GCQ rules to allow 75% outdoor dining capacity

April 25, 2021 | 7:27 pm

RESTAURANTS will be allowed to increase capacity in their outdoor dining spaces to 75% and operate indoor areas at 50% capacity under general community quarantine (GCQ), the Department of Trade and Industry (DTI) said.

DTI in Memorandum Circular 21-14 signed April 23 presented a list of allowed operating capacities for businesses. Outdoor dining at restaurants had been permitted to operate at 50% capacity under the stricter modified enhanced community quarantine (MECQ), while indoor dining was prohibited.

Personal-care services like beauty salons and massage therapy, meeting and conference venues, tourist attractions, and indoor non-contact sports businesses will be allowed to run at 50% capacity under GCQ. Such businesses were not allowed to operate under MECQ.

Non-contact sports like badminton, equestrian, and golf can operate at 50% capacity under MECQ and at full capacity under GCQ. Outdoor contact sports are not allowed at either lockdown level, along with entertainment venues, cinemas, internet cafes, and amusement parks.

Trade Secretary Ramon M. Lopez last week said that Metro Manila and nearby provinces could be placed under GCQ in May if the regions are able to improve contact tracing and increase hospital bed and intensive care unit capacity. The areas were placed under a stricter form of lockdown after coronavirus disease 2019 (COVID-19) cases surged.

The government last week also launched its safety seal certification program, which would provide establishments decals for display at entry points if they are found compliant with the required health and safety protocols. — Jenina P. Ibañez

Biomass projects eligible for FiT estimated at 135 MW

April 25, 2021 | 7:27 pm

THE National Transmission Corporation (TransCo) said 17 biomass projects with a capacity of 135.13 megawatts (MW) are billing the feed-in tariff allowance (FiT-All) to consumers after their renewable energy payment agreements (REPA) were deemed effective.

The FiT-All is a uniform charge billed to on-grid customers. The collections are remitted to TransCo, which will then distribute it to RE developers participating in the FiT system.

“There is already 135.13 MW in biomass capacity currently eligible for FiT and are already billing the FiT-All Fund for their FiT revenue,” TransCo told BusinessWorld by Viber Friday.

A REPA assures RE firms of revenue from the approved FiT. But TransCo said that only firms with an “effective REPA” are qualified for the FiT.

“The REPA will only be effective when the RE (renewable energy) developer has secured the necessary endorsement from the DoE (Department of Energy) to the ERC (Energy Regulatory Commission) in the form of a Certificate of Endorsement, and consequently, has secured a Certificate of Compliance from the ERC that indicates its FiT eligibility,” TransCo said.

TransCo has reported that it has signed REPAs with biomass projects representing capacity of 286.35 MW. However, it clarified later on that those holding signed REPAs were not automatically entitled to the FiT. Instead, they are considered “candidate plants for FiT.”

“The minimum requirement to sign a REPA with a potential FiT RE Developer is only a Certificate of Nomination from the DoE. This means the RE Plant has reached 80% of its electromechanical completion,” TransCo said.

“Even if we signed REPAs up to 286 MW, only those that will be declared by the ERC as eligible for FiT will have effective REPAs and will therefore be paid the FiT revenues. We leave it up to the DoE on how to treat those that will not be eligible for FiT,” it added.

The current FiT-All rate is P0.0983 per kilowatt-hour (kWh). TransCo said that the prevailing rate gives it an average cash inflow of around P600 million per month.

“Currently, we are waiting for the resolution or hearing continuation by the ERC of our 2021 FiT-All Rate application. We filed a 2021 FiT-All Rate of P0.1881 per kWh for the normal scenario, and P0.2008 per kWh for the COVID-19 scenario,” TransCo said.

Meanwhile, it aims to file the 2022 FiT-All rate application by the end of July.

Energy Secretary Alfonso G. Cusi announced last week that the department has decided to “stop the FiT which proved to be a big mistake as it forced electricity prices in the country upwards.”

Asked for comment on Mr. Cusi’s statement, TransCo told BusinessWorld Wednesday that biomass and run-of-river (RoR) hydro plants are still allowed to complete the earlier set of installation targets for the FiT system. But it added that it is the DoE’s prerogative to set the policy on future FiTs.

Under a DoE department circular issued in 2015, the revised installation targets for RoR hydro and biomass stand at 250 MW each. — Angelica Y. Yang

FDA told to expedite process for granting permits for domestic vaccine manufacture

April 25, 2021 | 7:27 pm

THE Food and Drug Administration (FDA) has been set a seven-day deadline to organize a faster permit approval process for vaccine manufacturers, the Anti-Red Tape Authority (ARTA) said.

ARTA Director General Jeremiah B. Belgica on Friday met with the agencies and potential domestic vaccine manufacturers, the red tape regulator said in a statement.

President Rodrigo R. Duterte supported expedited permit processing after Trade Secretary Ramon M. Lopez said that the companies studying domestic manufacturing will need quick permit processing and priority for government procurement.

Mr. Lopez said among the four companies considering domestic manufacturing are United Laboratories, Inc., which has confirmed its interest in setting up a manufacturing facility.

The fill and finish plant, in which active ingredients are imported for packaging, could start operations by 2023.

The FDA will be asked to present a timeline and requirements for expedited permit processing for the manufacturing firms next week.

ARTA Deputy Director General Ernesto V. Perez added that there should be a one-stop shop for companies looking to invest in vaccine manufacturing here.

“We want more detailed inputs coming from (pharmaceutical companies) so whatever (the issues), we will be able to raise these to the government agencies concerned,” he said. — Jenina P. Ibañez

First-quarter growth gains could be wiped out by COVID surge

April 25, 2021 | 7:26 pm

lockdown-philstar — PHILIPPINE STAR/EDD GUMBAN

GAINS made in the first quarter could be wiped out by the rising COVID-19 case count, further setting back the economic recovery, the Department of Finance (DoF) said.

In an economic bulletin Sunday, the DoF said a prolonged lockdown is possible if the ongoing surge in coronavirus disease 2019 (COVID-19) cases is not contained. Such draconian measures, however, would prevent the economy from sustaining its recovery momentum.

The economic recovery is not expected to pick up momentum if lockdowns are extended, the DoF said.

“The spread of the virus has to be contained and its risks managed, through pharmaceutical and non-pharmaceutical interventions alike. Otherwise, draconian measures will be implemented again and the incipient recovery be, so to speak, nipped in the bud,” the DoF said.

Metro Manila and the nearby provinces Bulacan, Cavite, Laguna and Rizal, were placed under a hard lockdown for two weeks until April 11. Lockdown restrictions were eased slightly after that date, but businesses were still restricted until April 30.

The government is set to announce new quarantine measures for May within the week.

Daily cases remain elevated. The Health department reported 9,661 new cases on Saturday, bringing the total to 989,380.

Deaths have totaled 16,674 after 145 new fatalities were recorded.

The DoF said the first quarter gains manifested in the rebound in international trade and a pick-up in manufacturing activity.

Goods imports rose 2.7% to $7.60 billion in February after a 12% year-on-year decline in January, the Philippine Statistics Authority said. This marked the first rise after 22 months of declines in the indicator.

Meanwhile, factory activity in March, as measured through the Philippine Manufacturing Purchasing Managers’ Index (PMI), remained above the neutral 50-point mark, which separates growth from contraction. The PMI declined to 52.2 last month from 52.5 in February, but marked a third month of expansion.

“The rebound in merchandise trade and indicators of expansion in manufacturing activities signify that the green shoots of economic recovery are growing, albeit precariously given downside risks posed by the SARS-CoV-2 virus and the uncertainties of its variants,” it added.

Economists have since lowered their gross domestic product forecasts for the Philippines this year. Capital Economics reduced its growth projection for 2021 to 7.5% last week, from 8% previously. — Beatrice M. Laforga

NGCP found non-compliant on AS reserve levels

April 25, 2021 | 7:21 pm

THE DEPARTMENT of Energy (DoE) said the National Grid Corp. of the Philippines (NGCP) is not compliant in terms of the required reserve levels procured under firm ancillary services (AS) contracts, noting below-target performance as of the end of 2020.

“The DoE sees the NGCP is consistent (in) not complying with its responsibility with the firm contracting requirement. The NGCP has been dragging its feet by pursuing insufficient capacity and even opting (for) an unreliable contracting of “non-firm” AS Procurement Agreements (ASPAs),” DoE Secretary Alfonso G. Cusi was quoted as saying in a statement issued Saturday.

The DoE estimates that the NGCP has only contracted regulating, contingency, and dispatchable reserves of 237 megawatts (MW), 180 MW, and 145 MW, respectively, for the Luzon grid as of the fourth quarter of 2020.

The Luzon grid’s required capacity for regulating, contingency and dispatchable reserves are at 491 MW, 647 MW, and 647 MW.

Regulating reserves are readily-available and dispatchable generating capacity, while the contingency reserve refers to the synchronized generation capacity allocated to cover the loss of a generating unit or transmission element. Meanwhile, the dispatchable reserve refers to the generating capacity which is readily available for dispatch whenever a generating unit trips or when a loss of transmission interconnection happens. These three types of reserves are considered by the DoE as AS.

Under a 2019 department circular which sets the AS rules, the NGCP can only procure regulating, contingency and dispatchable reserves “through firm contracts.”

Based on DoE data, the Luzon grid’s regulating, contingency and dispatchable reserves from “non-firms” stand at 525 MW, 395 MW and 806 MW, respectively.

In ASPAs, the AS provider decides when it will provide the services even if these are scheduled by the NGCP, and this arrangement compromises grid reliability at times, the DoE said in its media release.

“If non-firms have the contract, the reserves aren’t guaranteed. That is why there is a thinning of supply when electricity demand goes up during the summer season,” Mr. Cusi explained.

The DoE said that it is currently monitoring the close compliance of the NGCP in fulfilling the AS requirements.

“For the enforcement of these policies, the DoE has been collaborating with the Philippine Competition Commission, the Energy Regulatory Commission, and the Department of Justice,” the department said. — Angelica Y. Yang

Redefining Philippine Taxation: CREATE

April 25, 2021 | 7:20 pm

Third of four parts

Republic Act No. 11534, also known as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), is said to be the first-ever revenue-eroding tax reform package. The largest economic stimulus program in the country’s history, it provides major amendments to our tax and incentives laws with the goal of helping businesses move into post-pandemic recovery while encouraging foreign investments into the country. The law took effect on April 11, 2021.

The first and second parts of this four-part article discussed the passage and goals of the CREATE Act, as well as the exemption of foreign-sourced dividends, the repeal of improperly accumulated earnings tax, tax-free exchange, additional provisions to consider and provisions that were vetoed.

We continue by discussing the second salient feature of the CREATE Act: the codification and rationalization of Fiscal Incentives. In this third part, we cover the nature of incentives before CREATE, their centralization and administration, and how they are now more performance-based and targeted.

INCENTIVES BEFORE CREATE
The Department of Finance (DoF) had long since been pushing for tax reform and the rationalization of fiscal incentives to improve governance in the grant of incentives and promote a fair and accountable incentive system that is performance-based, targeted, time-bound and transparent.

Before the passage of CREATE, the various Investment Promotion Agencies (IPAs), such as the Philippine Economic Zone Authority (PEZA), Board of Investments (BoI), Bases Conversion and Development Authority (BCDA), Clark Development Corp. (CDC), and Tourism Infrastructure and Enterprise Zone Authority (TIEZA), administered their own investment regimes to registered business enterprises (RBEs) within their purview. In granting incentives, these IPAs exercised wide discretion, which allegedly resulted in detrimental and economically damaging competition among the IPAs.

As ASEAN integration progresses, a regional comparison of tax incentives becomes more relevant. Pre-CREATE, it was indisputable that the scope of tax incentives in the Philippines was far more generous than the rest of ASEAN. The Philippines appears to be the only ASEAN country that grants incentives in perpetuity. The perpetual grant of incentives, which is believed not to have attracted the commensurate new investments, expansion projects or measurable economic contributions, may have discouraged growth and resulted in tax leakages or foregone revenue (estimated at P441 billion in 2017).

By adopting a uniform policy and offering a single menu of incentives, the government hopes to cut down on redundancy and lost revenue.

CENTRALIZATION OF INCENTIVES IN THE FIRB
The consolidation of IPAs into one centralized agency has been long proposed in order to centralize the promotion and administration of incentives in a single agency, consistent with international best practice.

In a nutshell, CREATE centralized the oversight of the grant of incentives in the Fiscal Incentives and Review Board (FIRB). The primary role of the FIRB is to exercise policymaking and oversight functions on all RBEs and IPAs. As such, under CREATE, it is the FIRB that will, among other expanded functions, have the power to approve or disapprove the grant of fiscal incentives upon the recommendation of the IPA. The FIRB shall meanwhile delegate the grant of tax incentives to the IPA for investment projects involving P1 billion and below, though the President has clarified that the power of the IPAs to grant incentives only stems from a delegated authority from the FIRB. The FIRB is authorized to check whether the incentives granted by the IPAs conform with the intent to modernize the incentive system. The threshold, nonetheless, may be increased by the FIRB in the future.

Consistent with the declared policy to approve or disapprove applications on merit, the provision granting automatic approval of applications with complete documentary requirements within 20 days of submission was vetoed by the President, who said that there are other mechanisms to address inaction in the approval process.

TARGETING OF INCENTIVES
Codifying the longstanding intention to make incentives performance-based and targeted, CREATE categorized RBEs into export enterprises, which export at least 70% of their total production or output directly or indirectly; and domestic market enterprises (DMEs). The President vetoed provisions further categorizing DMEs into those that are engaged in activities classified as “critical” by the NEDA, and those with a minimum investment capital of P500 million.

Determining the availment period for incentives will be based on both the location and industry of the registered project or activity. This also includes other relevant factors as may be defined in the Strategic Investment Priorities Plan (SIPP), which is currently being worked on by various government agencies in consultation with the private sector.

Location is prioritized according to the level of development such that activities in areas outside or not adjacent to the National Capital Region (NCR) or other metropolitan areas can avail of longer incentive periods.

Meanwhile, the industry tiering of the registered project or activity is prioritized according to the national industrial strategy specified in the SIPP. We should note that the President vetoed the enumeration of specific industries in the CREATE Act to keep the law flexible enough to meet changing needs. As such, the activities and projects that may qualify should not be hardwired in the law so that the government does not keep on incentivizing obsolete industries and close its doors to technological advances and industries of the future.

With the targeted grant of incentives, the government hopes to attract the right kind of investors to do business in the country, particularly those that offer quality jobs and technology transfer, and can introduce new industries that would allow the economy to flourish.

In the fourth and final part of this article, we cover the periods of availment and the kind of incentives registered enterprises may enjoy.

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

Karen Mae L. Calam-Ibañez And Aiza P. Giltendez are a Tax Senior Manager and Manager, respectively, of SGV & Co.

What we can learn from Patricia and Greta

April 25, 2021 | 6:46 pm

1 of 2

“Delay muna ang judgement. Kausapin at kilalanin ang mga tao. Kumbaga learn from the masses.” This was how Ana Patricia Non, the organizer of the pioneer Maginhawa Community Pantry, responded to people’s fears of community members hoarding goods from the cart.

She admitted that at the pantry, which operates on the principle of “Magbigay ayon sa kakayahan, kumuha batay sa pangangailangan” (Give what you can, take what you need), some would indeed take plenty of supplies. But she asked people to suspend their judgment, get rid of their misconception of the poor as greedy, and instead, talk to people to understand their circumstances. While a few do hoard, most people take only what they need. What stands out are stories like that of a homeless man who only took two oranges despite being offered more, and generosity overflowing even from the poorest of the poor.

Patricia’s simple act of kindness, setting up a cart of canned goods, vegetables, and other essentials on a sidewalk in Quezon City, quickly snowballed into a huge movement, with around 350 community pantries having sprouted all across the country. Despite the thousands of people this mutual aid initiative has helped, Patricia remains humble and unassuming, keeping the pantry to what it is at its core — a way to provide immediate relief to the most vulnerable, born out of necessity due to the pandemic and lockdown.

While Patricia tells us to “learn from the masses,” another young woman whose simple act sparked a massive movement, environmental activist Greta Thunberg, tells us to “listen to the science.” In 2018, at the age of 15, Greta started skipping school to protest political leaders’ inaction over the climate crisis. Since then, she has spoken to world leaders at United Nations conferences and started a worldwide climate strike movement involving millions.

Both Greta and Patricia’s ideas and actions are simple, straightforward, and effective. Through their activism, they make it a point to amplify the voices of others, and never claim to own the movements they start.

Greta’s message is to “listen to the science.” She backs up her claims with data, as the movement’s scientific consensus allows her to go straight to the facts. But she doesn’t claim to be an expert and sticks to pointing us to scientists and communicating the reality of the climate crisis, conveying the urgency of the situation.

Like Patricia, she keeps things simple. In an October 2020 interview with the New York Times, when Greta was asked what she thinks draws people to her style of communication, she said: “I don’t think I have any specific wisdom… One thing that I do have is the childlike and naïve way of seeing things. We tend to overthink things. Sometimes the simple answer is, it is not sustainable to live like this.”

In a 2019 TED Talk, she said: “We already have all the facts and solutions. All we have to do is wake up and change.”

Patricia’s message is clear — she has always maintained the pure and simple intentions behind the initiative, is constantly looking for ways to improve it, and refuses to take full credit for its success. In an interview, Karen Davila told her that she was being likened to activists Greta and Malala, and Patricia said the comparison hadn’t sunk in for her.

Greta and Patricia differ in their methods of activism, but we need them both. Bold and passionate people like Greta appeal to our emotions, inspire us and rouse us from inaction. But we also need people willing to do the quiet work on the ground like Patricia, because as she has proven, it can turn into something revolutionary.

The sheer number of community pantries Filipinos have put up is undoubtedly driven by altruism or selflessness in a time of national emergency. And it is a response to bad political decisions, mismanagement, and incompetence. Our leaders deny their shortcomings and say “hindi tayo nagkulang” (we were not lacking) while more and more people are getting hungry and our healthcare system is getting overwhelmed.

If only the government took Patricia’s advice of “learning from the masses” and listened to a wider range of stakeholders from all walks of life, and not just the President’s inner circle, perhaps community pantries would not have been controversial. If more of our leaders had empathy, they’d provide sufficient relief for the marginalized and reallocate funds towards social protection and health expenditures. If they had humility, they’d hold themselves accountable for the many lives and livelihoods lost and recognize the huge gaps in the country’s pandemic response.

In a letter on climate action that Greta Thunberg wrote on Earth Day of this year, she said: “The gap between what needs to be done and what we are actually doing is widening by the minute.” Similarly, when it comes to pandemic response, our leaders must realize that as time goes on, their inaction leads to a very real loss of human lives and livelihoods. The longer it takes them to realize their missteps, the harder it will be for the country to recover.

In our world where leaders exhibit arrogance and insensitivity, Greta and Patricia become models of virtue. We need people who put a premium on listening to vulnerable people and listening to science.

Pia Rodrigo is the communications officer of Action for Economic Reforms.

Kindness stations and community pantries

April 25, 2021 | 6:46 pm

“Then, taking the five loaves and the two fish and looking up to heaven, He said the blessing, broke the loaves and gave them to His disciples to set before the people; He also divided the two fish among them all. They all ate and were satisfied. And they picked up 12 wicker baskets full of fragments and what was left of the fish. Those who ate were 5,000 men.”

— Mark 6: 41-44

“The Feeding of the Multitude” in Tabgha, Galilee is among many miracles in the gospels performed by Jesus to show Jews and Gentiles His divinity as Son of God made Man, the awaited Messiah. Its parallel miracle in the Old Testament is the “Manna from Heaven,” the food that God provided for the Israelites led by Moses in the desert during the 40 years that they crossed over from Egypt to Canaan. “This is what the Lord has commanded: Everyone is to gather as much as they need” (Exodus 16:16). Is there a meaning to “taking only as much as you need” required of the bountiful food in the deprivation of the Judean desert, and complied with, at Tabgha with the 12 wicker baskets of leftovers? No one took home a “doggie bag”!

The message is communal sharing, according to Fr. James Martin S.J., in his book, Jesus: A Pilgrimage: “The sharing of food is a communal event, underlining the community aspect of faith… Food is also about giving, sacrificing and sharing; someone must labor to grow it and expend time and effort to prepare it. Food requires work and sacrifice. Someone also needs to do the feeding, in this case, Christ. Overall, it is a gift.”

Food for the poor is the most urgent need in the veritable desert that the COVID-19 pandemic has made of the world, parched for more than a year now of its accustomed bounty of capitalist production and supply of wants and needs. According to the World Food Program in May 2020, about 230 million people were at risk of starvation, 130 million more than in 2019. Projections show that the world is not on track to achieve Zero Hunger by 2030 and, despite some progress, most indicators are also not on track to meet global nutrition targets. The food security and nutritional status of the most vulnerable population groups is likely to deteriorate further due to the health and socio-economic impacts of the COVID-19 pandemic (http://www.fao.org).

As early as April 2020, Caritas Philippines and the National Secretariat for Social Action (NASSA) worried about the more than 100 million Filipinos to be greatly affected by lockdown enforced due to COVID-19, as announced by the Philippine government. (NASSA/Caritas Philippines is the humanitarian, development and advocacy arm of the Catholic Church in the Philippines. It was created by the Catholic Bishops’ Conference of the Philippines in 1966 and mandated to accompany the poor and marginalized in the just and legitimate struggle for social justice and transformation.)

Caritas Philippines set up Alay Kapwa (Offering of Oneself), the fundraising program of the Philippine Catholic Church to serve as an emergency fund during calamities and other major social concerns. For its self-funded community food program, Caritas has set up “Kindness Stations” in communities in 30 dioceses across the Philippines, benefitting some 122,000 families. The concept of the “Kindness Stations” is to “decentralize giving and sharing by mobilizing parishes, community organizations, and individuals. This is unlike the relief operations we are so used to doing in the past. Soon, resources from the government and aid organizations will run out, aid will cease and our collection boxes will be emptied. But we will always have more than enough supply of people with generous hearts and selfless souls. We will always be doing the multiplication of loaves and fish,” Caritas Philippines said (https://reliefweb.int May 9, 2020).

Kindness Stations have been set up in villages, town plazas, parish churchyards, where neighbors, farmers in the area, store owners, and whoever else had some small donation in kind can deposit their contribution (of course, seeking no payment or exchange for it), and those in need of whatever was available from donations would pick up what they needed, without having to pay for it. There is just the instruction, honor system, to “take what you need, leave some for others, and give what you can.”

“Take only what you need” is the perfection of communal sharing, as in Moses’ and the Galileans’ times.

And it works, to this day. While the Kindness Stations have fluctuated in exuberance and interest through the seesawing between GCQ (general community quarantine, a less strict quarantine level) and ECQ (enhanced community quarantine, the strictest quarantine level), a young woman’s heart bled for her hungry poor neighbors who have been waiting for the government’s long-promised P1,000 cash assistance to 22.9 million low-income earners affected by the ECQ in Metro Manila, Bulacan, Cavite, Laguna, and Rizal. On April 14, Ana Patricia Non put out in front of her residence a rolling cart of canned goods, vegetables, and various other food items from her own pantry and offered these free to those who lacked food. Something like the Kindness Stations, only, it was a one-woman show.

Now called the Maginhawa Community Pantry, her single cart of donated food has become a row of stalls heavy with donations of rice, canned goods, and other food from the neighborhood and beyond, fresh vegetables from backyard farmers and real farmers, and whatever else — some even high-end food. Donations have come from poor and middle-income individuals more than the rich, Patricia says.

“Magbigay ayon sa kakayahan, kumuha batay sa pangangailangan,” or “Give whatever you can, take only what you need.” (Sounds familiar!) This is the motto of the Community Pantry. which has replicated in hundreds of community pantries around the country — in just over a week! It has been encouraged by excited exchanges among like-minded netizens on social media. The idea is not new (the Caritas Kindness Stations started it). The Straits Times reported that “Sharing pantries” also caught on in Thailand last year, where the initiative spread to at least 43 provinces. Similar “Food banks” proliferated in the United States when the COVID-19 outbreak there peaked and millions suddenly found themselves without jobs when their companies had to shut down due to shelter-at-home restrictions (The Straits Times, April 20, 2021). It must be a spontaneous spiritual elevation in the collective (community) consciousness. But it is probably “only in the Philippines” where organizers of community pantries are red-tagged (suspected of being communists) and profiled (with their dossiers placed on watch lists) or called Satanists (really evil) by military authorities out for blood on their “terrorist watch.” Policemen and other military men, in the guise of checking on social distancing compliance and curfew transgressions have arrested and hauled some to jail from the long queues for the free food. Originally, the local officials asked for business permits.

Then denials of harassment were issued on national TV and social media by the military and related officials who said that there is no red-tagging, no warrantless arrests, no nothing. Suddenly, the government factotums are profuse with praises for such a noble groundswell of the bayanihan (community) spirit in this trying time of the COVID-19. Might it be that they want the “looking good” thing, riding on the current hype for this unforeseen sensation? Some government offices and local government units (LGUs) have even organized their own look-alike community pantries — free this and that for everyone, anyone, no matter that they, the government, would not get any donations for the free food and goods given. But local governments have money to allocate for the food security of their constituents. Setting up a community pantry by LGUs “would be redundant because we already shoulder the taxes,” Ms. Non points out (NikkaINQ, April 18, 2021). Greed for glory?

The Israelites did as they were told; some gathered much, some little. And when they measured it by the omer, the one who gathered much did not have too much, and the one who gathered little did not have too little. Everyone had gathered just as much as they needed (Exodus 16:17-19).

However, some of them paid no attention to Moses; they kept part of it until morning, but it was full of maggots and began to smell. So Moses was angry with them (v. 20).

Ugly greed and personal gain have no place in noble community sharing.

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Some rays of light

April 25, 2021 | 6:45 pm

ECQ-lockdown — PHILIPPINE STAR/ MICHAEL VARCAS

It’s quite natural and understandable to be very pessimistic and depressed at this time. There seems to be no end to this pandemic and no coherent government plan to end it. Instead, we are seeing another surge, deadlier than the initial one. While I have friends who died in the first wave last year, I know of many more acquaintances and relatives who have recently gotten infected, a number of whom have died.

The government seems to be at a loss. Having imposed the strictest lockdown in the world last year with not much to show for it, the Duterte administration is caught between a rock and a hard place:

Continue the ECQ and other severe forms of mobility restrictions and risk multibillion losses to the economy, or relax the restrictions and risk overwhelming the hospitals and letting the virus go unchecked.

Between the “hammer” and the “dance,” the government has only resorted to the “hammer” of lockdowns. The government has wasted one year because measures to contain the virus more smartly — mass testing, tracing, isolation and treatment — have still not been done. There are as many tracing apps as there are LGUs. Surge hospital and isolation capacity hadn’t been built even as the government started loosening the restrictions to perk up the economy.

Moreover, the IATF keeps making decisions not based on evidence and data. It restricted outdoor exercise to 6 to 9 a.m., when evidence has shown that when there’s outside natural ventilation, the risks are much lower. Extended curfews were imposed, giving commuters a small window to get home, risking crowding in public transportation. The result has been messaging that people were unlikely to follow because they lacked common sense.

All the while, the government’s vaccination program has been a mess. The government has been late to procure vaccines. It first tried to monopolize procurement and deny the private sector the right to procure on its own. It tried to erect one bureaucratic hurdle after another at the private sector, including mandating that the private sector must follow the Department of Health (DoH) protocols for prioritizing who may get the vaccine. The result is that the country is way behind other countries in vaccination per capita. Consequently, the government is left with no option but to impose another lockdown to contain the virus surge.

Contributing to the air of public pessimism is a president who seems tired and out of ideas.

What is worse is that he keeps the same team which had clearly failed in managing the pandemic.

Instead of giving people hope, all President Duterte does is double down on criticizing Leni Robredo and Leila de Lima and perpetuating a reign of human rights abuses.

That said, some rays of light are showing through the dark clouds. If one wallows only in pessimism, one will miss several important things happening. I refer to structural changes which will foster sustainable economic growth in the long run. To wit:

EO 127 which classified satellite broadband as a value-added service. This means that accessing satellites would no longer be confined to those which have telco franchises. Under the new EO, ISPs (Internet Service Providers) and VAS (Value-Added Service) providers registered with the National Telecommunications Commission can now access more than 15 high throughput satellites, including Elon Musk’s Starlink, which have the Philippines under their respective footprints. Broadband speeds of as fast as 150 mbps can be made available anywhere in the Philippines where one can put up a satellite dish. This will make internet service accessible even in remote areas, and promote distance learning and financial inclusion.

The Department of Environment and Natural Resources (DENR) DAO 2020-18. This DAO liberalized tree plantation. The previous DAO, issued under former President Aquino’s DENR Secretary Ramon Paje, mixed natural forests and planted forests and essentially killed the tree plantation and wood processing industry with regulatory overreach. The new DAO will revive the tree plantation industry once again. Being a mountainous tropical country, the Philippines has a competitive advantage in forest production but it had wasted its opportunity to develop the forestry sector because of over-regulation and uncertain property rights.

The Public Service Act (PSA) is finally moving in the Senate after President Duterte certified it as urgent together with amendments to the Retail Trade Liberalization and the Foreign Investment Act. As I keep saying, the PSA is the most consequential economic legislation since the founding of the Republic. Nay, perhaps since the Commonwealth era because nationalist protection of “public utilities” started in the 1935 Constitution and is the reason why the Philippines has retrogressed economically compared to its once backward but now more progressive neighbors.

The PSA will redefine public utilities so that only natural monopolies are deserving of the nationalist protection of a 40% foreign ownership limit in the Constitution. If the PSA is passed, the transport and telecommunications sectors will be open to 100% foreign investment. This will increase competition and break the back of the monopolies strangling these strategic industries. We will see more investments, increased competition, more innovation, technology transfer, lower prices, and better service in transportation and telecommunications that will have positive ripples throughout the economy.

More than ever, there is a great chance that the PSA will, after eight years, be finally passed.

Sometimes, a crisis forces the mind.

There is, however, another recent EO that will also be a huge boon to economic development.

Two weeks ago, President Duterte issued EO 130, which lifted the ban on new mining development imposed by former President Ninoy Aquino. The previous EO halted the issuance of new mining licenses until the institution of a new fiscal regime.

EO 130 justified the lifting of the ban because the excise tax on mineral products had already doubled in 2017 from 2% of Gross Sales to 4% under RA 10963 or TRAIN. It also said that with new regulations, environmental safeguards are in place.

Government estimates that the proposed contribution of new Mineral Agreements will amount to P5 billion in royalty fees, P20 billion in annual government revenues, P57 billion in exports, and generate 41,000 jobs in the countryside.

More than the activation of shovel-ready projects, the new EO provides a regulatory environment where the mining industry in the Philippines can reach its full potential.

The Philippines is one of the five most mineralized countries in the world. Valuable minerals, such as gold, copper, nickel, manganese, chromite as well as non-metallic minerals like marble and limestone, lie abundantly in its domain. Mining development has never reached its full potential because of legal, regulatory, and public relations issues. Environmental disasters of a long time ago, such as the Marcopper tailings disaster, turned the public against mining and spurred anti-mining activist fervor. Unregulated small-scale mining, which doesn’t adhere to any environmental standards, also contributed to mining’s negative public image.

However, if mining is properly regulated and the industry self-regulates in accordance with international environmental standards, there’s no reason why the Philippines can’t use mining to increase the people’s living standards, in much the same way that Australia and Canada do.

Why do I say that mining is an industry of the future?

There are two main trends that are driving increased demand for metals worldwide. First is the increased demand for computer and tech equipment which started during the pandemic and is expected to last for years. In fact, the demand has been so high that this has led to a global chip shortage, affecting industries such as car manufacturing. Minerals such as copper, lithium, cobalt, and nickel are needed to produce cell phones, computers, smartwatches, and the Internet of Things (IoT).

The other huge demand driver is the coming shift to electric cars. By 2035, GM expects its line-up to be all electric. The other carmakers won’t be far behind. Presently, electric cars constitute only about 2% of all car production but that will grow to 80% in 20 years.

However, the core of electric cars is the EV or electric car battery, which is mostly made of lithium, cobalt, nickel, manganese and other minerals. Elon Musk is already foreseeing a shortage of nickel, and Tesla is being wooed by the Indonesian government to put up a plant in Indonesia, a major source of nickel. The Philippines is rich in nickel and cobalt too.

In other words, what Saudi Arabia, Kuwait, and Venezuela were to the oil industry (which is expected to decline with the shift toward renewables), minerals-rich countries, such as Bolivia, Congo, Australia, Canada, and perhaps the Philippines could be on top of the new global energy order. And because the United States doesn’t want to be dependent on China, it would seek to develop a supply chain from among friendly countries. Therefore, mining is the industry of the future and the Philippines could be a superpower in mining.

That is the dream. In the meantime, there’s this pandemic to defeat.

Calixto V. Chikiamco is a board director of the Institute for Development and Econometric Analysis.

idea.introspectiv@gmail.com

www.idea.org.ph

Is it fair to describe government as ‘incompetent’?

April 25, 2021 | 6:44 pm

I rolled my eyes when the Presidential Spokesman and COVID-19 protocol breaker (say hello to the dolphins!) declared that the government’s COVID response is “excellent.”

While most of our regional neighbors have put the pandemic behind them and are well on their way towards rebuilding their economies, the Philippines finds itself in the midst of a more violent infection surge, far worse than what we experienced in 2020. This has left the government with no choice but to impose an Enhanced Community Quarantine (ECQ, the strictest quarantine level) over Metro Manila and surrounding provinces all over again.

The ECQ comes as a painful blow to the micro-, small-, and medium-sized enterprises (MSMEs) which are just now recovering from the losses of 2020. Now, they must absorb more losses (if they can) which significantly shortens their cash runways to stay open. Thousands more MSMEs are expected to fall into insolvency and this means more job layoffs. As far as the welfare of our people are concerned, the ECQ has made their sad plight even more unbearable.

One out of every 11 Filipinos are unemployed and one out of every six are underemployed. Worse, one in every 6.6 Filipinos are living in abject poverty.

While Malacañang pats itself on the back for a job well done, the international press has declared President Duterte’s government’s COVID response as the most incompetent in the region. This was written not only by Nikkei Asia but also by The Diplomat, The Straits Times, Time.com and many other respected media channels.

“Incompetent” is a harsh word that carries serious implications. Certainly, it should not be dispensed without serious consideration, especially when said toward a government.

As a Filipino, the words of the international press were offensive — but I am finding it difficult to disagree with them. As I reviewed the events that led up to the recent surge of infections and the second ECQ, I cannot help but think that indeed, the government’s actions were laced with distorted personal biases, simplistic thinking, political considerations, and, yes, downright incompetence. Let me look back….

When news that a highly infectious virus from China threatened to trigger widespread infections in the Philippines, President Duterte responded by belittling the situation. He said, and I quote, “there is nothing to be afraid of with this Corona thing”…. He also said “maliit na bagay ito sa buhay natin” (This is a small thing in our lives). These statements tell me that the President did not bother to consult expert virologists or epidemiologists as due diligence would dictate. Neither did Health Secretary Francisco Duque raise red flags on the gravity of the threat. The President maintained a cavalier attitude towards the virus even if what was at stake was the very health and wellbeing of our people.

This cavalier attitude was exemplified again when the President refused to close our borders to Chinese visitors even if the rest of the region did so already. More weight was given on not offending the “feelings” of his Chinese demigods rather than safeguarding the health and wellbeing of our people. Sec. Duque even defended the President’s position in a Senate hearing. True enough, the first two COVID cases recorded in the country were a Chinese couple who arrived as tourists.

When infections escalated in March 2020, the government responded by fear mongering and enforcing a militaristic lockdown that affected the entire island of Luzon and key cities in the Visayas and Mindanao. The move turned out to be disastrous as it immobilized the economy for at least four months. It consigned a multitude of businesses to bankruptcy and instigated the massive layoff of workers. All these caused the economy to register the largest economic contraction since World War 2. In retrospect, a surgical lockdown (confined to our smallest political units, the barangays) would have been more effective, but the government could not establish a tracking and tracing mechanism to permit this.

What is truly regrettable is that the lockdown was not maximized to bolster testing capacities. Even today, testing remains localized among a few LGUs and private corporations. Neither did the government put a tracking and tracing system in place. That too was left to the LGUs to do. The government tracing app was only rolled out this month, a whole year after the first ECQ was declared (it is not even certain if the app has been debugged yet). As for medical capacities, although quarantine centers were established, little was done to increase the number of intensive care unit (ICU) beds in anticipation of a succeeding case surges. Instead of focusing on the anti-COVID response, Malacañang squandered the precious time in lockdown inflicting political revenge against ABS-CBN. It was a reckless and selfish move that Congress kowtowed to.

Upon passage of the Bayanihan laws, the disbursement of financial assistance to indigents was fraught with corruption. Financial aid for struggling tourism enterprises was diverted to “tourism infrastructure” instead, which is another word for congressional pork barrel.

As if the economy had not been clobbered enough by the 9.5% contraction in 2020, the government organized the smallest stimulus package in the region at only 5.88% of GDP. This, compared to 25.35% for Singapore, 22.73% for Malaysia, 15.96% for Thailand, 10.94% for Indonesia, and 10.12% for Vietnam. It was more important for the government to maintain its “investment grade” rating than give the economy the financial stimulus it needs to recover quickly.

Vaccination is the silver bullet to end this pandemic. But as has become the usual story, the government dropped the ball in the vaccine order procedure. Someone (name withheld from the media) forgot to remind the President that vaccine makers require an Indemnification Law to be in place before vaccines can be shipped out. Congress had to rush the passage of the Indemnification Bill last February, but not without delaying the vaccine delivery.

As for the Department of Health (DoH), it’s cold logistics chain was still not in place as of end-March due to a failed bidding process for third party logistics providers. The bidding was declared a failure since bidders “failed to comply with all the requirements” of the DoH. In truth, it was the DoH who dropped the ball since its request for quotation (ROQ) did not disclose the number of vaccines to be received, stored, and deployed, the schedule of vaccine delivery and location of drop-off points. These details are vital for the formulation of accurate quotations. Naturally, the bidding exercise failed.

The national vaccination program is way behind schedule. As of April 17, the National Vaccination Operations Center reported that only 1,264,811 people have received their first jab of the vaccine. At this rate, it will take the DoH 12 years to achieve herd immunity.

Notwithstanding multiple missteps on the government’s part and especially the DoH, Health Undersecretary Maria Rosario Vergeire had the temerity to blame the Filipino people for the recent surge in infections, accusing us all of violating safety protocols. Three points: First, she forgets that the biggest violators are her colleagues in government — Debold Sinas, Harry Roque, Koko Pimentel, and Benjamin Magalang, among many others who weren’t caught on camera. Second, Vergeire prefers not to take responsibility and instead, blame others for the disaster her department is partly responsible for causing. Third, her hubris reflects the general attitude of government in that they cannot see beyond their own blunders. It is painful for me to think that my hard earned taxes pay this woman’s salary.

So — Is it fair to describe government as “incompetent”? Can I dispute the international press? I cannot. With everything that has happened in the last 12 months, the international press is justified for their harsh assessment. The situation we are in today is painfully self-inflicted.

Andrew J. Masigan is an economist

andrew_rs6@yahoo.com

Twitter @aj_masigan

EU blames China for endangering peace in the South China Sea

April 25, 2021 | 6:25 pm

A PHILIPPINE FLAG is seen perched on a Philippine Coast Guard-manned vessel as it conducts patrols at Whitsun Reef, South China Sea, in a handout photo distributed by the Philippine Coast Guard, April 15. — PHILIPPINE COAST GUARD/HANDOUT VIA REUTERS

BEIJING — The European Union (EU) called out China on Saturday for endangering peace in the South China Sea and urged all parties to abide by a 2016 tribunal ruling which rejected most of China’s claim to sovereignty in the sea, but which Beijing has rejected.

The EU last week released a new policy aimed at stepping up its influence in the Indo-Pacific region to counter China’s rising power.

The Philippines on Friday protested to China over its failure to withdraw what it called as “threatening” boats believed to be manned by maritime militia around the disputed Whitsun Reef, which Manila calls the Julian Felipe Reef.

“Tensions in the South China Sea, including the recent presence of large Chinese vessels at Whitsun Reef, endanger peace and stability in the region,” a EU spokesperson said in a statement on Saturday.

EU reiterated its strong opposition to “unilateral actions that could undermine regional stability and international rules-based order”.

It urged all parties to resolve disputes peacefully in accordance with international law, and highlighted a 2016 international arbitration that had ruled in favor of the Philippines while invalidating most of China’s claims in the South China Sea.

China rejected EU’s accusation that its ships at Whitsun Reef, which China calls Niu’E Jiao, had endangered peace and security.

The Chinese Mission to the EU in a statement on Saturday reiterated that the reef is part of China’s Nansha Islands, or Spratly Islands, and that it was “reasonable and lawful” for Chinese fishing boats to operate there and shelter from the wind.

The Chinese statement also insisted that China’s sovereignty, rights and interests in the South China Sea were formed in the “long course of history and consistent with international law” and rejected the 2016 tribunal ruling as “null and void”.

“The South China Sea should not become a tool for certain countries to contain and suppress China, much less a wrestling ground for major-power rivalry,” the Chinese statement said.

China is increasingly worried that Europe and other countries are heeding US President Joseph R. Biden’s call for a “coordinated approach” towards China, which had so far materialized in the form of sanctions over its security crackdown in Hong Kong and treatment of Uyghur Muslims.

US Secretary of State Antony Blinken last month said Washington “stands by its ally, the Philippines,” in the face of China’s massing maritime militia at Whitsun Reef. — Reuters

Myanmar people slam ASEAN-junta consensus to end violence, but no immediate protests

April 25, 2021 | 6:24 pm

People in Myanmar on Sunday criticised an agreement between the country’s junta chief and Southeast Asian leaders to end the violence-hit nation’s crisis, saying it fell short of restoring democracy and holding the army accountable for hundreds of civilian deaths.

There were no immediate protests in Myanmar’s big cities a day after the meeting of the Association of Southeast Asian Nations (ASEAN) with Senior General Min Aung Hlaing in Jakarta, Indonesia, that agreed to end the violence but gave no roadmap on how this would happen.

But several people took to social media to criticise the deal.

“ASEAN’s statement is a slap on the face of the people who have been abused, killed and terrorised by the military,” said a Facebook user called Mawchi Tun. “We do not need your help with that mindset and approach.”

According to a statement from group chair Brunei, a consensus was reached on five points – ending violence, a constructive dialogue among all parties, a special ASEAN envoy to facilitate the dialogue, acceptance of aid and a visit by the envoy to Myanmar.

The five-point consensus did not mention political prisoners, although the chairman’s statement said the meeting “heard calls” for their release.

ASEAN leaders had wanted a commitment from Min Aung Hlaing to restrain his security forces, which the Assistance Association for Political Prisoners (AAPP) says have killed 748 people since a mass civil disobedience movement erupted to challenge his Feb. 1 coup against the elected government of Aung San Suu Kyi.

AAPP, a Myanmar activist group, says over 3,300 are in detention.

“Statement doesn’t reflect any of people’s desires,” wrote Nang Thit Lwin in a comment on a news story in domestic Myanmar media on the ASEAN deal. “To release prisoners and detainees, to take responsibility for dead lives, to respect election results and restore democratic civilian government.”

Aaron Htwe, another Facebook user, wrote: “Who will pay the price for the over 700 innocent lives.”

The military has defended its coup by alleging that the landslide win by Suu Kyi’s party in November’s election was fraudulent, although the election commission dismissed the objections.

The ASEAN gathering was the first coordinated international effort to ease the crisis in Myanmar, an impoverished country that neighbours China, India and Thailand and has been in turmoil since the coup. Besides the protests, deaths and arrests, a nationwide strike has crippled economic activity.

Myanmar’s parallel National Unity Government (NUG), composed of pro-democracy figures, remnants of Suu Kyi’s ousted administration and representatives of armed ethnic groups, said it welcomed the consensus reached but said the junta had to be held to its promises.

“We look forward to firm action by ASEAN to follow up its decisions and to restore our democracy,” said Dr. Sasa, spokesman for the NUG.

Besides the junta chief, the leaders of Indonesia, Vietnam, Singapore, Malaysia, Cambodia and Brunei were at the meeting, along with the foreign ministers of Laos, Thailand and the Philippines. — Reuters

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