inspection of boilers, pressure vessels and mechanical and electrical wiring installations; and inspection of companies or industries that Mr. Bello had ordered. 

He ordered regional directors to submit a list of labor inspectors recommended to do the job next year. They must have a “very satisfactory” performance rating for the past two rating periods and have no pending administrative or criminal cases, he added. 

The Labor department said it had inspected 56,332 establishments as of Oct. 31. 

Among the notable violations on general labor standards include record-keeping, Pag-IBIG coverage, and remittances to Pag-IBIG, Philippine Health Insurance Corp. and Social Security System, the agency said. 

Common safety and health standard violations include the absence of first aid personnel, safety officers, fire safety inspection certificate, registration of establishment and annual medical report, it added. — Kyle Aristophere T. Atienza 

Gov’t urged to allow vaccination walk-ins 

A SENIOR citizen got injected with his first dose of the Sinovac vaccine at the Mega vaccination facility at the Marikina Sports Complex on June 15. — PHILIPPINE STAR/ MICHAEL VARCAS
A SENIOR citizen got injected with his first dose of the Sinovac vaccine at the Mega vaccination facility at the Marikina Sports Complex on June 15. — PHILIPPINE STAR/ MICHAEL VARCAS

VACCINATION sites should allow walk-ins for seniors, seriously ill people and persons with disabilities, according to a congressman. 

These people are vulnerable groups that are typically not technology-savvy and do not have internet access, Party-list Rep. Rodolfo M. Ordanes said in a statement on Sunday. 

The lawmaker, who heads the House committee on senior citizens, said online registration had turned off many people including one mission senior citizens from getting vaccinated. 

He added that while some local governments allow walk-ins, most of them insist that people register online and wait for a schedule for them to get vaccinated. 

He also said he had been calling for the house-to-house vaccination of seniors and persons with disabilities. 

Mr. Ordanes said internet access had also caused delays in the distribution of state cash aid, noting that some local governments were still distributing the cash assistance, only they are doing it manually now. 

“Online registration is an even greater barrier in the provinces where internet access is much worse than in the National Capital Region,” the congressman said. 

He said many people from vulnerable groups were yet to get vaccinated because they don’t have online access. — Jaspearl Emerald G. Tan

The first 365 days

VECTORJUICE-FREEPIK

(Part 1)

In this space a decade ago, I wrote about how President Fidel Ramos hit the ground running in 1992 to address the critical pain points plaguing our nation, citing in particular the power crisis that flat lined our economy. (“National leadership and our collective future,” January 2010, http://romeobernardo.blogspot.com/2010/01/natl-leadership-and-our-collective.html).

I noted that success in “putting the lights back on literally and in terms of business confidence set the stage for reviving investments and rallying public support behind other reforms to improve global competitiveness and our people’s lives.”

We are entering once again a threshold that “will define the course of our collective future for at least the next six years,” this time facing a more existential crisis of global proportions.

As an input to the programs of the national candidates and their teams, a few economists and subject matter expert friends in the Foundation for Economic Freedom, the Management Association of the Philippines, the Makati Business Club, the Philippine Disaster Resiliency Foundation, and I developed a 10-point wish list for the first 365 days of the new administration. I am pleased to share this with readers, abbreviated a bit to fit column space.

THE 10 POINTS:

1. Create a National Recovery and Resilience Council. Downscale the IATF (Inter-Agency Task Force for the Management of Emerging Infectious Diseases) and create a Health Security Council.

2. Rapidly upgrade the country’s healthcare system and nutrition.

3. Prioritize and address with utmost urgency the resolving of our worsening Learning Crisis.

4. Liberalize key segments of the economy.

5. Address the country’s future Energy Security.

6. Uphold the rule of law.

7. Revive the PPP (private public partnership) model of infrastructure development.

8. Craft Industry Roadmaps in the 10 sectors with the most potential for massive job generation.

9. Institutionalize labor flexibility.

10. Improve the ease of doing business and delivery of public services.

1. CREATE A NATIONAL RECOVERY AND RESILIENCE COUNCIL AND A HEALTH SECURITY COUNCIL
Create a National Recovery and Resilience Council (NRRC), headed by the National Economic and Development Authority (NEDA), and assisted by an Advisory Committee including the private sector, to manage the tradeoffs between job creation and social protection, versus COVID-19 mortality rates. Downscale the IATF and create a Health Security Council (HSC) that is composed of the Departments of Health (DoH), Interior and Local Government (DILG), Information and Communications Technology (DICT), and Budget and Management (DBM), and the Office of Civil Defense (OCD), with a mandate for emergencies, with oversight over pandemic control, and empowered to tap other government agencies and private sector entities as resources.

On the HRC and NRRC

a. Background: The creation of the HSC and NRRC assumes that we are moving into an endemic phase of COVID-19 in 2022. While there will be the threat of surges, this has to be mitigated by high levels of vaccination for the eligible population, and an easily mobilized surge capacity in public and private hospitals.

b. The HSC will maintain its pandemic control functions of PDITR (Prevention, Detection, Isolation, Treatment, Reintegration, Vaccination for COVID-19). Comprising the HSC shall be the DoH, OCD, DILG, DICT, and DBM. The body will have oversight of pandemic control and can tap any of the other agencies of government as needed, as well as ensure that preventive measures, epidemiological surveillance (databases and digital tech support) and treatment of cases are undertaken properly, nationwide. The HSC can tap private sector and the academe as resource persons.

c. The NRRC shall be led by the NEDA Secretary, as he/she would be best placed to assess and manage tradeoffs, as well as set the appropriate targets (e.g. job creation and minimum health, education, and social protection outcomes). Aside from the members of the private sector, member government agencies shall include those whose inputs are crucial towards economic recovery (e.g. Departments of Labor and Employment, Trade and Industry, Social Welfare and Development, Transportation, Education, etc.).

d. The HSC and NRRC report to the President and integrate policy decisions at the level of the President. The bodies can report at the Cabinet level, where policy decisions can be made. Critical to the structure is a cross-walk and constant communication between the two bodies, such that information is symmetric, and the best possible decision can be made at a rapid pace.

Immediate COVID-19 Response Measures

e. Increase vaccination rates to 80% of total national population ASAP by opening up pediatric vaccination down to five-year-olds, booster shots for the general population, and entering into Vax 2.0 as we shift from a Pandemic to an Endemic situation.

f. Encourage vaccination among the lowest socio-economic classes (e.g. families covered by the Conditional Cash Transfer program, CCT) by providing a “top up” or additional incentive to get vaccinated and take regular boosters.

g. Refine a Vaccine Incentives/Disincentives programs: entry into restaurants, cinemas, sports facilities, churches, etc. for the fully vaccinated, while restricting access for the unvaccinated; similar for employment.

h. Refine Alert Level criteria to make them clearer (e.g. focus on vaccine coverage, average daily attack rate, hospital bed utilization rate, rather than on cases).

i. Further ease mobility restrictions as applicable in transportation, schools, and other institutions and facilities.

2. RAPIDLY UPGRADE THE COUNTRY’S HEALTHCARE SYSTEM
Rapidly upgrade the country’s healthcare system to manage against an endemic situation by increasing hospital bed and manpower capacity, reforming the national insurance system, and guaranteeing a steady supply of vaccines and medicines. The healthcare program should include Nutrition/Malnutrition, which has significant impact on personal health, learning and education, and future productivity.

a. Upgrade public and private hospital capacity across all regions. This includes expanding current bed capacity and manpower complement to staff the beds. Provide significantly more financial benefits and incentives to attract and retain doctors and nurses.

b. Reform PhilHealth by overhauling its leadership; investing in claims, fraud, and billing technology; and considering options to privatize or outsource some of its functions to ensure efficient service delivery.

c. Ensure the continuous supply of two to three of the most trusted vaccines for boosters and therapeutic medicines for COVID, while establishing the appropriate logistics infrastructure, especially in the provinces to ensure proper deployment.

d. Improve data integration for case data, vaccinations, and testing, among other data points.

e. Increased emphasis on Nutrition. There should be a strong program to combat hunger, malnutrition, and stuntedness which can lead to irreversible and permanent damage on learning, personal health, economic productivity.

3. RESOLVE THE WORSENING LEARNING CRISIS
Prioritize and address with utmost urgency resolving our worsening Learning Crisis by restarting face-to-face classes, reconstituting the Education Commission, and providing connectivity support for remote learners.

a. Return to full face-to-face classes in all schools that are in non-high-risk areas, while adhering to the highest levels of health and safety guidelines by the start of SY 2022-2023.

b. Prioritize subsidies for connectivity in the 2023 Budget.

c. Immediately convene an action-oriented, multi-sectoral Education Committee 2 (EdCom 2), with a mandate to develop a roadmap to address the Learning Crisis by tackling foundational reforms; ensure Public-Private Complementarity; assuring and institutionalizing lifelong learning/upskilling.

4. LIBERALIZE SEGMENTS OF THE ECONOMY
Liberalize segments of the economy such as importation and foreign investment restrictions, with the aim of lowering prices to stave off inflation and improving competitiveness by lowering costs.

a. Liberalize as many inputs to production and items for consumption as possible, taking inspiration from the successful rice trade liberalization and looking into other items, such as corn, pork, and others. The aim of which is to manage inflation and structurally adjust the economy towards greater competitiveness.

b. Enact economic policy reforms, which include further easing up of restrictions to foreign investments in key industries (e.g. utilities), as well as considering other critical sectors (e.g. cement production).

i. Note: The following laws are in advanced stages of legislation and may be passed by this Congress by yearend — Amendments to the Public Services Act, Amendments to the Foreign Investments Act, Amendments to the Retail Trade Liberalization Act, RCEP (Regional Comprehensive Economic Partnership) ratification.

ii. Note: Several executive actions are needed once the above amendments are legislated:

• PSA: Appropriate administrative agencies to formulate sector-specific regulations;

• Foreign Investments Act: The Inter-agency Investment Promotion Coordination Council (IPCC) which will be created to integrate all promotion and facilitation efforts to encourage foreign investments including “foreign investment promotion and marketing plan”;

• Retail Trade Liberation Act: Department of Trade and Industry-Board of Investments to formulate IRR (implementing rules and regulations) consistent with the legislative objectives of the amendments to the law.

c. Develop and signal to financial markets a medium-term fiscal consolidation plan. Improve efficiency in spending through privatization or sale of government assets and functions, abolition, merger, and/or streamlining of agencies.

(To be continued.)

 

Romeo L. Bernardo was finance undersecretary during the Cory Aquino and Fidel Ramos Administrations. He is a Trustee/Director of the Foundation for Economic Freedom, Management Association of the Philippines and FINEX Foundation

Learning from Jakarta

PIXABAY

Urban planners extol the virtues of the excellent public transport of places like Hong Kong, Seoul, Tokyo, and London. Filipinos traveling to these places often marvel at how easy it is to get around using public transport, and wish we could have that here, too.

That wish can seem remote. After all, these places are much richer than the Philippines, and good public transport costs money. But that doesn’t mean we can’t aspire to and demand better public transport than what we have today. And we can learn valuable lessons from the experiences of other places which face the same challenges as we do, and are just as resource challenged (i.e. poor) as we are, yet are delivering better public transport to their citizens than we are.

On Nov. 18, the Institute for Transportation and Development Policy — an international organization which advocates and advises cities on sustainable development, including sustainable and inclusive public transport — organized a webinar entitled “The Power, Potential, and Pitfalls of Integration: Lessons Learned from Jakarta’s Public Transport Integration.” A video of the webinar, which lasts just under an hour, is available on YouTube and deserves the attention of everyone interested in public transport in Metro Manila.

Indonesia and the Philippines have similar incomes per capita, and Jakarta and Metro Manila have similar land areas, population, and population density. Jakarta is about the same size as Metro Manila, in terms of land area and population. But, as the webinar made clear, Jakarta organizes its public transport very differently from how we do, and if the videos shown during the webinar are representative, Jakarta’s commuters are much better off than Metro Manila’s.

It is beyond the scope of this article to compare in depth, but even a few highlights show some very big contrasts:

1. Jakarta’s 11 million people, living in 660 square kilometers, are governed as a single political unit, which they call a province, with one elected leader called a governor. In Metro Manila, a slightly larger population lives in a similar land area, but is governed under 17 political units with 17 mayors. Plans, decisions, and project implementation, which in Metro Manila would need the approval and coordination of several mayors, can be approved and implemented by a single unit in Jakarta.

2. In Jakarta, transportation policy, its implementation, and its financing, are responsibilities of the Jakarta local government. Jakarta’s local government plans, implements, and owns the Jakarta equivalents of the LRTs and MRT. It also owns and operates Jakarta’s Bus Rapid Transit System (more on this later). Metro Manila has no BRT, but the rest of the transport-related functions undertaken by the Jakarta government in Jakarta are undertaken by the national government here.

3. Jakarta’s Bus Rapid Transit (BRT) system, one of the world’s largest, is also owned and operated by the local government. That BRT system has 388 kilometers of dedicated lanes with 260 stations and served 950,000 passengers per day before the pandemic.

4. Microbuses, the Jakarta equivalent of our jeepneys, link residential and industrial areas to the larger capacity rail and bus lines, providing much of the first- and last-mile travel in Jakarta. Microbus rides are free for passengers, and their operators are paid distance-based payments through service contracts. Unlike in the Philippines, where the government considers service contracting and libreng sakay temporary responses to the pandemic, these are permanent features of Jakarta public transport.

5. The Jakarta local government subsidizes public transport, at a cost of the equivalent of P12.5 billion per year. This is about 5-10% of the local government’s total budget per year, and during the pandemic, with a collapsed ridership, the subsidies covered about 70% of the system operating costs.

6. In Jakarta, preparations are underway for full fare integration by 2022, under which passengers will be able to pay a single fare equivalent to P18 to travel for three hours, regardless of how many transfers through different transport modes (LRT, MRT, bus, microbus) the trip takes. There are no such plans in Metro Manila, not even for the rail lines.

There are many other differences, and the policies described above are part of a wider package of reforms in Jakarta, including the development of more multimodal stations as well as greater provisions for the needs of cyclists, active transport users, and pedestrians.

Jakarta appears to be willing to spend much more money and play a more active role in ensuring good public transport for its residents than our national government, not to mention our local governments.

Of course, the speakers in the webinar were government officials, who naturally want to show their city in the most positive light. They claim significant improvements in ridership, service quality, and passenger satisfaction, but all governments do that. Listening to them made me want to believe them and wish that our government was doing the same things here.

When it becomes easier to travel, I plan to travel to Jakarta to see whether things are as good as the Jakarta officials described. Because if they are, it will point to policy directions we may want to take here in the Philippines.

 

Sunny Sevilla is a former government official who believes that it shouldn’t take longer than 45 minutes door-to-door to travel from any point in BGC to any point in Mandaluyong, on public transportation, on Friday at 6 p.m., and that it is government’s job to make that happen.

Industry drivers 2022-2030

FREEPIK

McKinsey and Company recently made public its outlook for the Philippine economy from 2021 to 2023. It appears that the Philippines growth trajectory did not and will not resemble a V-, U-, or K-shaped line but one that resembles a long MMMM, albeit on an upward trend. Our new reality is that the economy will continue to grow but will always decelerate once a new variant of the COVID virus disrupts everyday life.

The general prognosis — which I agree with — is that the economy will clock-in at a growth rate within government’s projections of 5-5.5% in 2021 and between 7-9% in 2022 and 2023. McKinsey rightfully forecasts that the economy could return to pre-pandemic levels by the third quarter of 2022 to the first quarter of 2023, depending on rate of vaccination and spread of new COVID variants. For context, Indonesia and China rebounded to pre-pandemic levels this year. This illustrates the depth and breadth of our five quarters of economic contraction. Regretfully, even when fully recovered, the Philippine economy will continue to show pandemic-induced scars, particularly in the tourism sector, manufacturing sector, and brick and mortar retail.

Which sectors will be the drivers of growth within the next 18 months?

Forty percent of the economy will be driven by four sectors. They are, IT-BPOs, OFW remittances, the energy sector, and the healthcare sector. The IT-BPO sector has shown great resilience and is forecasted to grow by 8% to 12% in revenues and 7% to 8% in headcount next year. OFW remittances have already recovered and will post modest growth this year and next. The energy sector will expand continuously as industrial and commercial demand picks up. Growth in capacity will come from renewable energy, but regulatory issues need to be sorted out. As for healthcare, COVID exposed the gaps in the system and both government and the private sector will be filling these gaps in the next 18 months.

Twenty percent of the economy will be driven by consumer goods and industrial manufacturing, combined. The demand for consumer goods will still revolve around the essentials — food, hygiene, and healthcare products. There will be a slight uptick in entertainment and home improvement products. As for industrial manufacturing, the sector will rebound as global demand and exports pick-up. However, it is stymied by raw material bottlenecks and unstable prices of raw materials.

Eighteen percent of the economy will be driven by the wholesale and retail trade. There will be an increasing shift from shopping in malls and supermarkets to online channels and neighborhood resellers. Whereas during lockdown, retailers benefited from stockpiling, the absence of panic will give rise to “per piece” purchases again.

Twelve percent of the economy will be driven by construction and real estate. Construction benefits from government’s infrastructure program going on high gear as well as pent-up demand due to delayed projects during the lockdown. For its part, real estate will be fueled by the high-end residential sector and those that cater to the OFW market.

Ten percent of the economy will be driven by financial services. Owing to the increasing popularity of e-commerce, many of the unbanked will start to enter the banking system. Bank’s shift to digital transactions will increase transactions exponentially.

Now that we know which sectors will be driving the economy, let me enumerate the industries seen to be the high growth superstars from 2022-2030.

The Philippines is positioning itself as a regional hub for Electric Vehicles (EV) and EV parts in ASEAN. At the moment, there are only 54 manufacturers and importers of EV parts and components. The industry is still at its infancy, with opportunities aplenty for parts manufacturing, assembly, electronics, battery charging infrastructure, and recycling.

Copper, nickel, cobalt, and lithium are vital components for manufacturing EV batteries. Fortunately, the Philippines is blessed with the world’s 4th largest reserves of copper with some 4.1 billion tons, and the world’s 5th largest cache of nickel with 298 million tons. At present, copper production is only at 287,000 metric tons per year while the output of nickel is at 12.5 million tons a year. Our copper and nickel output is minuscule when viewed against global demand and the amount of reserves we have.

Production can increase but three factors stand in the way. The ban on open pit mining. The power of LGU’s to enact ordinances banning mining even if it overrides government policy. And the zonal ban on mining, which is hyper-excessive. These three impediments must be removed in order for the mining industry to thrive.

Open pit mining has been over politicized in the Philippines but is actually an accepted means of extracting minerals that lie near the surface. The mining industry coordinating council (MICC) has adopted the latest Canadian standards for open pit mining, which are the world’s most stringent in terms of environmental protection. There is no reason to choke the industry just because of an archaic stigma.

Aerospace is another emerging industry for the Philippines due to our large supply of aerospace engineers. At the moment, the Philippines hosts three original equipment manufacturers (OEM) who collectively exported $470 million last year. There is much room for expansion.

In agro-processing, opportunities lie in coconut processing (VCO, MCT oil, coconut sugar, coco milk, etc), processed tropical fruits, carrageenan, cassava processing, natural health supplements, and fishery products.

The construction sector offers immense opportunities given the following factors: a housing backlog of 12.4 million homes; the need for 368,600 square meters of new office space until 2025; the government’s continued push towards infrastructure development; and $14 billion to be spent on modernizing logistics supply chains. Opportunities are rife for engineering services outsourcing, general contracting, electrical engineering, mechanical engineering, sanitary engineering, and project management.

Creative industries are making a comeback. Although exports of creative industries (which include furniture, fashion, homewares, toys, etc.) amounted to only $4 billion last year, the industry will soon get a shot in the arm when the Creative Industries Act is enacted into law. The bill was passed in the House on third reading and is presently awaiting deliberation in the Senate. When passed, the bill will open the floodgates of opportunity for creative entrepreneurs, what with financial and institutional support to be provided by government.

The Creative Industries Act mandates the creation of the Philippine Creative Industry Development Council. This will enable the centralization effort across government agencies and across the entire creative value chain. The Council will formulate and execute the Philippine Creative Industries Development Plan as well.

E-commerce offers enormous opportunities for wholesaler and retailers. With 94 million internet users and 89 million Filipinos active on social media, e-commerce in the Philippines grew by 93% last year, with 64.7% of all internet users having engaged in at least one e-commerce transaction. Merchandise trade over e-commerce in the Philippines is seen to reach $660 by the year 2030.

Finally, Artificial Intelligence (AI) has the potential to be the number one growth driver in the country. For this reason, the National AI Strategy was established to position the Philippines as a center of excellence in AI. The Philippines aims to be a producer, programmer, and provider of all products that utilize AI.

All these, coupled with our traditional money makers such as the electronics industry, tourism, and IT-BPO industry, means that our businessmen will not be short of opportunity for expansion and diversification. The next 18 months is the best time to take a position in a high-growth industry of your choice.

 

Andrew J. Masigan is an economist

andrew_rs6@yahoo.com

Facebook@AndrewJ. Masigan

Twitter @aj_masigan

Economic scarring

VECTORJUICE-FREEPIK

“Rebounding from a deep contraction in 2020, the Philippine economy is forecast to grow 5.3% this year before accelerating to an average of 5.8% in 2022-23 on the road to recovery,” according to the World Bank (WB) in its 2021 Philippines Economic Update (PEU), launched at a Zoom press briefing on Dec. 7 (https://www.worldbank.org). Specifically, Gross National Product (GNP) “will grow at 5.9% next year — up from its 5.8% projection in September — and 5.7% in 2023 from 5.5% figure” (https://cnnphilippines.com/business, Dec. 7).

The “Joint Statement of the Duterte Administration’s Economic Managers on the Philippine Economic Performance for the Third Quarter (Q3) of 2021” boasted that “The Philippine economy grew by 7.1% year-on-year in the third quarter. This is up from the -11.6% in the same period last year. This is among the highest third quarter growths in the ASEAN and East Asian region” (https://neda.gov.ph/, Nov. 9). And with the 7.1% Q3 growth, the economic managers claimed that average GDP growth from January to September stood at 4.9%, within the upper end of the government’s target range of 4-5%.

In August “the government cut its economic growth target to 4-5% from 6-7% previously to address the effects of tightened restrictions in rising cases of the new Delta variant in the pandemic” (https://www.bworldonline.com, Nov. 2). Sad, because the economy had grown by 11.8% in the second quarter after falling 3.9% in the first three months of the year and had technically exited recession in the second quarter after five straight quarters of decline.

Socioeconomic Planning Secretary Karl Kendrick Chua told legislators at the start of deliberations on the proposed P5.02-trillion 2022 national budget that since the Development Budget Coordination Committee (DBCC) slashed this year’s economic growth forecast to 4-5%, GDP needed to expand by over 9% next year so that nominal GDP could return to its pre-COVID-19 P19.52 trillion (Philippine Daily Inquirer, Aug. 26). When the GDP shrank 9.6% at the end 2020 (the worst annual economic contraction post-war), nominal GDP slid to P17.94 billion. The earlier 6-7% GDP growth target was calibrated to coach GDP to grow back to pre-COVID base. Chua said that 75% of the economy stopped at the height of the most stringent COVID-19 lockdown in 2020 (Ibid.).

The International Monetary Fund (IMF) lowered its 2021 Philippine GDP forecast to 3.2%, from the 5.4% projection set in June. Fitch Ratings downgraded its projection to 4.4% from 5%, while the ASEAN+3 Macroeconomic Research Office cut its forecast to 4.3% from 6.4%. The Asian Development Bank (ADB) maintained its forecast for the country’s gross domestic product (GDP) growth at 4.5% in 2021 and 5.5% in 2022 in its Asian Development Outlook (ADO) 2021 Update.

During the Q&A at the Dec. 7 press briefing, WB Senior Economist Kevin Chua was asked: What is this instability in GDP growth targets, projections, and even final measurement that confused planners, administrators, and regulators; actors and influencers, victims or observers. One prominent economist in the audience asked what figures and data are to be believed, for sure knowing for herself that scientific measurement can be subjectively interpreted and analyzed. One other prominent econometrist challenged the poverty statistics and income elasticities imbedded in the GDP projections. Does the WB/IMF or the ADB conduct live surveys to get primary data on economic factors vulnerable in this pandemic? Chua replied that the WB and international agencies use econometric models and simulation for this.

And these models recognize “economic scarring” as a “subject-to” constraint made important in analyzing economic growth and development in this 20 month-long COVID pandemic. “The recession brought on by the COVID-19 pandemic is no ordinary recession. Compared to previous global crises, the contraction was sudden and deep — using quarterly data, global output declined about three times as much as in the global financial crisis, in half the time.” (https://blogs.imf.org, “Slow-Healing Scars: The Pandemic’s Legacy”).

Economic scarring from persistent epidemics has been analyzed before, but this is the first time a pandemic has hit the whole world and lingered to stalk and attack all people. Projections analyses of past epidemics suggest that their initial impact on the level of potential output is relatively short-lived, tending to dissipate two years after the end of the epidemic. However, it should be noted that the past epidemics considered in the analysis were — with the exception of the swine flu — mostly localized events which are not comparable to a major global pandemic (https://voxeu.org, Feb. 5).

The IMF expects world output in the medium-term to be about 3% lower in 2024 than pre-pandemic projection. This will vary across countries, depending on the future path of the pandemic; the share of high-contact sectors; the ability of businesses and workers to adapt; and the effectiveness of policy responses. Emerging market and developing economies are expected to have deeper scars than advanced economies, with losses expected to be largest among low-income countries. (imf.org, op. cit.).

“Severe recessions in the past, particularly deep ones, have been associated with persistent output losses from reduced productivity. Although the pandemic has spurred increased digitalization and innovation in production and delivery processes — at least in some countries — the resource reallocation needed to adapt to a new normal may be larger than in past recessions, affecting productivity growth going forward. Another risk is the pandemic-driven rise in market power of dominant firms, which are becoming increasingly entrenched as weaker competitors collapse.

“Productivity has also been affected by COVID-19 disruptions to production networks. High-contact sectors, such as arts and entertainment, accommodation and restaurants, and wholesale and retail trade are less central to production networks than, say, the energy sector. But historical analysis shows that even shocks to these peripheral sectors can be greatly amplified through spillovers to other sectors. Widespread school closures have occurred across countries, but the adverse impacts on learning and skills acquisition have been larger in low-income countries. The resulting long-term individual earnings losses and damage to aggregate productivity could be a key legacy of the COVID-19 crisis” (Ibid.).

The IMF advises countries to adjust their economic policies to the different stages of the pandemic with a combination of better-targeted support for affected households and firms, and public investments. Human capital nurturing should be first priority, with adequate resources allocated to healthcare and education. Jobs must be protected through policies to facilitate job mobility and promote competition and innovation. Public infrastructure investment should be increased, in cooperation and partnership with the private sector.

“Finally, strong international cooperation will be needed to address the growing divergence across countries. It is vital that financially constrained economies have adequate access to international liquidity for development spending. On the health front, this also means ensuring adequate production and universal distribution of vaccines — including through sufficient funding for the COVAX facility — to help developing countries beat back the pandemic and prevent even worse scarring,” the IMF admonishes (Ibid.).

True. Best for small emerging economies like the Philippines to focus on what can be done towards a New Normal in this persistent pandemic.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Biden warns Putin: Russia will pay ‘terrible price’ if it invades Ukraine

A RUSSIAN FLAG flies with the Spasskaya Tower of the Kremlin in the background in Moscow, Russia, Feb. 27, 2019. — REUTERS
A RUSSIAN FLAG flies with the Spasskaya Tower of the Kremlin in the background in Moscow, Russia, Feb. 27, 2019. — REUTERS

WILMINGTON, Del. — US President Joseph R. Biden on Saturday said he told Russian President Vladimir Putin that Russia would pay “a terrible price” and face devastating economic consequences if it invaded Ukraine.

Biden told reporters the possibility of sending US ground combat troops to Ukraine in the event of a Russian invasion was “never on the table,” although the United States and the North Atlantic Treaty Organization (NATO) would be required to send in more forces to eastern flank NATO countries to beef up their defenses.

“I made it absolutely clear to President Putin … that if he moves on Ukraine, the economic consequences for his economy are going to be devastating, devastating,” he said after remarks about the deadly tornadoes that hit the US on Friday.

Mr. Biden, who spoke with Putin by telephone for two hours last week, said he had made clear to the Russian leader that Russia’s standing in the world would change “markedly” in the event of an incursion into Ukraine.

Mr. Biden spent the weekend at his home in Wilmington.

Foreign ministers from the Group of Seven (G7)richest democracies on Saturday sent a similar message to Moscow after a meeting in Liverpool, warning of dire consequences for any incursion and urging Moscow to return to the negotiating table.

G7 finance ministers are meeting virtually on Monday to review economic concerns, including inflation, but will also touch on potential sanctions against Russia if it moves against Ukraine, officials said.

Ukraine has accused Russia of massing tens of thousands of troops in preparation for a possible large-scale military offensive.

Russia denies planning any attack and accuses Ukraine and the United States of destabilizing behavior, and has said it needs security guarantees for its own protection.

Mr. Biden last week promised Central European NATO members more military support amid growing concern over the buildup, which countries near Russia’s border worry could result in a similar outcome as Russia’s 2014 annexation of the Crimea region of Ukraine, Lithuania’s presidential adviser said. — Reuters

DHL doubles robots as humans alone can’t handle holiday crunch

DHL.COM

SANTA CLAUS is getting a bunch of help from robots this Christmas, as one of the world’s biggest supply-chain firms rushed to add automation to its US operations ahead of the holidays.

DHL’s supply-chain unit doubled its use of robots in the US this year and now has about 1,500 picking robots at its warehouses around the country, on top of adding 15,000 seasonal workers, Oscar de Bok, chief executive of the unit, said in an interview with Matthew Miller on Bloomberg TV Friday. It has helped the parcel-delivery company to stay current on its orders, despite bottlenecks and higher labor costs.

“The supply-chain disruption that we’re seeing at the moment is not a one-time thing,” Mr. De Bok said. “Because of the growth of e-commerce, supply chains are now organized differently because you get major hops and jumps at the end of the supply chain, because that’s the end-consumer. All the stores and the wholesalers and distributors that used to be in between are now less, and that’s why you get more disruptions in supply chains.”

The unit of Deutsche Post AG started ramping up for the holiday season early, Mr. De Bok said, allowing it to add the 15,000 workers. The hiring surge came with a cost, though, with wages rising as much as 15% in some parts of the U.S.

Longer term, DHL created eight resourcing centers around the US to recruit and train workers. Other moves to better cope with soaring demand include investing in fulfillment centers that are closer to customers, and relying more on data analytics to better forecast customers’ shipping volumes, Mr. De Bok said. — Bloomberg

Australia shortens wait time for COVID-19 booster doses as Omicron cases increase

BW FILE PHOTO

CANBERRA — Australia said on Sunday it will shorten the wait time for people to receive a coronavirus disease 2019 (COVID-19) booster following a rise in cases of the Omicron variant.

Australia had previously said it would offer the booster to everyone over 18 who had had their second dose of the vaccine six months earlier.

But with rising cases of the Omicron variant, Health Minister Greg Hunt said the time interval will be shortened to five months after the second dose.

“A booster dose five or more months after the second dose will make sure that the protection from the primary course is even stronger and longer lasting and should help prevent spread of the virus,” Mr. Hunt said in an e-mailed statement.

“Data from Israel shows boosters supporting reductions in the rate of infection in eligible age groups, severe disease in those aged over 40 years and deaths in those over 60 years.”

Australia will use both vaccines from Pfizer and Moderna in its booster program.

Australia is one of the most vaccinated countries, with about 90% of people over 16 fully inoculated.

Still, Australia on Sunday reported 1,556 cases in the previous 24 hours as infections lingered near the six-week high reported a day earlier.

Australia has recorded about 229,000 COVID-19 infections, well below the toll of other nations, and 2,100 deaths. — Reuters

Peña stuns Nunes to claim UFC bantamweight crown

JULIANNA PEÑA moves in with a hit against Amanda Nunes during UFC 269 at T-Mobile Arena. — REUTERS

LAS VEGAS — Julianna Peña pulled off one of the biggest upsets in mixed martial arts history to score a second-round submission win over Amanda Nunes and win the Ultimate Fighting Championship (UFC) bantamweight title at UFC 269 on Saturday.

In the main event, Charles Oliveira retained the lightweight title, submitting Dustin Poirier with a standing choke early in the third round of a thrilling battle.

Peña looked to be in trouble in the first round of the co-main event against one of the most dominant champions the sport has ever seen, but the 32-year-old came storming back in round two, rocking Nunes with combinations.

Coming into the fight a heavy betting favorite Nunes, whose record includes wins over Ronda Rousey, Valentina Shevchenko and Cris Cyborg, wilted as Peña poured on flurries of punches as the two stood and traded blows before the fight went to the mat.

Nunes’ five-year reign at the top came to an end when she tapped out at the 3:23 mark of the second round as Peña sank in a rear naked choke to hand the Brazilian her first defeat since September 2014.

In the main event former interim champion Poirier, who scored a pair of wins over Conor McGregor earlier this year to earn the title shot, landed some heavy left hands and downed Oliveira as he won the first round.

However, Oliveira got Poirier on his back in the middle of the cage early in the second, landing thunderous elbows before jumping on Poirier’s back and securing the choke early in the third round. — Reuters

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