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Pandemic threatens Asia-Pacific’s progress  on global development goals

PHILSTAR

MANILA — The coronavirus pandemic may have pushed as many as 80 million people in developing Asia into extreme poverty last year, threatening to derail progress on global goals to tackle poverty and hunger by 2030, the Asian Development Bank (ADB) said on Tuesday.

Developing Asia’s extreme poverty rate — or the proportion of its people living on less than $1.90 a day — would have fallen to 2.6% in 2020 from 5.2% in 2017 without coronavirus disease 2019 (COVID-19), but the crisis likely pushed last year’s projected rate higher by about 2 percentage points, ADB simulations showed.

The figure could even be higher considering the inequalities in areas like health, education and work disruptions that have deepened as the COVID-19 crisis disrupted mobility and stalled economic activity, the ADB said in a flagship report on the region.

“As the socioeconomic impacts of responses to the virus continue to unfold, people already struggling to make ends meet are at risk of tipping over into a life of poverty,” the Manila-based lender said.

Among reporting economies in Asia and the Pacific, which refers to the 46 developing and three developed ADB member economies, only about one in four posted economic growth last year, it said.

As unemployment rates increased the region also lost about 8% of work hours, affecting poorer households and workers in the informal sector.

The economic damage brought about by the pandemic had further intensified the challenge of meeting global development goals adopted by the United Nations in 2015.

U.N. members unanimously passed 17 Sustainable Development Goals, known as SDGs, in 2015, creating a blueprint of ambitious tasks from ending hunger and gender inequality to expanding access to education and health care.

The goals had a deadline of 2030.

“Asia and the Pacific has made impressive strides, but COVID-19 has revealed social and economic fault lines that may weaken the region’s sustainable and inclusive development,” ADB Chief Economist Yasuyuki Sawada said in a separate statement. — Reuters

BDO Foundation receives Enterprise Asia award for 5th straight year

For the fifth consecutive year, BDO Foundation was recognized by Enterprise Asia at the prestigious Asia Responsible Enterprise Awards.

BDO Foundation’s corporate citizenship initiatives were recognized once again as among the most outstanding in Asia. For its efforts to help control the spread of the coronavirus, support frontliners and aid underserved sectors of society vulnerable to the effects of the pandemic, the corporate social responsibility arm of BDO Unibank was recently awarded by international non-governmental organization Enterprise Asia.

The award was officially conferred at the Asia Responsible Enterprise Awards (AREA) 2021, a virtual event witnessed by audiences across the continent. BDO Foundation has received recognition from Enterprise Asia for five consecutive years now.

Out of the more than 200 nominees Enterprise Asia received from 16 countries this year, BDO Foundation’s entry was among 69 honored at AREA. The foundation was one of only five Philippine organizations awarded as other winners were based in Cambodia, India, Indonesia, Malaysia, Singapore, Taiwan, Thailand and Vietnam.

The award-giving body acknowledged the foundation for its pooled testing program, relief assistance forfamilies affected by the health crisis and COVID-19 initiatives designed to support health workers.

As part of its COVID-19 response, BDO Foundation funded the pilot implementation of pooled testing in the Philippines. The mass testing intervention—considered a game-changer in efforts to curb the transmission of the virus—was carried out in Makati, Cebu and Mandaluyong for 18,000 market vendors, public utility drivers and medical frontliners.

The foundation also embarked on a donation drive, donated 10,000 test kits to 10 hospitals, distributed 8,000 food packs in disadvantaged communities on lockdown and supported the donation of 1,900 hygiene kits to repatriated overseas Filipino workers. It supported the government’s efforts to facilitate the movement of frontliners during quarantine and to accelerate the distribution of financial assistance to beneficiaries of the Social Amelioration Program. Further, the foundation facilitated the donation of 200,000 doses of AstraZeneca vaccines to the government.

“Guided by BDO Unibank’s ‘We find ways’ philosophy, BDO Foundation has made significant strides to promote the health and well-being of Filipinos,” BDO Foundation president Mario A. Deriquito said as he accepted the prestigious award. “Moving forward, we will continue to help underserved sectors of society grappling with the pandemic. We will find ways to help communities recover from COVID-19, mindful of our commitment to sustainable development and nation-building.”

Now on its tenth year, AREA honors corporations in Asia that promote sustainable and socially responsible business practices. The awards program is organized by Enterprise Asia, an NGO that recognizes responsible entrepreneurship in the areas of green leadership, investment in people, health promotion, social empowerment, corporate governance, circular economy leadership and responsible business leadership.

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Social entrepreneurs fight to make gig work fairer, greener

DURBAN – When Londoner Rich Mason signed up as a bicycle food delivery rider in 2017, he found the long hours, poor pay and lack of communication from management “jaw-dropping” – so he started his own delivery app instead.

One of his proudest moments was in June this year when his phone pinged with the first order on his Wings platform, which he says pays bicycle couriers above minimum wage, is an eco-friendly alternative to motorbikes and supports family-run restaurants.

“We wanted to create a model that is good for riders, good for society and good for the environment,” said Mason, 32, adding that he wanted to humanize the gig economy into a model that is worker-focused.

“Our brand is built on community,” he told the Thomson Reuters Foundation in a video call, adding that Wings also partners with local charities to deliver food to people in need.

The gig economy – where people pick up work in a flexible manner – boomed during COVID-19 lockdowns, as people around the world suddenly needed goods and food delivered to their homes and millions of newly jobless were looking for work.

By 2020, there were more than 777 digital labour platforms – from food delivery to web design – around the world, up from about 140 a decade earlier, according to the International Labour Organization (ILO).

But many people drawn to gig work for its flexibility have reported being exploited by companies paying low wages, and offering weak insurance policies and no sick leave while encouraging long hours.

Now social enterprises like Wings are trying to rejig the gig economy model by offering tech-driven, on-demand services that prioritize workers’ rights and ethical supply chains.

“It is always exciting to see communities taking ownership of digital tools for work and production in a way that is fair and inclusive,” said Kelle Howson, a researcher at Fairwork, a gig economy research project at the Oxford Internet Institute.

PLANET AND PEOPLE
At the large companies that dominate the gig platform sphere, most delivery drivers are classified as “partners”, not employees, meaning they have flexible work hours but few to no benefits, such as healthcare or paid leave.

But some businesses are using elements of the gig economy – like reliance on tech, employment flexibility and direct-to-consumer orders – to create both profit and social change.

In 2014, Colombian entrepreneur Diego Benitez launched SiembraViva, an e-commerce platform that connects rural smallholder farmers with consumers while helping the farmers transition to organic produce through training and technical support.

The platform uses a WhatsApp chatbot to gather planting information from farmers to determine their ideal harvesting schedules based on customer demand, reducing waste and guaranteeing an income for the farmers.

“We work to make the fruit and veg supply chains sustainable, inclusive and efficient,” said the 40-year-old former banker, who hopes to expand into other countries in South America in the coming years.

Similar startups have sprung up around the world from Namibia to the United States, utilizing technology and direct-to-consumer models to help small-scale, organic farmers hold their own against bigger grocery stores.

A core component of the gig economy involves door-to-door deliveries and Spanish courier company Koiki realized they could boost eco-friendly job opportunities for people at risk of social exclusion, like migrants or homeless people.

Koiki provides the technology, training and parcels for delivery people who are hired by partner charities or organizations, said marketing director Patricia De Francisco, adding that all parcels are delivered on foot or on bike to reduce the company’s carbon emissions.

Many of Koiki’s 150 couriers have physical or mental disabilities and they work out of delivery centers in their own neighborhoods so that the routes are familiar to them, said De Francisco.

“They were the heroes of the pandemic, the only ones on the roads delivering medicine and food to people in need,” she said, adding that all workers are on fixed or flexible contracts aligned with the minimum wage.

“We realise we have to take care of the planet and people if we want to be here longer,” said De Francisco.

In East Africa, Kenya-based Digital Lions became the world’s first Fairtrade verified digital agency, highlighting the enterprise’s commitment to fair pay and environmental protection using solar power and emissions offsetting.

The company has trained 300 members of the largely pastoralist community on the shores of Lake Turkana in business and tech skills, helping them enter the international market as web designers, animators and more.

“We can create jobs in remote areas, empower and educate women and deliver quality service, that’s very hard to beat,” said co-founder Jan Veddeler.

Major gig platforms are beginning to take note of smaller players in the sector, with some incorporating their social impact goals into their own model.

In June European gig companies Delivery Hero, Bolt, Glovo, and Wolt announced the European Purpose Project – an online consultation inviting individuals to help draw up an inclusive gig economy code of conduct.

In India, businesses working with temporary staff like garment and construction workers have begun turning to LabourNet, a training and employment mediator for gig workers that has helped improve work contracts and social security benefits.

So far they have helped 8,000 people with the aim of reaching 15,000 in the coming year, said founder Gayathri Vasudevan.

Bigger corporates have also used their capital to fund ethical gig platforms – like Robinhood – launched by Thailand’s Siam Commercial Bank last year to help small food businesses that had taken a hit during lockdowns.

Launched as part of the bank’s corporate social responsibility (CSR) initiative, the app does not charge merchants a fee for listing on the platform, and has drawn 150,000 small food vendors and more than 2 million subscribers.

‘READY FOR ETHICAL ALTERNATIVES’
Co-operatives and enterprises like Wings and SiembraViva say consumer demand and decision making is a huge factor in rethinking the gig economy model.

Customers are getting more discerning about how online services use their money and their impact on communities and the environment, said Mason at Wings.

“People are ready for ethical alternatives … I hope we will have built up a loyalty in our community that will come through for us and stand with us if an Uber Eats tries to kill us off in a year or two,” he said.

But customer loyalty alone is not enough, said Howson, the gig economy expert.

“To enable (these) enterprises to succeed, we need changes in wider commercial, tax, supply-chain and labour policy settings … (regulation) should favour companies providing maximum social and economic benefits to local communities,” she said over email.

Social entrepreneurs like Benitez agree that the gig economy is not going anywhere, but that using elements of the gig model for good would make it both more sustainable and profitable.

“Success is not just about money. We can make money and capture carbon and create equitable supply chains for farmers … we can do it all, so that the next generation lives in a better place than we do now,” he said. — Thomson Reuters Foundation

Evergrande wooed retail investors with Gucci bags, Dyson appliances

SHANGHAI – Lured by the promise of yields approaching 12%, gifts such as Dyson air purifiers and Gucci bags, and the guarantee of China’s top-selling developer, tens of thousands of investors bought wealth management products through China Evergrande Group.

Now, many fear they may never get their investments back after the cash-strapped property developer recently stopped repaying some investors and set off global alarm bells over its massive debt.

Some have been protesting at Evergrande offices, refusing to accept the company’s plan to provide payment with discounted apartments, offices, stores and parking units, which it began to implement on Saturday.

“I bought from the property managers after seeing the ad in the elevator, as I trusted Evergrande for being a Fortune Global 500 company,” said the owner of an Evergrande property in the conglomerate’s home province of Guangdong surnamed Du.

“It’s immoral of Evergrande not to pay my hard-earned money back,” said the investor, who had put 650,000 yuan ($100,533) into Evergrande wealth management products (WMPs) last year at an interest rate of more than 7%.

More than 80,000 people – including employees, their families and friends as well as owners of Evergrande properties – bought WMPs that raised more than 100 billion yuan in the past five years, said a sales manager of Evergrande Wealth, launched in 2016 as a peer-to-peer (P2) online lending platform that originally was used to fund its property projects.

Some 40 billion yuan of the investments are outstanding, said the person, declining to be named as they were not authorized to speak with the media.

China Evergrande did not respond to a request for comment on Tuesday, which was a public holiday in China.

With more than $300 billion in debt, Evergrande’s liquidity crisis rattled global markets this week. The company has vowed to repay WMP investors.

CHRISTMAS PROMOTION

China’s years-long effort to deleverage its economy has pushed companies to resort to off-balance sheet investments in search of funding.

After Beijing further capped debt levels of property developers last year, the most indebted players like Evergrande felt even more pressure to find new sources of capital to ease mounting liquidity stress, turning to employees, suppliers and clients for cash through commercial paper, trust and wealth management products.

Evergrande Wealth started to sell WMPs to individuals in 2019 after a regulatory crackdown led to a collapse of the P2P lending sector, said the sales manager and another Evergrande employee who bought the WMPs.

To attract investors, the sales manager offered gifts such as Dyson air purifiers and Gucci handbags to each person who bought more than 3 million yuan of WMPs during a Christmas promotion last year.

A product leaflet provided by the sales manager seen by Reuters showed the WMPs are categorised as fixed-income products suitable for “conservative investors seeking steady returns”.

‘DE-FACTO EVERGRANDE PRODUCT’

In two products sold last November, a construction company in Qingdao was looking to raise up to 10 million yuan with annualised yield of 7% in one and 20 million yuan with yields ranging from 7.8% to 9.5%, depending on the investment size, in another. Minimum investments were 100,000 yuan and 300,000 yuan, respectively.

Evergrande also usually offers additional yield up to 1.8% to certain investors, which can push returns to above 11% for a 12-month investment, said the sales manager.

Proceeds were to be used for Qingdao Lvye International Construction Co’s working capital, the documents showed. The firm could not be reached for comment during a public holiday.

Repayment would either come from the issuer’s income or from Evergrande Internet Information Service (Shenzhen) Co, a subsidiary that runs Evergrande Wealth and promises to cover the principal and interest if an issuer fails to repay, the prospectus said.

The sales manager said the Qingdao company was working on Evergrande projects and would use the payment from Evergrande upon completion to repay investors.

“It’s a de-facto Evergrande product,” the person said.

Other highly leveraged Chinese conglomerates including HNA Group, which declared bankruptcy early this year, and China Baoneng have used similar products.

In a petition to various government bodies, a group of WMP investors in Guangdong accused Evergrande of inappropriately using money that should have gone to the issuers to fund its own projects, and not sufficiently disclosing the risks.

They also complained that they were misled by the stature of its chairman, Hui Ka-yan, noting that he was seated prominently during a 2019 celebration of the 70th anniversary of the founding of the People’s Republic of China.

“The investors trusted Evergrande and bought Evergrande’s WMPs out of our love for and faith in the Party and government,” they wrote. — Reuters

McDonald’s Happy Meal toys to go green globally by 2025

McDonald’s Corp said on Tuesday it will drastically cut the use of plastic in the more than 1 billion children’s toys it sells globally each year by the end of 2025.

The change involves swapping out a plastic figurine of Batman, for example, for one made with a dozen cardboard pieces that kids can put together themselves.

More toys will also be made from recycled or plant-based plastics, McDonald’s said. The changes will allow the Chicago-based company to cut its use of virgin fossil fuel-based plastic for Happy Meals by 90% compared with 2018.

McDonald’s is one of many restaurant chains aiming to reduce environmental harm from packaging and other products.

Burger King, a unit of Restaurant Brands International Inc , said in 2019 that it would stop giving out free plastic toys and that customers could return existing ones to be melted down and used as trays and other items.

Stephanie Feldstein, population and sustainability director at the Center for Biological Diversity, said in a statement that if McDonald’s really wanted to be more sustainable it should reduce the amount of beef it serves and “stop nibbling around the edges of sustainability.”

McDonald’s, which started selling Happy Meals in 1979, shifted to more sustainable toys in the UK, Ireland and France in 2018.

Some similar toys will soon make their way to the more than 100 other countries where Happy Meals are sold.

In the United States, McDonald’s is already using some sustainable toys, including books and Pokemon collectible cards.

More such toys will hit the U.S. market in January, said Amy Murray, vice president of global marketing enablement. The revamped Happy Meals will not cost franchisees more money, she said. — Reuters

Celebrity mayor eyes Philippine presidency, challenging Duterte

Manila Mayor Francisco "Isko" Moreno Domagoso / Photo by Edd Gumban, Philippine Star

The movie star turned mayor of Manila declared his candidacy for the Philippine presidency in next year’s elections, posing the biggest challenge to President Rodrigo Duterte’s plans to extend his hold on power.

Manila Mayor Francisco “Isko” Moreno Domagoso, 46, said on Wednesday he will soon unveil his platform, but pledged to expand his pandemic response and projects for the poor in the capital on a national level. He also said he will appoint officials outside his circle and encourage millennials to join a “government of national reconciliation.”

“The road to recovery will be hard, the journey long, the challenges complex,” Moreno said in a speech declaring his presidential bid. “There is no magic wand that will make our problems go away, only hard work will.”

Moreno has picked cardiologist Willie Ong as a running mate, his political strategist Lito Banayo said in an earlier interview with ABS-CBN News Channel.

The Manila mayor’s entrance heats up a crowded presidential race as he is the nearest rival to Duterte’s daughter, Sara, in a presidential preference survey carried out in June. While Duterte’s daughter has since said she will no longer seek the presidency in next year’s elections, her father accepted his party’s vice-presidential nomination with his aide-turned-senator Christopher “Bong” Go as a potential presidential candidate.

Moreno was a garbage collector before becoming a movie teen star in the 1990s. He later entered Manila politics as a city councilor and eventually became its vice-mayor. Rivals have often tried to use Moreno’s sexy photos from his showbiz career to cast doubt on his character, but Moreno has been candid about his past and often talks about how his impoverished childhood in Manila gives him perspective in governing the city.

In a sign of increasing rivalry, Duterte in August mocked a mayor who has “bikini” photos, without naming Moreno. Duterte himself appointed the former movie star as the social welfare undersecretary in 2018 before Moreno resigned a year later to seek the top post in Manila, which he won.

Moreno is now the third politician to confirm joining next year’s presidential race. Aside from him, boxer-turned-senator Manny Pacquiao, who is from the same ruling party as Duterte, launched his bid over the weekend, while Senator Panfilo Lacson declared his run earlier this month.

The son of late dictator Ferdinand Marcos has said he’s eyeing a national post in the 2022 elections. — Bloomberg

US to donate an additional 500 million COVID-19 vaccines

Handout

WASHINGTON – The United States plans to donate an additional 500 million COVID-19 vaccines made by Pfizer Inc and BioNTech SE to nations around the world, lifting the total the country is sharing to more than 1 billion doses, according to a source familiar with the plans.

President Joe Biden is hosting a virtual summit on COVID-19 on Wednesday and is likely to announce the new pledge then.

Earlier on Tuesday, Biden told the United Nations General Assembly that the United States had put more than $15 billion toward the global response to COVID-19 in order to fund more than 160 million COVID-19 vaccines in other countries.

The U.S. has already purchased 500 million doses of the Pfizer/BioNTech vaccine and donated them through the global vaccine-sharing platform COVAX.

Vaccines have already landed in 100 countries, Biden said, adding he would announce additional commitments on Wednesday at the U.S.-hosted global COVID-19 summit.

The United States is pushing global leaders to endorse its targets for ending the COVID-19 pandemic, including ensuring 70% of the world’s population is vaccinated by this time in 2022, according to a draft U.S. document viewed by Reuters.

Chinese leader Xi Jinping reiterated on Tuesday in a speech to the UNGA that China aims to provide 2 billion COVID-19 vaccine doses to the world by the end of the year.

Philippine President Rodrigo Duterte and Indonesian Foreign Minister Retno Marsudi were critical of plans by rich countries to provide booster shots when so many people in the developing world are unvaccinated.

“Rich countries hoard life-saving vaccines, while poor nations wait for a trickle,” Duterte said in his address to the General Assembly. “They now talk of booster shots, while developing countries consider half-doses just to get by.

“This is shocking beyond belief,” he said, stressing the pandemic will not end unless the virus is defeated everywhere.

Speaking to the Asia Society think tank, Marsudi emphasized restrictions on the export of materials to make vaccines must end, saying “access to safe and affordable vaccines is critical.”

U.S. regulators could authorize a booster shot of the Pfizer/BioNTech vaccine for older and some high-risk Americans this week, in time for the government to roll them out by Friday.

The U.S. Food and Drug Administration is expected to give the nod to the third shots for at least this group before advisers to the U.S. Centers for Disease Control and Prevention are due to meet on Wednesday.

As the gap widens between vaccinations in wealthy and poor countries, the World Health Organization has repeatedly implored the United States and other wealthy countries to hold off on plans to offer boosters and to use those doses to help inoculate the many people worldwide who have yet to receive their first shots. — Reuters

Duterte vows accountability for anyone who went ‘beyond bounds’ in drug war

REUTERS

UNITED NATIONS – Philippines President Rodrigo Duterte said on Tuesday that anyone found to have “acted beyond bounds” in his campaign against illegal drugs would be held accountable under national laws, while appearing to reject an International Criminal Court probe.

Duterte told the United Nations General Assembly he had instructed the Philippines Justice Department and police to review the conduct of the campaign, in which more than 6,100 suspected drug dealers and users have been killed since he took office in June 2016.

“Those found to have acted beyond bounds during operations shall be made accountable before our laws,” Duterte said in a video address to the annual gathering.

Duterte made no mention of a formal investigation into possible crimes against humanity, which was approved by judges from the International Criminal Court last week, although he appeared to reject outside interference in human rights issues.

“We have recently finalized with the United Nations our Joint Program on Human Rights. This is a model for constructive engagement between a sovereign Member State and the United Nations,” he said.

“Meaningful change, to be enduring, must come from within. The imposition of one’s will over another – no matter how noble the intent – has never worked in the past. And it never will in the future.”

Duterte’s government said last week it will not cooperate with the ICC or allow any investigators into the Philippines. Duterte and his police chiefs have said the killings were in self-defense and his government has insisted the ICC has no right to meddle in the country’s affairs.

Rights groups say Duterte personally incited deadly violence in the drug war and accuse police of murdering unarmed suspects on a massive scale. Rights group say the police summarily executed suspects, which the policy deny.

In February, the Philippine police said they were looking into a government review of the killings after the justice minister made an unprecedented admission to the United Nations of widespread police failures. — Reuters

FEU to conduct virtual stockholders’ meet on October 16

The 2021 Annual Stockholders’ Meeting of Far Eastern University, Inc. (FEU) will be conducted virtually on October 16, 2021, at 3 p.m.

COVID’s economic cost to hit P41T

PHILIPPINE STAR/ MICHAEL VARCAS
Economists have warned of the possible “long-term economic scarring” for the Philippines if the pandemic drags on. — PHILIPPINE STAR/ MICHAEL VARCAS

THE TOTAL ECONOMIC cost of the coronavirus pandemic and lockdowns may reach P41 trillion over the next four decades, the National Economic and Development Authority (NEDA) said.

The economy is now expected to return to the pre-pandemic growth trend after 10 years, as consumption and investments will likely remain sluggish, according to the NEDA presentation obtained by BusinessWorld.

Socioeconomic Planning Secretary Karl Kendrick T. Chua said the cost of the pandemic and quarantines on society is estimated to have reached P4.321 trillion in 2020. This is measured through the net present value (NPV) terms, or the difference between the present value of inflows against the value of outflows for a certain period of time.

The economic cost of the pandemic is estimated to rise by another P37.044 trillion over the next 10 to 40 years in NPV terms, mainly due to the projected heavy losses in private investments and human capital gains.

In a Viber message on Tuesday, Mr. Chua said the 40-year period is equivalent to the average working life of a Filipino from age 22 to 62. He said NEDA conducted the study for six months starting January.

Mr. Chua in his presentation said the size of the Philippine economy may have grown by 9.5% to P21.4 trillion in 2020 had the COVID-19 pandemic not occurred. However, due to the pandemic, the size of the economy shrank by 8.1% to P17.9 trillion last year from P19.5 trillion in 2019.

“Consumption and investment will be lower in the next 10 years due to lower demand in sectors that require social distancing (e.g., amusement, tourism, restaurants, public transportation). Consequently, tax revenues will be lower,” Mr. Chua said in the presentation.

“After the 10th year, the economy is expected to converge to the pre-pandemic growth path,” he added.

Losses in private investments would have the biggest impact on present and future generations, followed by unrealized human capital investment gains and weak consumption, according to NEDA estimates.

“Foregone consumption and investments in 2020 will result in lower capital accumulation in the future… (This) will result in lower financial returns and lower economic benefits for the people,” NEDA said.

It attributed the decline in consumption and investments to social distancing rules, lackluster business and consumer confidence and rules that prevent children from going out.

The economy may miss out on P25.8 trillion in consumption, investments and returns over the next four decades, after already losing P3.92 trillion in 2020 due to the strict lockdowns. Foregone investments and returns alone would reach P21.33 trillion in 40 years.

“It may take 10 years to reach pre-COVID-19 trajectory,” Mr. Chua said.

Foregone tax revenues for the government could hit P1.206 trillion in a decade as it collects less income taxes from pandemic-hit companies and individuals and less sales taxes. In 2020 alone, foregone tax revenues reached P782 billion.

The Philippine economy also stands to lose heavily due to the severe impact of COVID-19 pandemic on human capital investments, particularly on education and the health sector.

NEDA estimated foregone income from human capital investment and returns could reach P15.528 trillion in NPV terms over the long run.

Two-thirds of the projected losses are mainly from the impact on the education sector. The Philippines has not allowed in-person classes since March 2020, although the government has approved a pilot test for face-to-face classes in low-risk areas.

“The estimated cost of face-to-face school closure is P11 trillion in lost wages over a 40-year period,” Mr. Chua said.

NEDA noted the estimated cost of COVID-19 and non-COVID-19 diseases will reach P4.5 trillion over a 40-year period. This includes foregone wages from premature deaths, lost productivity due to illnesses and additional medical expenses.

“Life expectancy in the Philippines before COVID-19 ranged from 71 years for males and 77 for females. This could be 1-4 years shorter based on international estimates… This results in forgone wages due to early deaths,” Mr. Chua said.

He said the health crisis may lead to lower productivity for the population as many people who recovered from COVID-19 still experience related health complications such as brain fog, weakness and respiratory damage, while some cannot still return to work in their full capacity due to the lack of treatment from other diseases.

The Philippines saw its steepest economic downturn in 2020, with gross domestic product contracting by 9.6%.

The economic team earlier slashed its growth target for 2021 to 4-5% from 6-7% amid strict lockdowns to curb a Delta-driven surge in COVID-19 cases.

Economists have warned of the possible “long-term economic scarring” for the Philippines if the crisis drags on. — Beatrice M. Laforga

PHL slips in global innovation report

REUTERS

THE PHILIPPINES slipped one spot to 51st place out of 132 economies on an annual list that measures innovation performance after the country’s information technology (IT) infrastructure scores sank.

The country’s performance in the Global Innovation Index (GII) 2021 had previously been improving drastically.

The index, which is prepared by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO), showed the Philippines reached its highest rank so far last year after it broke into the top 50. In 2019, the Philippines jumped 19 spots to 54th.

Philippines places 51<sup>st<sup> out of 132 economies in global innovation ranking

The index measures seven innovation pillars, in which the Philippines dropped 23 spots to 86 in the infrastructure category this year, after losing points in information and communications technology access and use, along with government online service and e-participation.

The Philippines improved its institutions ranking by one spot at 90th and improved under human capital and research (80th) along with knowledge and technology outputs (24th). The country retained its market sophistication rank at 86th.

However, its business sophistication (33rd) and creative outputs (65th) rankings also slipped this year.

Among the sub-pillars, the Philippines was strong in trade, diversification and market scale as well as both knowledge diffusion and absorption, which are measured in high-tech and ICT services exports and imports. The country’s lowest sub-pillar rankings include regulatory environment, general infrastructure, credit, and investment.

Science and Technology Secretary Fortunato T. de la Peña at a briefing on Tuesday said that he is hoping for the passage of the Science for Change Program (S4CP) bill, which backs research and development, to help improve the country’s ranking.

“We need to have policies to strengthen the pillars that we are weak in, namely investments. No matter how efficient we are in transforming our limited resources to Knowledge and Technology Outputs, there are limits if we still need more inputs,” he said.

According to the report, the Philippines is one of several middle-income economies that are “changing the innovation landscape,” naming the country an innovation achiever for the third straight year.

“Although it’s one position back, the high-level news we sent regards to the Philippines is extremely positive. Let’s make sure it’s not minus 5 or 10 slots next year,” WIPO Economics and Statistics Head Sacha Wunsch-Vincent said.

The Intellectual Property Office of the Philippines (IPOPHL) in a statement said a multi-sectoral task force should address the country’s innovation weak spots.

“We might not only reverse our GII ranking but also push the country further into an innovation frontier,” IPOPHL Director-General Rowel S. Barba said. — Jenina P. Ibañez with inputs from Brontë H. Lacsamana

BSP regulations to support post-pandemic economy, Diokno says

THE BANGKO SENTRAL ng Pilipinas (BSP) said it will continue supporting the post-pandemic economy through enabling regulations that will encourage investments and infrastructure projects.

“On the part of the BSP, we support investment promotion through a regulatory environment that is welcoming to foreign investors and technological innovation,” BSP Governor Benjamin E. Diokno said in a speech for an event organized by London-based think tank Official Monetary and Financial Institutions Forum.

Central bank officials have said their sandbox approach to regulating digital financial firms allows them to be more flexible and open, rather than stifling potential players.

This is reflected in the BSP’s approval of three digital bank licenses to foreign entities — including Tonik Digital Bank, Inc. (Philippines) and UNObank which both have Singapore-headquartered parent units, and GoTyme which jointly is owned by the Gokongwei Group and Singapore fintech firm Tyme.

Mr. Diokno said government policies that will further liberalize the economy will also be key to making the Philippines “more investor-friendly” in a post-pandemic world.

These include the country’s participation in the Regional Comprehensive Economic Partnership (RCEP) among select Asia-Pacific economies and tax reforms like the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

The Philippines signed the RCEP in November together with 14 other economies in the Asia-Pacific. The deal builds on existing bilateral and multilateral agreements in the region and also simplifies the rules related to identifying products that are “made” in a particular country.

Meanwhile, Republic Act 11534 or the CREATE law took effect this year. It streamlines tax incentives for businesses and immediately slashed the corporate income tax to 25% from 30%.

Mr. Diokno said the BSP will also back the infrastructure push that is seen to help the post-pandemic economy.

“The BSP is contributing to infrastructure development through regulatory measures such as by increasing the single borrower’s limit (SBL) as well as deepening of the capital market that makes it easier for infrastructure companies to finance projects,” he said.

In December last year, the BSP said it will waive sanctions for foreign bank branches that will breach the SBL until end-2021. This was done in a move to diversify credit exposures specifically for funding big-ticket projects.

The Monetary Board in 2018 also approved a separate SBL for special purpose entities that take part in implementing major infrastructure projects of the government.

The central bank chief said regulations and programs that provide accessible credit for small businesses are also expected to support recovery. This is complemented by financial literacy programs done related to savings and investments, he added.

The BSP is developing a credit risk database together with the Japan International Cooperation Agency that is aimed to help financial institutions for their lending decisions to micro-, small-, and medium-sized enterprises.

“Looking ahead, we do not aim to simply regain the economic losses from the pandemic. We aspire for a ‘post-COVID-19 Philippine economy’ that is stronger and more resilient, more technologically advanced, and more inclusive than ever before,” Mr. Diokno said. — L.W.T.Noble

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