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Property in civil forfeiture valued at nearly P900 million — Diokno

REAL PROPERTY seized from criminals and subject to civil forfeiture as part of money-laundering prosecutions has been valued at nearly P900 million, Bangko Sentral ng Pilipinas Governor and Anti-Money Laundering Council (AMLC) Chairman Benjamin E. Diokno said.

Mr. Diokno reminded the real estate industry of its responsibility to guard against money laundering risks.

“As of 2020, real estate with an estimated value of almost P900 million accounted for 22% of the total assets subject to civil forfeiture proceedings in the Philippines,” Mr. Diokno said in a speech delivered to the Real Estate Brokers Association of the Philippines (REBAP) Friday.

He added that the AMLC has confiscated outright nearly P30 million worth of real estate that was “used as a means to hide the proceeds of crime including terrorism financing.

Mr. Diokno said the dirty-money regulator recently filed a petition for civil forfeiture on assets, including a property in Cebu, connected to the illegal drug trade.

Real estate assets that are subject to freeze orders were also found to have links to terrorism financing, he added.

These cases demonstrate how illicit funds are parked in the formal economy, Mr. Diokno said.

“When used for business activities, the purchased real property, such as a hotel or restaurant, may also provide what appears to be a legitimate source of income,” he said.

Mr. Diokno noted how condominiums and other real property have been identified as assets of criminals in a majority of fraud, corruption, and illegal drug cases.

He told the REBAP to practice customer due diligence and to retain Know Your Customer records for property transactions for at least five years.

Following the recommendation of the Financial Action Task Force (FATF), Republic Act 11521 passed in January included real estate developers and brokers as covered persons for the purpose of enforcing anti-money laundering laws. It also covered single-property cash transactions of over P7.5 million.

The Philippines is currently on the FATF gray list of jurisdictions that are obliged to prove their progress in implementing stricter anti-money laundering and counter-terrorism financing laws. Mr. Diokno is hopeful of exiting the list by January 2023. — Luz Wendy T. Noble

Asian Terminals reports 24% decline in nine-month profit

ASIAN TERMINALS, Inc. (ATI) said net profit in the first nine months fell 24% year on year to P1.5 billion following disruptions in global supply chains, rising fuel prices, pandemic-related measures, and unfavorable foreign exchange rates.

“Cargo flow during the third quarter was tempered by operational disruptions in major Asian transshipment hubs caused by spikes in COVID-19 (coronavirus disease 2019) incidents, with governments pre-emptively locking down port facilities to curb infection rates,” the listed port operator said in a statement Friday.

The company added that disruptions in the major regional ports caused ship rerouting, anchorage queuing, terminal gridlocks, and delays in container and logistics cycles.

But ATI Executive Vice-President William Khoury said the company expects cargo to increase for the rest of the year due to increased consumer confidence and the easing of community quarantine rules.

“As of October, we have reached 100% vaccination rate for our employees. This further boosts ATI’s capacity and capability to handle more container volumes safely and efficiently as we keep in step with market recovery and fulfill our vital role in keeping cargoes flowing in the supply chain,” Mr. Khoury said.

ATI’s international gateway ports in Manila and Batangas handled more than 810,000 TEUs (twenty-foot equivalent units) and almost 200,000 TEUs in the first nine months, respectively.

The company said the volumes indicate “resilient growth since the novel health emergency disrupted global and local supply chains last year.”

“This represents a consolidated volume growth of 8% compared to end-September 2020,” it noted.

For the first nine months, revenue totaled P8.22 billion, up 3.2% from a year earlier. — Arjay L. Balinbin

How to win Asia-Pacific consumers in the new era

First of two parts

Before the COVID-19 pandemic unleashed its unprecedented impact on economies and societies, consumer behaviors were already shifting. Digitalization was reimagining how consumers live, work, play and consume, evidenced by the rapid rise of e-commerce in the Asia-Pacific region.

In a survey conducted by VISA (VISA Consumer Payments Attitude Study) mid-year, about 93% of Filipinos increased their shopping activity on websites and mobile apps. In fact, up to one in two Filipinos shopped online during stricter lockdown protocols. Businesses and consumers alike anticipate monthly promotions of online retail platforms and explore shopping via social media platforms such as Facebook and Instagram.

The pandemic accelerated some of these changes that were underway, leading consumers to reprioritize what they value. Arguably, it is no longer just about what they buy but also how they want to live their lives. That means consumer companies need to understand what is driving consumer lifestyles and ultimately, use these insights to make bolder plans to get ahead of change.

To be fair, many consumer companies did pivot to cater to shifting consumer demand during the last 18 months of the pandemic. However, the consumers that companies adapted to serve during the pandemic may not be the same consumers who will make them profitable in the future. That said, certain pandemic-induced traits may persist. For example, companies that offered the supply and price stability needed by consumers early in the pandemic are more likely to be rewarded with consumer stickiness than those that chose to pass on the higher costs to consumers.

Many consumers, particularly in the Asia-Pacific region, appear to be turning into COVID-19 anxiety “long haulers,” as indicated by real-time global consumer sentiment tracked by the EY Future Consumer Index which surveyed more than 5,500 respondents across six Asia-Pacific countries — China, India, Indonesia, Japan, Australia and New Zealand — from among 20 countries in total. Of the Asia-Pacific consumers surveyed in the May 2021 edition, 85% express concerns over health. With regard to pandemic-related caution in their spending behavior, 44% say they are purchasing only essentials and about two-thirds say they are thinking more carefully about how they spend money. This is consistent with the results of the study published by Kantar (Kantar Purchase Confidence Study in July 2020) where roughly 79% of consumers expressed worry about their financial situation and the importance of health and immunity benefits of fast-moving consumer goods (FMCG) products.

FIVE DOMINANT BEHAVIORAL SHIFTS
While individual consumer behaviors are likely to be volatile in the foreseeable future, companies can proactively accommodate their needs in five key areas: value, health, sustainability, experiences and omnichannel.

VALUE
Consumers, being concerned about finances, are invariably increasingly price-sensitive. Of the respondents in the consumer index report, 56% of consumers see price as a more important purchasing criteria than before, while 44% are purchasing only essentials. Less than half at 42% will buy more store-brand household staples moving forward.

Consumer companies need to review their overall portfolios and value chains to consider if they can offer consumers quality, low-cost alternatives, as well as compete effectively with store brands and private labels. At the same time, retailers need to reassess their private label strategy. Short-term brand conversion during the pandemic could likely lead to longer-term brand loyalty — but only if private labels continue to drive product range and innovation, marketing outreach and quality.

HEALTH
The pandemic has re-emphasized the importance of health, fitness and wellness. Understandably, as much as 85% of consumers are concerned about their family’s health. Meanwhile, 48% are spending more on healthy or “good for me” products, and 36% are willing to pay a premium for products promoting health and wellness.

Asia-Pacific consumers are concerned with protecting their health and that of their family. Consumers are actively shopping for health products that will make them safer and healthier at home. Catering to this “in-home” hygiene market, including cleaning, nutrition, fitness and even beauty products may require more ingenuity in exploring healthier formulations, reshaping product portfolios and R&D investments.

SUSTAINABILITY
It is not enough to just offer a product at the right price point: the behavior of a company is as important as what it sells. An overwhelming 82% of Asia-Pacific consumers say that companies must be transparent about their environmental impact and 28% are willing to pay a premium for more sustainable goods and services. Almost half at 48% also say that local sourcing has become more important.

If consumer companies can proactively demonstrate accountability and transparency over their environmental impact, they will be able to gain consumer trust and encourage higher spending. To do so, companies should look into re-engineering their production, logistics and supply chains as well as recognizing the third-party risks that can erode credibility.

EXPERIENCES
Pent-up demand for unique experiences, especially among younger consumers, will create opportunities for consumer companies to provide new offerings that fit a range of budgets. The EY Future Consumer Index revealed that 64% of Asia-Pacific consumers are willing to share personal data for a tailored online experience. Meanwhile, 45% will be less inclined to take part in experiences outside their homes, and 43% will actually spend more on experiences. The question is whether companies can switch flexibly between on-trade (or on-site) and off-trade (or bring home) as pandemic restrictions vary.

Forward-thinking companies are offering consumers a mix of both digital and physical experiences: digital experiences that can be accessed safely at home, paired with unique in-store experiences that are worth exploring. Adapting to this new trend may require an operating model reset for some Asia-Pacific companies, strategically reallocating resources and restructuring the organization for greater agility.

OMNICHANNEL
Many consumers who moved online out of necessity will largely sustain their online behaviors, although the extent of digital engagement may shift. The interaction between online and offline will be more important than before. For instance, 54% of consumers in the Asia-Pacific region are doing their grocery shopping both online and in person, while 47% even say that the availability of delivery is a more important priority when shopping. On the other hand, 41% are visiting stores less frequently.

Consumers want digital engagement to be just as reliable as going to the store. An integrated channel strategy, supported by agile supply chains and logistics, is needed to deliver a consistent and enjoyable experience across online and offline channels. With the right data strategy, the data captured from online interaction and consumption will also yield valuable insights for business planning and delivering superior, bespoke experiences.

In the second part of this article, we discuss the three key actions that leaders of consumer companies should consider in order to address these aforementioned shifting consumer expectations.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

 

Olivier Gergele is the EY ASEAN Consumer Products & Retail leader, Maria Kathrina S. Macaisa-Peña is a business consulting partner and the Consumer Products and Retail Sector leader of SGV & Co., and Fabrice Imparato and Shaurya Ahuja are EY-Parthenon partners.

Duterte daughter tries to justify VP ambition

DAVAO CIO

PRESIDENT Rodrigo R. Duterte’s daughter on Sunday said running for vice-president next year was an opportunity to meet halfway her supporters, who wanted her to run for president.

“I have thousands of supporters who cried last Oct. 8 and I cannot find it in my heart to make them cry again on Nov. 15,” Davao City Mayor Sara Duterte-Carpio said in a video message posted on her Facebook page.

Ms. Carpio, 43, earlier rejected calls for her to run for a national post. She had opted to run for reelection as mayor before the Oct. 8 filing deadline. Substitution of candidates is allowed until Nov. 15.

“After the deadline, the offer to run for vice-president became an opportunity to meet you halfway,” Ms. Carpio said. “It’s a path that would allow me to heed your call to serve our country.”

The Davao mayor on Saturday agreed to run for vice-president in tandem with former Senator Ferdinand “Bongbong” R. Marcos, Jr. who filed his candidacy for President last month.

The Partido Federal ng Pilipinas, Mr. Marcos’s party, adopted Ms. Carpio as its vice-presidential bet for the May elections, according to a copy of a resolution passed by the party at the weekend.

The presidential daughter registered her candidacy for vice-president under the Lakas-Christian Muslim Democrats (Lakas-CMD) through a representative.

She substituted for a party member who is a relative unknown.

She took her oath last week as a member of Lakas-CMD, which is led by former President Gloria Macapagal Arroyo — a known powerbroker in Philippine politics.

Political analysts have said Mr. Duterte could not afford to lose support from the Marcoses because their supporters backed his presidential bid in 2016.

Civic groups earlier asked the Commission on Elections to disqualify the younger Mr. Marcos from the presidential race after a trial court convicted him for tax evasion in the 1990s.

More than 70,000 people were jailed, about 34,000 were tortured and more than 3,000 people died under his father’s martial rule, according to Amnesty International.

The dictator ended martial law in Jan. 1981, but it wasn’t until five years later that he was toppled by a popular street uprising that sent him and his family into exile in the United States.

The younger Mr. Marcos was among the first to return to the Philippines from exile in 1991.

Ms. Carpio als tried to distance herself from the ruling PDP-Laban.

“The problems of PDP are their own,” she said. “Let them resolve the issues within their party. This is all politics and this will not matter in five years, or even now when what we need to focus on is our country’s recovery and the people’s welfare.”

Senators Ronald M. Dela Rosa and Christopher Lawrence T. Go withdrew their presidential and vice-presidential bids on Saturday under PDP-Laban.

Mr. Go, Duterte’s former aide, filed his candidacy for president under another party via substitution.

Mr. Duterte, who earlier claimed he was retiring from politics next year, might also run for vice-president, Communications Secretary Martin M. Andanar said on Saturday.

The tough-talking leader is barred by law from running for reelection.

Analysts earlier said the ruling camp might be doing everything to remain in power to protect Mr. Duterte from potential lawsuits.

The International Criminal Court (ICC) has ordered an investigation of Mr. Duterte’s crackdown on illegal drugs that has killed thousands, saying crimes against humanity might have been committed.

The other vice presidential candidates include Senate President Vicente C. Sotto III, Senator Francis N. Pangilinan, Party-list Rep. Jose L. Atienza, Jr. Willie Ong and Walden F. Bello.

Also running for president  next year aside from Mr. Marcos are Vice-President Maria Leonor “Leni” G. Robredo, Manila Mayor Francisco M. Domagoso, Senator  Panfilo M. Lacson and boxing champion and Senator Emmanuel “Manny” D. Pacquiao. — Norman P. Aquino

Gov’t adviser seeks further lockdown easing in capital

PHILIPPINE STAR/ MICHAEL VARCAS
MAINTENANCE workers from the Pasig local government disinfected an isolation booth of a quarantine facility at the Caruncho stadium before it got dismantled on Nov. 11. — PHILIPPINE STAR/ MICHAEL VARCAS

THE LOCKDOWN level in Metro Manila could be eased further to Alert Level 1 next month, as long as its more than 13 million residents remain cautious to prevent another surge in coronavirus infections, according to the country’s entrepreneurship adviser.

“We can do it,” presidential adviser for entrepreneurship Jose Maria A. Concepcion III told ABS-CBN’s TeleRadyo in Filipino on Sunday. “While we continue to go down in cases, and we’re recommending Alert Level 1, vigilance is important.”

An area may be put under the first alert level if virus transmission is low, cases are decreasing, and hospital bed and intensive care unit use is low, according to an inter-agency task force.

Under this quarantine level, movement is allowed regardless of age and illness. All types of businesses may operate and venues may be used at full capacity subject to minimum public health standards.

“I think the relaxed policies this fourth quarter will continue until 2022,” Mr. Concepcion said. “We already found the solution — local governments vaccinating at least 80% of their constituents.”

The Department of Health (DoH) reported 1,926 coronavirus infections on Sunday, bringing the total to 2.82 million.

The death toll rose to 45,581 after 309 more patients died, while recoveries increased by 3,140 to 2.74 million, it said in a bulletin.

There were 28,102 active cases, 62.3% of which were mild, 5.8% were asymptomatic, 10.5% were severe, 16.94% were moderate and 4.5% were critical.

The agency said 26 duplicates had been removed from the tally, 24 of which were tagged as recoveries, while 245 recoveries were relisted as deaths. Two laboratories failed to submit data on Nov. 12.

DoH said 34% of intensive care units in the Philippines were occupied, while the rate for Metro Manila was 31%.

The government aims to vaccinate at least 50% of its adult population by yearend.

Metro Manila is now under Alert Level 2. Mr. Concepcion cited the need for people to get vaccinated against the coronavirus and always wear masks.

“We all need to get vaccinated,” he said. “This is for the national interest and common good. Our economy depends on it.”

Mr. Concepcion said there is now enough vaccine supply, and local governments should counter fake news against vaccination.

The Philippines has received almost 122 million COVID-19 vaccine doses, 67.7 million of which had been given out.

About 30.8 million Filipinos had been fully vaccinated against the coronavirus as of Nov. 11. Almost 37 million more have received their first dose.

President Rodrigo R. Duterte has approved a plan to use for the entire country a coronavirus alert level system first tested in the Philippine capital and nearby cities.

The nationwide enforcement of the quarantine strategy will be in four phases, according to Executive Order 151 released on Thursday.

The government on Sept. 16 started enforcing granular lockdowns with five alert levels in Metro Manila, weeks after the government struggled to contain a fresh surge coronavirus infections triggered by a more contagious Delta variant.

Coronavirus cases in the capital region might soon plateau as the infection rate dropped to 3%, the OCTA Research Group from the University of the Philippines said last week. — K.A.T. Atienza

Local governments should lead disposal plan for face shields  

PHILIPPINE STAR/ MICHAEL VARCAS

A PROPER disposal plan should be drafted and strictly implemented, environmental experts said, as government mulls ending the use of face shields for the general public, the only country in the world to do so in response to the coronavirus pandemic.  

“The mass stoppage of using face shields will definitely add to our plastic problems in the country, and that’s a big strain on our waste management systems,” Zero Waste campaigner Marian Frances Ledesma of Greenpeace Philippines told BusinessWorld via Viber call. 

Ms. Ledesma, along with Plastic Flamingo (Plaf) Communications and Marketing Associate Allison Audrey Tan, said local governments, particularly the barangay level, should be at the forefront of the disposal plan while receiving both technical support and financial assistance from the national government.  

It is important for the government to issue ordinances or regulations around how each barangay should be collecting and properly disposing of these face shields, said Ms. Ledesma.   

“What LGUs (local government units) need right now is guidance on how to get disposed face shields to the right facilities, and how to safely collect them from households to make sure the waste pickers are properly protected during that collection and disposal process,” she added. 

Under Republic Act 9003 or the Ecological Solid Waste Management Act of 2001, LGUs are supposed to lead the implementation of proper waste disposal with policies on segregation, recycling, and reuse.   

Many LGUs, however, have yet to fully comply with the 20-year-old law, including the establishment of barangay-level material recovery facilities.   

Ms. Tan said LGUs must provide a consolidated list of recycling centers to inform people how to properly dispose of the face shields.  

“It’s not an overnight thing, we have to slowly implement that and make it a behavior or a lifestyle,” she told BusinessWorld in a separate Viber call.  

Environment Undersecretary Benny D. Antiporda did not immediately reply to inquiries on the government’s face shield disposal plan.  

The government should consider recycling face shields more than dumping them in landfills or bodies of water, said Ms. Ledesma.  

Ms. Tan cited a study by Ocean Cleanup indicating that 1,600 rivers worldwide are accountable for at least 80% of marine pollution, of which 30% come from Philippine rivers.  

The environmental experts further warned that any recycling methods that involve incineration and burning should be avoided since they will release toxic emissions that lead to cancer, respiratory issues, and developmental side effects for pregnant women and young children. 

Ms. Tan suggested plastic extrusion, which is already being done by Plaf’s recycling facility. It is the process in which plastics are melted then molded to different materials such as eco lumber to build homes, furniture, and other products.   

SINGLE-USE PLASTIC
Meanwhile, Health Care Without Harm Asia Executive Director Ramon San Pascual told BusinessWorld that there is no longer any way to create value to plastic waste.  

“That is the reason why the call is to ban single-use plastic.”  

There is nothing that can be done but to cope and learn to avoid or refuse the use of unnecessary materials, he added, noting that a disposal plan should have been considered by the government prior to implementation.  

“Most of it is a knee-jerk kind of response, without long-term planning and a cohesive holistic attempt to address effectively the pandemic,” said Mr. Pascual.   

Similarly, Oceana Philippines Vice President Gloria Estenzo Ramos said plastics are not recyclable. “It is not degradable; it only turns into microplastics.”  

This is why manufacturing should be stopped from the source, she added, noting that legislation to ban single-use plastics at a national level was needed.  

The Philippines’ current medical waste is beyond the existing capacity for treatment, storage, and disposal, the Department of Environment and Natural Resources said in Sept.  

It said the country produces about 15,383 metric tons of medical waste per day, and over 5.6 million metric tons per year.   

“The generated health care waste, as of June 20, 2021, approximately increased (by) 11.30% of the total capacity of the existing TSD facilities nationwide,” Environmental Management Bureau Assistant Director Visminda A. Osorio said in an earlier Senate hearing.  

The task force handling the coronavirus response has already forwarded its recommendation on face shield use to President Rodrigo R. Duterte, who is expected to decide soon on policy adjustments.    

Several cities — including Manila, Muntinlupa, Cebu, Iloilo, and Davao — have already scrapped the use of face shields except in medical facilities.  

“Face shield becomes a cover-up for the inadequacy of the government in terms of the holistic, effective response to the pandemic,” Mr. San Pascual said. — Alyssa Nicole O. Tan 

Solon says hike in teachers’ election duty allowance not enough 

PHILIPPINE STAR/ MIGUEL DE GUZMAN

A LAWMAKER from the progressive Makabayan bloc said that a recent resolution by the Commission on Elections (Comelec) that would increase the allowances of public school teachers serving election duty are not enough.    

ACT Teachers Party-list Rep. France L. Castro said that the resolution only provides “minimal increase” in honoraria.  

“We cannot accept what was released through Comelec Resolution 10727. It is lacking to the call of teachers who make up majority of election service volunteers,” she said in a statement.  

Comelec Resolution 10727 would provide P7,000 to the electoral board chair, P6,000 for electoral board members, P5,000 for the supervising official from the Department of Education, P3,000 for support staff and medical personnel. 

It would also provide an anti-pandemic allowance worth P500 along with at least five days of service credit if poll workers are in government service.  

The resolution also provides different rates for travel and communication allowances.  

Rates under the law are currently set at P6,000 for electoral board chair, P5,000 for members, P2,000 for support staff, and P1,000 for additional travel allowance.    

Ms. Castro said that a higher compensation is needed for poll workers in consideration of longer voting hours in next year’s elections and to ensure their safety and wellness.  

Comelec Commissioner Marlon S. Casquejo said during a House hearing that voting period for the 2022 elections will run from 6 a.m. to 7 p.m.   

ACT-Teachers recommended that benefits mandated by Republic Act 10756 or the Election Service Reform Act be increased to P10,000 for chairpersons of electoral boards, P9,000 for electoral board members, P7,000 for support staff, P3,000 to P5,000 for travel allowance, and P2,500 for food allowance, among others. — Russell Louis C. Ku 

Senator, labor leader say addressing vaccine hesitancy should be scientific, not coercive 

PHILIPPINE STAR/ MICHAEL VARCAS

THE GOVERNMENT should focus on information-based methods to address vaccine hesitancy, a senator said, rather than imposing coercive regulations.  

“Since day one, the government’s so-called solution on issues surrounding vaccine hesitancy among Filipinos has been dependent on fear and coercion instead of concrete and scientific solutions,” opposition Senator Leila M. De Lima said in a statement Sunday.  

She suggested an intensified information drive to educate people on the benefits of inoculation along with a campaign that would help build public trust on vaccines.  

Presidential Spokesperson Herminio L. Roque, Jr. said Friday that beginning Dec. 1, employees from both public and private institutions in areas with enough vaccine supply will be required to get vaccinated against the coronavirus disease 2019 (COVID-19).  

“They should not pass the responsibility to the workers,” national labour centre SENTRO Secretary-General Josua Mata told BusinessWorld via Viber call. 

“It is their responsibility to explain, convince the people and provide the right vaccine. They have no right to impose yet again punitive measures to the workers that don’t want to accept the kind of vaccines they are providing,” he added in a mix of English and Filipino.  

According to an OCTA Research survey cited by Ms. De Lima, 65% of 1,200 adult respondents are uncertain over COVID-19 vaccine safety while 14% are unsure of its effectivity.  

Other reasons for vaccine hesitancy include pre-existing medical conditions, belief that it is not needed, fear of death, and fear of injections.  

“I’ve said this before, if the government had given more attention to increasing the understanding and trust of the people to vaccines, it’s likely that the number of people rejecting vaccines would not have risen,” Ms. De Lima said in Filipino.  

The attempts of the government to “simplify the solution” will not solve the problem, said Mr. Mata.   

He added that vaccination in itself is not the means to ending the pandemic, since it is still necessary to observe other containment measures such as mass testing, effective contact tracing, isolation, and treatment.  

“The best way to go about this is to patiently explain to people why it is important, the science of it,” he said.    

Mr. Roque also said that “eligible employees who remain to be unvaccinated may not be terminated, but they shall be required to undergo regular RT-PCR testing, or antigen tests, at their own expense.”  

For more than a year, workers have endured the loss of income and jobs, said Mr. Mata. Now, the government is making them vulnerable, yet again, to losing their jobs by requiring additional costs to their already limited earnings.  

The policy is “inhumane” because minimum wage earners cannot afford the pricey costs of testing and will be forced to either lose their earnings or quit their jobs, he said.  

Unemployment rose to 8.9% in September as bad weather left nearly 900,000 without work in the farm sector and strict lockdowns claimed over 340,000 factory jobs, based on data from the Philippine Statistics Authority.  

This translated to 4.25 million unemployed Filipinos in September, up from 3.88 million in August. — Alyssa Nicole O. Tan 

Cooperative for tech services eyed in Mindanao 

COOPERATIVES in southern and central Philippines are moving along the digital path with plans to set up a specialized technology service enterprise in Mindanao, while small and micro co-ops in Central Visayas have started looking into the adaption of automated platforms.  

The Cooperative Development Authority (CDA) recently met with Mindanao-based farmer co-ops to discuss their plan to set up a secondary unit that will be named Technology Service Cooperative to focus on the sector’s digital transformation.  

“The organized cooperatives are expected to pool their resources so as to introduce technological innovations, particularly in supporting cooperatives across the country through e-commerce, portals and innovative ways of bridging the gap in market access,” Assistant Secretary Myrla B. Paradillo, CDA acting administrator and board member, said during the meeting.   

The tech service cooperative, which will be composed of at least 15 existing ones, will comply with financial regulation requirements, particularly those from the central bank. 

“One of the dreams of Philippine cooperatives is to be part of the national payment management system,” said Assistant Secretary Vidal Villanueva III, head of the CDA’s financial cluster.  

While some cooperatives, particularly the bigger ones, have already started their own digital systems, there is still room to improve their smaller counterparts’ access to online services, he added.   

CENTRAL VISAYAS
In Cebu City, 15 cooperatives from across the Central Visayas region met in end-October to discuss the digital shift, especially for small and micro cooperatives.  

“Top cooperatives worldwide make use of technology to engage their members in governance and decision-making,” said Ann J. Cuisia, chair of Traxion Cooperative, which provides the DigiCOOP platform to Mindanao-based First Community Credit Cooperative, Inc. 

“Unfortunately, technological adoption in the local setting is still considered low,” she added.  

DigiCOOP has recently set up business centers in Cebu City and Antique in partnership with existing local cooperatives to expand into the Visayas area.   

“Digitalization is a natural progression for cooperative members that are part of the huge, (asset-rich) cooperatives. But how about the small and micro cooperatives? That is still the challenge for our country,” said CDA Central Visayas Regional Director Doreen C. Ancheta.   

She noted that 54% of cooperatives in the Philippines are classified as micro. These account for 2% of all cooperatives’ assets. — MSJ 

How may the Tampakan copper project leave a smaller mining footprint?

PIXABAY

The Provincial Government of South Cotabato has a delicate balancing act to do. Nearly 10 years ago, it banned open pit mining in its territory. Xstrata, an Anglo-Swiss multinational mining company, was ready to invest about $5-5.9 billion to construct the copper mines in Tampakan, South Cotabato and operate it. The firm was locally registered as Sagittarius Mines, Inc. (SMI). Unfortunately, it was unable to operate. It continued to work for the lifting of the ban, unsuccessfully.

The late former President Benigno “Pnoy” Aquino imposed a moratorium to new mining projects while Congress was deliberating on mining tax reforms.

The mining industry’s challenges turned worse when the current government of President Rodrigo Duterte echoed the same concern of its predecessor on revenue sharing. The late Environmental Secretary Gina Lopez, who was fiercely anti-mining, then imposed a nation-wide ban on open pit mining and added to the list of concerns against large scale mining, namely the alleged huge mining footprint and alienation of host communities. Then the COVID-19 pandemic hit the world and triggered a relatively prolonged slump of the global economy.

While all these setbacks unfolded, Xstrata merged with Glencore, another multi-national in 2013. The Filipino partners of Glencore purchased their partners’ share in the company in 2015.

THE TAMPAKAN COPPER PROJECT
Once operational, the Tampakan copper project in South Cotabato would put the Philippines on the global map. The site is one of the largest undeveloped copper deposits in the world. The site offers 15 million tons of copper and 17.9 million ounces of gold at a 0.2% copper cut-off grade.

SMI reported that since 1995, when the company secured a financial and technical assistance agreement (FTAA) with the Philippine government to develop the copper mine, and eventually to construct and operate it, nearly P30 billion had already been invested. From these investments, the national and local governments earned P2.7 billion in taxes and fees, while the host communities obtained P1.2 billion of benefits in the form of schools constructed or assisted, college scholarships, health access, infrastructure, and forest programs.

Under new ownership since 2015, SMI decided to construct and operate the Tampakan copper project in three phases. Under the first phase, SMI would start at a reduced production rate; in 10 years, it would calibrate its operation to attain its production objective with a reduced mining footprint and expanded benefits to host communities. The company is committed to let stakeholders assess the company’s performance against its stated production, environmental protection plans, and social development goals.

BENEFITS FROM THE COPPER MINE
The national and local governments would receive billions of pesos from its commercial operation under Phase 1 or the first 10 years of its operation. Indigenous peoples and the host communities also expect to receive billions of pesos in royalty payments and social development and management programs.

Mining investments like this one have tremendous development impact on the regional economy. The opportunity could not have come at a better time than now, when the country is just recovering from the recession due to COVID-19. People are looking for jobs and income opportunities. Small and medium enterprises need to be back in business.

SMI would directly employ 1,000 workers during construction and 500 during operations. To get this mine operating, SMI would need supplies and would have to engage local businesses, contractors, and service providers. The core investment of SMI to construct and operate the Tampakan copper project would have significant ripple effects of stimulating the provincial economy and those of its neighboring provinces and cities.

The project would have beneficial effects as well for the national economy, aside from the tax revenues going to the national government. Over the life of the project, SMI is projecting net exports from copper worth billions of US dollars. With the country being a net exporter of copper, it is in a position of stimulating downstream industries dependent on copper. Those in turn will generate new jobs and incomes.

BAN ON OPEN PIT MINING
The holdouts to getting this copper project constructed and operating are the Department of Environment and Natural Resources (DENR) and the Provincial Government. The late former Environmental Secretary Gina Lopez imposed a nationwide ban on open-pit mining. This not only prevents the operation of the Tampakan copper projects but also those of two other large-scale mines. Both located in Mindanao, these are the Silangan Project of Philex and the King-king Project of NADECOR.

There appears to be hope that the DENR will lift the nationwide ban on open pit mining, according to a report by Catherine Talavera, which appeared in the Philippine Star yesterday.

As for the provincial ban on open pit mining in South Cotabato, this continues to be a challenge to SMI. Based on the pattern of copper deposits in the area, the company has to operate the project as a surface mine. However, it cannot proceed without the Sangguniang Panlalawigan of South Cotabato lifting the ban. Opponents of mining in the province say that South Cotabato will be left with an abandoned mine, one with a gaping hole.

ABANDONED MINES
While there appears to be a basis for this concern, the matter of abandoned and inactive mines reflects the problem of either a lack of rules and regulations and weak enforcement of rules as the following show. Let us look into a few of the abandoned and inactive mines.

According to the Mines and Geosciences Bureau (MGB) of the DENR, in its report to the National Economic and Development Authority’s Philippine Council for Sustainable Development several years ago, there are five abandoned mines and 18 inactive mines in the country.

Abandoned mines are those without any legal owner and where the rehabilitation and closure are either not done or incomplete. Inactive mines are temporarily not operating for a variety of reasons including waiting for the approval of their respective applications to explore or operate, or being temporarily suspended due to the lack of integrity of the overall mine.

The Bagacay mine in Western Samar was abandoned in 1992. Its previous owner apparently encountered high recovery cost of pyrite concentrates, and had a dispute with the local union. The MGB is presently rehabilitating the area using Philippine government funds and official development assistance.

The abandonment occurred before the 1995 Mining Act. It was only in 1995 that the rules and obligations of mining companies with respect to protecting the environment were set.

This point applies as well to the Privatization Management Office (PMO), which took over the mine in consideration of the unpaid loan that its previous owner incurred. The PMO is unfamiliar, in the first place, with mining operations, including as owner its obligation under the law to rehabilitate the mine. Many of the abandoned mines got sequestered like the Bagacay mine, and were abandoned for a long period of time.

Another case of abandonment before the rules were set in 1995 is the Palawan Quicksilver Mines, Inc. The mine started operating in 1955 and its owner abandoned it in 1976.

The third case is different. The mine suspended operations because of a tailings spill and problems with the integrity of the mine’s structure. The Marcopper incident happened in 1996 in Marinduque, but again before the rules and regulations of the 1995 Mining Act were issued. The suspension of operations followed the tailing spill incident in 1996.

All three cases illustrate the importance of rules and regulations that would need to be crafted and issued in order to elicit proper behavior by mining companies towards conserving the environment.

The fourth case is entirely different as it occurred after the 1995 Mining Act. The abandonment occurred in 2010 and therefore this is a case of lack or weak enforcement of regulations. Black Mountain, Inc. abandoned its operation in 2010 due to bankruptcy.

The MGB is slow in carrying out its mandate to rehabilitate abandoned/inactive mines. Under the 1995 Mining Act, funds are set aside by the company and deposited with the MGB, earmarked for the rehabilitation/closure of mines. For example, the Bagacay mine was abandoned in 1992 and it was only several years later that the MGB rehabilitated the mining site.

CONSIDER OUTSOURCING THE REHABILITATION OF MINES
The government may consider outsourcing the rehabilitation of a mine to the private sector. The MGB calls for proposals to rehabilitate the mine and selects the best. The best may even propose to convert the mine into another asset that can be operated by the private company, such as housing, parks, farming, fishing, and other assets suitable to the area of the mine to be closed.

Presently, the mining company comes up with its proposal to close the mine, or the final mine decommissioning plan, before it is even allowed to operate. But the more detailed decommissioning and rehabilitation plan is finalized five years before closure, and the MGB approves it. The MGB may improve on this plan by procuring private sector services for this purpose.

The benefit of outsourcing the rehabilitation of the mine is that better ideas of transforming the previous mine to other assets can come out. The present protocol is such that the company initiates the planning for the rehabilitation. Expectedly, it has very little interest in coming up with better ideas of rehabilitation. Definitely, the host LGU should partner with the MGB in selecting the best proposal.

 

Ramon L. Clarete is a professor at the University of the Philippines School of Economics.

Rising teen pregnancy and the ‘cycle of misinformation’

PIXABAY
PIXABAY

Rising teenage pregnancy in the Philippines is now a national social emergency. The 2017 National Demographic and Health Survey showed that one out of 10 women between the ages 15 and 19 was childbearing. Similarly, 200,000 teenage girls in the Philippines give birth every year.

This essay explores an alternative perspective at examining and maneuvering around the current constraints on minors’ access to contraceptives.

The lack of access to sexual and reproductive health (SRH) commodities is a contributing factor to the teenage pregnancy problem. Minors can only avail themselves of these commodities upon presenting the written consent of their parents or guardians. Hence, as different stakeholders work on the long and arduous process of amending this existing provision of the Reproductive Health (RH) law, in the interim, highlighting the responsibility of parents and legal guardians to ensure the access of minors to SRH services and commodities serves as an alternative path to increasing the protection of teenagers from unplanned pregnancies.

Not only is there lack of access to reproductive health services and information, violence, and abuse and the persisting negative social norms towards young people’s sexuality contribute significantly to teenage pregnancy.

The lack of access stems from the non-implementation of comprehensive sexuality education. Similarly, a comprehensive communications plan for the RH law is missing. Further, adolescent-friendly spaces in local health units to assure the confidentiality and privacy of young people are wanting.

The result is that young people get their sexual and reproductive health information from informal and inaccurate sources, which in turn contribute to the cycle of misinformation.

Unfortunately, the RH law prevents young people from having complete access to reproductive health commodities and services. The RH law requires written consent from a parent or a guardian before minors can access modern forms of reproductive health commodities.

Thus, adolescents have the largest unmet needs. Teens are left with abstinence and the “pull-out” method as the only options that they can choose and practice. Both are the least effective in preventing unplanned pregnancies.

Violence and abuse also contribute to the rising incidence of teen pregnancy. The age of consent in the Philippines is one of the lowest in the world. The current age of consent is 12 years old. A low age of consent means that adolescents are more vulnerable to sexual abuse.

According to the United Nations Children’s Fund (UNICEF), adults may lure young adolescents into sexual activity in exchange for goods and favors. Those from disadvantaged settings and poor backgrounds, particularly, at risk of unwanted or early pregnancy.

The law’s barrier is hinged on the prevailing beliefs and attitude on young people’s sexuality and agency that discussing sexual and reproductive rights to young people would encourage them to engage in risky behaviors. Also, young people who engage in pre-marital sex are deemed immoral.

There is a perception that parents should decide on the family planning of young people. There is also a belief that only health workers can initiate discussion on sexuality. However, the biased attitudes and behaviors of service providers towards teen clients deter young people from approaching them.

Nevertheless, women’s rights organizations, other civil society groups and stakeholders are addressing the lack of access to information and the transformation of the existing social norms. The problem of access to contraceptives is the main bottleneck, especially the provision on parental consent.

Amending the RH law, specifically the clause on the mandatory written parental or legal guardian consent, is the main reform to remove the bottleneck on young people’s access to SRH services and commodities.

This is a long-term agenda, but its feasibility at present is remote. With the legislators being fixated on the 2022 national elections, the reform advocates have a short and narrow timeframe for legislative reform.

That said, the best possible outcome of the advocacy is directed towards efforts to incorporate the prevention of teen pregnancy in the electoral agenda. This initiative will also directly challenge the existing norms that govern young people’s sexuality and agency over their bodies — a reform battle that might be reminiscent of the long and arduous journey of the RH law.

So, what can be done given the current circumstances, including the hard-wired beliefs and attitudes on young people’s sexuality? What can serve as a bridge between the formal barriers and the existing social norms?

In the interim, highlighting the responsibility of parents and legal guardians to ensure the access of minors to SRH services and commodities can serve as an alternative path to increasing the protection of teenagers from unplanned pregnancies. This can serve as the focal point to refocus the discussion on why and how minors should have access to sexual and reproductive health information and services.

Responsible parenthood, as defined by the RH law, refers to the will and ability of a parent to respond to the needs and aspirations of the family and children. Looking at this term from a new perspective, we can reinterpret this to emphasize the duty of parents and legal guardians to ensure that their children will be able to reach their full potential in terms of health, social development, and economic potentials.

Parents and guardians obviously play a crucial role in promoting positive sexual health outcomes, influencing the sexual behaviors of their children, and aiding them in accessing the health interventions that are provided in the community. All parents and legal guardians aspire for the good health and development of their children. Along with school and health professionals, they share the responsibility of ensuring that children can attain sexual health and general wellbeing. Conversing about the body, consent, and touching helps parents be supportive agents in the health decision-making of their children.

Young people’s ability to control, decide, and plan about their bodies has been associated with the capability to complete their education, achieve their career goals, increase their chances of breaking out of the cycle of poverty, and have higher levels of satisfaction in their relationships. It also leads to positive mental health outcomes.

Research suggests that teenagers who engage in healthy conversations on sexual and reproductive health with their parents may help reduce the chances of engaging in risky sexual behaviors that can lead to unintended pregnancies. Teens who also have high levels of communication with their parents are more likely to discuss pregnancy, sexually transmitted infection prevention, and use contraception. Teenagers also echo that open and honest conversations with parents about sex and sexuality can help them avoid unintended pregnancy.

For parents and guardians to fulfil this role and responsibility, they need support and assistance. Civil society organizations can actively develop initiatives and innovative tools that are targeted towards parents and guardians. These can be in the form of giving educational sessions on sexual and reproductive health, conducting communication skills-building workshops, connecting them to websites or platforms where they can access age-appropriate sex education materials, and linking them to support groups where they can learn from other people.

While the legal barrier and policy landscape on sexual and reproductive health and rights remain challenging, civil society can enable parents and guardians to become active collaborators and first-line responders in addressing the teenage pregnancy problem in the Philippines.

Their active participation and intervention can then be the alternative interim channel for young people to exercise their informed choice over their sexual health. Hopefully, this will lead to greater opportunities to realize the youth’s full potential and aspirations.

 

Iverly Viar has handled projects on human rights, sexual and reproductive health and rights, and women, peace, and security. She previously worked with Oxfam Pilipinas as project officer for the Sexual Health and Empowerment Project. She was also part of the first cohort of the Development Entrepreneurship Mentoring Program of the Coalitions for Change.

Inflation and high pork prices

PHILIPPINE STAR/ MICHAEL VARCAS

The national inflation rate is too high for comfort. It stood at 4.9% and 4.8% in August and September, respectively, and eased to 4.6% in October. The Economic Intelligence Units of BDO and ADB both forecast that year-end inflation will hover at around 4.5%. This is a cause for concern since gross domestic product (GDP) is projected to grow by only 5% this year. This means spending power will likely remain static despite the growth in the economy.

One of the principal reasons for the high inflation rate is the high price of fresh pork resulting from a shortage in supply. It will be recalled that the African Swine Fever (ASF) entered our shores in 2019 through smuggled swill feed imported from China. Swill feed is composed of food scraps and/or food waste that may contain or may have come into contact with meats infected with viruses and other pathogens. In theory, the use of swill feed is illegal, but it is still widely used in the hog raising industry.

The ASF virus decimated hog supplies in the last two years, especially in National Capital Region. The national inventory of hogs dropped from 13 million heads in 2019 to just 8 million heads today. Consequently, price of pork increased from P220 per kilo to about P335 per kilo.

To augment pork supplies and to address high retail prices, the Office of the President handed-down Executive Order (EO) 128 on April 7. The EO effectively lowered the tariff rates for imported pork from 30% to 5% for imports within the import quota and from 40% to 15% for imports outside the import quota until July 7. From July 8, 2021 to April 6, 2022, tariff rates were slightly adjusted to 10% for imports within the import quota and 20% for imports outside the import quota. Further, import quotas were also increased from 54,000 tons to 404,000 tons.

The liberalization of pork importation should have driven pork prices down. Why hasn’t it worked?

Two reasons. First, only traders (wholesalers and retailers) were initially allowed to import pork. Processed meat manufacturers were not allowed to do the same.

As we all know, a large portion of the national pork supply is used by food processors to produce hotdogs, sausages, luncheon meats and the like. Unlike other Asian nations, Filipinos derive their protein not from milk and soy, but from processed meats and fish. Filipinos consume more hotdogs, on a per capita basis, than the Americans themselves.

The prohibition for meat processors to use imported pork left them no choice but to use local alternatives at high prices. This is why the liberalization of pork had no effect in arresting the continued rise in prices for canned and frozen meats products during the second and third quarter of the year. It was only last month that the Department of Agriculture (DA) issued Memorandum Circular 23 which allowed food processors to utilize imported meats. Thus, we can only expect prices of processed meats to roll back by January.

The second reason is due to the DA’s decision not to allow the sale of imported meats at room temperature. The meat can only be sold if it is stored and displayed in freezers and kept at a temperature of -18 degrees Celsius.

As we are well aware, vendors in our public markets do not operate with freezers — they do not have the financial bandwidth to purchase them. Meats are displayed at room temperature or on ice, at best. The frozen temperature requirement of the DA has impeded the entry of imported meats in public markets. Even today, public markets vendors still make do with the limited local pork supply which is why prices have remained above P300+ per kilo.

The main beneficiaries of the DA’s temperature requirement are the supermarkets. But instead of rolling back prices, supermarkets maintained their prices at sky high levels since public markets are unable to offer price competition. For those who are unaware, the landed cost of imported pork belly is only P220 per kilo. Instead selling this at P265 per kilo (adding on a decent 20% profit margin), supermarkets are selling them at P335 per kilo, the same price as local pork in public markets. This has allowed supermarkets to enjoy a windfall profit of 52% for every kilo of pork sold.

The high cost of pork has made the meat inaccessible for the majority of Filipinos. This has caused demand to drop. Importers and traders are now stuck with high levels of inventory. Millions of kilos of imported pork are tied up in cold storages which, according to DA, totaled 80 million kilos or about three times more than the normal pre-pandemic monthly inventory.

Of total pork volume in cold storage, 25 million kilos are in Metro Manila; 21 million kilos in Calabarzon, another 21 million kilos in Central Luzon, and 12 million in Cebu.

What makes the DA’s temperature requirement for imported pork contentious is that local pork is still allowed to be sold in public markets without refrigeration. This does not make sense. The chemistry of pork is the same, regardless of whether it is imported or locally raised. Why require one to be sold frozen and disallow the other? If the DA’s intention is to avoid bacterial contamination, it should impose the freezer requirement on local pork too. To impose it only on imported pork defeats the purpose.

Besides, Filipinos customarily consume their pork well done. In almost no instance is it consumed raw or rare. Bacteria dies at 62.8 degrees Celsius, which is normally exceeded in the cooking process.

The DA’s imposition of the stiff temperature requirement is the reason why millions of kilos of imported pork cannot be sold in public markets and why it is unable to reach the masses. It is the reason why prices have not rolled back despite liberalizing importations.

The only way to solve the situation is for the DA to relieve the temperature requirement in the sale of imported pork. Only then will we see the price of pork decrease. Only then will it have an impact on the national inflation rate.

 

Andrew J. Masigan is an economist

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