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Gov’t to subsidize cost of pork shipments from distant farms

THE Department of Agriculture (DA) said Monday that pig farmers in the Visayas and Mindanao will receive subsidies on their shipping costs when they send their products to Metro Manila, to expanded supply base for pork and head off a brewing inflation crisis.

Agriculture Secretary William D. Dar said the DA will provide hog raisers in Mindanao a transport subsidy of P21 per kilo, with the aim of ultimately bringing down the price upon landing in Metro Manila to about P165.

“What was discussed is that with pork sold at P144 per kilo at farmgate for live hogs, landed price in Metro Manila should be P165 per kilo, (factoring in) the DA’s transport assistance,” he said in a televised briefing.

Hog raisers in the Visayan islands will receive a transport subsidy of P15 per kilo, while those in other parts of Luzon will receive a transport subsidy of P10 per kilo, he said.

The supply of animals on Luzon has been greatly reduced due to an outbreak of African Swine Fever, which has killed outright hogs where the disease has been detected while triggering a cull of many more animals to contain the spread of the disease. The government has responded by seeking volume from farmers beyond the nearby provinces which are the capital’s typical source of supply.

According to the DA’s price monitoring report, the price of pork shoulder, or kasim, in Metro Manila markets fell to about P270 per kilogram on Monday from P350 Friday, while pork belly, or liempo, fell to P330 per kilo from the estimated Friday average of P380.

Mr. Dar said the transport subsidy will be distributed by DA’s regional field offices.

The DA will fast-track the processing of the required documents to facilitate the unhampered passage of pork products, he said.

In a separate briefing, the President’s Spokesman Herminio L. Roque, Jr. said hog raisers in Southern Cotabato have committed to sending 10,000 hogs to Metro Manila weekly at a farmgate price of P145 per kilo.

He said the government may also import pork and live hogs “as a matter of last recourse.”

President Rodrigo R. Duterte last week approved the DA’s recommendation to expand the minimum access volume (MAV) allocation for pork imports as a temporary solution to curb the rise in pork prices. Pork imports within the MAV quota enter the country at a 30% tariff. — Kyle Aristophere T. Atienza

Gov’t says supply deal for rail project attracted lone bid

ONLY ONE PARTY, the joint venture of Sumitomo Corp. and Japan Transport Engineering Co. (J-Trec), submitted a bid for the contract to provide train sets for the Japan-funded North-South Commuter Railway Extension Project, the Transportation department said Monday.

The department made the announcement after a live-streamed bid opening Monday.

“Next will be the evaluation of the submitted bid,” Transportation Assistant Secretary Goddes Hope O. Libiran told BusinessWorld in a phone message.

She said the awarding of the contract is targeted for June.

The Procurement Service of the Department of Budget and Management started issuing bid documents on Sept. 15.

The contract covers the manufacture of 38 eight-car train sets. The contractor will also be required to provide technical support for the train sets.

The bid was to be accompanied by a bid security of one billion yen.

The Sumitomo-J-Trec joint venture signed a contract with the Transportation department to provide 240 train cars for the first phase of the Metro Manila Subway project.

The Japanese joint venture was also awarded in July 2019 the contract to provide 104 train cars for the Malolos-Tutuban segment of the North-South Commuter Railway project.

Sumitomo is one of the maintenance service providers of Metro Rail Transit Line 3 (MRT-3), along with Mitsubishi Heavy Industries Engineering, Ltd. and TES Philippines, Inc. — Arjay L. Balinbin

House body merges various bills on tax-free vaccines

THE House Committee on Ways and Means said it voted to consolidate bills making permanent the tax-exempt and duty-free status of imports of coronavirus disease 2019 (COVID-19) vaccines.

In a virtual hearing Monday, the committee approved in principle a substitute bill that will grant the exemptions to various types of medicine and vaccine, including those used for the COVID-19. Medical equipment and supplies are also covered by the measure.

Muntinlupa Representative Rozzano Rufino B. Biazon said in the explanatory note of a bill that was consolidated that the government “must, at all times, be ready to respond to public health emergencies effectively and efficiently to cushion their effects and prevent them from becoming disasters… Government must willingly give up these revenue sources as it will redound to more lives saved.”

According to Albay 2nd District Rep. Jose Maria Clemente S. Salceda, the recently approved Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act allows VAT-free and duty-free imports of COVID-19 medicines and vaccines only until 2023. CREATE is currently awaiting the President’s signature.

“(CREATE) is only good for three years. (In this bill), this one is good for forever,” he said during the committee meeting on Monday.

Mr. Salceda said in a statement that the tradeoff for the foregone revenue will be the prospect of a prompt reopening of the economy.

“(W)e are losing some P20 billion in economic output due to delays in vaccination. So, the revenue impact of these bills matters very little to me, in view of their overwhelming economic importance,” he said.

A committee report is expected after the bills are consolidated. The report will be forwarded to the Committee on Rules. — Gillian M. Cortez

New IATF panel to oversee aquaculture and fisheries

THE Inter-Agency Task Force (IATF) on Food Security has created a sub-task group to focus on aquaculture and fisheries, a non-governmental organization (NGO) said.

At a virtual briefing Monday, advocacy group Tugon Kabuhayan said the new sub-task group was tasked with improving aquaculture production by streamlining the process for identifying potential aquaculture sites and approving private sector investment.

“The Philippine aquaculture industry is efficient, strong, and competitive. It doesn’t require state subsidies to survive. All it needs is a policy environment conducive for sustainable growth,” the NGO said.

Citing government data, Tugon Kabuhayan said the aquaculture subsector accounted for 53.4% of fisheries output in 2019.

Tugon Kabuhayan added that according to price monitoring by the Department of Agriculture, the prevailing price of milkfish (bangus) and tilapia was P160 and P120 per kilogram, respectively, cheaper than other protein sources such as pork, which was at P380 per kilogram, and chicken, at P180 per kilogram.

“Filipinos consume more fish protein. Fortunately, this is the most reasonably priced and readily available. Based on volume and prices, aquaculture is now the backbone of our protein food security,” Tugon Kabuhayan said.

It said issues currently hampering the development of the aquaculture industry include short tenures in production sites which discourage long-term investment; limited government-approved sites; and the need for stronger regulation.

The sub-task group’s chairperson, Agriculture Undersecretary Cheryl Marie Natividad-Caballero, said the new panel plans to increase production volume by 2-3%.

Ms. Natividad-Caballero added the plans call for 80 additional fish cages in Laguna de Bay within the first half of 2021, to augment the fish supply for Metro Manila.

She said 10% of the country’s dams are suitable for aquaculture, including Pantabangan Dam in Nueva Ecija, Magat Dam in Ifugao and Isabela provinces, and San Roque Dam in Pangasinan and Benguet.

“There have been initial discussions. We just have to define the protocol and the terms of reference so that when the private sector goes into aquaculture in those non-traditional areas, the laws are already defined,” Ms. Natividad-Caballero said. — Revin Mikhael D. Ochave

House passes POGO tax bill on 3rd reading

THE House of Representatives approved on third and final reading a measure taxing foreigners involved in Philippine Offshore Gaming Operators (POGOs).

In plenary session Monday, the House voted 198-13 with two abstentions on House Bill 5777, which seeks to amend the National Internal Revenue Code of 1997.

If enacted, the bill will add foreign nationals employed by POGOs to Section 25 of the National Internal Revenue Code which lists the types of nonresident foreign individuals subject to tax.

“An alien individual regardless of residency and who is employed and assigned in the Philippines… by an offshore gaming licensee or its service provider… shall pay a final withholding tax of twenty-five percent (25%) on their gross income,” according to the bill.

The bill was sponsored by the House Committee on Ways and Means Chairman Jose Maria Clemente S. Salceda. Last month, Mr. Salceda estimated that the measure, which also adjusts the excise tax on the industry, will generate additional revenue of nearly P150 billion if it becomes law.

The bill calls for a 5% excise tax on gross gaming revenue or receipts from POGOs’ gaming operations and other related activities.

Explaining his negative vote, Minority Leader Joseph Stephen S. Paduano said the bill included provisions that were not debated during past plenary sessions.

Mr. Paduano added, “Further, Special Economic Zones with their own Charter like Aurora, Zamboanga and Cagayan already have a Tax Provision in their Charters. They should have been excluded from the coverage of this proposed revenue measure.” — Gillian M. Cortez

Here comes CREATE

More than three years have passed since Republic Act No. 10963 (the TRAIN Law) or the first package of the government’s comprehensive tax reform program was enacted. Now, the second package of the comprehensive tax reform program is a step closer to becoming law.

Last week, the second package or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill was approved by the bicameral conference committee of the House of Representatives and the Senate. The final version of the CREATE Bill is now up for signing by the President. If signed, the CREATE Bill aims to improve the corporate tax system, rationalize the fiscal incentives system and provide support to businesses to aid them in their recovery from the pandemic.

Below are some of the key features of the bicam-approved CREATE Bill:

REGULAR CORPORATE INCOME TAX
Starting July 1, 2020, the corporate income tax (CIT) rate will be reduced to 25% for domestic and resident foreign corporations. Domestic corporations with net taxable income not exceeding P5,000,000 and with total assets not exceeding P100 million will be subject to an even lower CIT rate of 20%. Moreover, the minimum corporate income tax rate will be lowered to 1% between July 1, 2020 and June 30, 2023.

Once the CREATE Bill becomes a law, taxpayers will have to consider the above reduced rates  in their annual tax computation specially for those income tax returns that are due this April 15, 2021.

For non-resident foreign corporations that derive income within the Philippines, the CIT rate will also be at 25% based on gross income, and this rate will be used starting Jan. 1, 2021.

PREFERENTIAL INCOME TAX RATES
Non-profit proprietary educational institutions and hospitals which are non-profit are to be taxed at a much lower rate of 1% for the period beginning July 1, 2020 until June 30, 2023, and then, the rate will revert to 10%. However, the preferential rates or exemption for offshore banking units and Regional Operating Headquarters are being proposed for eventual repeal.

VALUE-ADDED TAX AND PERCENTAGE TAX
Under CREATE, the sale and importation of COVID-19 vaccines, medicine and medical devices prescribed and directly used for the treatment of COVID-19 and capital equipment, spare parts and raw materials necessary to produce personal protective equipment component will be exempt from VAT starting Jan. 1, 2021 until Dec. 31, 2023. The sale or import of prescription drugs and medicine for cancer, mental illness, tuberculosis, and kidney diseases will likewise be exempt from VAT starting Jan. 1, 2021.

Small businesses that are exempt from VAT are subject to percentage tax at the rate of 1% instead of 3% for the period between July 1, 2020 and June 30, 2023.

FISCAL INCENTIVES RATIONALIZATION
Under CREATE, incentives to be granted by the government to businesses will be rationalized to become more performance-based, targeted, time-bound, and fully transparent. Hopefully, this will encourage investors to invest in industries that are crucial to the country’s economic development, attract a new wave of foreign investment, and create more jobs.

The Fiscal Incentives Review Board (FIRB) or the investment promotion agencies (IPAs), under a delegated authority from the FIRB, are authorized to grant incentives to the extent of the approved registered project or activity under a Strategic Investment Priority Plan (SIPP).

Qualified registered enterprises under CREATE will be entitled to an income tax holiday (ITH) followed by either a Special Corporate Income Tax (SCIT) of 5% based on gross income earned, in lieu of all taxes, or regular CIT but with enhanced deductions. One notable change in the bicam-approved version from the previous versions of the bill is the requirement for domestic enterprises to have at least P500 million in investment capital in order for it to avail of the SCIT.

The period of availment of incentives will be limited to period of 14 to 17 years for export and critical domestic enterprises and 9 to 12 years for non-critical domestic enterprises, depending on the location and industry priorities. Registered enterprises that fully relocate from the National Capital Region during the duration of their incentives will be entitled to an additional three years of ITH. Also, registered enterprises that locate in areas recovering from armed conflict or major disasters will be entitled to an additional two years of ITH.

Businesses currently enjoying incentives under the existing laws governing their respective IPAs will still be allowed to enjoy existing incentives for a certain period. After expiration of the transitory period, existing registered export enterprises will have the option to reapply and avail of the incentives provided under CREATE and may still be extended for a certain period not exceeding ten years at any one time subject to the qualifications under the SIPP and performance review by the FIRB.

Indeed, the long wait may finally soon be over for CREATE once it becomes law. Here’s to hoping that it’s all worth it!

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

John Paulo D. Garcia is a manager of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Revisiting citizen roles and state response

This follow up piece comes almost exactly a year since it’s older sibling: a Blueboard article entitled “Reconsidering citizen roles and State response” which was written in January of 2020. The Philippines (and the world) was at the tail end of the “old normal” and at that point, the first month of that year had given us “much to consider” with the eruption of Taal Volcano, and movements in the Middle East that could potentially displace our OFWs. The then officially unnamed coronavirus strain was only beginning to give us “a little cause for pause.”

In this context, the article posited that the role of the State was “one of many actors” and “no longer had monopoly of people’s actions in times of change.” Just like any relationship, it should be one which should be continued to be re-examined and re-negotiated by, first and foremost, the citizens themselves. Political actors that were identified to continue to reshape this relationship include: non state actors (CSOs, churches, local networks), local actors (including the LGUs themselves), and international organizations and national agencies rounded up the list of political actors that were noted in last year’s article which lobbied for a more flexible state response to emerging issues.

Twelve months later, the usual anchors of analysis, reliable yearly milestones such as economic growth, disaster risk response and climate change, political reform, and the protection of vulnerable sectors have been inextricably linked to the global pandemic and most current analysis in any of these areas are now anchored on the effective state response.

Non state actors will have to redefine their network. Once easier to reach, vulnerable sectors in this new normal have required technology for communication and coordination (available to both the assisting organization and the sector they intend to reach), new protocols for active engagement (including social distancing and other health related requirements), and (sometimes the most difficult to produce) an innovative mindset when articulating and aggregating the responses of these sectors.

Strong local response is not enough. These will have to be joined with a good organizational structure at the grassroots level and robust coordinative mechanisms to deal with the complexity and fast changing nature of the pandemic.

International organizations and national agencies are now required to rewrite policy more frequently, and in doing so consistently consider a balance in economic, political and social indicators along with the necessary health related ones.

One year later, we are nowhere near normal and those who are farthest from what is acceptably normal are still those who were farthest from it in January 2020: the youth, women, overseas workers, and other vulnerable groups are sometimes lost in even the policies that seek to protect them from the effects of the pandemic.

We return to the need for re engagement with the State, and aside from the mentioned non state actors, locally based actors, international organizations, and national agencies who used to front quite effectively for vulnerable groups, the individual citizen will also now have to recast their role. What does active citizenry mean in the new normal? How do we ensure a voice? Not just ours but also those who are normally left out of the conversation. Where do we take this conversation with schools physically closed and people limited to little else than work and home (or work from home)? Granted that the effects of the pandemic have left many of these questions secondary to health concerns, our answers to these questions will determine our lives past this pandemic and into a new era of state-society relations.

 

Maria Elissa J. Lao is an Assistant Professor of Political Science at the Ateneo de Manila University where she is currently the Director of the Institute of Philippine Culture.

The weight of influence in trust

They are omnipresent, quite inescapable, and — let’s face it — growing in number. As more people gain access to social media platforms and discover their voice and amass followers, influencers as we call them, have exponentially increased digital content and, ultimately, changed the way we interact with brands.

Marketers and consumers alike have obsessed over personalities whose social media activity opened up room for discussion, inspiration, and affinity. The public’s regard for these personalities has definitely shifted over time — but perhaps no shift has been greater and more relevant than that which happened during 2020, when the pandemic struck out of nowhere, rendering many of the frills and fluff of social media nearly obsolete.

Filipinos have been spending more time online and seeing different people’s pandemic experiences through the window of social media. It has thus far been a time of distance and uncertainty, and people are looking for inspiration and guidance when it comes to what to buy into and what to believe. More than the diversion that the otherwise “fluffy” type of influencer marketing used to provide, audiences are in search of what mirrors their own realities. Rather than glitz and glamor, the pandemic has led people to a greater appreciation of grit and authenticity from those who dominate the numbers on the wide variety of social media platforms made available to us today.

Appreciation has risen for influencers that exhibit qualities of being socially aware and socially responsible. The paradigm shift in online content creation is not anymore about #goals, but rather about genuine expression.

Due to the heavy blows of the pandemic, numerous natural disasters, and even waves of global political change, influencers are now held to a higher standard as their followers demand more accountability and responsibility from them. Brands are also challenged to make messages that should be mindful of the hypercritical and hypersensitive consumer landscape. It is no secret that one of the most effective ways to create brand awareness and trust is the use of influencer marketing. Organic and relatable content is becoming a trend, making online brands heavily dependent on honest reviews from the people that their consumers not only admire but trust.

However, with the rise in numbers of influencers, how can you choose the right one for your brand? Where do influencers stand in the midst of different consumer mindsets?

EON, in partnership with Tangere, conducted a study called “Influencers: Eye Candy or Eye-Openers?” that revealed the different types of influencers in the age of COVID-19 and how social media users perceive their content. The team has identified three types of influencers:

THE INSENSITIVE INFLUENCER
These are the ones who exhibit apolitical stances, are ignorant of what’s happening in the country and in the world, and show little awareness or desire to take action on societal issues. In the age of cancel culture, this type of influencer tends to be the type brands need to steer clear of. American TikTok star and influencer Dixie D’Amelio is an example of this cohort. She has been accused of being transphobic and racist, and lost over a million of her TikTok followers. Off-White and Louis Vuitton designer Virgil Abloh was also the subject of controversy after his comments on the protests against police brutality were seen as insensitive and, at best, tangential to the real issue.

THE TOTAL PACKAGE INFLUENCER

Funny, creative, likeable yet still credible; these influencers mix comedy with social commentary to engage people in pressing issues. The Total Package influencer tends to resonate deeply among millennial and centennial audiences, reflecting the meme-able humor and wit in which they find much relief during these trying times. With most influencers limited to the confines of their home, followers would still look into how they strike a balance between entertaining and informing them. Vlogger Mimiyuuuh, everyone’s favorite Dalagang Pilipina, is a total package. Aside from creating viral, hilarious content, he has been very vocal about several hot button society issues and he praises other influencers who are willing to voice their opinions while being sensitive about what they post online.

THE ONLINE CHANGE-MAKERS
Opinionated, charitable, and genuine — they take a stand for the betterment of society, and are persuasive in promoting causes and advocacies. Though deemed controversial by some, social media users turn to these influencers to amplify the needs and voices of the many. With their courageous stances on pressing issues, the Online Change-Makers seem to have gained not just likes and followers, but genuine respect. Kakie Pangilinan is one change-maker who inspires her audience to speak their minds. Her brave and well-thought-out opinions have drawn praise and respect from social media users and have caught the attention of the powers-that-be and have inspired many others to stand up for what they think is right, however unpopular.

These are the “new-breed” of influencers who are authoritative figures coming from all walks of life, disrupting and molding consumer mindsets. Brands today need to catch up with these influencers who have a captive organic audience as they focus on consumers and not on client briefs. Therefore, brands are left with the demand of considering the congruence of their messages with the influencer’s personality to remain authentic and relevant.

According to GWI’s report on the age of influence and how to personalize on social media, the chosen influencer and their opinions on a product affect the purchase choice of consumers where 67% of respondents say that they are more likely to consider a brand/product if their favorite influencer has promoted it, 56% of respondents look to them for honest reviews, and 37% of respondents say they valued the greater authenticity seen in their recent content. The top industries that have recognized this reality at an early time and are actively utilizing influencers include fashion, cosmetic, and e-commerce brands.

Recently, big name influencers have made it to the headlines and just about every coffee corner conversation. Their actions (or inaction), and behavior (or misbehavior) are being put on the stand as more and more people are being made aware that their status and lifestyles are — in one way or another — a result of the trust that their followers put on them through millions of views, clicks, and shares. Content is the biggest differentiator among influencers, and accountability is what provides the check and balance.

More than a brand name, people trust real people. Influencers are real. The aim now is to be an inspiration through actions taken with a sense of purpose in mind. The criteria for choosing influencers has now changed and the drive for influencers to reevaluate their content shows how this pandemic has helped us see more of what truly counts in this world: a two-way relationship, not a one-way sales channel.

These days, the time-tested adage still applies — tell me who you follow, and I’ll tell you who you are.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

 

Junie Del Mundo is Chair of the MAP Health Committee, Vice-Chair of MAP the CEO Committee, and Co-Founder and CEO of the EON Group, a fully integrated communications consultancy with expertise in consumer and corporate PR, reputation management and public affairs, digital marketing and creative technology, and experiential marketing.

map@map.org.ph

junie.delmundo@eon.com.ph

http://map.org.ph

No to indefinite electricity subsidies

The issues of no disconnection for months, and electricity subsidy for the “lifeline” consumers extended for another 30 years until 2051, have elicited varied reactions from many legislators, energy players and the public. Here are recent reports on this subject plus related stories published in BusinessWorld.

1. “Due process not followed in FiT adjustment, NGO claims” (Feb. 1).

2. “NREB confirms higher quota for contracted RE power” (Feb. 5).

3. “Palace approves two more months of no disconnection for poor power consumers” (Feb. 5).

4. “Decarbonizing for a better working world” (Feb. 1 and Feb. 8).

5. “Regulator notifies 81 utilities of potential violations in second half of 2020” (Feb. 8).

Report number 1 is about Laban Konsyumer, Inc. (LKI) pressuring the Energy Regulatory Commission (ERC) not to give a high feed-in tariff (FiT) allowance especially for solar and wind projects. In 2014, FiT for solar and wind were only P9.68/kWh and P8.53/kWh, respectively. In 2021, these will be increased to P11.28/kWh and P9.90/kWh, respectively.

Lots of favoritism is given to solar and wind, with high guaranteed prices for 20 years via FiT even if overall power generation rates are falling. In 2020 for instance, the customer effective spot settlement price (ESSP) at the Wholesale Electricity Spot Market (WESM) was only P2.45/kWh, the load-weighted average price (LWAP) only P2.41/kWh. And solar-wind will get P11.28/kWh and P9.90/kWh. Lousy cronyism.

Report number 2 is about the National Renewable Energy Board (NREB) recommending the Energy Department to increase the minimum level of electricity contracted from renewable energy (RE) developers from the current 1% to 2.5%.

This will be burdensome for distribution utilities (DUs) which they will pass on to consumers. RE, especially solar-wind, is not cheap, it is expensive because it is unstable and intermittent, needs huge batteries, needs ancillary services from big diesel gensets as back-up power, which automatically raises the cost.

NREB now speaks as a big lobbyist for big solar-wind developers. Any public consultations done on how much additional cost consumers will endure and absorb? None as I know of. There are existing market-based schemes that promote RE, like the green energy option program (GEOP) under RA 9513 (RE law of 2008), and retail competition and open access (RCOA) under RA 9136 (EPIRA law of 2001). So why would NREB and big solar-wind developers impose higher punishment for the consumers? Get lost, guys.

Despite sweetheart schemes for RE like FiT, fiscal and non-fiscal incentives, priority dispatch to the grid under the RE law of 2008, solar, wind, and biomass still contribute very little. In 2019, latest national data from the Department of Energy (DoE), these three intermittents combined contributed only 3.2% to total power generation. In 2020, data from the Independent Electricity Market Operator of the Philippines (IEMOP) show that these three intermittents contributed only 4% of total power generation in the Luzon-Visayas grids (see Table 1).

Report number 3 is about extending the “no-disconnection” policy for lifeline consumers (those using 100 kWh/month or less) by two more months, and bills in Congress and Senate that extend the lifeline rates and subsidies until 2051, next 30 years.

These are energy socialism policies. No disconnection even if lifeline consumers do not pay their electricity bills for more than one year is the government removing household responsibility and passing this as private sector responsibility. It will adversely affect everyone in the power sector — DUs and electric cooperatives (ECs), generation companies (gencos), the transmission company, the banks that lend to these companies, etc.

I saw the statement issued by the Philippine Rural Electric Cooperatives Association, Inc. (Philreca) on Feb. 4. They are correct in saying that “If electricity consumers default on their utility bills payments, then, the DUs will eventually default as well to its power suppliers.”

Congress and NGO lobbyists that push for “no disconnection for lifeline consumers” forget or ignore that the private firms are themselves suffering from the pandemic too. Legislators and politicians pushing this are trying to look good with other people’s money.

Report/opinion number 4 is extending climate alarmism and RE cronyism agenda. If we look at our rich neighbors in the ASEAN like Singapore and Malaysia, they hardly care about having more intermittent energy in their electricity grid. The share of solar-wind in their total electricity generation in 2019 was less than 0.5% (see Table 2).

Report number 5 seems serious but there are no details given. These could be related to accumulated bills that run to tens of thousands because there were no monthly billing and collections from March to May or June.

The proposed electricity subsidy to lifeline customers until 2051 is wrong. A rich household with rooftop solar and which uses little electricity from the grid — below 100 kWh/month — is not a “lifeline” customer and hence, does not need a subsidy. A rich household in an expensive condo that uses all energy-efficient appliances and lights and consumes below 100 kWh/month is not a “lifeline” customer and hence, does not need a subsidy. And even poor households are already given monthly cash allowances by the government, have free healthcare, free education, so they hardly deserve additional electricity subsidy.

Endless subsidy policies promote mendicant and state-dependency thinking. They corrupt people’s values that individual and household responsibility can be erased because the government can always coerce and enforce corporate responsibility as a substitute. Not good.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers

minimalgovernment@gmail.com

Why is it so annoying to send money abroad?

IF YOU’VE ever spent significant time abroad, or tried supporting family overseas, you know that the process of sending money internationally can be stressful. It costs time and money — often too much of both. There’s hope that global crypto currencies will make this process easier, but until those become more accepted, you’ll have to find other ways to save.

I remember returning to New Delhi after a semester at Yale University in Connecticut some years back and trying to move what I had in US dollars to my bank account in India. The process of remitting these savings was so clunky — involving applications in banks in both countries — that I just used my US debit card until the account ran dry. I’m sure I paid a bunch of fees and got short-changed on currency conversion costs, but I found it easier to spend this money rather than spending time trying to find a cheaper way.

Although the costs of remitting have fallen in recent years, they’re still above the United Nations’ Sustainable Development Goal of 3% per transaction by 2030. A world bank study shows that the overall average costs of transmission were 6.5% in 2020, with sending money digitally costing slightly less and sending via bank transfer slightly more.

That means for every $100 you want to remit abroad, you really only send around $93 on average. This varies depending on how you move your money and by where you’re sending money to and from. For example, remitting from a Group of Twenty (G20) country will on average cost just more than 3% if it’s going to India, but more than 6% if it’s going to South Africa. When money is sent within Sub-Saharan Africa, fees can run into as much as 20% of the amount.

That’s a heavy cost for what should be a simple transaction. According to the World Bank, global citizens sent and received more than $650 billion in personal remittances in 2019. That means we lost around $45 billion to costs alone.

Fortunately, there are a few things you can do to lower your own costs when trundling money around the world. But keep in mind that exact costs will depend on where you are and where you’re remitting to.

First, it helps to know that there are two main components of the cost in sending money abroad: the fees of the bank or transmitting entity you use, and the foreign exchange margin they make when they buy at the lower end of the currency exchange rate and sell at the higher end. You should check both before you move any money. You’re getting a good deal if your total cost — fees plus the currency exchange margin — is lower than 5% of the transaction amount. If you’re being offered 8% of the amount, that’s generally too much.

You should also consider where you go. There are four entities that will do the job: banks, credit and debit cards, traditional money transfer firms, and fintechs. No surprises here that the banks and cash transfers cost the most and fintech firms the least.

If the country you’re remitting to allows for exchanging mobile money through e-wallets, then that’s likely to be the cheapest way to send and receive money. Find a licensed, regulated entity that works between the geographies you want to move money between, and check if the total cost is less than 5%. But keep in mind that certain places don’t have wallets that work with each other, and that there may be country specific rules around the movement of money.

Cost isn’t the only consideration either. Perhaps it’s worth paying the higher bank transfer fees because you get the greatest sense of security from going through that institution. It usually helps to find others who have made similar payments and see what worked best for them.

Of course, what you decide to use will ultimately depend on your goals. Are you trying to set up a child who’s just moved abroad? If so, going through a bank is still your best bet. And you’ll want to make sure they have at least two months of rent, food, and other expenses in cash since setting up cross-border bank accounts takes time.

Are you sending money back to your family on a regular basis? Then you’ll want a cheaper fintech solution if possible, otherwise a bank will remain your friend. If you’re just traveling for a short period (once we’re traveling again), you can simply use your debit or credit cards to get access to your own money — check with your card company, though, about any foreign transaction fees — or you can use mobile money in the form of e-wallets.

No, these solutions aren’t perfect, and yes, the remittance system remains a headache. We can only hope that as crypto currencies gain acceptance, moving money across countries will become as fast, easy and cheap as moving money within them.

BLOOMBERG OPINION

S. Africa puts AstraZeneca vaccine rollout on hold over variant data

JOHANNESBURG — South Africa will put on hold use of AstraZeneca’s COVID-19 shot in its vaccination programme, after data showed it gave minimal protection against mild-to-moderate infection caused by the country’s dominant coronavirus variant.

Health Minister Zweli Mkhize said on Sunday that the government would await advice from scientists on how best to proceed, after a trial showed the AstraZeneca vaccine did not significantly reduce the risk of mild or moderate coronavirus disease 2019 (COVID-19) from the 501Y.V2 variant that caused a second wave of infections starting late last year.

Prior to widespread circulation of the more contagious variant, the vaccine was showing efficacy of around 75%, researchers said.

In a later analysis based mostly on infections by the new variant, there was only a 22% lower risk of developing mild-to-moderate COVID-19 versus those given a placebo. Although researchers said the figure was not statistically significant, due to trial design, it is well below the benchmark of at least 50% regulators have set for vaccines to be considered effective against the virus.

The study did not assess whether the vaccine helped prevent severe COVID-19 because it involved mostly relatively young adults not considered to be at high risk for serious illness.

AstraZeneca said on Saturday that it believed its vaccine could protect against severe disease and that it had already started adapting it against the 501Y.V2 variant.

Still, professor Shabir Madhi, lead investigator on the AstraZeneca trial in South Africa, said data on the vaccine were a reality check and that it was time to “recalibrate our expectations of COVID-19 vaccines.”

South Africa hopes to vaccinate 40 million people, or two-thirds of the population, to achieve some level of herd immunity but has yet to administer a single shot.

It had hoped to roll out the AstraZeneca vaccine to healthcare workers soon after on Monday receiving 1 million doses produced by the Serum Institute of India (SII).

Instead, it will offer health workers vaccines developed by Johnson & Johnson (J&J) and Pfizer/BioNTech in the coming weeks.

“What does that mean for our vaccination programme which we said will start in February? The answer is it will proceed,” Mr. Mkhize told an online news briefing. “From next week for the next four weeks we expect that there will be J&J vaccines, there will be Pfizer vaccines.”

NEW APPROACH
Professor Salim Abdool Karim, an epidemiologist advising the government, said there needed to be a new approach to immunizations, given uncertainty about how effective current vaccines would be against the 501Y.V2 variant.

First a vaccine should be used in a targeted group to assess hospitalization rates, and then if it proves effective in reducing hospitalizations it could feature in a wide-scale rollout, he said.

If it was not effective in reducing hospitalizations, individuals who had received it should be offered another effective vaccine, either a booster based on the variant or another vaccine, Mr. Abdool Karim added.

It was probable that South Africa would experience a third wave of infections when winter starts in around four months’ time, Mr. Madhi said.

He added that it would be “somewhat reckless” to discard the 1 million AstraZeneca doses the country had received when there was still a chance they could protect against severe COVID-19.

Anban Pillay, health ministry deputy director-general, said the expiry date on the AstraZeneca doses was in April, but the government was speaking to the SII to seek an extension or exchange.

Mr. Madhi said South Africa might want to reframe its target group for vaccination. “It really needs to be centered around the prevention of severe disease and death from what will likely be a resurgence sometime soon.” — Reuters

Diamond jewelry forecast to regain pre-pandemic sparkle in 2022-2024

JOHANNESBURG — Diamond jewelry demand will recover to pre-pandemic levels between 2022 and 2024, with China leading the way, a report commissioned by the Antwerp World Diamond Center (AWDC)predicted.

Demand recovery will diverge depending on lockdown policies, government support, and the extent to which retailers manage to shift sales online, said the report by consulting group Bain.

The diamond industry was already under stress before 2020, but although the COVID-19 pandemic exacerbated this, the report said it is well placed to recover.

“We strongly believe that the industry is in very good shape for a strong rebound,” Olya Linde, a partner at Bain, said.

China’s diamond jewelry demand will recover fully this year, while in India it will only recover by end-2023 or 2024, with the US expected to recover by 2022-2023.

Bain forecasts that rough diamond production will remain stable from 2023 to 2030, with very few new mine projects coming online, helping the recovery. Growing high and middle classes in China and India will drive the global industry.

Diamond production fell 20% in 2020, the report estimated, and rough diamond sales, which had already fallen 18% year-on-year in 2019, plunged 33% in 2020 as diamond miners faced with plummeting demand sought to shore prices up by limiting supply.

Mining companies bore the brunt of the downturn, with profit margins falling by 22 percentage points, Bain found.

But while the pandemic hit the diamond jewelry market hard, with sales dropping 15% from 2019, it performed better than personal luxury — which includes watches, apparel, and accessories — which saw sales fall 22% year-on-year.

Threats to the market’s recovery include a double-dip recession and competition from other luxuries, the report said. — Reuters

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