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Analysts’ December 2021 inflation rate estimates

HEADLINE INFLATION probably slowed in December as fuel retailers reduced prices, although holiday demand and the impact of Typhoon Odette may have caused a faster rise in food prices, according to analysts. Read the full story.

Analysts’ December 2021 inflation rate estimates

Miners see no clarity on industry policy from 2022 candidates

A port is pictured as trucks and a backhoe load rocks and soil containing nickel-ore minerals into a barge in the mining town of Sta Cruz, Zambales, Feb. 8, 2017. — REUTERS

By Luisa Maria Jacinta C. Jocson

THE CHAMBER of Mines of the Philippines (CoMP) said it is not clear on whether mining policy implemented by the current government will enjoy any continuity in the succeeding administration in the absence of clear intentions expressed by the 2022 Presidential candidates.

“We have yet to hear a clear minerals development policy or strategy from any of the Presidential candidates. All candidates should develop a long-term minerals development policy as many future technologies (renewable energy, batteries, EVs, computers, etc.) all depend on scarce minerals, and securing these will be critical,” CoMP Executive Director Ronald S. Recidoro said in an e-mail interview.

“The mining industry has always looked at changes in administration with cautious optimism. This is particularly true of the 2022 national elections, considering the policy gains we have secured in the last two years,” he added. “We would like to ensure that these gains are sustained under the next administration, and that its fruits — increased socio-economic contribution from mining — are felt by the Filipino people.”

On Dec. 23, the four-year ban on open-pit mining was lifted by Department of Environment and Natural Resources (DENR). Its Department Administrative Order (DAO) 2021-40 repeals the 2017 order issued by the late Environment Secretary Regina L. Lopez.

DAO 2017-10 banned open-pit mining, noting that “most of the mining disasters in the country were to due tailings spills associated with open-pit mining.”

Mr. Recidoro said the current government is taking the steps in the right direction.

“We think the (current) administration was right in making these policy corrections. With regulatory safeguards now firmly in place, and an improved fiscal regime being implemented, the time was right to allow new mines to come onstream. We can only hope that the new administration will see it fit to continue and build upon these reforms,” he said.

In April, the government lifted the nine-year moratorium on granting new mining permits.

“The mining industry under President Rodrigo R. Duterte’s administration was a mixed bag, but which has turned in our favor in the last 12 months. Early in his administration, Mr. Duterte voiced his concern over irresponsible mining practices he had seen while mayor of Davao City. He then appointed Secretary Regina L. Lopez to introduce radical change into how mines were regulated and operated. As a result, suspensions and closure orders were issued, and a ban placed on open- pit mining,” Mr. Recidoro said.

At the time, Mr. Recidoro said the excise tax on minerals doubled ahead of the moratorium on new mining permits.  He said the industry “suffered tremendously during that time, but we took it as an opportunity to re-examine the industry, effect key environmental, social, and governance (ESG) reforms, and upgrade our capacities and capabilities.”

“Like the other mineral-rich countries, we should position the country as a global player and make best economic use of our mineral resources. Given the opportunity, we would be happy to provide the candidates with a briefing on the matter and emphasize the importance of a strong and responsible minerals industry to the country,” he added.

The Foundation for Economic Freedom (FEF) said in a statement that the lifting of the ban would boost an economy still reeling from the pandemic by generating government revenue at the national and community level and increasing export revenue to help finance critical capital imports.

“Lifting the ban on open-pit mining will accelerate the growth of the mining industry, which will generate good paying jobs in the countryside and help dent rural unemployment and poverty,” the FEF read.

“Any negative effects on the environment can be mitigated with rehabilitation measures and other environmental safeguards that mining companies must adhere to. Open-pit mining is used worldwide and in countries with strict environmental laws, such as the US, Australia, and Canada,” the FEF added.

Meanwhile, environmental groups and political parties expressed their opposition to the resumption of open-pit mining, calling it a reversal of Mr. Duterte’s election promise.

Isa na naman itong pangakong napako ng administrasyong Duterte. Sabi niya noong eleksyon na ipapasara ang mga dambuhalang mina na nakasisira sa kalikasan, ngunit ngayon  binibigyang-daan ang open-pit mining, ang panghuhuthot sa yamang mineral ng bansa, ang matinding pagwasak ng mga kabundukan,” Bayan Muna Party-list said in a statement.

(This is another promise of the Duterte Administration that was not fulfilled. During the campaign, he said he will have the big mining companies closed. But now, he is giving way to open-pit mining, which damages the environment, robs us of our mineral wealth, and destroys our mountains.)

Mukhang nais ng administrasyong Duterte na mangolekta ng malaki mula sa kompanya ng mina bago mag-eleksyon kung kaya’t ngayon tinanggal itong ban sa open-pit mining,” it added.

“It is crystal clear that if the Duterte-Marcos alliance wins the elections in 2022, we can expect more pro-mining policies from government. We must call on the opposition to campaign for the reinstatement of the open-pit mine ban and the moratorium on new mining projects. We call on all pro-environment Filipinos to unite and defeat the pro-mining Duterte-Marcos alliance,” Leon A. Dulce, national coordinator of Kalikasan People’s Network for the Environment said in an e-mail, referring to the ticket of Presidential candidate Ferdinand R. Marcos, Jr. and his running mate, Davao Mayor Sara Z. Duterte-Carpio.

Anakpawis Party-list and the fisherfolk group Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas also warned of major environmental consequences of the return of open-pit mining in a joint statement.

“The resumption of open-pit mining is (brining) our environment towards a major disaster in the making. The country’s productive agricultural and fisheries resources will be sacrificed for this extreme greed for profit of mining corporations at the cost of the people’s socio-economic rights, national patrimony, and sound and sustainable environment. Moreover, this order is a betrayal of the people who continue to defend their livelihood and rights to a healthy ecology,” the statement read.

“As a result of the nickel tailings, traditional fish species that used to thrive in the municipal waters have become extinct. Moreover, the tailings have destroyed several reefs that used to be the breeding grounds of fish. Until now, those big mining companies responsible for the degradation of fishing waters have yet to compensate the affected fishing communities,” it added.

Dominguez proposes shorter school holidays

PHILIPPINE STAR/ MICHAEL VARCAS

FINANCE Secretary Carlos G. Dominguez III said reduced school holidays could help students make up for the shortcomings of pandemic-era schooling, such as the absence of face-to-face lessons.

At a briefing in December, he said the drastic reduction in in-person school hours will have long-term effects because it reduces the earnings potential of future graduates.

“That is economic scarring, I think, that will potentially hit us in the future,” he said.

“I’m not an education expert, so I really don’t know, but we do have to catch up for those lost two years.”

Schools stopped running face-to-face classes in 2020 to deal with lockdowns designed to curb the spread of the coronavirus disease 2019 (COVID-19).

Socioeconomic Planning Secretary Karl Kendrick T. Chua has said that the unavailability of face-to-face schooling could cost the country P11 trillion in lost wages over the next four decades.

The Philippines was the last country to return to in-person classes, which are being piloted by a handful of schools. The Department of Education plans an expanded reopening this year.

Moody’s Investors Service in July 2021 said that the Philippines could face deep economic scarring over the long-lasting effects of the pandemic.

This scarring, it said, may manifest in the labor market and poverty levels.

In response, Mr. Dominguez said the economy is headed to a “strong and early recovery.”

“Improvements in our macroeconomic indicators were driven by government policies that further reopened the economy safely, including more targeted and granular lockdowns, accelerated vaccination drives and more mobility for vaccinated individuals.

The government recently raised its gross domestic product projection for 2021 to 5.5% after the economy grew 7.1% third quarter last year after lockdowns declared to curb a Delta-driven surge in cases. 

Economic managers retained the 7-9% growth target for 2022.

The government announced that Metro Manila will return on Monday to Alert Level 3, a stricter form of lockdown, to curb a recent spike in COVID-19 cases.

The economy declined by a revised 9.6% in 2020. — Jenina P. Ibañez

COVID numbers may top past surges, says OCTA

PHILIPPINE STAR/MICHAEL VARCAS
HEALTH workers attended to coronavirus patients at the chapel of the Quezon City General Hospital on Aug. 2. — PHILIPPINE STAR/ MICHAEL VARCAS

CORONAVIRUS infections in the Philippines would probably continue rising and top past surges due to the highly mutated Omicron variant, according to researchers from the country’s premier university.

Metro Manila’s daily positivity rate has hit 28%, near the all-time high of 30%, Fredegusto David, OCTA Research Group fellow from the University of the Philippines said on Sunday.

Daily coronavirus cases could hit more than 10,000 in Metro Manila in the worst scenario, he told the ABS-CBN News. “It’s just possible, I’m not predicting it yet. But it seems like we’re heading there.”

Antonio C. Leachon, a doctor and former special adviser to the country’s pandemic task force, told ABS-CBN TeleRadyo daily cases might reach 20,000.

The Department of Health (DoH) has reported 14 Omicron cases in the Philippines.

The variant dampened New Year festivities around the world, with Paris canceling its fireworks show, London relegating its own to television and New York City scaling down its famous ball drop celebration at Times Square.

Globally, airlines canceled more than 6,000 flights on Christmas Eve, Christmas and the day after Christmas as COVID-19 cases surged. In the United States, more than 1,200 flights were canceled and more than 5,000 were delayed on Dec. 26 alone as staff and crew called out sick.

DoH reported 4,600 coronavirus infections on Sunday, bringing the total to 2.85 million.

The death toll hit 51,570 after 25 more patients died, while recoveries increased by 535 to 2.78 million, it said in a bulletin.

The agency said 19.6% of 26,122 samples on Dec. 31 tested positive for COVID-19, more than the 5% benchmark set by the World Health Organization.

There were 21,418 active cases, 769 of which did not show symptoms, 15,644 were mild, 3,081 were moderate, 1,589 were severe and 335 were critical.

The agency said 99% of the reported cases occurred from Dec. 20 to Jan. 2. The top regions with infections in the past two weeks were Metro Manila with 3,279 cases, Calabarzon with 676 and Central Luzon with 252.

It said 28% of the reported deaths occurred in December, 8% in November, 4% in October and 16% in September.

The Health department said 22% of intensive care units in the Philippines were occupied, while the rate for Metro Manila was 27%.

Mr. David said coronavirus infections have been spiking, mostly concentrated in Metro Manila.

The region’s high vaccination rate could ease the effects of the virus on people’s health, he added. The infection surge also might not last as long.

He said the government should consider placing Metro Manila and nearby provinces in a bubble to avert its spread to other regions. Provinces should also consider enforcing stricter border control.

President Rodrigo R. Duterte has raised the coronavirus alert in Metro Manila to Level 3 from Jan. 3 to 15 amid rising infections.

State-run Philippine General Hospital has posted a steady increase in COVID-19 patients, spokesman Jonas del Rosario said.

“There were 93 confirmed COVID-19 cases in the hospital as of Jan. 1 from a low of 30 on Dec. 25,” he said in a text message.

Gene A. Nisperos, a board member of the Community Medicine Development Foundation, Inc., said the fresh surge could not be blamed solely on people having moved more freely during the holiday.

“Even the DoH has already stated that there is community transmission of Omicron,” he said in a Facebook Messenger chat.

The Delta variant, which has become the dominant strain in the Philippines, nearly exhausted the country’s health system last year. 

Meanwhile, Albay Rep. Jose Ma. Clemente S. Salceda said the country’s best defense against the Omicron variant is to isolate the infected and to heal them quickly.

While the Omicron variant appears to be more infections, it is also less deadly, he said in a statement.

The congressman said the government should reactivate unused isolation facilities to prepare for the surge.

“It is essential for economic recovery that we do not lose the momentum in demand and job creation that we have already sustained,” he said. “So we have to get fighting this variant right.”

Mr. Salceda, who heads the ways and means committee, said Congress could adjust the budget so the government could buy more medicines, ventilators and other medical supplies to prepare for a sudden increase in hospitalizations. — Norman P. Aquino, Kyle Aristophere T. Atienza and Jaspearl Emerald G. Tan

Transport sector told to observe protocols amid Omicron threat

PHILSTAR

THE TRANSPORTATION department has ordered the sector to enforce health protocols amid a fresh surge in coronavirus infections probably spurred by the highly mutated Omicron variant.

“The safety of commuters is paramount,” Transportation Secretary Arthur P. Tugade said in a statement at the weekend. “We must make sure that health protocols are strictly implemented in all public transport vehicles and in all transport facilities.”

Mr. Tugade issued the order after the government raised the coronavirus alert in Manila, the capital and nearby cities to Level 3 from Jan. 3 to 15.

Under the third alert level, intrazonal and interzonal movement will be allowed but local governments may impose reasonable restrictions.  

The Transportation chief also ordered the Land Transportation Office, Land Transportation Franchising and Regulatory Board and train marshals of all railway lines to enforce physical distancing in public transport vehicles and terminals.

He added that all enforcers and marshals have been ordered to enforce the use of face masks by commuters entering terminals and boarding public transport. Public transport operators should also disinfect their vehicles.

“Let’s us not be complacent,” Mr. Tugade said in Filipino. “The virus is still here, so let’s make it a habit to wear face masks especially inside public transportation. Don’t eat or talk while inside the vehicle. Observe physical distancing.”

He also urged commuters to be vigilant against violators of health protocols.

“We need everyone’s cooperation,” he said. “We cannot do this alone. Passengers, drivers and operators should help each other. Let us all be reponsible and disciplined.”

Mr. Tugade likewise asked aviation officials to revisit, in coordination with other agencies, the cap on daily passenger arrivals at main gateways.

The aviation sector should observe health protocols at all airports and coordinate with various airlines to ensure these are observed inside the cabin, he said.

“Let us continue to hold our guards up,” Mr. Tugade said. “If there is a need to reduce the cap on passenger arrivals, then let us implement it in coordination with concerned agencies.”

“Revisit the existing cap. Let us make sure that the process is thoroughly observed, and in everything we do, make sure that we ensure the protection of our fellowmen,” he added.

The Philippines will impose tighter curbs in the capital region for the next two weeks to contain a surge spurred by the highly mutated Omicron variant that is spreading globally, the presidential palace said on Friday.

Manila, the capital and nearby cities that are home to more than 13 million people, will be placed under the third of a five-scale alert system on Jan. 3 to 15.

Level 3 bans face-to-face classes, contact sports, funfairs and casinos. The government’s coronavirus task force will also cut the operating capacity for social events, tourist attractions, amusement parks, restaurant dine-in services, fitness studios and personal care services.

The coronavirus has infected 2.84 million and killed more than 51,000 people in the Philippines, which has the second-highest number of COVID-19 cases and deaths in Southeast Asia, after Indonesia. — Revin Mikhael D. Ochave

Baguio proposing to be pilot site for use of antigen self-test kits 

BAGUIO PIO

BAGUIO City is planning to launch this week the use of antigen self-test kits for coronavirus to speed up case detection after national authorities reported the high probability of community transmissions of the more contagious Omicron variant.

“Our city could be the pilot site for this do-it-yourself testing kits that are widely used in the US, Canada, Europe and Singapore,” Mayor Benjamin B. Magalong said in a statement late Saturday.

He said testing czar Vivencio B. Dizon has expressed support to the plan, which will be presented for approval by the national task force managing the coronavirus disease 2019 (COVID-19) pandemic. 

Mr. Magalong said the city government is aiming to rollout a program, tentatively this week, that will inform residents on the “easy-to-use home testing method.” 

The self-test kits will help in the early detection of cases, which is currently reliant on the capacity of laboratories for RT-PCR testing.

“Aside from expediting testing, self-tests work to reduce the chances of spreading the virus as (potentially) infected persons could undertake their own tests in the comforts of their homes without having to go to health facilities which exposes other people to the health risk,” the city government said. 

Officials appeal to typhoon relief donors to coordinate with local gov’t to avoid politics, abuse

DINAGAT ISLANDS PIO

TWO LOCAL government units affected by typhoon Odette, internationally known as Rai, have issued separate appeals to aid donors to coordinate with authorities to avoid “politicization” of distribution efforts and ensure equitable delivery of goods and services.  

Spokesperson Jeff Crisostomo of Dinagat Islands, one of the most devastated provinces, said all assistance are being managed by their Emergency Operations Center, which serves as the hub of relief and recovery efforts. 

“I encourage all present and future partners in relief and recovery in Dinagat Islands to engage with local government channels at the municipal and provincial levels in order to prevent the politicization of aid,” he said in statement posted on the provincial information office’s official Facebook page.

“The needs of the people, not politicians, should always come first,” he said.

Mr. Crisostomo noted that the province, through its disaster management council, has a “robust and effective system of deployment and distribution” in place.

The Philippines will have national and local elections in May, and candidates are already set after the completion last year of the filing of applications and substitutions.

In Negros Oriental, Governor Roel R. Degamo issued an advisory on Dec. 30, also posted on the province’s official Facebook page, asked “all kindhearted organizations and individuals, who wish to extend assistance to the Typhoon Odette affected communities, to please coordinate with your local authorities.” 

“This is not to curtail your right to choose your target beneficiaries but this is for your own safety. With more and more individuals and institutions volunteering their support to the affected areas, there rises a need for a more coordinated action in order to have an orderly conduct of the relief operations,” he said.

He said local disaster management councils, incident management teams, the police, and barangay officials are working together in relief operations.

Mr. Degamo also called on “authorities” to keep in check people who stand along highways begging for aid. 

“Per result of an initial verification conducted, findings revealed these people already received more assistance as compared to those from other areas,” the governor said. “Some are just taking advantage of the situation.” 

Typhoon Odette struck southern and central parts of the Philippines, making nine landfalls from Dec. 16 to 17 with heavy rain and winds of up to almost 200 kilometers per hour.

An average of 20 typhoons enters the Philippines annually. 

Guidelines and protocols on disaster response have been issued by the national government based on Republic Act 10121, the Disaster Risk Reduction and Management Act of 2010. — Marifi S. Jara

RCEP delay risks PHL exclusion from markets, exporters say

REUTERS

THE DELAY in ratifying the Regional Comprehensive Economic Partnership (RCEP) treaty risks freezing the Philippines out of a massive market, exporters warned. 

RCEP, which took effect on Jan. 1, is a free trade agreement among ASEAN countries, Australia, China, Japan, South Korea, and New Zealand. The Senate went into recess without ratifying RCEP before the year ended.

Sergio R. Ortiz-Luis, Jr., Philippine Exporters Confederation, Inc. (Philexport) president, said in a phone interview that the Philippine entry into the trading bloc will be delayed by a few months. 

“The biggest argument is we will be shut out from the market. We will not be a priority. It is difficult to be shut out. That is the biggest worry,” Mr. Ortiz-Luis said. 

“We hope that the delay will not take long. But I think it will delay the process for us by a few months,” he added. 

RCEP is being opposed by the agriculture industry, which fears a surge in imports, lower prices, and the displacement of domestic producers.

Philexport supports ratification, deeming it beneficial to employment and livelihood.

Mr. Ortiz-Luis warned that any further delay in ratifying RCEP will reduce the Philippines’ share of regional trade.

“We will eventually notice that the Philippines will be left behind by those participating in RCEP,” Mr. Ortiz-Luis said.  

Asked to comment on the ratification process, the chairman of the Senate Committee on Foreign Relations, Senator Aquilino L. Pimentel III, said many senators are requesting interpellations.

“We have to give them the chance to ask questions when session resumes this Jan. 17,” Mr. Pimentel said by phone message.

Trade Secretary Ramon M. Lopez said in a phone message that the impact of RCEP’s delayed ratification will be minimal if it is “a matter of few days or weeks.”

However, Mr. Lopez said further delay to join RCEP will negatively impact the economy.

“We will lose the recovery momentum. Our double-digit growth in foreign direct investment (FDI) and exports will definitely reverse as investors will easily shift to other RCEP participating countries. Jobs will be lost,” Mr. Lopez said.

Semiconductor and Electronics Industries in the Philippines Foundation, Inc. President Danilo C. Lachica said by phone message that the government needs to study why other ASEAN countries like Vietnam and Indonesia are taking in more FDI than the Philippines.

“That’s why regardless of RCEP, government needs to study why. We need an honest President who can restore our country’s credibility in international circles,” Mr. Lachica said.

The DTI has touted RCEP benefits such as cheaper manufacturing inputs, ease of transactions with free trade agreement partners, and increased competitiveness for Philippine industries. — Revin Mikhael D. Ochave

Solon pushes for localized updating of building code for more disaster-resilient structures 

THE LIPATA Port in Surigao City was among the public structures heavily damaged by typhoon Odette. — PHILIPPINE NAVY

LOCAL government units should be given authority to issue updated versions of the National Building Code to pave the way for planning and constructing structures that are more resilient to natural events such as typhoons.  

“(U)pdating that (National Building Code) has been quite difficult in both chambers of Congress. Even with a supermajority, quite difficult because the families of legislators are into the construction business,” Bagong Henerasyon Rep. Bernadette R. Herrera-Dy said in a statement following questions from BusinessWorld.  

The Philippine’s National Building Code, contained in a presidential decree passed in the 1970s, provides guidelines on how buildings and structures should be constructed, including location, design and the quality of materials to be used. 

“Perhaps other legislative ways can be resorted to. LGUs (local government units) could enact their own building, structural and safety codes,” she said.

Most LGUs have local ordinances relating to building rules, though these are mainly in line with the national code.

Herrera-Dy said in an earlier statement that rebuilding weak structures that cannot withstand calamities would not be enough as those structures could just be easily damaged again by the next disaster. 

Typhoon Odette, internationally named Rai, struck wide parts of central and southern Philippines in mid-December, leaving at least P16.9 billion in damage to infrastructure, based on the Jan. 2 assessment update from the national disaster management agency.

This cost estimate covers government facilities; roads and bridges; schools, including those that are designated as evacuation centers during calamities; health facilities, and utility service facilities.

There were also more than 407,000 houses that were partially damaged and almost 175,300 that were totally destroyed. The estimated cost for residential damage stood at P28.16 million.

The solon said the government should also set up more home repair loans, and calamity loans should be modified for inflation. 

She also proposed that families living in areas vulnerable to calamities should be provided with membership to the Home Development Mutual Fund, more commonly known as Pag-IBIG Fund, a government-owned and controlled corporation that manages a savings program and low-cost loans for shelter. It also has a calamity loan program for contributing members.

On the pending legislation for the creation of a Department of Disaster Resilience (DDR), Ms. Herrera-Dy said its passage was affected by restrictions relating to the coronavirus pandemic, but the recent typhoon has underscored the urgency of having an agency focusing on calamity preparedness and response. 

“The pandemic may have delayed the DDR bill but as we can plainly see, typhoons, earthquakes and volcanoes do not care about pandemics. They just happen to strike,” she said. 

The House of Representatives passed its version of the proposed law under House Bill No. 59589 in Sept. 2021. It has been transmitted to the Senate and is currently pending at the committee on national defense. 

For the immediate response to typhoon Odette’s aftermath, Ms. Herrera-Dy said the different departments under the executive branch can review available funds that could be realigned for relief and recovery measures. 

She cited that based on the Department of Budget and Management’s (DBM) disbursement data as of Sept. 2021, there was a combined P690 billion in unobligated funds among 10 departments.

She said just 1% of those funds or P6.9 billion would be enough for reconstruction projects. 

Before end-2021, DBM said it had released P7.68 billion to local governments and national agencies for disaster relief operations in typhoon-hit areas. — Jaspearl Emerald G. Tan

DTI reports 69 violations of price freeze orders in typhoon zone

LENI GERONA ROBREDO ON FACEBOOK

THE Department of Trade and Industry (DTI) said it issued 69 show-cause orders to sellers of construction materials who violated price freeze orders in provinces affected by Typhoon Odette (international name: Rai).

The DTI said in a statement on Sunday that it also confiscated overpriced supplies from hard-hit areas like Surigao del Norte.

Items covered by the DTI’s price controls include consumer goods, power generator sets, construction materials, and fuel products.

Trade Secretary Ramon M. Lopez warned alleged profiteers: “Our DTI regional teams and the Consumer Protection Group, in collaboration with the Philippine National Police-Criminal Investigation and Detection Group (PNP-CIDG), have been relentless in this drive to catch… hoarders who are taking advantage of our countrymen who are already suffering from the damage caused by Typhoon Odette.”  

The DTI said it recently started distributing livelihood kits to microentrepreneurs affected by Typhoon Odette.

The first recipients were 1,036 beneficiaries, including micro, small, and medium enterprises (MSMEs) from Siargao, the Dinagat Islands, Surigao del Norte, Bohol, Cebu, Southern Leyte, Negros Occidental, Negros Oriental, Guimaras, and Iloilo.

“With an initial fund of P8 million readily available for distribution, the program immediately heeded the call of the President to bring government services to the typhoon victims as soon as possible,” DTI said.  

“This is part of the estimated P150-million fund to bring livelihood kits to around 2,000 beneficiaries per typhoon-affected province, with around P8,000-10,000 per beneficiary, or around P20 million per province,” it added.

Mr. Lopez also announced earlier that the DTI’s financing arm, the Small Business Corp., will also provide P500 million for lending to MSMEs.

“The fund will be offered at zero interest, with no collateral requirement, and with a grace period that will not require immediate principal payment to allow the affected MSMEs some time to recover from the damages of Typhoon Odette,” the DTI said. — Revin Mikhael D. Ochave

Transformative Leadership in the year of recovery

For many business leaders, the beginning of this new year will be a time to reflect on the lessons of the past two years and to resolve to take steps to improve their respective organizations. If the global pandemic has taught us anything, it is the need to ensure that our enterprises are strong enough to survive major upheavals and agile enough to adapt and evolve into healthier ones primed for future success.

This is where “future-back” thinking becomes useful. Future-back thinking is all about having a clear purpose and a clear vision of what you want your organization to become and then working backwards and planning for the steps and strategies that will lead to that vision and help make it a reality. It’s strategizing for the transformation of your business as it moves toward reaching its potential.

This thinking is even more critical for large, established enterprises, where transformation happens much more slowly and is likely to meet resistance. Every business needs to transform in order to thrive because change and disruption are inevitable.

This becomes even more critical given the encouraging signs of recovery we are beginning to see in our country and economy. While there is a sense of cautious optimism and rising hope that the worst is behind us, leaders understand that obstacles will still arise. However, they also know that there can be no true success without challenges to overcome.

Given the exigencies of our times and the challenges to come in what we all hope will be the year of recovery, we believe that the need for transformative leadership becomes even more urgent and important than ever. Transformative leadership is a framework that focuses on three value-driving pillars: people, technology, and innovation.

HUMANS@CENTER
Author and leadership guru Simon Sinek once said, “Business is about people. If you don’t know people, you don’t know business.” Your business would not exist without people, especially the two most important ones: your customers or clients and your employees. Your strategies and long-term vision should have them both at their center. Every decision, every technology implementation, and every product and service must be viewed through the human lens.

Understanding your customer or client is paramount in delivering products and services that will delight them and create compelling value propositions. This is at the core of business success, but it is also critical to recognize the need to adapt to your audience constantly. As society shifts and trends emerge, having the pulse of your base and having a solid understanding of where they are going is essential for planning for the future.

Meanwhile, understanding your own people is just as important. They are more motivated to perform when they see that leadership values them and sees them as humans with real needs instead of replaceable workers. Enacting organizational transformation becomes easier when we always consider the impact on our people and act accordingly. One such transformation that is necessary for businesses to be future-proof but has a high impact on people’s everyday work is new technology implementation.

TECHNOLOGY@SPEED
Technology can be a great disruptor, but it can also be a great equalizer. Nowadays, technology is a necessity for businesses to be competitive, and because markets can shift quickly and dramatically, rapid technology adoption is an important step that allows your organization to continue creating value for and meeting the ever-evolving needs of customers and clients.

However, as we continue to move forward into a very interconnected world, the issue of trust becomes that much more important as well. Information security and integrity are now at the forefront of conversations regarding technology in business. Speedy implementation without enough attention given to safeguards means taking on undue risk. The balancing act between ease of access and security will need vigilance and constant adjustment.

Internally, successfully leveraging and implementing technology requires upskilling and/or reskilling your people. One of the common causes of resistance to this kind of change is the need to learn new things which can be disruptive and gets in the way of people getting their work done.

I am sure that many readers are old enough to remember businesses having to drag their operations kicking and screaming into the internet age. However, as technology never stops evolving, so should we never stop thinking of how we can make it work for us and make us better. As leaders, technology transformation for your organization can be very tricky and will need you to be patient, understanding, encouraging, and communicative. This is part of making sure your business adopts a culture of growth and innovation.

INNOVATION@SCALE
For an organization to continuously thrive into the future despite shifts and disruptions, it must have a mindset of impatience and dissatisfaction, and a willingness or even an ardent desire to always seek new and better ways to operate and deliver what customers and clients need.

On the human side of this, leaders should seek to embed the transformative mindset into company culture. Make it intrinsic in how people think and operate and empower them to experiment and take appropriate risks. With innovative thinking as part of company culture, strong resistance to transformation is far less likely.

On the technology side, adoption and implementation should make business sense. Innovation should not be practiced simply for innovation’s sake. Thoughtfully scaling technology transformation allows you to learn and adjust as you go. In this way, the human impact is better managed and leveraging new technological capabilities is more effective.

TRANSFORMING FOR THE FUTURE
The three pillars of people, technology, and innovation each are drivers that create long-term value for stakeholders. Together they comprise the transformative leadership framework that guides the necessary approach, planning, and strategies to ensure that an organization is built for the future and resilient enough to survive and thrive future disruptions — such as the Great Resignation.

Anthony Klotz, a professor of Texas A&M University, proposed the concept of the Great Resignation. This idea predicts a large portion of the workforce leaving their jobs once the pandemic ends, as it is established that how work is organized and conducted will not return to how it was before the pandemic started. This makes it even more critical for leaders to adopt these value-driving pillars not just to simply retain its employees, but to even potentially bring about a potential resurgence in the constant war for talent. In essence, we believe that by applying the transformative leadership framework to their organizations, business leaders can shift their focus from worrying about the Great Resignation and instead proactively build trust and confidence in order to drive a Great Resurgence in the business.

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 author and do not necessarily represent the views of SGV & Co.

 

Wilson P. Tan is the country managing partner of SGV & Co.

RTL can modernize the country’s rice industry and lock in rice security

JCOMP-FREEPIK

Presidential candidate Ferdinand Marcos, Jr. had recently articulated his support for reversing the rice tariffication law (RTL). He decried the so-called many “unintended consequences” of RTL for the country’s rice farmers. He said his government would usher back the old policy of using rice imports as a last resort to protect rice farmers. He wants the National Food Authority (NFA) to resume its role not just as a rice importer but also a regulator of rice prices.

The RTL or Republic Act 11203, enacted nearly two years ago, liberalized rice imports, ending the nearly half a century of the NFA’s monopoly of rice imports. It lowered import tariffs on rice from 50% to the country’s ASEAN rate of 35% and made the NFA, powerful food price regulator, into a mere trader and keeper of the country’s emergency rice stocks.

Those who have opposed RTL, like the Federation of Free Farmers (FFF), continue to push for reversing the law. FFF have argued that the net gain of RTL to all Filipinos, while positive, comes at the expense of rice farmers and favors rice importers and wholesalers/retailers. Not even consumers, on whose behalf the RTL was enacted to reduce rice price inflation, have registered significant gains, garnering only nearly a quarter of a billion pesos yearly. The number pales in comparison with the losses of rice farmers which FFF estimated at about P40.34 billion. Even rice millers lost. The biggest gains went to importers and traders, who siphoned off about P57 billion yearly.

Studies on the impact of RTL, which make use of economic models of the country — like Balié, J. and Valera, G., 20201; Perez, N. Pradesha, A. 20192; Cororaton, C., and K. Yu., 20193; and Briones, R. 20184 – had found that the net gain to Filipinos is positive. Rice farmers lose from rice tariffication, but this is more than offset by the gains of rice consumers, who include rice farmers. Balié, J. and Valera, G., 2020 estimated that 89% of Filipinos are net buyers of rice.

The other group of studies is comprised of ex-post assessments on the economic impact of RTL on various stakeholders. PhilRice (2019)5 estimated that around 1.6 million or 55% of rice farming households are smallholders, growing rice on smaller than a hectare field. This implies that although over half of the country’s farmers might have lost from lower farm prices during harvest because of the reform, they nonetheless gain as rice consumers in the rest of the year as consumers.

Adriano, K. et al. (2020)6 focused on the impact of RTL on inflation rate, which peaked at more than 6% in the third quarter of 2018 due largely to the delayed and limited rice imports. In just two quarters of RTL implementation in 2019, the inflation rate significantly dropped to its lowest level at less than 2%, as rice constitutes almost 10 percentage points in the computation of the consumer price index.

Do rice farmers have to lose for the rest of society to gain from RTL? No, not all rice farmers lose, only those farm households who are net sellers of rice since RTL lowered the protection accorded to rice farmers. The majority of rice farm households gained since they are more rice consumers in most times of a year as PhilRice has noted.

There are two things we can do to cushion the losses of rice farmers due to RTL, but those exclude reversing RTL. Restoring rice trade protection will come at the expense of rice consumers, majority of whom are poor. According to Adriano et al. (2020), the highest retail price of regular milled rice in 2018 averaged around P45 per kilogram. Immediately after the RTL passage, the price went down to an average of P37 from September to December 2019. That is a significant help to the majority of the voting population of the country and their families.

One way to cushion farmers’ losses, which is done by RTL, is to use the tariff revenues from rice imports to invest in raising the productivity of rice farmers. RTL created the Rice Competitiveness Enhancement Fund or RCEF. While several analysts had criticized how RCEF had been designed, having the fund is already a good start at ensuring rice farmers can increase productivity.

Higher rice productivity can undo the current disadvantage of rice farmers with production costs remaining high, even as return to rice farming had gone down because of RTL. FFF National Chairman Raul Montemayor, citing a survey they made of rice production costs in several places of the country, decried the net income squeeze RTL had induced. But with higher yields, rice farmers can regain partly the loss they suffer from reduced trade protection.

Production costs can go down. RCEF can be more effective in raising productivity if rice farms are clustered or larger because of scale economies. About half of the fund is devoted to mechanization, the incremental productivity of which is higher with larger farms.

Per hectare production costs are high because of rice farm fragmentation, thanks to the comprehensive agrarian reform program (CARP). CARP has forced rice farmers to become small holders, and thus their leverage for reducing production costs has been greatly reduced. The government may consider promoting the clustering of rice farms into cooperative farming as a condition for them getting RCEF assistance. Perhaps, we can also consider getting rid of the ceiling farm size of five hectares under CARP in order to reduce production costs.

The second way is to modernize rice milling and domestic trading. Jandoc and Roumasset (2019)7 had observed that the larger share of the higher price that consumers pay for rice goes to traders and millers, not to rice farmers. If the government reverses the RTL, the higher protection would only sustain the low productivity in rice milling and trading. The two authors estimated that about three-fourths of the price did not go to rice farmers, but to rice traders and millers.

If we use part of RCEF to modernize rice milling, that could significantly increase the farmgate price of palay (unmilled rice). The losses of rice millers that the FFF had noted could reflect that rice mills with relatively low milling conversion rates had to exit the business because of RTL. That can be undone with investments in more efficient rice mills.

In RTL, we have the opportunity of modernizing our rice industry. With rice trade liberalization, consumers are already benefiting from lower rice prices, and we don’t have to spend taxpayer money to sustain the operation of the NFA. We need, however, to raise productivity of rice farming and milling efficiency to cushion if not to completely offset the losses of rice farmers and millers. RCEF investments, farm clustering, getting rid of land market restrictions under CARP, and investments in modern rice mills can make the good vision of RTL happen.

 

1 See Balié, J., Valera, G. 2020. Domestic and international impact of the rice trade policy reform in the Philippines. Food Policy 92. www.elsevier.com/locate/foodpol.

2 See Perez, N. Pradesha, A. 2019. Philippine rice trade liberalization: Impacts on agriculture and the economy, and alternative policy actions. NEDA-IFPRI Policy Studies June 2019. Washington, DC: International Food Policy Research Institute (IFPRI).

3 See Cororaton, C., & K. Yu. 2019. Assessing the Poverty and Distributional Impact of Alternative Rice Policies in the Philippines. DLSU Business & Economics Review 28(2): 1.

4 Briones, R. 2018. Scenarios for the Philippine Agri-Food System with and without Tariffication: Application of a CGE model with Endogenous Area Allocation. Discussion Paper Series No. 2018-51. Quezon City: PIDS.

5 PhilRice. (2019). Rice Tariffication Law (Republic Act 11203). FAQs Rice Competitiveness Enhancement Fund (RCEF), Series no. 2. Retrieved from https://www.philrice.gov.ph/wp-content/uploads/2019/09/RCEF_FAQ02-RiceTariff.pdf.

6 Adriano, F., Adriano, L., Adriano, K. 2020. Philippine Rice Tariffication Law — A year and a half later: Challenges and Opportunities. ADB paper, unpublished.

7 Jandoc, K. and Roummaset, J. 2018. Rice Tariffication and its Role in Reducing Rice Prices. Unpublished paper.

 

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