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Suncity shuts VIP gaming rooms in Macau after CEO’s arrest -sources

HONG KONG – Embattled gambling group Suncity Group Holdings has closed all of its VIP gaming rooms in Macau, the world’s largest gambling hub, after the company’s CEO was arrested, two sources with direct knowledge of the situation told Reuters.

The shutting of the company’s VIP rooms will result in a cut of around a third of its Macau headcount, according to one of the sources, a senior casino executive who declined to be identified as the closure has not been publicly announced.

Suncity Group, whose shares were suspended from trade on Wednesday, did not immediately respond to a request for comment.

The news comes amid a broader investigation into Suncity, which has sent Macau-listed casino stocks tumbling for a third day in a row. Shares in Wynn Macau Ltd, which analysts say is the casino operator most reliant on Suncity‘s gaming rooms, slid 7% on Wednesday, bringing this week’s losses to 18%.

Alvin Chau, the CEO of the company as well as the founder of Macau‘s biggest junket operator which brings in high rollers to play at casinos, was arrested on Sunday over alleged links to cross-border gambling.

Macau authorities have accused Chau and 10 others of using the former Portuguese colony as a base for an illegal “live web betting platform” in the Philippines that attracted mainland Chinese.

A warrant for his arrest was also issued on Friday by the mainland Chinese city of Wenzhou.

“The writing was on the wall already. But nothing was done in Macau until the Wenzhou police talked about it,” the executive said.

While Chau’s junket operations, also called Suncity, are not part of the listed Suncity Group, they have previously been singled out by mainland China’s state-run media, which said they harmed China’s social order.

A 2019 article by the Economic Information Daily, a unit of China’s state news agency Xinhua, alleged that the annual amount of online betting on websites run by Suncity was more than 1 trillion yuan ($155 billion). Suncity has also not responded to a request for comment on that estimate.

One of the casino executives told Reuters that Suncity operated VIP rooms in properties owned by all six of Macau‘s licensed casino operators – Wynn Macau, Sands China, MGM China, SJM Holdings, Melco Resorts and Galaxy Entertainment.

In 2019, Suncity operated up to 17 VIP clubs in Macau and accounted for nearly half of the gambling hub’s VIP market, the executive added.

The six licensed casino operators have not responded to Reuters requests for comment.

Suncity Group said this week that Chau, who is both CEO and chairman, intended to resign. Reuters efforts to contact Chau or his lawyer have been unsuccessful.

Suncity Group‘s stock plunged 48% on Tuesday to a record low after being suspended from trade a day earlier, valuing it at HK$880 million ($113 million). Suncity has also said its operations would not be impacted in the event that it ceased to have Chau’s support. – Reuters

Sydney braces for more Omicron cases but no lockdowns for now

EN.WIKIPEDIA.ORG

SYDNEY – Australian authorities on Wednesday flagged another probable case of the Omicron variant in Sydney as they braced for more infections after at least two international travellers visited several locations in the city while likely infectious.

Officials in New South Wales (NSW), home to Sydney, said initial testing “strongly indicates” a man in his 40s, who arrived from southern Africa on Nov. 25, had been infected with the Omicron variant and had spent time in the community.

“We believe it is likely it will be confirmed later this afternoon as a definite Omicron case,” NSW Health Minister Brad Hazzard told reporters, but he ruled out lockdowns to contain the newly identified variant.

“I feel like it’s time for a change in approach. We don’t know how many more variants of this virus are going to come,” Hazzard said.

Sydney, Australia’s largest city, came out of nearly four months of lockdown in early October to contain a Delta outbreak and has been gradually easing curbs after higher vaccinations.

Omicron has prompted Australia to delay by two weeks its plans to reopen its borders from Wednesday to skilled migrants and foreign students. Mandatory two-week quarantine has been enforced for citizens returning from southern African countries.

Vaccinated Australians reaching Sydney and Melbourne from all other countries must now quarantine for 72 hours. Other states have not opened their international borders yet.

“It’s very confusing, it was very emotional … I did lots of praying. I just thought I’m going to land here and see what happens,” Lorelle Molde, who returned to Australia from the United States, told Reuters at the Sydney airport.

When confirmed, the latest probable case would bring the total number of confirmed infections in Australia to seven, with six detected in NSW.

The other person who contracted the Omicron variant is in isolation in the quarantine facility in the remote Northern Territory. Police said three people were taken into custody after escaping from the facility early Wednesday morning.

Authorities on Tuesday confirmed the country’s first community case of the new variant but the national cabinet decided against more restrictions and to wait for more data on its severity and transmissibility.

Australia has recorded around 212,000 cases and 2,012 deaths from COVID-19. – Reuters

Air travelers to U.S. set to face tougher COVID-19 testing

STOCK PHOTO

WASHINGTON – The U.S. is moving to require that all air travelers entering the country show a negative COVID–19 test performed within one day of departure in response to concerns about a new coronavirus variant, the Centers for Disease Control and Prevention (CDC) said late on Tuesday.

Currently, vaccinated international air travelers can present a negative test result obtained within three days from their point of departure. Nearly all foreign nationals must be vaccinated to enter the United States. Unvaccinated travelers currently must get a negative COVID–19 test within one day of arrival.

The new one-day testing requirement would apply equally to U.S. citizens as well as foreign nationals.

Reuters reported earlier that a draft proposal was circulating among government agencies for the stricter testing requirement.

A CDC spokeswoman confirmed the agency is working to modify its global testing rules for travel “as we learn more about the Omicron variant; a revised order would shorten the timeline for required testing for all international air travelers to one day before departure to the United States.”

The administration is also considering whether to require air travelers to get another COVID–19 test within three to five days after arrival in the United States, officials said.

The CDC did not confirm that, but noted it continues to recommend all “travelers should get a COVID–19 viral test 3-5 days after arrival” and “post-travel quarantine for any unvaccinated travelers.”

The stricter rules could be announced Thursday, but it was not clear when they might take effect.

CDC Director Rochelle Walensky said the agency “is evaluating how to make international travel as safe as possible, including pre-departure testing closer to the time of flight and considerations around additional post-arrival testing and self-quarantines.”

On Monday, the White House barred nearly all foreign nationals who have recently been in South Africa and seven other southern African countries over concerns about the Omicron variant.

A White House official said earlier Tuesday the administration is evaluating COVID–19 measures “including considering more stringent testing requirements for international travel.”

On Tuesday, the CDC advised Americans against travel to Niger, Papua New Guinea, Poland, and Trinidad and Tobago, citing COVID–19 concerns.

The CDC now lists about 80 foreign destinations as having “Level Four,” its highest level of COVID–19 transmission, and discourages Americans from traveling to those destinations. – Reuters

Philippines vaccine mandate sees millions facing COVID test fees

PHILIPPINE STAR/ MICHAEL VARCAS

Millions of Filipinos face having to pay for their own COVID-19 tests as a new rule mandating vaccines in workplaces comes into force, even as essential workers in some parts of the country struggle to access shots.As of Wednesday, businesses will require employees entering offices to factories to be inoculated against the virus. The rule is being enacted despite the Southeast Asian nation having one of the lowest vaccination rates among major economies, with just 41% of the population inoculated.While the government acknowledges many people haven’t been able to access vaccines due to logistical and supply delays, it’s making even those who haven’t been able to get a shot undergo regular PCR or antigen screenings at their own expense to be able to go to work.Restaurants and government agencies will also be allowed to refuse entry or deny service to individuals who remain partly or wholly unvaccinated, with the measures part of a wider push by the government to boost the overall vaccination rate.Authorities haven’t specified how often workers will need to get tested to access workplaces, but antigen tests typically cost around P2,000 ($40), while PCR tests can cost as much as P3,000 to P5,000. The gross monthly minimum wage in the Philippines was the equivalent of $10 in 2019, according to the International Labour Organization.Labor secretary Silvestre Bello told Bloomberg News the “ideal situation” would be for all workers to be vaccinated, to ensure workplace safety.“Since we can’t compel them until there’s a law that would require that, the next best thing we can do on the part of the employer is to require them to undergo testing,” Bello said in an interview. “This requirement is conditioned to the fact that we have available vaccines.”Bello said consideration would be given to workers from remote areas where access to shots was available but limited, and that the vaccine mandate and testing rule wouldn’t apply in these areas. He didn’t, however, elaborate or specify any locations.Covid vaccines are widely available in Metro Manila, which accounts for a third of the Philippines’ economic output. Outside the capital region, however, widespread logistics challenges, from storage, to transportation to distribution, hamper people’s ability to get inoculated. Of the 35.5 million essential workers across the country, only 13.2 million were fully vaccinated as of November 28, according to government data. Besides poor access, the Philippines is also seeing some vaccine hesitancy, like in many parts of the world.‘NO CHOICE’While the mandate follows similar restrictions in neighboring Singapore, which is limiting unvaccinated people’s access to workplaces starting January, the city-state’s inoculation rate is significantly higher at 89%, according to Bloomberg’s vaccine tracker. A national vaccination program run from Monday to Wednesday focused on six regions outside Manila, and had the goal of issuing another 9 million shots.The new rule “was like an ultimatum for me,” said Bernardo Wabe, 46, a security guard at a state-owned bank in Manila. “I don’t want to end up working and using my earnings just to pay for my swab tests. I headed to the nearest vaccination site to get my shot last week.”Wabe had waited even as the Philippines started rolling out vaccines starting in March. “I was afraid I’d get even more sick if I get vaccinated, but this time I really had no choice,” he said.The Philippines has eased pandemic restrictions in recent weeks as cases have declined, including loosening up internal travel rules to bolster the economic recovery. But it’s rolled back the reopening to tourists as concerns rise globally about the new omicron variant, and closed the border to countries where the strain has been detected.The vaccine mandate and push will “help sustain further re-opening and recovery of many businesses,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp. in Manila. The measures will also help cushion omicron’s potential impact, he said. — Bloomberg

SM Supermalls unites with gov’t for Bayanihan Bakunahan

Encourages Filipinos to get vaccinated for a better, safer Christmas celebration

In its bid to further ramp up the COVID-19 vaccination rollout in the Philippines, SM Supermalls joined the government’s endeavor to inoculate 9 million Filipinos nationwide, starting November 29 until December 1.

Dubbed Bayanihan Bakunahan, the three-day vaccination drive’s ceremonial launch at SM City Masinag was attended by President Rodrigo Roa Duterte; Secretary Carlito Galvez Jr., National Task Force against Coronavirus Disease-2019 (NTF COVID-19) chief implementer; Health Secretary Francisco Duque III; Senator Christopher Lawrence “Bong” Go, Chair, Senate Committee on Health and Demography; Defense Secretary Delfin Lorenzena; Rizal Governor Rebecca “Nini” Ynares; SM Supermalls President Steven T. Tan; members of the COVID-19 Inter-Agency Task Force; Cabinet Secretaries; and partners from the private and public sectors.

Bayanihan Bakunahan is a collaborative effort of the government, led by the Department of Health (DOH) and the Department of the Interior and Local Government (DILG), in cooperation with the National Task Force (NTF) Against COVID-19, together with various communities and private organizations.

“This multi-sectoral event is a resounding expression of our Bayanihan spirit, which coincides with the nation’s observance of Bonifacio Day on November 30. The heroic example of Gat Andres Bonifacio’s courage resonates in each of us as we work together to fast-track and intensify our efforts to overcome this pandemic,” said President Duterte in a speech.

Bayanihan Bakunahan was rolled out nationwide to increase the country’s coverage of the first dose to 70% as well as to increase the booster jabs across 16 regions outside Metro Manila. The second wave of the vaccination drive was slated on December 15 to 17.

“The concept of Bayanihan Bakunahan is that you and I, we’re both heroes. And we can be heroes if we vaccinate ourselves against COVID-19, not only for ourselves and our families but also for the people around us,” said Ma. Florinda Princess E. Duque, Director IV, Bureau of Communications Services.

During the event, the government mentioned that the Philippines is expecting to vaccinate 54M Filipinos by the end of the year including 80% of minors aged 12 to 17 years old. President Duterte also said that the government seeks to complete booster shots of fully-vaccinated seniors, health workers and people with comorbidities by the end of 2021. As of November, over 35 million Filipinos have been fully vaccinated.

Meanwhile, the government has also assured that there’s enough supply for the three-day vaccination drive. “It is safe to say that we have enough COVID-19 vaccine doses for the National Vaccination Days. The national government is continuously working with the local government in terms of vaccine supply. Also, preparations have been done beforehand so that we can reach our goal of inoculating 3 million individuals per day,” said Communications Director Duque.

Under the collaboration, SM Supermalls, along with over 8,000 vaccination sites, will be opened to accommodate the target population. To date, SM Supermalls has already administered 6 million doses of the COVID-19 vaccines in over 71 malls around the country, of that number 200,000 are children aged 12 to 17 years old inoculated at 45 malls.

“We at SM Supermalls have always believed that getting vaccinated is the best defense Filipinos have against the COVID-19 virus. In the past months of working together with the government, we have achieved great things. We thank the government for the opportunity to serve the country and our fellow Filipinos as we open more convenient and accessible mall vaccination sites nationwide,” said Steven Tan, President of SM Supermalls.

Apart from opening 66 mall vaccination sites, SM Supermalls also announced the participation of the National University in this endeavor. Over 500 alumni, employees, and students from the said university have registered to volunteer during the Bayanihan Bakunahan.

During the three-day Bayanihan Bakunahan event, Filipinos can walk in and register at the identified sites. For adults who want to get vaccinated, they are required to bring a government-issued ID and a medical certificate for those who have comorbidities. Pregnant and lactating mothers are also encouraged to get immunization shots.

For kids aged 12 to 17 years old, the parent/guardian should secure the following: any valid ID of the parent/guardian as well as a birth certificate, baptismal, or passport of the child. For children with health risks, parents/guardians are advised to get a medical certificate from their child’s attending pediatrician or physician showing that the child is eligible for vaccination. If both parents are not available during the vaccination day, an authorization letter signed by parents indicating the name of the assigned guardian with a valid ID will be needed.

And for those who have been vaccinated, booster shots will only be administered to those who had their 2nd dose for at least 6 months. Individuals who will avail of the booster shot should present a copy of their vaccination card. Apart from that, vaccinated individuals are also encouraged to volunteer in their respective LGUs and to rally behind the government to be vaccine advocates in their communities.

“Let us be heroes in this fight against COVID-19. Get vaccinated, volunteer, and encourage your families, friends, workplaces, and communities to get jabbed. Let us all strive to make this Christmas safer and better for the people we value most. Because it is only through our collective will to put an end to this crisis will we be able to build back better for a brighter future,” Tan closed.

For more information and up-to-date news on vaccination schedules at the SM malls in your LGU, follow @smsupermalls on all social media platforms.

 

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Globe Business helps combat sea turtle egg poaching, supports reforestation

Globe’s enterprise group, Globe Business, supports The Mead Foundation in its environmental initiatives by contributing P500,000 to combat sea turtle egg poaching and continuing the reforestation efforts in Zambales. This is broadly aligned with the United Nations Sustainable Development Goals, which Globe is committed to.

“It is important for companies to think beyond profit as a sole metric of success and a sole purpose. Instead, let us measure our performance based on our efforts to improve the world we live in and uplift the lives of the people — from the policies we enact, the investments we make, and the technology we use,” said Peter Maquera, Senior Vice President for Globe Business, Enterprise Group.

The donation was made during Globe Business’ 12th Leadership Innovation Forum (Lead-In) attended by over 900 guests, including C-Level executives and leaders from various industries. With the theme “Bigger Picture, Greater Future: Redefining Success Beyond Business,” the event, which was held virtually, underscores the power that environmental, social, and governance (ESG) integration has on the future of enterprises.

“The Mead Foundation thanks Globe for their recognition of and support for our non-profit initiatives focused on conservation of the environment and community development. While the pandemic has presented unique challenges, we have worked diligently to continue our programs as the need remains as great as ever,” said Ben Mead, founder of The Mead Foundation.

The foundation is preparing for the pawikan (sea turtle) season, the time when these endangered species start nesting. The organization is set to embark on a conservation project to protect the sea turtles and prevent poachers from smuggling the eggs to areas where they are eaten as a delicacy.

In addition, the Mead Foundation will apply the funds towards the ongoing reforestation program in Iba, Zambales, which Globe has supported since 2018. The foundation also works closely with indigenous communities, particularly the Aetas of Zambales, to provide them with livelihood opportunities.

Engaging local communities yields positive environmental, ecological, and social benefits. It makes people aware of their significant role and participation in taking care of the area, the importance of environmental protection, and the benefits of a natural forest area.

Both Globe Business and the Mead Foundation believe that partnership and collaboration help achieve impactful outcomes by enabling corporations and individuals with three key components: Reforestation, Food Security, and Sustainable Livelihood Development.

Globe strongly supports the United Nations Sustainable Development Goals, particularly UN SDG No. 15, which promotes the protection, restoration, and sustainable use of terrestrial ecosystems. Globe is committed to upholding the UN Global Compact principles and contributing to 10 UN SDGs.

For more information about Globe Business, visit www.globe.com.ph/business/enterprise.

 

Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

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BWVEF 2021 | What Lies Ahead: Global Economic Growth Prospects

IMF’s Changyong Rhee gives his keynote speech on the topic “What Lies Ahead: Global Economic Growth Prospects” on the first day of BusinessWorld Virtual Economic Forum 2021.
#BWVEF2021 #RecoveryRoadmapPH

 

Delivering state-of-the-art logistics solutions to suit every need

Logistics firms, which are involved in the movement, storage, and flow of goods, serve as the backbone of a nation’s economy. Both within and across international borders, they facilitate trade and commerce and help businesses get their products to customers.

This role is heightened in light of the pandemic, where disruptions to the value chain has created outsized effects on the global economy, which in turn has affected overall competitiveness, economic growth, and job creation in many countries. Therefore, the importance of logistics to local and international business cannot be overstated.

Entrego, as a technology-driven business solutions provider for the fulfillment and logistics needs of enterprises in the Philippines, takes these responsibilities seriously. This is why the company has made efforts to improve its services to become an enabler of Philippine business and become a reliable logistics and fulfillment partner for companies of all sizes.

Competitive and quality service to fulfill every need

Entrego boasts of a nationwide reach with hubs strategically located across the Philippine archipelago, along with state-of-the-art facilities offering solutions such as courier express parcels for delivering premium documents and bulky items for business-to-consumer (B2C) and business-to-business (B2B) clients; domestic freight forwarding via air, land, and sea; as well as contract logistics for the designing, development, and operation of fulfillment centers and cross-docking facilities for its clients.

As such, Entrego ensures end-to-end logistics fulfillment from first mile pickup to last mile delivery.

Entrego’s contract logistics solutions, in particular, are designed to cover and add value to any supply chain even during these disruptive times. This is so that clients can prioritize their core competencies while Entrego utilizes its logistics expertise to handle the supply chain.

Entrego provides efficient and reliable inbound, put-away, storage, order processing, outbound, and reverse services. The company also uses a sophisticated Warehouse Management System (WMS) in all of its processes, starting with an Electronic Data Interchange (EDI) to clients’ systems. Through this, clients are provided real-time visibility of their stock levels and can track inventory locations and order processing in real time throughout the warehouse operations.

The Entrego omni-channel solutions ensure reliability when it comes to storage of high volumes or even small parcels. With a focus on continuous improvements and a highly responsive team, Entrego aims to provide customizable and scalable solutions to manage any warehouse requirements in the country for both B2B and B2C solutions.

Depending on the industry’s specific needs, Entrego’s suite of customizable solutions are guaranteed to fit into any requirement and operation.

“Entrego’s Contract Logistics e-commerce division looks back over the past months at a road paved with improvements in the warehouse processes and performance to new opportunities for even more success. At the helm is a strong and experienced team, and modern warehouse management systems to continue this journey to success with our partners,” Leonardo Loreto III, Entrego Express Corporation Contract Logistics Operations Manager, said.

Leading the growth of Philippine logistics

As a leading provider of courier and express parcel delivery, freight forwarding, and contract logistics services in the country, Entrego aims to seize the opportunity created by the growth of e-commerce and help put the spotlight on Philippine business.

Having a wide network in the Philippines allows Entrego clients to reach 95% of the e-commerce serviceable market in the country. Meanwhile, through its logistics solutions platform myEntrego, micro, small, and medium-sized enterprises (MSMEs) can have easy access to pickup and delivery services, enabling their growth and expansion.

“As the year 2021 ends, the journey of e-commerce is thriving. Various research shows that e-commerce market in the Philippines will grow four times in size over the next five years. Visit the Entrego website to know more about our capabilities, storage locations and promotions!” Moritz Becker, Entrego Logistics Corporation Contract Logistics Director, said.

“The Entrego Group’s warehousing and transport solution, with a multi-platform and multi-channel connection to major marketplace platforms or to any webstore, provides the flexibility required for the demands of any e-commerce business of any scale.”

Entrego has a wide portfolio of servicing partners from industries including banking and finance, telecommunications, pharmaceuticals, retail, automotive, fast-moving consumer goods, education, and construction.

Entrego continues to study the country’s logistics demand to complement with process improvements, new services, and increase in capacity nationwide.

For more information about Entrego’s capabilities, storage locations, and promotions, visit www.entrego.com.ph. For service inquiries, send an email to info@entrego.com.ph.

 

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S&P raises growth forecast for PHL

PHILIPPINE STAR/ MICHAEL VARCAS

But warns Omicron coronavirus variant may threaten recovery

THE PHILIPPINES is likely to grow by 5% this year, boosted by the stronger-than-expected rebound in the third quarter, according to S&P Global Ratings.

However, S&P warned that the Omicron variant of the coronavirus disease 2019 (COVID-19) could pose a new risk to the region’s recovery.

“Growth in the Philippines surprised on the upside with year-over-year expansion of 7.1% [in the third quarter]. This surpassed the consensus expectation for a 4.8% increase, on strong consumer activity,” S&P said in a note on Tuesday.

The debt watcher’s latest estimate of 5% gross domestic product (GDP) growth is faster than the 4.3% forecast it gave in August and matches the upper end of the government’s 4-5% growth forecast for the year. Year to date, Philippine economic growth is at 4.9%.

Household spending, which accounts for about three-fourths of GDP, rose by 7.1% year on year in the third quarter.

The Philippines was an outlier compared with its regional neighbors which saw weaker economic activity in the July to September period amid a Delta-driven surge, the ratings agency said. 

The country is expected to grow faster this year than Indonesia (3.3%), Malaysia (2.6%), Vietnam (1.9%), Thailand (1.2%), but slower than Singapore (6.5%), based on S&P projections.

However, it should be noted that the Philippine economy had the steepest contraction in the region at 9.6% in 2020 as it imposed one of the world’s strictest and longest lockdowns.

S&P said Philippine GDP is projected to rise by 7.4% in 2022. This is slightly slower than the 7.7% it gave in August due to the base effect of the stronger economic growth it forecasts for 2021.

S&P noted Southeast Asia’s growth is gaining traction as restriction measures are gradually relaxed, vaccination rates are picking up and travel restrictions being eased.

“This is leading to a gradual improvement in domestic demand and widening improvement in manufacturing activity in the fourth quarter,” it said.

However, S&P warned that the Omicron variant may threaten the region’s rebound, as governments may reimpose short-term containment measures.

“We believe the new Omicron variant is a stark reminder that the COVID-19 pandemic is far from over… We believe this shows that, once again, more coordinated, and decisive efforts are needed to vaccinate the world’s population to prevent the emergence of new, more dangerous variants,” S&P said.

The Philippines has already fully vaccinated 40.58% or 43.87 million of its population. Officials are hoping to vaccinate 70 million Filipinos by the end of 2021.

Meanwhile, S&P expects inflation in the Philippines to average 4.5% in 2021, above the 2-4% target of the central bank. It is expected to ease to 2.4% in the next two years.

It also sees the Bangko Sentral ng Pilipinas keeping its key policy rate steady until the end of 2022, before raising rates to 2.75% by the end of 2023.

GLOBAL SLOWDOWN UNLIKELY
Meanwhile, Fitch Ratings in a separate note said that it may be too early to consider the impact of the Omicron variant on global economic forecasts since there is no clear data yet on its transmissibility and severity.

“We currently believe that another large, synchronized global downturn, such as that seen in (first half of 2020), is highly unlikely but the rise in inflation will complicate macroeconomic responses if the new variant takes hold,” it said.

The possibility of nationwide lockdowns to curb the spread of Omicron will continue to be a risk to the global economy, Fitch said. It noted that tourism and travel will likely be disrupted once again, and the shift to services from goods consumption will likely slow.

“However, recent increases in inflation will complicate any policy response to Omicron, which could have an inflationary effect if new lockdowns or voluntary social distancing constrain labor supply recoveries or exacerbate global supply-chain shortages and bottlenecks. Hence, we believe central banks could be wary of delaying the normalization of monetary policy settings in response,” Fitch said. — Luz Wendy T. Noble

Implementation of the Mandanas ruling seen to dampen economic growth

PHILIPPINE STAR/ MICHAEL VARCAS

THE IMPLEMENTATION of the Supreme Court ruling expanding the local governments’ share in national taxes next year would lead to a “three percent lower economic growth,” according to Department of Finance (DoF) estimates.

The DoF in a statement on Tuesday said the higher tax allocation for local government units (LGUs) would dampen spending efficiency because the National Government usually spends at double the pace.

Lower spending efficiency refers to the reduced share of productive spending — or funds that go back to the economy by creating jobs or stimulating demand — to total spending.

“Based on our estimates, the implementation of the Supreme Court’s 2018 ruling will yield lower economic growth because local governments spend less efficiently,” Finance Secretary Carlos G. Dominguez III said.

The Supreme Court’s Mandanas ruling is named after Batangas Governor Hermilando I. Mandanas who successfully challenged the government’s previous position that LGUs were entitled to a smaller share of National Government funds.

Starting in 2022, LGUs will get a bigger share of the National Government’s tax collections, alongside the transfer of basic services.

President Rodrigo R. Duterte in June signed Executive Order (EO) 138 which transfers a number of basic services to LGUs by 2024. With this, the government is shifting programs and projects, worth an estimated P234.4 billion, to LGUs.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said there are more policy uncertainties among LGUs when it comes to spending, compared with continuity at the national level.

“LGUs may vary in their management style in terms of handling various government projects — while more standardized at the National Government level — amid some continuity issues as local officials are re-elected every three years,” he said in a Viber message.

Greater funding flexibility for LGUs positively affect those that spend efficiently, he said, but misappropriation and wastage are a drawback for others.

The World Bank has said that funds that the LGUs fail to spend could increase by P155 billion next year, or the equivalent of 0.7% of gross domestic product (GDP), if their capability to enforce projects are not upgraded.

Unspent budgets waste opportunities to bring crucial services to communities that need them most, World Bank economist Kevin Cruz said in June.

World Bank estimates found that tax allotments to LGUs could grow by 55% to 1.08 trillion next year.

To minimize economic scarring from the pandemic and the larger share of LGUs on national taxes, Mr. Dominguez said the Finance department is reviewing a possible fiscal consolidation plan, or policies aimed at reducing the country’s deficit.

“Tax revenue losses from the pandemic-induced economic slump, the rise in debt to fund our COVID-19 response, the looming revenue impact of our economic recovery measures, and lower spending efficiency as a result of the Supreme Court decision to expand the share of LGUs from the national tax allotment (NTA) must be adequately addressed by the next administration’s economic team,” he said.

The DoF flagged revenue losses and financing costs caused by the pandemic-induced economic decline. The department estimates revenue losses stood at P785.64 billion for 2020 and anticipates higher foregone revenues as the country enforces its tax reform programs.

Loans to finance the coronavirus disease 2019 (COVID-19) response has reached P1.47 trillion, or $28.91 billion, DoF said.

“The outstanding balance or the principal value of the loans is US$22.58 billion or P1.15 trillion, while the projected amount of interest payments until maturity is US$6.32 billion or P320.85 billion,” DoF said. “These loans will mature between 2024 and 2060.”

The DoF plans to focus on debt management, inflation, economic inequality, and climate change as it transitions to the next administration after the national elections in May 2022. — Jenina P. Ibañez

Plan to tax the super-rich needs further study, economists say

A Louis Vuitton store is seen in the Makati central business district in this file photo. — REUTERS

By Jenina P. Ibañez, Senior Reporter

THE PLAN to tax the super-rich would need further evaluation to identify wealth and appropriate tax levels after the Finance department suggested the plan could lead to capital flight, economists said.

Cid L. Terosa, a senior economist at the University of Asia and the Pacific School of Economics, said empirical studies have shown that taxing more than an “appropriate” level is counterproductive.

“I am not saying that it is a bad idea, but I would like to stress that certain challenges have to be addressed first,” he said in an e-mail.

He said the plan must carefully identify the super-rich by defining and measuring their wealth, and determine the appropriate level of tax that would not lead to negative consequences.

House Bill 10253 or the proposed Super-Rich Tax Act of 2021 seeks to impose a tax of 1-3% for wealth starting at P1 billion and beyond. Under the bill filed by a minority bloc at the House of Representatives, the tax would be used to fund medical assistance, education, employment, social protection and housing for the poor.

Finance Secretary Carlos G. Dominguez III has said that the proposal could trigger aggressive tax avoidance schemes and drive investment out of the country.

The risk of capital flight may depend on how the government uses the tax revenues it collects, Asian Institute of Management economist John Paolo R. Rivera said.

“Taxation is also a game of credibility whether tax revenues will be used to improve the conduct of doing business and improve infrastructure, telecommunications, transportation, technology, among others,” he said in an e-mail.

“Of course, in principle, everyone, even the wealthy, would be privy (to) where their taxes go.”

Mr. Rivera also flagged the need for a way to identify the super-rich because this form of taxation requires wealth declarations.

“Income declaration is already a challenge, what more (with) wealth,” he said. “This policy needs further deep thinking and evaluation.”

Mr. Dominguez earlier said the government can only impose a wealth tax if Congress approves amendments to the Bank Secrecy Law allowing regulators to look into bank deposits. He said the government should also sign information exchange agreements with other countries on the movement of wealth, in the absence of a reliable database identifying the country’s richest.

Meanwhile, nongovernment organizations are criticizing claims that a wealth tax would drive out investment.

Lidy B. Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development, said the tax could fund urgently needed government services as the country faces multiple crises, noting that the country should prioritize investors that pay their fair share of taxes.

“Rather than help convince the super-rich about this measure that they can very well afford to pay, (Mr. Dominguez) is already taking their side,” she said in an e-mail. “He should apply his expertise in finance to develop transparency and regulatory systems to reduce tax avoidance and capital flight.”

Argentina last year passed a wealth tax that allowed its government to raise $2.4 billion by May 2021. The government plans to use the funds for its pandemic response, including health programs and small business subsidies.

In the Philippines, outstanding government debt ballooned to P10.2 trillion last year from P8.2 trillion in 2019 as the state ran big deficits to battle the coronavirus pandemic.

The country’s debt-to-GDP ratio was 63.1% as of September, the highest in 16 years, government data showed.

Tony Salvador, Freedom from Debt Coalition executive committee member, said in an e-mail that a wealth tax would raise much-needed funds to address the pandemic, as it would provide healthcare and food subsidies for the country’s poorest.

“We believe that it will help the economy in the long run and in fact benefit even the super-rich who are obliged to pay this tax,” he said.

Think tank IBON Foundation said the measure would generate P467.1 billion from 2,919 people who have taxable assets exceeding P1 billion. These super-rich account for 0.003% of the population and control 16% of the country’s wealth, it said.

This estimated revenue could fund P10,000 in emergency aid to 18.6 million poor households, provide subsidies for micro, small and medium enterprises to support a daily wage increase of P100 for three months, and hire additional health workers.

Federal Reserve chief says Omicron adds economic risks, inflation uncertainty

EN.WIKIPEDIA.ORG

US FEDERAL RESERVE Chair Jerome H. Powell, in his first public remarks on the Omicron variant of the coronavirus, said it poses risks to both sides of the central bank’s mandate to achieve stable prices and maximum employment.

“The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” Mr. Powell said in a prepared testimony released on Monday, a day ahead of his appearance before the Senate Banking Committee. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.”

Mr. Powell, in the relatively brief text, didn’t discuss specific monetary policy actions or the possibility of changing the pace of the tapering of its asset purchases — a key issue that other officials have flagged in recent remarks.

Mr. Powell — who a week ago was selected by President Joseph R. Biden for a second term as central bank chief — will appear before the panel on Tuesday at 10 a.m., together with Treasury Secretary Janet Yellen, in the first of two days of congressional oversight hearings related to pandemic stimulus. The House Financial Services Committee will follow with a separate hearing on Wednesday.

For her part, Ms. Yellen said in prepared remarks to the panel that while she is following news about the Omicron variant, “at this point, I am confident that our recovery remains strong.”

Ms. Yellen also called on the Senate to pass Mr. Biden’s social-spending bill known as Build Back Better, and warned lawmakers they must soon raise the nation’s debt limit. She previously indicated the Treasury could run out of cash potentially after Dec. 15.

“I cannot overstate how critical it is that Congress address this issue,” Ms. Yellen said of the debt limit. “If we do not, we will eviscerate our current recovery.”

The discovery of the new variant of COVID-19 has triggered fresh uncertainty over the economy. Governments around the world stepped up restrictions on travel and the World Health Organization warned that the Omicron strain could fuel a fresh surge in infections.

Despite strong job growth this year, “there is still ground to cover to reach maximum employment for both employment and labor force participation, and we expect progress to continue,” Mr. Powell said, adding that joblessness continues to fall “disproportionately” on Blacks and Hispanics.

Even amid the challenges posed by the pandemic, the US economy is powering ahead. JPMorgan Chase & Co. economists have upgraded their estimate for annualized growth to 7% from 5% for the final three months of the year. The boom has fueled high inflation, with consumer prices in October rising at the fastest pace in 30 years.

“Most forecasters, including at the Fed, continue to expect that inflation will move down significantly over the next year as supply and demand imbalances abate,” Mr. Powell said. “It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year.”    

Fed officials in recent weeks had discussed the possibility of speeding up the pace at which they scale back the central bank’s monthly asset purchases, which would give them the option to raise interest rates sooner than otherwise next year if needed to keep price pressures in check.

“I am very open to accelerating the pace of our slowdown in purchases,” Atlanta Fed President Raphael Bostic, a voter this year on the policy-setting Federal Open Market Committee, told Fox News in an interview Friday. San Francisco Fed President Mary Daly, who is also a voter this year and has been a dovish voice on policy, told Yahoo! Finance earlier last week that she would accept a faster pace of tapering if inflation continued to run too high. Ms. Daly’s interview was conducted before the news of Omicron broke.

Fed officials will see reports on CPI and employment for November before their final meeting of the year on Dec. 14-15. — Bloomberg

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