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Richest deal

As expected, Kawhi Leonard declined his player option for the upcoming season of the National Basketball Association. Nope, he’s not aiming to secure new digs, never mind his stated desire to listen to any and all offers that come his way as an unrestricted free agent. His intent is to remain with the Clippers, but on a fresh contract with which to secure his future. In other words, he’s thumbing down $36 million for the next year in order to bank even more, and for a longer period.

To be sure, Leonard could have done the same had he opted in and looked to the end of the 2021-22 campaign as his key to even more riches. He could have then inked a $181.5-million extension that guaranteed him a whopping $50.2 million in the last leg of its four-year term. By resetting the clock, he instead stands to claim a maximum $176.2 million through 2025. That said, it must be noted that he’s able to latch on to either deal if he stays with the red and blue.

In any case, the Clippers will, no doubt, accede to Leonard’s wishes, which project to a one-plus-one arrangement that will net him $39.3 million this year and, more importantly, eligibility for the qualifying veteran free agent exception. Otherwise known as full Larry Bird rights, the provision in the league’s collective bargaining agreement allows him to negotiate for a maximum contract lasting half a decade. Translated, this means he figures to affix his Hancock on a $235-million accord, the richest in NBA history.

The irony is that Leonard will be sidelined for the foreseeable term. The Clippers stand to pay him megabucks for being a towel bearer at the end of the bench. And they’ll be smiling throughout, if for no other reason than because they firmly believe he’s worth the hassle, and more. After all, the Raptors had him on a single-season rental, and wound up with a championship banner in the rafters. Which, of course, is the bottom line — especially for a snakebit franchise bent on finally emerging from the shadows of the neighboring Lakers.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Understanding the four industrial revolutions

CHANUT43-FREEPIK

Part 3

When the Philippines attempted to industrialize upon obtaining political independence in 1946, it faced two major handicaps. First, as we discussed in the first article in this series, it lacked the green revolution that preceded much of the First Industrial Revolution that occurred in the Western World and in Japan. The productivity of the food and feed sectors was very low. That meant very low incomes accruing to the 50-60% of its population that worked in the countryside. As the economy tried to move to the second stage of industrialization (Industry 2.0), the inward-looking policy of protectionism and import substitution made it difficult for such industries as iron, steel, machine tools, paper making, chemicals, rubber, and bicycles to attain economies of scale because of the limited purchasing power of the masses and the relatively small population, which did not exceed 25 million people after the Second World War (as contrasted with our 110 million inhabitants today).

Thus, with the exception of the food manufacturing enterprises that flourished during that period and are now predominant in our local industrial sector (e.g., San Miguel Corp., the Robina group, Century Canning, Monde Nissin, Unilever, Nestlé, etc.) most of the attempts to put up such major industries as iron, steel, paper, machine tools, rubber, and motor vehicles failed upon the liberalization of international trade. Even an industry that belonged to the First Industrial Revolution did not survive: textile manufacturing. In contrast, our Asian neighbors like Singapore, Taiwan, South Korea, and Malaysia were able to overcome the handicap of a small population by focusing first on very labor-intensive, export-oriented industries which led to full employment of their labor force and provided the small population with sufficient incomes for them to support the viability of the heavy industries that flourished in the second stage of industrialization. In the case of Taiwan and South Korea that have limited land resources, their governments’ focus on rural and agricultural development in the initial stage of development also provided higher incomes for the farmers that supplemented the wages of the industrial workers in creating a domestic market large enough to make the heavier industries economically viable.

The good news today is that thanks to Filipinos’ the preference for big families, our population has swelled to four or five times its level in the 1950s. Like countries such as China, India, and Indonesia, our economy does not have to be dependent on exports (such as our neighbors Singapore, Taiwan, Malaysia, and even Thailand) for long-term economic growth. Given the appropriate complementary policies from the State, many of these Industry 2.0 sectors can become economically viable without tariff protection, especially as we intensify our presence in the ASEAN Economic Community, a free trade area that consists of some 650 million consumers coming from 10 member countries. True, we still have the highest poverty incidence of more than 20% of the population in East Asia. We are, however, already endowing at least 80 million of our population with increasingly upper-middle levels of income in the next decade or so. Our domestic market can sustain more and more of the industries that failed to take off in the past, such as iron and steel, paper making, machine tools, chemicals, rubber, selected motor vehicles, engines and turbines, marine technology, and fertilizers. Now is the time to actively invite foreign direct investors, especially from South Korea, Japan, Taiwan, Spain, Germany, Italy, and the United States to team up with local investors in establishing these Industry 2.0 sectors.

Fortunately, these manufacturing enterprises are not included in the prevailing constitutional restrictions against foreign direct investments, although, as we shall see later, it will be difficult for the country to lead in the Fourth Industrial Revolution if we do not amend our Constitution and allow more foreign direct investments in such sectors as public utilities, telecommunications, and higher education.

As our economic managers learned from the mistakes of the past and began to liberalize the Philippine economy towards the last quarter of the 20th century, we were able to take better advantage of the Third Industrial Revolution (Industry 3.0) which brought about and advanced the electronics industry during the last decades of the 1900s.

Industry 3.0 can also be described as the electronics age which brought about the widespread manufacture and use of chips. As briefly described by Eric Howard in a blog, the invention and manufacturing of a variety of electronic devices, including transistors and integrated circuits, automated the machines substantially, resulting in reduced effort, increased speed, greater accuracy, and even total replacement of the human agent in some cases. Programmable Logic Controller (PLC), which was first built in the 1960s (I still remember the mammoth computers I used as a doctoral student at Harvard) was one of the landmark inventions that signified automation using electronics.

The integration of electronics hardware into the manufacturing systems also created a requirement of software systems to enable these electric devices, thereby feeding the software development market as well. The production of the Z1 computer, which used binary floating-point numbers and Boolean logic, was the beginning of more advanced digital developments. The next development in communication technologies was the supercomputer, with extensive use of computer and communication technologies in the production process which intensified the move to replace human power with machines.

Apart from controlling the hardware, the software systems also enable many management processes such as enterprise resource planning, inventory management, shipping logistics, product flow scheduling and tracking throughout the factory. The entire industry was further automated through the use of electronics and information technology (IT). The automatic processes and software systems have continuously evolved with the advances in the electronics and IT industry since then.

The pressure to further reduce costs forced many manufacturers in the developed countries like the US, Germany, the UK and Japan to move to low-cost countries. Thanks to the establishment of numerous export processing and industrial zones in Metro Manila and Cebu, the Philippines made up for its notorious lack of export orientation in its Industry 2.0 phase by becoming a major participant in the global supply chain in electronics and semiconductor manufacturing. Today, the largest share in our manufactured exports goes to the semiconductor industry which is expected to recover strongly after the pandemic as the whole world cannot have enough of digital devices like smart phones, laptops, iPads and other consumer electronic products that are vital to the Fourth Industrial Revolution.

Another view of Industrial Revolution 3.0 has been presented by Jeremy Rifkin, President of the Foundation on Economic Trends and the principal architect of the European Union’s (EU) Third Industrial Revolution long-term economic sustainability plan to address the triple challenge of the global economic crisis, energy security, and climate change. According to him, internet technology and renewable energies (solar, wind, geothermal, hydro, and biomass) will merge to create a powerful new infrastructure for a Third Industrial Revolution that would change the world. In Industry 3.0 (which can be simultaneous with Industry 4.0), hundreds of millions of people will produce their own green energy in their homes, offices, and factories, and share it with each other in an “energy internet,” just like we now create and share information online. The democratization of energy will bring with it a fundamental reordering of human relationships, impacting the very way we conduct business, govern society, educate our children, and engage in civic life.

This vision may not be as utopian as it sounds. The university where I work, the University of Asia and the Pacific, has already been saving significant amounts on its Meralco bill after solar cells were installed on top of one of its buildings. I know that there are many universities following suit all over the country, thanks to major selling efforts of companies like Singapore-based WeEnergy.

Another positive note about our local enterprises that enjoy domestic markets large enough to make them attain profitability (without high tariff walls being erected by the Government) is that there is enough evidence that Filipino-owned businesses can hold their own in competing with their foreign counterparts. This is very obvious in the largest manufacturing sector which is food and beverage. Some of our large companies in this sector, such as San Miguel Corp., Tanduay, Zesto, Robina, Century Pacific, CDO, and many others do not have to play second fiddle to the likes of Nestlé, Unilever, Coca-Cola, and Pepsi Cola in their respective market segments. I am confident that Filipino entrepreneurs can count on world class technology and management to be able to compete with multinational corporations in any of the sectors that are contributing our Second Industrial Revolution.

It is heartening to read in the Financial Times (June 26, 2021) that, also thanks to a very large domestic market, Chinese consumer brands are beating their foreign counterparts. Thanks to savvy social media marketing and optimized supply chains, century-old multinational brands are being threatened by Chinese startups. As reported by the Financial Times, “the pre-eminence of Chinese brands marks a turnaround in a country where foreign products have historically been viewed as safer and of higher quality. It poses a big challenge to multinationals that are increasingly looking to China for growth.”

To be continued.

 

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is Professor Emeritus at the University of Asia and the Pacific, and a Visiting Professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

Don’t forget about the education crisis

OLLYY-FREEPIK

The State of the Nation Address (SONA) is a constitutional obligation and yearly tradition wherein the President reports on the status of the country and unveils the government’s agenda for the coming year. Like clockwork, on every fourth Monday of July, the President appears before a joint session of Congress to deliver an address.

As expected, many tune in to watch or listen to the proceedings. However, not all are looking and listening for the same things. For instance, before COVID-19, more people than would dare admit would tune in to watch the red carpet and the SONA “fashion show,” as if it were a celebrity gala of some sort. Perhaps even odder though are the ones that sit through it all just to count the number of times a president receives applause, then after, comment on how untimely the claps and how awkward the intervals were.

However, for those who work with legislation like policymakers, congressional staff, or maybe public policy nuts, they tune in to the SONA with a pen and notepad, ready to jot down legislative measures that the President proposes to Congress throughout his Address. This list of measures, often referred to as SONA priority bills, are those that the President is asking his allies in Congress to approve. And, more often than not, such a request carries great weight. At the very least, a SONA priority bill sends a clear message of the executive branch’s priorities.

In President Duterte’s 6th and final SONA, which he delivered last week, he asked Congress to pass 12 bills before his term ends next year. The SONA priority bills are: 1.) the passing of a unified system of separation, retirement, and pension for uniformed personnel; 2.) free legal assistance for police and soldiers; 3.) the Foreign Investments Act; 4.) the Public Service Act; 5.) the Retail and Trade Liberalization Act; 6.) the creation of a department for overseas Filipinos; 7.) the E-governance Act; 8.) the creation of the Philippine Center for Disease Control and Prevention; 9.) the creation of the Virology Institute of the Philippines; 10.) the creation of a department of disaster resilience; 11.) the creation of mandatory evacuation centers in provinces, cities, and municipalities; and, 12.) Bureau of Fire Protection modernization.

In many ways, the list of SONA priorities is a reflection of the issues and challenges the country now faces, as well as the Duterte administration’s ongoing campaigns. For instance, you will find several bills that deserve to be on the list because they respond to challenges and issues brought to the fore by the COVID-19 pandemic.

The three economic bills on the list are no doubt prioritized to help with the country’s economic recovery. You will also find a measure creating a Center for Disease Control and Prevention, as well as a bill to create a Virology Institute. These bills are clearly a response to the country’s overall lack of preparedness to handle pandemics such as the current one. The E-Governance Act bill was undoubtably prioritized because the government saw the need for its services to adapt to the demands of the “new normal.”

With the just 11 months left in the 18th Congress, legislators will be hard pressed to act on the bills identified during the SONA. Hence, it is understandable if the President did not want to add even just one to the list.

However, I’d like to argue that a measure that seeks to address the country’s looming education crisis is more deserving of a place on the priority list than a measure seeking free legal assistance for police and soldiers, especially if the underlying intent of the latter is only to tip the scales of justice in their favor in court, just as they have the scales of judgement outside of it.

Besides, the education crisis has been lurking even before the pandemic. In the Organization for Economic Co-operation and Development’s (OECD) 2018 Program for International Student Assessment (PISA), the Philippines ranked among the lowest in reading, math, and science.

When the pandemic hit, the situation only got worse, with the continuing lockdowns forcing many students to stop schooling entirely. At the same time, many private schools were also forced to close up due to the falling enrollment numbers.

During a recent virtual town hall discussion organized by the Stratbase ADR Institute, attorney Joseph Noel M. Estrada of the Coordinating Council of Private Educational Associations of the Philippines (COCOPEA) said that “Challenges in education have been exacerbated by the pandemic as more private schools close, many students and teachers migrate to the public school system, and many students fail to continue with their education because of economic difficulties.”

Mr. Estrada further stressed that the passage of important bills on education will help build on and strengthen the complementarity between the public and private sectors in education which is crucial in our country’s rehabilitation and recovery measures post-pandemic. Two such bills he identified were House Bill 9596 and Senate Bill 2272 which are seeking to stop a 150% increase in taxes for private schools, which, according to Mr. Estrada, “would certainly be a death sentence to many struggling private schools.”

Had this bill been added to the list of SONA priorities, then perhaps more schools would have the confidence to offer classes when the school year opens in mid-September. Regrettably, education didn’t make the cut.

Truly unfortunate, since, as Stratbase ADRi President Dindo Manhit said during his remarks at our virtual event, “People should feel that the government caters to their issues. Especially in times of extraordinary hardships brought about by the pandemic.”

 

Paco A. Pangalangan is the Executive Director of the Stratbase ADR Institute.

A discussion of NFTs as virtual assets

VECTORJUICE-FREEPIK

Play-to-Earn games have been gaining traction recently. With popular games like Axie Infinity and My Defi Pet, users are drawn to the unique selling proposition that one can earn money as they play.

In a nutshell, Play-to-Earn games involve the use of Non-Fungible Tokens (NFTs) which gamers can use to progress in the game. NFTs in essence are a type of intangible property which represent something of value. NFTs are non-fungible: it is something unique, as from its nature, it cannot be treated as an equivalent of any other unit. Obtaining NFTs will require spending real money, which will be converted into a cryptocurrency through the use of electronic instruments such as e-wallets. Players own their NFTs, and by fiat of such ownership, will have the ability to sell them for a price.

In Axie Infinity, players purchase creatures known as Axies which can be used to compete in battles to win. Conquering certain levels in the game will reward players with “Smooth Love Potions” (SLP); this can be used to breed Axies and can also be converted to real money. Axies are NFTs which can be bought and sold in the dedicated marketplace using Ethereum, a type of cryptocurrency. Since the transaction is based on cryptocurrency, the amount to be gained upon conversion will vary depending on the exchange rate at the time.

The aspect of being able to reasonably expect profits through such a system is increasingly becoming the subject of government interventions across multiple jurisdictions. In the Philippines, no government regulation has attempted to provide a categorical definition of NFTs. Nonetheless, the Securities and Exchange Commission (SEC) and Bangko Sentral ng Pilipinas (BSP) have recognized the emergence of such financial innovations and have been proposing and issuing rules to keep up with the times to ensure adequate regulation of the operations of these system/service providers.

For instance, the SEC had the occasion to define “tokens” as a “virtual currency that vests certain rights, including a digital representation of value that is intended to represent any assets or rights associated with such assets.”

This year, the BSP issued Circular No. 1108 which requires Virtual Asset Service Providers (VASPs) to secure a Certificate of Authority to operate such a service. Under the Circular, Virtual Asset (VA) refers to “any type of digital unit that can be digitally traded, or transferred, and can be used for payment or investment purposes. It is used as a medium of exchange or a form of digitally stored value created by agreement within the community of VA users.” Virtual Currency (VC) exchanges are also considered as VASP under the Circular. To clarify, VASPs are distinct from Electronic Money Issuers (EMIs) as the latter provides money transfer or remittance services using electronically stored money value system and similar digital financial services. EMIs are primarily governed by the BSP Manual of Regulation for Banks (MORB) and related issuances. Unlike in a Virtual Asset, Electronic Money is legal tender. In either case, prior approval by the Bangko Sentral is needed for an entity to operate as a VASP or EMI.

Notably, both definitions of a token and virtual asset respectively exclude “a digital representation of value issued by or on behalf of the publisher and used within an online game or game platform sold by the same publisher or offered on the same game platform” and “the payment of virtual goods and services within an online game (e.g., gaming tokens).” Whether NFTs obtained through Play-to-Earn games fall within such an exclusion remains to be seen, especially in view of the convertibility of the token into real currency and their potential use outside of gaming. In an SEC Advisory, some virtual currencies, based on the facts and circumstances surrounding their issuance, may even be considered as a security which requires the appropriate registration and/or license with the SEC.

In any event, users should be made aware of the limitations of tokens and VAs. The BSP has clarified that VAs are not issued nor guaranteed by any jurisdiction and do not have legal tender status. Because of price volatility, VC holders may incur significant losses when trading or investing in VCs. VCs (and by extension VAs) are not considered as deposits; hence, VC holders cannot claim deposit insurance from the Philippine Deposit Insurance Corporation. In contrast, real currency is fully backed by the government of a country, and is acceptable as payment for public and private debts. n

This article is for informational and educational purposes only. It is not offered and does not constitute legal advice or legal opinion.

 

Juan Miguel C. De La Cruz is an Associate of the Corporate and Special Projects Department (CSPD) of the Angara Abello Concepcion Regala & Cruz Law Offices or ACCRALAW.

jcdelacruz@accralaw.com

Let’s build up the Hidilyn pandemic

Beyond just her weightlifting skills, which she has certainly labored painstakingly for years to attain global leadership at, there are many reasons why Hidilyn Diaz should be admired and promoted to all our people, especially the young, as a model Filipino. “Amazing grace” is the description given by Rappler (in reference to the unsavory public listing of her as part of a conspiracy to “oust Duterte” by then presidential spokesman Salvador Panelo) to her extraordinary ability to rise beyond the petty. It is her strong faith that gives her strength, say some leaders of the Catholic hierarchy.

We must use her admirable qualities to inspire and uplift our children in the midst of an epidemic of egocentric, materialistic, hypocritical public personalities and truly undeserving leaders.

I never had a daughter, but Hidilyn is my idea of the ideal one. Her weighty burdens in her many years’ journey towards the Olympic gold have not hardened her. She strikes me as sensible and wholesome, possessed of a healthy ego that does not take itself seriously. I love her refreshing candor. When interviewer Karen Davila remarked that she is so unlike most girls who just like to watch Netflix, she interrupted to say that “nag-neNetflix din ako. (“Oh, I also do Netflix”). When asked what she first did after winning her gold medal, her answer, after some hesitation was “kumain” (I ate).

Her wholesomeness in the context of her many years of grim determination to be among the world’s best in her field has got to be a tribute to the parents who obviously raised her well. She has topped the world’s best in a field traditionally open only to men. And yet, she remains truly feminine. She strikes me as someone who could one day be the good wife and mother that she hopes to be.

She constantly expresses her gratitude to her training team and to all those who prayed for her and helped her earn the global prestige that she wished for our country.

It has not been easy for her. She comes from humble beginnings, with parents who were among the poor in her home town in Zamboanga. She came upon an opportunity to learn to lift weights from a friendly neighbor; and she focused on sharpening her skills in it to become among the best. This dogged determination to succeed without losing the right values is something worth emulating by our children.

Getting a formal education has been a struggle for Hidilyn; and in the midst of her global success, she continues to pursue it during what time she is able to grab within her heavy work schedule. She still aims to earn a “diploma.” The high value she puts on her education is something our children can learn from.

Our educational system has rated poorly in competitive international assessments in academic skills such as mathematics, reading, and science. We must at least ensure that when it comes to character building and values education, the Filipino turns out as well as anyone.

It will certainly help if we provide popular public models who carry desirable character traits such as those that Hidilyn possesses. We cannot limit our role models to physical beauty queens, entertainment celebrities, or, worse, notorious politicians.

Hidilyn Diaz has admitted that she hopes to be a role model for the youth who should learn to “dream high” and work hard to achieve their dreams. When she was rewarded by the Philippine Olympic Committee with P5 million (as provided by a law signed by President Benigno “PNoy” Aquino) as a silver medalist in an earlier Olympic competition, she invested it in a gym for training young athletes in weightlifting. She openly aspires to have future champions as her legacy.

Let us get Hidilyn’s story and persona more and more into our traditional and social media content and into our educational system. Today, it is possible to weave it into “modules” in online learning systems. It can be one of the best investments of what PNoy called “the peoples’ money.”

 

Teresa S. Abesamis is a former professor at the Asian Institute of Management and Fellow of the Development Academy of the Philippines.

tsabesamis0114@yahoo.com

Why EU is paying more for new COVID shots

REUTERS

BRUSSELS — The European Union (EU) has agreed to pay a premium on new orders of COVID-19 vaccines because it is requiring tougher terms to be met, European officials said, as the bloc tries to protect supplies after a rocky start to its vaccination campaign.

The higher price is less than the United States has agreed to pay in its latest order in July.

On Sunday, the Financial Times reported the EU has agreed to pay Pfizer and BioNTech 19.5 euros ($23.1) for each of their COVID-19 shots under a contract signed in May for up to 1.8 billion doses, up from the 15.5 euros per dose under two initial supply contracts for a total of 600 million vaccines.

The price for Moderna shots went up to $25.5 a dose, the newspaper said, referring to a 300 million vaccine deal, up from $22.6 in its initial deal for 160 million jabs.

EU lawmaker Tiziana Beghin, a member of Italy’s 5-star ruling party, said the EU was being ripped off. “It’s inexplicable,” she said.

Moderna’s price is still at the lowest end of the $25-$37 range indicated by the company last year, but Pfizer and BioNTech had previously said prices would be lower for bigger volume deals.

Others said there were good reasons to pay more and that circumstances had changed greatly from when initial deals were struck with drugmakers last year.

France’s European affairs minister Clement Beaune told French radio RFI on Monday the likely higher prices were still under negotiation and were the result of stricter clauses on variants, production and deliveries.

One European official familiar with negotiations with vaccine makers said the value of the drugmakers’ shots had risen since evidence had emerged of their efficacy and of the positive impact they had on helping the economy to recover from a pandemic-induced recession.

“Several factors played a role,” the official said, speaking on condition of anonymity.

BARGAINING POWER
All the vaccines used in Europe have been shown to have a beneficial impact, but those made by AstraZeneca and Johnson & Johnson, have faced restrictions on their use in the EU because of concerns they can in rare instances lead to blood clots.

Those two vaccine makers have also suffered supply problems, which in the case of AstraZeneca have led to legal challenges by the EU.

While the bargaining power of Pfizer/BioNTech and Moderna has increased, additional EU demands are likely to raise the costs of making and delivering vaccines.

A spokesman for Pfizer declined to comment on the European prices, but said the latest contract with the EU was different from the initial ones, including on matters concerning production and delivery.

Moderna did not respond to a request for comment.

The European Commission, which coordinates negotiations with vaccine makers together with EU governments’ representatives, declined to comment for this story, citing confidentiality clauses.

Earlier this year, lawmakers, media and some analysts criticized the bloc for paying too little for the early supplies of COVID-19 vaccines, saying that had contributed to initial delays in the vaccination drive.

“It’s easy to criticize the EU because it spends little and late or because it spends too much,” said Giovanna De Maio, non-resident fellow at the Brookings Institution, a US research group.

“Reality is much more complicated, and perhaps it is correct to give priority to access to vaccines rather than costs given the pace at which the Delta variant is spreading,” she added, referring to the more transmissible variant that was first detected in India.

On July 23, Washington bought an additional 200 million vaccines from Pfizer at a price of $24 a dose (20.1 euros), the company said, up from $19.5 the United States paid for its first 300 million shots.

Pfizer said the higher US prices reflected investment needed to produce, package and deliver new formulations of the vaccine, as well as extra costs in producing smaller pack sizes suited to “individual provider offices, including pediatricians.” 

MADE IN THE EU
When the EU agreed in May its third supply deal with Pfizer for up to 1.8 billion doses, the Commission said the new contract required the vaccines to be made in the EU and the essential components to be sourced from the region.

In its first supply deals, the EU had required that only vaccines were made in the EU, not their components.

Concentrating production in Europe can help guarantee supply now that production lines are well established and there is less need for leeway, but it is also likely to increase costs.

The EU Commission also said in its statement that under the new contract “from the start of the supply in 2022, the delivery to the EU is guaranteed,” whereas under the first contract Pfizer was only required to make its “best reasonable efforts” to ship pre-agreed volumes by set deadlines.

Pfizer has so far respected its commitments to the EU, and has delivered slightly more than initially planned in the first quarter of the year.

Another big change since the early contracts is the emergence of variants and concerns vaccines may not be effective against them.

EU officials said governments could refuse to buy shots that did not protect against variants, while companies will be expected to quickly adapt their vaccines, potentially at significant cost. — Reuters

Japan to hospitalize only most serious COVID-19 cases in surge

TOKYO — Japan will hospitalize only COVID-19 patients who are seriously ill and those at risk of becoming so while others isolate at home, officials said, as worries grew about a strained medical system amid a surge in Olympics host city Tokyo and elsewhere.

The country has seen a sharp increase in coronavirus cases, and is recording more than 10,000 daily new infections nationwide. Tokyo had a record high of 4,058 on Saturday.

Tokyo hospitals are already feeling the crunch, Hironori Sagara, director of Showa University Hospital, told Reuters.

“There are those being rejected repeatedly for admission,” he said in an interview. “In the midst of excitement over the Olympics, the situation for medical personnel is very severe.”

Chief Cabinet Secretary Katsunobu Kato told reporters fewer elderly people, most of whom are already vaccinated, are getting infected.

“On the other hand, infections of younger people are increasing and people in their 40s and 50s with severe symptoms are rising,” he said. “With people also being admitted to hospital with heat stroke, some people are not able to immediately get admitted and are recovering at home.”

Prime Minister Yoshihide Suga, who announced the change on Monday, said the government would ensure people isolating at home can be hospitalized if necessary. Previous policy had focused on hospitalizing a broader category of patients.

But some worry the shift could lead to more deaths.

“They call it in-home treatment but it’s actually in-home abandonment,” opposition Constitutional Democratic Party of Japan leader Yukio Edano was quoted as saying by NHK public TV.

Japan on Monday expanded its state of emergency to include three prefectures near Tokyo and the western prefecture of Osaka. An existing emergency in Tokyo — its fourth since the pandemic began — and Okinawa is now set to last through Aug. 31.

VACCINATIONS LAG, PUBLIC WEARY
The country has avoided a devastating outbreak of the virus, with about 932,000 total cases and just over 15,000 deaths as of Sunday.

But it is now struggling to contain the highly transmissible Delta variant even as the public grows weary of mostly voluntary limits on their activities and the vaccination rollout lags.

Just under 30% of the population is fully vaccinated, including three-quarters of those 65 and over.

Nearly 70% of hospital beds for seriously ill COVID-19 patients were filled as of Sunday, Tokyo data showed. 

Showa University Hospital’s Sagara said there was a difference between theoretically available beds and beds that could accept patients immediately.

“I think the latter is close to zero,” he said, adding that if infections keep rising, hospitals will have to limit surgery and other non-COVID-19 treatments.

“We must avoid a situation in which the Olympics was held but the medical system collapsed,” he said. “At present, infections are spreading quite a lot and if they spike further, (the Olympics) will be considered a failure.”

According to health ministry guidelines, seriously ill patients are defined as those admitted to intensive care units (ICUs) or needing artificial respirators.

The Tokyo Shimbun newspaper said 12,000 patients were isolating at home, a 12-fold increase in the past month.

Suga and Olympics organizers say there is no link between the July 23-Aug. 8 Summer Games and the sharp increase in cases.

Medical experts, however, have said holding the Olympics sent a confusing message about the need to stay home, contributing to the rise.

Unlike the voluntary restrictions and low vaccination rates elsewhere in Japan, more than 80% of the people in the Olympic village in Tokyo for athletes and coaches are vaccinated, testing is compulsory and movement is curtailed.

Organizers on Tuesday announced 18 new Games-related COVID-19 cases, bringing the total since July 1 to 294. — Reuters

China’s Wuhan to test all 12 million residents after Delta variant found

BEIJING — China’s Wuhan city will test all of its 12 million residents for the coronavirus, an official said on Tuesday, after the place where the virus emerged in late 2019 confirmed its first domestic cases of the highly transmissible Delta variant.

Wuhan, which gave the world its first glimpses of lockdowns and mass testing, had reported no local coronavirus cases since mid-May last year but on Monday, authorities confirmed three new cases of the Delta variant.

“To ensure that everyone in the city is safe, city-wide nucleic acid testing will be quickly launched for all people to fully screen out positive results and asymptomatic infections,” Li Qiang, an official in the city, the capital of central Hubei province, told a news briefing.

The new cases in Wuhan, along with infections in the nearby cities of Jingzhou and Huanggang since Saturday, were linked to cases found in Huaian city in Jiangsu province, said Li Yang, vice director of Hubei’s provincial disease control center.

The outbreak in Jiangsu is believed to have begun in the provincial capital of Nanjing, with the Delta variant mostly likely introduced on a flight from Russia, officials have said.

Since then, numerous cities in southern China and a few in the north including Beijing have reported infections. The tally of locally transmitted cases in China since July 20, when the first Nanjing infections were found, stood at 414 as of Monday.

But it was not immediately clear if all those cases were of the Delta variant, or if they were all linked to Nanjing, as some authorities have not disclosed conclusive results of their virus-tracing efforts.

The Delta variant poses new risks for the world’s second-biggest economy as it spreads from the coast to inland cities. Authorities in numerous cities have launched mass testing to identify and isolate carriers.

China reported on Tuesday 90 new confirmed cases had been recorded the previous day compared with 98 on Sunday, according to the National Health Commission (NHC).

Of the new confirmed patients, 61 were locally transmitted, the health authority said.

A total of 45 patients with symptoms were reported in Jiangsu, with five in Nanjing and 40 in Yangzhou city, the provincial government said.

Six domestically transmitted cases were also detected in Hunan province and three in Hubei province, NHC data showed.

The three Hubei cases were all in Wuhan.

Henan and Yunnan province reported two locally confirmed patients each, while Beijing city, Shanghai city and Fujian province respectively detected one local case.

As of Aug. 2, mainland China had recorded 93,193 confirmed cases, with the cumulative death toll unchanged at 4,636. — Reuters

Residential units, lifetime flying miles among incentives awarded to Olympic silver medalist Nesthy Petecio

Sena Irie of Japan celebrates after winning her fight against Nesthy Petecio of the Philippines in Tokyo, Japan, Tuesday. REUTERS/Ueslei Marcelino
Sena Irie of Japan celebrates after winning her fight against Nesthy Petecio of the Philippines in Tokyo, Japan, Tuesday. REUTERS/Ueslei Marcelino

Silver medalist Nesthy A. Petecio, who went up against Japanese opponent Sena Irie in the women’s featherweight final bout, is guaranteed P5 million pesos for her 2021 Tokyo Olympics stint, per Republic Act No. 10699.  

She is also set to receive other incentives, including a condominium in Davao Park District from Megaworld Corporation chairman Andrew L. Tan, and lifetime Mabuhay Miles from Philippine Airlines.  

“Your silver win showed the heart of a strong Filipina to the world!,” said PAL in a statement on Tuesday.  

Here are the details of her windfall thus far:  

  • Philippine Airlines – 60,000 Mabuhay Miles per year for life   
  • AirAsia Philippines – 5 years unlimited flights. All 14 Filipino athletes who competed in the 2020 Tokyo Olympics additionally get three free round-trip tickets to any AirAsia domestic destination.  
  • Megaworld Corporation – a P10 million residential condominium unit by Suntrust Properties, Inc., a Megaworld subsidiary, inside its Davao Park District township  
  • Ovialand, Inc. – a Caliya house and lot unit worth P2.5 million in Candelaria, Quezon   
  • Philippine Sports Foundation – P5 million  
  • MVP Sports Foundation, Inc. – P5 million  
  • San Miguel Foundation – P5 million  
  • Deputy speaker representative Michael “Mikee” L. Romero – P2 million  
  • Baguio City – P300,000, care of the city’s athletes’ incentives  
  • Phoenix Petroleum Philippines, Inc., through its Siklab Atleta Pilipinas Foundation – P3 million  

 Ms. Petecio is the first Filipino boxer to earn a place on the Olympics podium since Mansueto “Onyok” Velasco, Jr. in the 1996 Atlanta Games.  

 Her journey to a silver finish in the women’s featherweight (54–57 kg) included a unanimous decision against Colombian boxer Yeni Marcela A. Castaneda in the quarterfinals, and a win over European boxing champion Irma Testa of Italy via split decision in the semifinal bout.   

Weightlifter Hidilyn F. Diaz received similar incentives after she secured the Philippines’ first-ever Olympic gold medal on July 27. — Patricia B. Mirasol  

GCash named ‘Outstanding Partner’ at the BSP stakeholders appreciation ceremony 2021

GCash, the undisputed no. 1 mobile wallet app in the Philippines, was named an “Outstanding Partner” by the Bangko Sentral ng Pilipinas (BSP) at this year’s Stakeholders Appreciation Ceremony for its innovative financial solutions to grant financial access to all Filipinos, especially the unbanked and underbanked segments.

“We are very honored to be named as one of the Outstanding Partners by the Bangko Sentral ng Pilipinas. At GCash, we have been working very hard to provide more relevant financial services and products to build a more inclusive financial ecosystem,” said Martha Sazon, GCash president and chief executive officer. “This recognition is an affirmation of our hard work to achieve finance for all.”

For this year, the annual BSP Stakeholders Appreciation Ceremony was done virtually.  With the theme “Pagpugay at Pagkilala sa Gitna ng Hamon ng Pandemya,” the awarding ceremony acknowledged the outstanding partners who have supported BSP’s various initiatives and advocacy programs especially during the pandemic.

“It has been more than a year since the pandemic began, and with cautious optimism, we can say that the worst is over. Though our economy received big blows because of the pandemic, we started green shoots of recovery as early as the third quarter of last year. This is because of a whole nation approach that we, which includes our partners, employed,” said BSP Governor Benjamin Diokno.

In support of BSP’s recovery efforts, including its vision of financial inclusion for Filipinos, GCash has launched a host of products and services at the height of the pandemic. On the app, users can enjoy GSave, an online savings bank; GInvest, an easy investment feature; GInsure for insurance for medical emergencies such as dengue, COVID-19, and accidents; GCredit, a personal credit line with up to P30,000 credit line and up to 3% prorated interest rate. GCash features GLife, the e-commerce feature on the GCash app  that allows users to shop exclusive deals from 35 brands across retail, food, gaming, entertainment, and transport.

To help mobilize the economy, GCash partnered with businesses and rolled out GCash QR on Demand. On the app, users can use the QR Code in place of their mobile number to send or receive money, whether for personal use or small businesses. These business partnerships include market vendors and customers, helping them have a safe and convenient payment method. GCash has also enabled 15,000 jeepney drivers to receive alternative income sources through the app and provides PUJ drivers and commuters with a safe and cashless transaction option amid the pandemic via P2P QR Codes on the GCash app.

Recently, GCash partnered with the BSP in launching a webinar series, which kicked off with the webinar entitled, “One with the Nation: Forging Public-Private Partnerships Towards Digital Inclusion in the Philippines.” The online event featured distinguished speakers from the public  and private sectors led by  Diokno, Sazon, Makati Mayor Abby Binay, Congressman Jose Enrirque Garcia, DSWD Director Wayne Belizar, BSP official Atty. Leah Irao, and Bureau of Treasury of the Philippines OIC Deputy Treasurer Ed Marino.

With its numerous programs and initiatives to promote digital transformation among Filipinos during the pandemic, the e-wallet app has grown its user base to more than 40 million, doubling the figure from 20 million users in January 2020.

For more information, visit www.gcash.com.

Tencent tumbles after China media calls online gaming “spiritual opium”

SHANGHAI, Aug 3 (Reuters) – Tencent Holdings Ltd shares were on track to fall by their most in a decade on Tuesday after a Chinese state media outlet branded online video games “spiritual opium“, stoking concern that the sector may be next in regulators’ crosshairs.

China‘s biggest social media and video game firm saw its stock tumble more than 10% in morning trade, wiping almost $60 billion from its market capitalisation.

Shares of rival NetEase Inc slumped as much as 15.7%, while those of game developer XD Inc and mobile gaming company GMGE Technology Group Ltd also plunged.

State-run Economic Information Daily in an article on Tuesday said many teenagers were addicted to online video games and called for more curbs on the industry. The outlet is affiliated with China‘s biggest state-run news agency, Xinhua.

The newspaper repeatedly cited Tencent‘s flagship game, “Honor of Kings”, which it said was the most popular online game among students who sometimes played for up to eight hours a day.

“No industry, no sport, can be allowed to develop in a way that will destroy a generation,” the newspaper said, likening online video games to “electronic drugs”.

Tencent did not respond to a Reuters request for comment.

The government has vowed to strengthen rules around online gaming and education to protect child wellbeing. Last month, it banned for-profit tutoring in core school subjects, a move that threatens to decimate China‘s $120 billion private tutoring sector.

In online video games, authorities have sought to limit hours that teenagers can play, and companies including Tencent have implemented anti-addiction systems that they say cap young users’ game time.

The Economic Information Daily, citing legal experts and professors, said current curbs were not able to keep up with the sector’s development to prevent youth addiction, and that there should be more “mandatory means” to increase the social responsibility of video game companies.

Tencent has already been under pressure alongside major technology peers by increased regulatory action on online platforms. Last month, it was barred from exclusive music copyright agreements and fined for unfair market practices. – Reuters

ADB, Citi, HSBC, Prudential hatch plan for Asian coal-fired closures -sources

LONDON/MELBOURNE, Aug 3 (Reuters) – Financial firms including British insurer Prudential, lenders Citi and HSBC and BlackRock Real Assets are devising plans to speed the closure of Asia’s coal–fired power plants in order to lower the biggest source of carbon emissions, five people with knowledge of the initiative said.

The novel proposal, which is being driven by the Asian Development Bank, offers a potentially workable model and early talks with Asian governments and multilateral banks are promising, the sources told Reuters.

The group plans to create public-private partnerships to buy out the plants and wind them down within 15 years, far sooner than their usual life, giving workers time to retire or find new jobs and allowing countries to shift to renewable energy sources.

It aims to have a model ready for the COP26 climate conference which is being held in Glasgow, Scotland in November.

“The private sector has great ideas on how to address climate change and we are bridging the gap between them and the official-sector actors,” ADB Vice President Ahmed M. Saeed said.

The initiative comes as commercial and development banks, under pressure from large investors, pull back from financing new power plants in order to meet climate targets.

Saeed said that a first purchase under the proposed scheme, which will comprise a mix of equity, debt and concessional finance, could come as soon as next year.

“If you can come up with an orderly way to replace those plants sooner and retire them sooner, but not overnight, that opens up a more predictable, massively bigger space for renewables,” Donald Kanak, chairman of Prudential‘s Insurance Growth Markets, told Reuters.

Coal–fired power accounts for about a fifth of the world’s greenhouse gas emissions, making it the biggest polluter.

The proposed mechanism entails raising low cost, blended finance which would be used for a carbon reduction facility, while a separate facility would fund renewable incentives.

HSBC declined to comment on the plan.

Finding a way for developing nations in Asia, which has the world’s newest fleet of coal plants and more under construction, to make the most of the billions already spent and switch to renewables has proved a major challenge.

The International Energy Agency expects global coal demand to rise 4.5% in 2021, with Asia making up 80% of that growth.

Meanwhile, the International Panel on Climate Change (IPCC) is calling for a drop in coal–fired electricity from 38% to 9% of global generation by 2030 and to 0.6% by 2050.

 

MAKING IT VIABLE

The proposed carbon reduction facility would buy and operate coal–fired power plants, at a lower cost of capital than is available to commercial plants, allowing them to run at a wider margin but for less time in order to generate similar returns.

The cash flow would repay debt and investors.

The other facility would be used to jump start investments in renewables and storage to take over the energy load from the plants as it grows, attracting finance on its own.

The model is already familiar to infrastructure investors who rely on blended finance in so-called public-private deals, backed by government-financed institutions.

In this case, development banks would take the biggest risk by agreeing to take first loss as holders of junior debt as well as accepting a lower return, according to the proposal.

“To make this viable on more than one or two plants, you’ve got to get private investors,” Michael Paulus, head of Citi‘s Asia-Pacific public sector group, who is involved in the initiative, told Reuters.

“There are some who are interested but they are not going to do it for free. They may not need a normal return of 10-12%, they may do it for less. But they are not going to accept 1 or 2%. We are trying to figure out some way to make this work.”

Citi declined further comment.

The framework has already been presented to ASEAN finance ministers, the European Commission and European development officials, Kanak, who co-chairs the ASEAN Hub of the Sustainable Development Investment Partnership, said.

Details still to be finalised include ways to encourage coal plant owners to sell, what to do with the plants once they are retired, any rehabilitation requirements, and what role if any carbon credits may play.

The firms aim to attract finance and other commitments at COP26, when governments will be asked to commit to more ambitious emissions targets and increase financing for countries most vulnerable to climate change.

U.S. President Joe Biden’s administration has re-entered the Paris climate accord and is pushing for ambitious reductions of carbon emissions, while in July, U.S. Treasury Secretary Janet Yellen told the heads of major development banks, including ADB and the World Bank, to devise plans to mobilize more capital to fight climate change and support emission cuts.

A Treasury official told Reuters that the ADB‘s plans for coal plant retirement are among the types of projects that Yellen wants banks to pursue, adding the administration is “interested in accelerating coal transitions” to tackle the climate crisis.

 

ASIA STEPS

As part of the group’s proposal, the ADB has allocated around $1.7 million for feasibility studies covering Indonesia, Philippines and Vietnam, to estimate the costs of early closure, which assets could be acquired, and engage with governments and other stakeholders.

“We would like to do the first (coal plant) acquisition in 2022,” ADB‘s Saeed told Reuters, adding the mechanism could be scaled up and used as a template for other regions, if successful. It is already in discussions about extending this work to other countries in Asia, he added.

To retire 50% of a country’s capacity early at $1 million-$1.8 million per megawatt suggests Indonesia would require a total facility of roughly $16-$29 billion, while Philippines would be about $5-$9 billion and Vietnam around $9-$17 billion, according to estimates by Prudential‘s Kanak.

One challenge that needs to be tackled is the potential risk of moral hazard, said Nick Robins, a London School of Economics sustainable finance professor.

“There’s a longstanding principle that the polluter should pay. We need to make absolutely sure that we are not paying the polluter, but rather paying for accelerated transition,” he said. – Reuters

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