Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 6920

PEZA seeking Indian pharma, defense equipment investors

THE Philippine Economic Zone Authority (PEZA) said it has pitched to India the potential for investing in pharmaceuticals and defense manufacturing in the Philippines.

The investment promotion agency met with Indian Ambassador to the Philippines Shambhu S. Kumaran on March 1, in which he conveyed the potential interest of Indian companies in the two sectors, PEZA said in a statement Monday.

“It’s something that we would want to get some of our Indian companies who have connected suppliers to look at. We will be engaged with you and your team (regarding such investments) because this is a very interesting area,” he said.

There are around 28 Indian companies registered in PEZA. Among them, 21 are in the information technology and outsourcing sector while five are in manufacturing.

Mr. Kumaran also said the two countries must cooperate in upskilling their workforces.

“The demographic dividend can only be realized if we do what is required — that is to train and equip (those entering the job market) to meet the challenges of the new economy,” he said.

PEZA is aiming to take in over P100 billion in investment pledges this year, against P95 billion in 2020.

The agency is also planning to set up defense economic zones for makers of military equipment before the end of the Presidential term. — Jenina P. Ibañez

Indonesia, PHL close to deal on halal goods

INDONESIA may soon recognize the Philippine halal certification process, opening the door for exports to that country, the Department of Trade and Industry (DTI) said.

The DTI said in a statement Monday that the two countries are in the final stages of working on a memorandum of understanding (MoU) that would lead to Indonesia’s recognition of Philippine halal certification bodies accredited by the department.

Indonesian law requires all halal products shipped into the country to be registered with its government certification agency after being certified by the exporting country’s own authorized body.

Halal-certified products are those permitted by Islamic law. Around 87% of Indonesians identify as Muslim, equivalent to more than 220 million people.

The MoU between the department and Indonesia’s certification agency is awaiting confirmation and additional comment from the Indonesian side, Philippine International Trading Center Jakarta Commercial Attaché Jeremiah Reyes said.

“We see this being signed as soon as possible,” he said.

When the MoU is signed, the DTI said a mutual recognition agreement will eliminate the need for repeated compliance testing.

Philippine exporters must comply with halal certification for food and beverages. Starting in October, exporters of medicine, cosmetics, clothes, household equipment, office supplies, and medical equipment will also need to be compliant, the DTI said.

“Through exporting to predominantly Muslim countries like Indonesia, we can also help Filipino businesses pivot to this new market,” Undersecretary Abdulgani M. Macatoman said. — Jenina P. Ibañez

House panel backs increase in MAV quota for pork

THE House committee overseeing taxes said it supports an expansion of the quota for pork imports that pay a more favorable tariff, known as the minimum access volume (MAV), but did not recommend a lowering of tariff rates, saying that such a measure would not significantly reduce pork prices.

Representative Jose Ma. Clemente S. Salceda, chairman of the House Committee on Ways and Means, said at a hearing Monday that lowering the tariff rate for pork imports will have a minimum impact on prices.

“I recommend to keep the tariffs but increase the MAV,” he told Department of Agriculture (DA) officials at the hearing.

“It is increased supply that will reduce prices… Your (proposed) reduction in tariffs from 40% to 5% can reduce CPI inflation by only 0.4%,” he also said in the hearing.

The committee has congressional oversight powers on tariff matters. The DA wants to reduce tariffs on pork to 5% for imports within the MAV quota and 15% for out-of-quota imports, from 30% and 40% respectively.

The government is exploring ways to contain the sharp rise in food prices to avert a new inflation crisis, including price controls, expanded imports, lower tariffs, and increased shipments of pork to Metro Manila from distant farms that do not traditionally supply the capital.

The hog population on Luzon has been decimated by African Swine Fever, curtailing supply and causing prices to rise.

In a statement, Mr. Salceda said the impact on prices was equivalent to a 50-centavo reduction in pork prices per kilo, and concluded that such a change was “not worth the trouble” that the expansion in imports would cause to the farming sector.

He added that the only beneficiaries of tariff reductions will be big business, importers and supermarkets.

Backyard hog raisers make up 71% of the domestic hog industry.

Mr. Salceda proposed a scheme similar to the Rice Competitiveness Enhancement Fund (RCEF) using tariffs collected from pork imports to help upgrade the hog industry. “Let’s allow more importation at current tariff rates. Whatever is in excess of what we usually import, let’s use the tariff revenues as an RCEF for the swine industry. That could reach P14 billion more in tariff revenue if we import all of our shortfall.”

The DA has sent its proposal to expand the MAV quota to the President last month along with another proposal to reduce pork import tariffs. The DA wants a new MAV of 404,000 metric tons (MT) from the current 54,000 MT.

During the hearing, Agriculture Secretary William D. Dar said if the tariff reduction is approved by the President, the department will seek to prevent injury to the hog industry should the market be flooded by imports.

“We will have the arrival of imports in a calibrated fashion, ‘yung mga pangangailangan sa period na ‘yun, ‘yun lang po para sa ganun, hindi sobra sobra ang karne sa merkado (those that are needed for that particular period… so we don’t have an excess of meat in the market),” he said.

The DA is also carrying out a hog repopulation program which it is proposing for more funding, while raising insurance payouts for farmers to protect them as they restore their herds. — Gillian M. Cortez

Agri dep’t won’t budge on price controls for pork, chicken

PHILIPPINE STAR/MICHAEL VARCAS

THE price controls on pork and chicken will remain in force until April 8 as originally planned, the Department of Agriculture (DA) said, in order to stem a dramatic rise in the commodities.

“Lifting (the price controls) will undeniably result in a dramatic rise in prices of pork and chicken, given that the African Swine Fever (ASF) crisis is still raging and continues to impact on production of hogs nationwide,” Agriculture Secretary William D. Dar said in a statement Monday.

Forging ahead with price controls comes amid opposition from the pork industry, which is seeking the freedom to charge prices beyond the current limits in order to earn an adequate return on their produce.

The price controls were implemented via Executive Order (EO) No. 124 after market prices for pork topped P400 per kilogram.

The EO, issued on Feb. 1 but implemented a week later, capped the price of pork shoulder (kasim) at P270 per kilogram, pork belly (liempo) at P300 per kilogram, and whole chicken at P160 per kilogram.

Mr. Dar said adjustments to the price ceiling are likely to be met by sellers exceeding even the adjusted prices.

“Though the price ceiling may not ensure full compliance by the traders and retailers, it is still an effective deterrent against unscrupulous trading activities,” Mr. Dar said.

“By maintaining it, the government will send a strong signal to consumers — who are suffering from lower incomes due to the adverse impact of the coronavirus disease 2019 (COVID-19) pandemic on our economy — that it does care about their welfare,” he added.

The hog industry has pushed for the removal of price ceilings and proposed instead a suggested retail price for pork products of between P330 and P360 per kilogram.

Edwin G. Chen, president of the Pork Producers Federation of the Philippines, Inc., said in a mobile phone message that the group is awaiting government aid in hog repopulation and ASF eradication programs.

“We will just help in whatever we can. It is really up to the hog traders and vendors to follow the price ceiling,” Mr. Chen said.

As of Feb. 26, the total number of culled pigs due to ASF totaled 442,402 animals, the DA said. — Revin Mikhael D. Ochave

Fish output growth needed to keep up with population rise estimated at 50,000 MT/year

THE GROWTH of fisheries output needed to keep up with the rising population was estimated at about 50,000 metric tons (MT) a year, with most of the new demand to be met by aquaculture, advocacy group Tugon Kabuhayan said.

In a virtual briefing, Tugon Kabuhayan convenor Asis G. Perez said that based on United Nations data, the Philippine population is estimated to hit 111.05 million in 2021, and estimated fish demand this year at 4.086 million MT.

“By 2031, we need to produce (an additional) 500,000 MT to provide for the needs of the projected 125.02 million population, which is projected to consume around 4.6 million MT,” Mr. Perez said.

“With most fishing grounds showing signs of overfishing, it is only prudent to target the 500,000 MT increase in fisheries production through aquaculture,” he added.

“Right now, around 60% of the fish being produced around the world comes from aquaculture, while 40% are from capture fisheries,” he added.

Jon G. Juico, president of the Philippine Tilapia Stakeholders Association, said the needed increase in production can be achieved, adding that there are still a number of underutilized fish farms across the country.

“In terms of tilapia production, it can be increased,” Mr. Juico said.

However, Mr. Juico said the industry has encountered problems in bringing produce to market due to logistics issues caused by the coronavirus disease 2019 (COVID-19) pandemic.

“There are also certain markets in Metro Manila that closed down which were the traditional markets for fish farmers and traders,” Mr. Juico said.

Renato B. Bocaya, assistant vice-president for sales of Finfish Hatcheries, Inc., said there was an oversupply of fisheries products in the three months to November, which caused some small businesses to exit.

Mr. Bocaya said production costs for the period was around P90 to P100 per kilogram, but businesses were only able to sell for P70 to P80 per kilogram due to the oversupply caused by travel restrictions.

“Many cage operators across the country have experienced problems in selling their products from one province to another. It also did not help that the buying capacity of Filipino consumers declined last year,” Mr. Bocaya said.

Meanwhile, Mr. Perez said the plan of the National Economic and Development Authority (NEDA) to ease the import process for fish will be “dangerous” for the aquaculture sector.

In February, NEDA announced its proposal to fast-track food imports, including fisheries products, to bring down rising food prices.

Mr. Perez said the main problem of domestic producers is how to sell their produce. If they have to compete with imports, their burdens will be compounded.

“It’s not a question of availability, but a question of the logistical system that we are having primarily as a result of the pandemic,” Mr. Perez said.

“Our problem is not production, but logistics and postharvest losses. We should focus on that and not on importation,” he added.

The Philippine Statistics Authority (PSA) estimates that fisheries output in 2020 fell 0.3% to 4.403 million MT.

The PSA said aquaculture accounted for 52.8% or 2.32 million MT, followed by municipal fisheries at 25% or 1.10 million MT, and commercial fisheries with 22.2% or 978,170 MT. — Revin Mikhael D. Ochave

Inflation, unemployment seen weighing on economy in 2021

THE RECOVERY will be hindered by inflation and the weak job market this year, possibly outweighing positive factors like the vaccination campaign, tax reforms and the infrastructure program, Pru Life UK Investments said.

“As long as we see curtailed movement around the country, economic recovery may continue to be slow. So as a consequence of the curtailed movement, we also see inflation being a problem,” Pru Life UK Investments Head of Equities Charles Wong said at the company’s launch of two new funds.

The government expects the economy to grow by 6.5% to 7.5% this year following the record 9.5% contraction in 2020.

“We do expect GDP to grow by the second quarter due to a combination of looser restrictions and of course base effect from last year,” Mr. Wong said.

“We do hope that government spending picks up dramatically by the third quarter and fourth quarter to make up for the weak consumer spending and the multiplier effect from consumer spending,” he added.

Inflation picked up in recent months, with the February Consumer Price Index rising 4.7%, the second consecutive month the indicator has exceeded the government’s target band of 2-4%.

Mr. Wong said inflation is only likely to return to a “more acceptable level” by 2022.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said the central bank expects headline inflation to remain high in the next few months due to supply-side factors such as the African Swine Fever outbreak and higher oil prices, though inflation could taper off by the second half.

The Monetary Board (MB) last month maintained the key policy rate at 2% but raised its inflation forecast for the year to 4% from 3.2%.

“There’s an inflation danger. They’ve been saying that it is transitory but if you look at global prices of commodities particularly oil given that we are an importer, that’s something that would seep into the inflation more and more as oil prices move higher,” Pru Life Investments UK Head of Fixed Income Ricky Maddatu said.

In its previous policy-setting meeting, the Monetary Board also raised its forecast for the Dubai crude oil benchmark in 2021 and 2022 to averages of $54.65 (from $47.57) and $51.98 ($47.44) per barrel, respectively.

“As long as we maintain this trajectory in terms of the vaccine rollout, in terms of the reopening of the economy, and there are no other obstacles that come up, most likely the next movement is a rate hike,” Mr. Maddatu said.

Mr. Diokno has said the MB will remain accommodative and keep rates low to provide support until the country is back to its pre-pandemic growth track.

Aside from inflation, Mr. Wong said another downside risk to growth is unemployment which remains stubbornly high.

He said there has been a “worrying trend” in the October labor force data which showed unemployment actually increased for the age groups 25 to 34 and 35 to 44, which is “the most productive age for the country.”

The Philippine Statistics Authority said the jobless rate in October fell to 8.7%, equivalent to 3.813 million unemployed, improving from the 10% unemployment rate in July but still much higher than the 4.6% in October 2019 when 2.045 million were jobless.

Unemployment peaked at 17.6% in April last year, equivalent to 7.228 million jobless individuals at the height of the lockdown. The preliminary results of the January Labor Force Survey will be released Tuesday.

Pru Life UK Investments had assets under management at the close of 2020 of P10.4 billion, according to Pru Life UK Investments Chief Executive Officer Lee C. Longa. — Luz Wendy T. Noble

Here’s to healthier tax disputes

The COVID-19 vaccine is just around the corner but the challenges of the first quarter must still hold our attention. The news is full of headlines on the Philippines’ budget deficit growing to a record P1.37 trillion and the debt-to-GDP ratio rising to 54.5% at the end of 2020. The increased need to address the burgeoning deficit and debt leaves the government scrambling to raise revenue.

When tax people hear the phrase “raise revenue,” they think of increased Bureau of Internal Revenue (BIR) audits and tax disputes to make up for shortfalls. Several scenarios that can pose challenges and burdens to taxpayers come to mind. Two recent challenges relate to denial of Voluntary Assessment and Payment Program (VAPP) availment and issuance of subpoena duces tecum (SDT).

In September, the BIR issued Revenue Regulation (RR) No. 21-2020 for the implementation of VAPP for Taxable Year 2018 under certain conditions. One of the objectives of the RR is to reduce the number of audit investigations by encouraging voluntary payment of additional taxes.

However, there have been situations when the BIR denied VAPP availment. One of the denials was due to non-withholding of taxes. On another occasion, the BIR attempted to deny availment on the basis of an assessment finding for disallowed expenses which translated to overstatement of expenses by more than 30%.

In the case involving alleged non-withholding of taxes, it is important to note the difference between non-withholding of taxes and non-remittance of withholding taxes. What invalidates the VAPP availment is non-remittance of taxes that had in fact been withheld by a designated withholding agent — which is akin to theft of government tax revenue. It should be noted that mere non-withholding is not grounds for invalidation.

As for the overstatement of expenses case, the regulations provide that for VAPP availment to be invalidated, there must be “strong” evidence or findings of overstatement of deductions by more than 30%. This seems to be rooted in the Tax Code provisions on fraud, i.e., that under-declaring income or overstating deductions by more than 30% constitutes prima facie evidence of fraud. However, it must be emphasized that there must be strong evidence based on facts. The burden of establishing such strong evidence falls upon the BIR.

Many taxpayers avail of the VAPP in the hope of avoiding or putting an end to tax disputes. We can only imagine them clinging on in the hope of surviving yet another audit. Invalidating availments based on questionable application of the rules undermines confidence in VAPP.

Another challenge in tax assessment cases is the issuance of SDT. To many, the mere mention of the word “subpoena” is threatening. SDT is a process directed to a person requiring him to bring any books, documents, or other paraphernalia under his control. Basically, this type of subpoena is issued for presentation of documents that are necessary for the BIR to conduct an audit.

The problem, however, is that there are instances when subpoenas are issued even when there was prior submission of documents. The usual list attached to the Letter of Authority (LoA) issued to taxpayers is a long one. At times, taxpayers can submit majority of the documents, but not all due to the sheer volume of requirements. The problem is confounded today by the fact that retrieving documents in our COVID-stricken world can be a nightmare. When would such a subpoena be deemed absolutely necessary?

Under BIR regulations, a subpoena can be issued if the information or records requested are not furnished within the period prescribed or when the information or records submitted are incomplete. The word “incomplete” may be overly broad. Some taxpayers ask whether the examiner, during the examination stage, really needs 100% of such records. Even the BIR’s Handbook on Audit Procedures and Techniques allows for sampling, which is defined as the application of examination procedures to less than 100% of the items in an account to verify accuracy.

The concern is that the subpoena needs to be used fairly. At a time when everyone’s stress levels are at an all-time high, the issuance of SDTs for questionable “incomplete” submissions may be uncalled for.

With the array of concerns about erroneous denial of VAPP and unreasonable issuance of SDTs, it is no surprise that taxpayers are wishing for an improved BIR approach and for a healthier dispute resolution process in these difficult times.

An apt reminder in raising revenues in this time of crisis is the Supreme Court pronouncement in the case of Roxas vs. Court of Tax Appeals: “The power of taxation is sometimes called also the power to destroy. Therefore, it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally, and uniformly, lest the tax collector kill the ‘hen that lays the golden egg.’ And in order to maintain the general public’s trust and confidence in the Government, this power must be used justly and not treacherously.”

Yes, taxes are the lifeblood of the nation, but the most sustainable source of increased government revenue should come from growth spurred by increased business activity, profits, and increased employment. This will not happen if we kill today the “hen that lays the golden egg.”

Diana Elaine B. Bataller-Simbulan is a manager of the Tax Advisory and Compliance Division of P&A Grant Thornton.

Twitter: @GrantThorntonPH

Facebook: P&A Grant Thornton

dian.bataller-simbulan@ph.gt.com

pagrantthornton@ph.gt.com. at

www.grantthornton.com.ph

The administrative sanction approach to corporate governance reforms

When the Revised Code of Corporate Governance (RCCG) was issued by the Securities and Exchange Commission (SEC) in June 2009, it changed the regulatory approach to the corporate governance reform by providing for a general administrative sanction clause for any violation of its provisions, thus:

ARTICLE 11: ADMINISTRATIVE SANCTIONS
A fine of not more than P200,000 shall, after due notice and hearing, be imposed for every year that a covered corporation violates the provisions of this Code, without prejudice to other sanctions that the Commission may be authorized to imposed under the law; provided, however, that any violation of the Securities Regulation Code punishable by a specific penalty shall be assessed separately and shall not be covered by the abovementioned fine.

A major criticism we held against the 2009 RCCG was its overhaul of the definition and coverage of the term “Corporate Governance” (CG) and the deletion of all references to “stakeholders” and “constituencies,” and thereby limiting its application only to purely intra-corporate relationships already governed by the old Corporation Code. It was not difficult for the SEC to impose a general administrative sanction clause in the 2009 RCCG since this was consistent with general criminal penalty approach under Section 144 of the then Corporation Code, thus:

SEC. 144. Violations of the Code. — Violations of any of the provisions of this Code or its amendments not otherwise specifically penalized therein shall be punished by a fine of not less than P1,000 or by imprisonment for not less than 30 days but not more than five years, or both, in the discretion of the court. …

Nonetheless, the SEC still met oppositions to its exercise of any power to impose administrative sanctions for violations for the 2009 RCCG since there was no statutory basis thereof found in the then Corporation Code. What power the SEC had to impose administrative sanctions could be found only under Presidential Decree No. 902-A and the Securities Regulation Code, and yet the CG reforms mandated under the 2009 RCCG pertained primarily to a higher benchmark than those provided for under the Corporation Code.

We recall then that after reading the 2009 RCCG, one was left with the feeling that the great experiment of ushering into our jurisdiction modern CG principles and practices had abruptly come to an end; and that we in the Philippines were retreating back to old, familiar grounds — the governance principles espoused under the century-old principles expressed in the provisions of the old Corporation Code. Indeed, the issue that stood out from the provisions of the 2009 RCCG was not what cutting-edge concepts or provisions were introduced, but rather a withdrawal from the application Stakeholder Theory, and reverting back to the familiar Maximization of Shareholder Value.

In May 2014, under Chair Teresita J. Herbosa, the SEC issued Memorandum Circular No. 9-2014, with the principal purpose of reintegrating the stakeholder provisions of the original CG Code back into the 2009 RCCG. Nonetheless, the general administrative sanction clause for violation of any of the provisions of the 2014 RCCG was retained. The issue under the 2014 RCCG was how an “administrative sanction approach to any violation of its provision” would sit well with the promotion of good CG among the directors and executive officers of publicly-held companies.

Fines and other penalties imposed by the SEC are serious matters, not only because of the pecuniary burdens placed on the company, but more so on the egregious effect on the value of its securities to the detriment of investors. More importantly, under the then Corporation Code, and in the 2014 Revised CG Code itself, a violation may be a ground for the disqualification of a director, or constitute as “proper cause” for his removal by the requisite vote of shareholders.

Worse, was the fact that the overly broad language used in the administrative sanction clause sent a chilling effect through the publicly held companies sector. Although there is no doubt that the failure to comply with the requirement of filing the manual is punishable under Article 11 of the 2014 Revised CG Code, it seemed difficult to see how any other “violation” thereof may be properly punished by a fine of P200,000 “for every year that a covered corporation violates the provisions of this Code.”

Firstly, instead of the fine being imposed on every violation of the provisions of the 2014 RCCG, the penalty that was imposable was limited to “P200,000 every year.” That would come to the dubious end that a covered company may commit various infractions under the 2014 RCCG, and only be liable to a maximum penalty of P200,000 per year.

Secondly, CG principles and best practices are primarily to be followed or practiced by the directors and key officers of a covered company, and the infraction would be a personal liability on their part. Yet the provisions of Article 11 of the 2014 RCCG apply the penalty only to a violation by the company itself and not on the director or officer guilty of an offense under the Code.

Thirdly, although the non-filing of the manual on CG constituted a situation that “a covered corporation violates the provisions of this Code,” simply because the original provisions of the original CG Code specifically covered only such violation, it was not clear what other violations may be punishable under Article 11 of the 2014 RCCG.

To illustrate, under Art. 2(F) of the 2014 RCCG, it was provided that “The Board should formulate the corporation’s vision, mission, strategic objectives, policies and procedures that shall guide its activities, including the means to effectively monitor Management’s performance.” Obviously, compliance with such a duty may find its expression in the manual of CG submitted with the SEC. But if the manual duly submitted does not contain one or some of the items enumerated, or what are submitted are not effective or complete, did that constitute a violation of the 2014 RCCG, triggering the imposition, after notice and hearing, of the P200,000 fine? Who is to judge what is “effective”?

If we were to presume that the clear intention under Article 11 of the 2014 RCCG was that the penalty imposed would be personally against the offending director or officer, it would have a chilling effect on the exercise of business judgment on the part of the Board of Directors, and would even discourage qualified professional directors from accepting appointments to publicly held companies simply because they are not certain exactly what action or inaction would constitute punishable offense under the said provision.

In any event, what is important to consider is that the net effect of the changes introduced by the 2014 RCCG was to make the provisions thereof mandatory to publicly held companies, and non-compliance therewith may involve the imposition of administrative sanctions. Such penalty provisions are often necessary to get any system going, but effective only when they are evenly enforced. The use of coercive measures in fact misses the whole point of what CG reform movement is all about — it is meant to show to businessmen that doing good is consistent with doing well in business. As they say, piety obtained out of fear is mere pretense.

The second important feature of both the original CG Code and 2014 RCCG was that they were presented with the same format: they start each section by stating the CG principle in a certain area of concern, and then provide under each principle a set of duties and responsibilities or best practices that would enforce the principle highlighted. In short, both CG Codes issued by the SEC were primarily “rules-based” codes, as contrasted to “principles-based” approaches in CG reforms.

The main objection to rules-based codes, especially those that carry sanctions, is that they do not promote a “change of hearts and minds,” in the sense that they merely impel directors and officers to right away refer the matters to their legal counsel, and the organization ends up “ticking the boxes” to ensure compliance with the required or indicated measures of the code. In addition, since a rules-based code cannot possibly anticipate all situations that may occur in the corporate setting, then pursuit of CG reforms ends up with the Board and Management looking for loopholes, or in pursuit of a set of actions that are not clearly within the mandatory coverage of the rules or measures indicated in the code.

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.

 

Attorney Cesar L. Villanueva is Chair of MAP Corporate Governance Committee, trustee of the Institute of Corporate Directors, former Chair of Governance Commission for GOCCs (August 2011 to June 2016), Dean of the Ateneo Law School (April 2004 to September 2011), author of the book The Law and Practice in Philippine Corporate Governance and the National Book Board Award-winning Profession, and founding partner of the Villanueva Gabionza & Dy Law Offices.

map@map.org.ph

cvillanueva@vgslaw.com

http://map.org.ph

Impact of the COVID-19 pandemic on women Overseas Filipino Workers

In the first edition of the “ILO Monitor: COVID-19 and the World of Work” released in March 2020, the International Labor Organization (ILO) suggested that in determining the impact of coronavirus disease 2019 (COVID-19) on labor, the following be examined: health impact, quantity of jobs (both unemployment and underemployment), quality of jobs (wages and social protection) and specific vulnerable groups. In this thinkpiece, I examine the plight of women Overseas Filipino Workers (OFWs) as a specific vulnerable group and present some facts and musings regarding the impact of the COVID-19 pandemic on their health, jobs and wages.

I decided to focus on women OFWs for three reasons. Firstly, it’s International Women’s Month and it is thus an opportune time to push women’s concerns into the heart of public discourse.

Secondly, the starting point is compelling: there are now more female than male OFWs. According to the pre-COVID, 2019 Survey of the National Statistics Authority (NSA), female and male OFWs constitute 56% and 44% of total OFW deployment, respectively. Thus, of the 2,202,000 OFWs deployed in 2019, 1,233,000 were women and 969,000 were men.

Thirdly, I recently had the privilege to be part of a multi-stakeholder conversation on the proposed law for the creation of a Department of Overseas Filipinos (DOFil) that was organized by the Safe and Fair Migration Program of the Country Office of the ILO in Manila. In this public conversation, a female OFW emphatically claimed: “Hindi namin kailangan ng bagong departamento, kailangan namin ng trabaho! (We don’t need a new department, we need jobs!).” Those words have not left my mind since.

HEALTH RISKS
At the very start of this pandemic, we already knew that most of the OFWs, especially women OFWs, were in countries that had become the epicenters of the deadly COVID-19 virus. In March 2020, the World Health Organization declared that Europe was replacing China as the epicenter, with Italy having the most cases of infection outside of China (i.e., with 15,000 infections), followed by Spain (i.e., with more than 4,000 infections). Cases were then also increasing in the United Kingdom and the United States.

At that time, 81% of OFWs deployed or 1.78 million were in Asia and of these, 1.12 million were women while a little over 660,000 were men. In Hong Kong alone, of the 29,000 deployed OFWs, only around 1,500 were men. In Western Asia, women OFWs also outnumbered the men, with the deployment of 675,000 women and 267,000 men. In Qatar, there were 38,000 women OFWs and 15,000 men. In Europe and North and South Americas, there were more men than women, but the latter’s numbers were still substantial: 44,000 and 51,000, respectively.

In October 2020, the Department of Labor and Employment (DoLE) publicly announced that 9,402 OFWs had been COVID-infected, 4,938 had recovered, and 864 had died. As per DoLE’s latest data released on Jan. 17, “countries in Europe and the Americas listed 3,078 cases with 265 deaths while there were 1,239 reported cases of OFW infection in Asia and the Pacific.” OFW infections have reportedly been highest in the Middle East Region with 7,844 cases and within this region, the most affected OFW population is in Qatar, with 3,873 cases and 19 deaths.

While the DoLE figures regarding cases and deaths among OFWs are not sex-disaggregated, it is safe to assume that most of those affected are women OFWs. In many of the abovementioned countries or regions where COVID-19 cases are very high, women constitute the bulk of the OFW population.

Moreover, women OFWs are in jobs (i.e., healthcare, domestic work, hospitality and accommodation) where social distancing seems impossible. Attending to the sick or caring for entire households require proximity and contact, not distancing.

It is estimated that 25% of the total deployed OFWs, roughly 500,000 in total, are healthcare workers. Healthcare work — especially the nurses’ sector — has been highly feminized and thus, it is women OFWs who are at great risk. Despite the pandemic or perhaps because of the pandemic, there is continuing demand for Filipino health workers. Very recently, no less than DoLE officials claimed that the Philippine government was willing to lift its 5,000 persons-ban of OFW health workers to countries like the United Kingdom and Germany, in exchange of 600,000 vaccines supposedly for OFWs who want to continue to work abroad. Needless to say, this piece of news regarding the possible exchange of nurses for vaccines (as if nurses were tradeable goods!) has been met with public outrage.

JOBS AND WAGES AT-RISK
In the seventh edition of the ILO Monitor released in January 2021, the ILO claims that in 2020, 8.8% of global working hours were lost and that this was equivalent to 255 million full-time jobs. Half of these entailed employment loss while the other half involved reduced work hours.

The DoLE claims that by December 2021, at least one million OFWs will be displaced. This seems to be a realistic claim, given that by October 2020, DoLE figures showed that 486,446 OFWs had already been displaced due to the pandemic.

Of these, 275,619 had been repatriated, 131,047 were preparing to be repatriated while 79,780 were displaced but decided to stay in their host countries. Of those who stayed, the majority (41,581) are in the Middle East.

According to the Overseas Workers Welfare Administration (OWWA) Uwian na Program figures, 41.6% of total OFW returnees were women, at least half of whom came from the Middle East; 22.9% of the returnees were domestic workers. More women OFWs are expected to be displaced given that they are in occupations or sectors most affected by the pandemic in terms of economic output. Very early on, the ILO claimed that on top of manufacturing, the services, tourism, travel and retail trade sectors had been hit the hardest. Most women OFWs are in services and elementary occupations (this includes domestic work). As per the 2019 NSA data, almost 40% of those deployed, or roughly 870,000 workers worked in elementary occupations. Of these, around 770,000 were women OFWs. In the services and sales sector, meanwhile, there were 385,000 or 17.5% of total OFWs deployed. Of these, almost 220,000 were women. Women OFWs, thus, work mostly in sectors where pay is low and social protection is very limited and now, because of the pandemic, these women are likely to lose even such meager jobs.

The loss of jobs and wages due to the pandemic redound to the loss of income. At the global level, the ILO estimates that labor income loss for 2020 was at $3.7 trillion or 4.4% of the 2019 global gross domestic product (GDP).

In the Philippines, civil society groups and trade unions have been calling the public’s attention to the phenomenon of wage theft, not just wage loss. According to the Migrant Forum in Asia (MFA), many OFWs experienced non-payment or reduction of wages/benefits at the onset of the pandemic. Claiming these wages have apparently been very difficult for OFWs, prompting the MFA to call for an “international claims commission” and a “compensation fund” to address this phenomenon of migrant workers being deprived of wages and benefits due them. The pandemic, after all, should not be used as an excuse to invalidate the rightful money claims of workers.

The decline of OFW income is further revealed in the decline of OFW remittances.

According to the Bangko Sentral ng Pilipinas, personal remittances from overseas Filipinos have declined by 4.2%, from $2.876 billion in August 2019 to $2.756 billion in August 2020. This loss of $120 million is by no means insignificant since many Filipino families rely on remittances for their daily needs.

What we are facing today is a development conundrum. Even if we deny it in paper, our practice says otherwise: labor migration continues to be this country’s main development strategy. If in the past, we asked “isn’t it wise to promote migration?,” today, with the COVID-19 pandemic, we probably should be asking: “isn’t it foolish to further migration?”

 

Carmel V. Abao is a faculty member of the Political Science Dept. of the Ateneo de Manila University. She teaches political theory and international political economy.

Power demand contraction and natural gas cronyism

Based on average power demand in the Luzon-Visayas grids for January and February, the Philippines’ first quarter 2021 GDP seems to point to a -5% contraction with a -6.7% power demand contraction in January and a -4.8% contraction in February.

Data from the Independent Electricity Market Operator of the Philippines (IEMOP) further shows that electricity prices at the Wholesale Electricity Spot Market, the customer effective spot settlement price (ESSP) and load-weighted average price (LWAP) remain low in January and February, reflecting low demand relative to supply (see Table 1).

The indefinite lockdown policy of the government, turning exactly one year this coming March 15, remains the single biggest source of business uncertainties and economic contraction.

Last week, a Congress bill was discussed and reported in BusinessWorld, “House committee approves downstream natural gas bill” (March 3). It says that “the committee approved the draft substitute bill replacing House Bill No. 3031 or the proposed Downstream Natural Gas Industry Development Act.”

I checked the substitute bill and these three sections are highly suspicious:

“Sec. 38. Natural gas Share in the Philippine Energy Plan… required share of natural gas, in the form of a fuel mix, portfolio standard, and/or some other policy… be fully implemented.”

“Sec. 39. Off-take Support and Security… required to underpin investments in PDNGI shall be adopted.”

“Sec. 40. Capacity and Reserve Markets…. leverage reserve capacities of natural gas-fueled power generating plants… shall be established.”

Sec. 38 is about mandatory minimum share of natgas, Sec. 39 is about mandatory take or pay of natgas, and Sec. 40 is about mandatory reserve capacities of natgas. These are favoritism and cronyism for gas companies — horrible.

Three and a half years ago, this column (“Cronyism in Renewable energy, gas sectors?,” Sept. 7, 2017, https://www.bworldonline.com/cronyism-renewable-energy-gas-sectors/) wrote about the lecture in UPSE of FirstGen President and COO Giles Puno, where he lobbied for LNG — “1.) Holistic and defined energy mix, 2.) fiscal and non-fiscal policies, 3.) Secure LNG Off-take, similar to how Malampaya was underpinned.”

These three points are about the same as Sections 38, 39, and 40 of the Substitute bill — wow.

In a Viber interview with Lawrence Fernandez, Meralco Vice-President and Head of Utility Economics, he made an interesting observation that “Electricity consumers have been saddled for years by various subsidies and mandates to support (a.) renewable energy (RE) via Feed-in Tariff Allowance (FIT-All) and Renewable Portfolio Standards (RPS), b.) remote area electrification via Universal Charge Missionary Electrification (UCME), c.) off-grid RE development via RE Cash Incentive, and, d.) Malampaya gas via take-or-pay provision.”

These endless attacks to ease out or kill coal power in the Philippines and replace it with more intermittent RE and natgas which is also fossil fuel, are inconsistent with global energy realities.

Many countries are able to sustain their development needs and fast growth by relying on cheap, stable coal energy. Examples are China, India, South Africa, South Korea, Indonesia, Australia, Malaysia, Turkey, Taiwan, Vietnam, Poland, and the Philippines. The rich countries that developed fast many decades ago did so by relying on cheap, stable coal energy. Examples of these as of 1985 are the US, Germany, the UK and Spain (see Table 2).

China, India and Indonesia, which constitute 48% or nearly half of the total world population, were 63%-73% coal-dependent in 2019. Among rich countries in 2019, Taiwan, South Korea and Australia were 41%-56% coal dependent. And the much richer US, Japan, and Germany were 24%-32% coal dependent.

If gas power is given priority or mandatory dispatch to the grid, there is little or zero incentive for the gas companies to bring down their prices and thus, ignore two important rules: the “least cost” mandate of distribution utilities (DUs) provision of the EPIRA law of 2001 (RA 9136), and Competitive Selection Process (CSP). The end result is more expensive electricity for consumers.

The Department of Energy, Energy Regulatory Commission, Philippine Competition Commission, and business organizations should warn Congress of the dangers to energy consumers and businesses when natgas cronyism becomes a law.

 

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

minimalgovernment@gmail.com

The one vaccine efficacy number that truly matters

SOMETHING SOUNDS FISHY when public health experts advise us to take whatever vaccine is available even though some vaccines show much more promising efficacy numbers than others. And it’s understandable that people would want to shop for the best vaccine. Americans are accustomed to the idea of consumer choice in pharmaceuticals — why else would we have so much direct-to-consumer drug advertising? But cut through the noise and there’s only one thing that really matters: all three FDA-authorized vaccines seem to work equally well — close to 100% — at preventing hospitalization and death.

That message has gotten diluted in the reporting around the efficacy numbers for different vaccines. The efficacy numbers associated with the Moderna and Pfizer vaccines came in at around 95%, while the newly approved Johnson & Johnson vaccine has shown a less impressive 72% in the US, and even lower in other countries. As risk communication expert Peter Sandman says, people remember from school that 95% usually earns an A, and 72% a C at best.

The problem is that numbers most touted to measure “efficacy” measure various degrees of symptoms plus a positive test — criteria that vary some from trial to trial. They don’t measure what’s most important: protection against hospitalization and death.

And on that score, all three vaccines are outstanding. So public health experts are justified in suggesting people take the first vaccine available.

People aren’t only worried about dying from coronavirus disease 2019 (COVID-19); they’re also worried about getting so-called long COVID and transmitting the disease to others even after they’re vaccinated. There’s no data one way or the other one whether vaccination cuts the risk of long COVID for those who get sick, but all the vaccines appear to reduce the number of people who get mild illness or asymptomatic cases, and thereby probably reduce transmission.

While the Pfizer and Moderna vaccines work the same way, Johnson & Johnson’s vaccine works through a different mechanism. The first two use messenger RNA, and the latter uses DNA, which is ferried to the nucleus of cells with a different kind of virus, called an adenovirus, modified so it can’t replicate itself and cause disease. All three vaccines have good safety data, and all of them prompt the body to produce T-cells, which retain a sort of memory of the protein and attack it.

One reason for the seemingly stark difference in efficacy numbers is that the clinical trials were held in very different groups of people. The Johnson & Johnson trial enrolled more people with hypertension, diabetes, and HIV, as well as more people over 60, says University of California Infectious Disease Dr. Monica Gandhi. Johnson & Johnson’s results also came from testing people in South Africa and Latin America at a time when new variants of the virus were already rampant. The important thing to note, says Gandhi, is that nobody who got the vaccine in the clinical trials — for any of the shots — was hospitalized for COVID-19. None of them died. None even got a severe enough case to require medical intervention at all.

The absence of hospitalizations and deaths in the Johnson & Johnson trial looks even more impressive given that the volunteers included people who were more vulnerable to dying from the virus. Gandhi says she’d advise her own 80-something parents to get that shot if it was the first one available.

Earlier this year, Yale University epidemiologist Robert Hecht had told me in an interview that he thought more lives could be saved by vaccinating people in so-called hot spots where there was an unusually high burden of disease. I called him back and asked whether the single-shot advantage of the Johnson & Johnson vaccine might make it a good choice for those places. He agreed it would, but worried about the perception that it’s an inferior vaccine, which could incite outrage about racial or socioeconomic injustice.

Other experts are also wrestling with this question, since the Johnson & Johnson vaccine is cheaper than the other approved shots, delivered in a single dose, and requires only ordinary refrigeration rather than ultra-cold storage. That would make it a practical choice for vaccinating homeless people, and those in hard-to-reach rural areas, but again, experts are wrestling with the perception of inequality.

That concern isn’t justified, given a proper interpretation of the data. Even the perception of unfairness, though, could be harmful. Giving people the ability to vaccine-shop might help more hesitant people feel more in control and less coerced — but also inadvertently prolong the pandemic.

Getting the one-shot vaccine out as fast as possible and focusing on virus hotspots would save lives and hasten a return to some level of normal life. It’s now up to the public health community to send out a clearer message and get the public on board.

The most important numbers here aren’t 95% or 72%, but 0%: the number of vaccinated people who’ve died from the virus. When that’s the emphasis, the message to get the first available vaccine makes a lot more sense.”

BLOOMBERG OPINION

South Korea finds no link between deaths and coronavirus vaccines

SEOUL — South Korea said on Monday it had found no link between the coronavirus vaccine and several recent deaths, as it ordered nearly 100,000 foreign workers to be tested after clusters emerged in dormitories.

Health officials had been investigating the deaths of eight people with underlying conditions who had adverse reactions after receiving AstraZeneca’s COVID-19 vaccine, but said they found no evidence that the shots played a role.

“We’ve tentatively concluded that it was difficult to establish any link between their adverse reaction after being vaccinated, and their deaths,” Korea Disease Control and Prevention Agency (KDCA) Director Jeong Eun-kyeong told a briefing.

South Korea began vaccinating residents and workers at nursing homes and other at-risk individuals at the end of February, with 316,865 people having received their first shots as of Sunday.

Several outbreaks in manufacturing and other industrial workplaces prompted authorities to begin inspecting 12,000 work sites with international workers, while multiple local governments ordered foreign workers to be tested in coming days.

“Their work environment and communal housing raise the danger of infection but it is difficult to find patients early because of their limited access to medical resources and testing, and the issue of illegal stay,” Ms. Jeong said.

Gyeonggi Province ordered about 85,000 foreign workers to get tested in the next two weeks, Vice Governor for Administrative Affairs Lee Yong-chul told a briefing.

At least 151 foreign residents in the Gyeonggi city of Dongducheon have recently tested positive, though what caused the outbreak is still unclear.

In Namyangju, another city in Gyeonggi, at least 124 foreigners had tested positive after an outbreak at a plastic manufacturing plant.

In another central province, the industrial cities of Eumseong and Jincheon also ordered about 4,500 and 5,000 foreign residents respectively to be tested after group infections emerged from a glass factory and a food processing company.

Working conditions for migrant workers in South Korea received new scrutiny after a woman from Cambodia was found dead living in a greenhouse in freezing winter temperatures late last year.

The deaths of hundreds of mainly undocumented Thai migrant workers in South Korea prompted the United Nations last year to call for an inquiry into the fate of migrants.

The number of Thai worker deaths hit a record annual high in 2020 — 122 as of mid-December — according to a report by the Thomson Reuters Foundation. — Reuters

1...6,9196,9206,921...12,768Page 6,920 of 12,768
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube