WHO recommends two doses of Pfizer COVID-19 vaccine within 21–28 days

January 6, 2021 | 2:39 pm

With jabs in limited supply as production ramps up, the World Health Organization has been examining how they can be used most effectively. Image via Reuters

GENEVA/ZURICH — People should get two doses of the Pfizer and BioNTech vaccine within 21–28 days, the World Health Organization (WHO) said on Tuesday, as many countries struggled to administer the jabs that can ward off the COVID-19 virus.

Many are experiencing intensifying pressure on their health services due to surging coronavirus cases and the emergence of new variants that appear to spread more easily.

Governments are introducing new lockdown measures to halt the spread while facing massive demand for vaccines which are seen as the best way out of the global health crisis.

But with jabs in limited supply as production ramps up, the WHO has been examining how they can be used most effectively.

“We deliberated and came out with the following recommendation: two doses of this (Pfizer) vaccine within 21–28 days,” Alejandro Cravioto, chairman of WHO’s Strategic Advisory Group of Experts on Immunization (SAGE), told an online news briefing.

The panel said countries should have leeway to spread out shots over six weeks so that more people at higher risk of illness can get them.

“SAGE made a provision for countries in exceptional circumstances of (Pfizer) vaccine supply constraints to delay the administration of the second dose for a few weeks in order to maximize the number of individuals benefiting from a first dose,” Mr. Cravioto said.

He added: “I think we have to be a bit open to these types of decisions which countries have to make according to their own epidemiological situations.”

More than 85 million people have been reported to be infected by the novel coronavirus globally and around 1.85 million have died, according to a Reuters tally.

SPACING DOSES
SAGE executive Joachim Hombach said spacing out the two Pfizer inoculations could be acceptable for countries unable to implement the main recommendation. “The JCI, the recommending body of the UK, has given more flexibility up to 12 weeks in consideration of the specific circumstances that the country is currently facing,” he said.

“We … totally acknowledge that countries may see needs to be even more flexible in terms of administration of the second dose. But it is important to note that there is very little … empirical data from the trials that underpin this type of recommendation,” he added.

Given the limited supply of vaccines at present, Mr. Cravioto said SAGE did not recommend the Pfizer jab for international travelers as a priority unless they were in a very high-risk group, such as the elderly and those with pre-existing ailments.

Kate O’Brien, a WHO immunization expert, said there was a robust discussion at SAGE about the trade-off between adhering strictly to standard dosing in clinical trials and allowing for a broader use of vaccine as first doses, thus risking delay in getting the second dose out to some people.

Alluding to delays in rolling out inoculations, she said: “Nobody expected this to be easy and we are starting to see where the road bumps are and where we need to make adjustments.”

Tedros Adhanom Ghebreyesus, WHO director-general, said he was “very disappointed” that China had not authorized entry of an international mission to examine the origins of the global coronavirus pandemic.

Infections have been reported in more than 210 countries and territories since the first cases were identified in China in December 2019. — Emma Farge and John Revill/Reuters

Why is Bitcoin’s price at an all-time high? And how is its value determined?

January 6, 2021 | 1:57 pm

Bitcoin continues to trade close to its all-time high reached this month. Its price is now around US$34,000—up about 77% over the past month and 305% over the past year.

First launched in 2009 as a digital currency, Bitcoin was for a while used as digital money on the fringes of the economy.

It has since become mainstream. Today, it’s used almost exclusively as a kind of “digital gold.” That is to say, a scarce digital asset.

In response to the risk of economic collapse due to COVID, governments around the world have flooded global markets with money created by central banks, in order to boost spending and help save the economy.

But increasing the supply of money erodes its value and leads people to look for inflation-resistant assets to hold. In this climate, Bitcoin has become a hedge against looming inflation and poor returns on other types of assets.

WHAT IS BITCOIN?

Bitcoin, the world’s largest cryptocurrency by market capitalization, has a current circulating supply of 18,590,300 bitcoins and a maximum supply of 21,000,000.

This limit is hard-coded into the Bitcoin protocol and can’t be changed. It creates artificial scarcity, which ensures the digital money increases in value over time.

Whereas government-issued currencies such as the Australian dollar can have their supply increased at will by central banks, Bitcoin has a fixed supply that can’t be inflated by political decisions.

Bitcoin is predominantly traded on online cryptocurrency exchanges, but can also be sent, received and stored in “digital wallets” on specific hardware or smartphone applications.

But perhaps the most groundbreaking aspect of the Bitcoin network is that it draws on the work of cryptographers and computer scientists to exist as a blockchain-based digital currency.

A public blockchain is an “immutable” database, which means the record of transaction history can’t be changed.

A FUNCTIONAL AND DECENTRALIZED DIGITAL CURRENCY

Bitcoin is “decentralized.” In other words, it functions via a dispersed peer-to-peer network, rather than through a central authority such as a central bank.

And it does this through the participation of Bitcoin “miners.” This is anyone who chooses to run software to validate Bitcoin transactions on the blockchain. Typically, these people are actively engaged with cryptocurrency.

They are rewarded with bitcoins, more of which are created every 10 minutes. But the reward paid to miners halves every four years.

This gradual reduction was encoded into the network by creator Satoshi Nakamoto, who designed it this way to mimic the process of extracting actual gold—easier at first, but harder with time.

While several have laid claim to it, the true identity of Bitcoin creator Satoshi Nakamoto (a psuedonym) has never been confirmed. His last written post on the forum bitcointalk.org was on December 12, 2010.

Bitocoin miners today earn 6.25 bitcoins for every block mined, down from 50 bitcoins in the early years. This creates an incentive to get involved early, as scarcity increases with time.

Because of this, the price is expected to rise to meet demand. But because future scarcity is known in advance (predictable at four-year intervals), the halving events tend to already be priced in.

Therefore, massive surges and falls in price typically reflect changing demand conditions, such as a growing number of new institutional investors. More and more public companies are now investing in bitcoin.

But what function does Bitcoin provide for society that has people so invested?

WHY DOES BITCOIN MATTER?

There are a few possible explanations as to why Bitcoin is now deemed significant by so many people.

It’s a “safe” asset

In the face of global uncertainty, buying bitcoins is a way for people to diversify their assets. Its market value can be compared to that of another go-to asset that shines in times of trouble: gold.

Amid the turmoil of a global pandemic, an unconventional US presidential handover, and geopolitical power shifts the world over, it’s possible more people view gold and Bitcoin as better alternatives to dollars.

It ties into privacy-oriented ideologies

Bitcoin (and cryptocurrency in general) is not politically and ideologically neutral. It was born of the internet era, one plagued with grave concerns for privacy.

Bitcoin’s intellectual and ideological origins are in the “cypherpunk” movement of the 1990s and early 2000s.

Records of online forums show it was advocated for as an anonymous digital currency that allowed people to interact online without being tracked by governments or corporations, offering an alternative for anyone who distrusts the Federal central banking system.

Perhaps the overt rise of digital surveillance in response to the COVID pandemic has further stoked fears about online privacy and security—again piquing the public’s interest in Bitcoin’s potential.

WHY IS BITCOIN BOOMING?

Bitcoin’s recent boom in value comes down to a combination of three factors: ideology, social sentiment, and hope.

But although these are variable factors, this doesn’t discredit the significance of the digital economy, interest in the technology as it matures and the influence of institutional investors in cryptocurrency, including Bitcoin.

Bitcoin is in an upward market trend, also known as “bull market” territory.

It was designed to increase in value over time through the rules Nakamoto wrote into its software code — which Bitcoin’s most outspoken advocates, known as “maximalists,” vehemently defend.

IMAGINING NEW FUTURES

From a larger frame of reference, decentralized cryptocurrencies allow new ways to coordinate without the need for a central arbiter.

And decentralized blockchain-based networks don’t just enable digital money. Similar to ordinary smartphone apps, software developers around the world are building decentralized applications (DApps) on top of Bitcoin and other blockchain protocols.

They have introduced other cryptocurrencies, such as Ethereum, which are also open platforms for the public.

Other DApps include decentralized financial (DeFi) tools for prediction markets, cryptocurrency borrowing and lending, investing, and crowdfunding.

Nakamoto’s audacious experiment in digital currency is working as intended. And what really deserves attention now is what this means for our digital, physical, and social futures. — Jason Potts and Kelsie Nabben/The Conversation

Jason Potts is a Professor of Economics at RMIT University in Melbourne, Australia.

Kelsie Nabben is a Researcher/PhD candidate, RMIT Blockchain Innovation Hub/Digital Ethnography Research Centre, RMIT University.

World Bank sees global output up 4% in 2021, flags downside risks

January 6, 2021 | 1:13 pm

WASHINGTON — The global economy is expected to expand 4% in 2021 after shrinking 4.3% in 2020, the World Bank said on Tuesday, although it warned that rising COVID-19 infections and delays in vaccine distribution could limit the recovery to just 1.6% this year.

The World Bank’s semi-annual forecast showed the collapse in activity due to the coronavirus pandemic was slightly less severe than previously forecast, but the recovery was also more subdued and still subject to considerable downside risk.

“The near-term outlook remains highly uncertain,” the Bank said in a statement. “A downside scenario in which infections continue to rise and the rollout of a vaccine is delayed could limit the global expansion to 1.6% in 2021.”

With successful pandemic control and a faster vaccination process, global growth could accelerate to nearly 5%, it said in its latest Global Economic Prospects report.

More than 85 million people have been infected by the novel coronavirus and nearly 1.85 million have died since the first cases were identified in China in December 2019.

The pandemic is expected to have long-lasting adverse effects on the global economy, worsening a slowdown that was already projected before the outbreak began, and the world could face a “decade of growth disappointments” unless comprehensive reforms were put in place, the Bank said.

Shallower contractions in advanced economies and a more robust recovery in China helped avert a bigger collapse in overall global output, but disruptions were more acute in most other emerging market and developing economies, the Bank said.

Aggregate gross domestic product in emerging markets and developing economies—including China—is expected to grow 5% in 2021 after a contraction of 2.6% in 2020.

China’s economy was expected to expand by 7.9% this year after growing by 2% in 2020, the Bank said.

Excluding China, emerging market and developing economies were seen expanding 3.4% in 2021 after shrinking 5% in 2020.

Per capita incomes have dropped in 90% of emerging market and developing economies, tipping millions back into poverty, with reduced investor confidence, increasing unemployment and loss of education time seen dampening prospects for future poverty reduction, the Bank said.

The crisis also triggered a surge in debt levels among emerging market and developing economies, with government debt up by 9 percentage points of GDP—the largest one-year spike since the late 1980s.

“The global community needs to act rapidly and forcefully to make sure the latest wave of debt does not end with debt crises,” the report said, adding that reductions in debt levels would be the only way for some countries to return to solvency.

A resurgence of infections stalled a nascent rebound in advanced economies in the third quarter, with economic output now expected to expand by 3.3% in 2021, instead of 3.9% as initially forecast, the Bank said.

It forecast that US gross domestic product would expand by 3.5% in 2021, after an estimated 3.6% contraction in 2020. The euro area was expected to see output grow 3.6% this year, following a 7.4% decline in 2020, while activity in Japan, which shrank by 5.3% in the year just ended, is forecast to grow by 2.5%. — Andrea Shalal/Reuters

SM Foundation opens scholarship online application for SY 2021-2022

January 6, 2021 | 11:27 am

SM Foundation (SMFI) invites incoming college freshmen to apply for the SM College Scholarship program for School Year 2021-2022 via its online application portal from January 1 to February 28, 2021.

The SM scholarship program is open to the following:

Grade 12 graduates from public and private schools in the areas covered. For private school graduates, applicants should have the Department of Education (DepEd) voucher and was able to finish Junior High from a public school;
General Weighted Average grade of at least 88% or its equivalent for Grade 12 – 1st semester; and
Total household income of at most P150,000 per year.

The program covers the following field of studies: Computer Science, Information Technology, Engineering (Civil, Electrical, Mechanical, Computer, and Electronics), Education (Elementary and Secondary); Accountancy, and Financial Management, among others. For more information and to apply, visit www.sm-foundation.org.

Furthermore, the SMFI also invites Pasay City residents to apply for the SM – Pasay Tech-voc Scholarship Program which is open to 17 – 30 year-old residents of Pasay city who have finished at least the 10th Grade (For graduates of the new DepEd curriculum) or High School graduates (For graduates of the old DepEd curriculum), Single, and with a total household income less than PHP150,000 per year.

Interested applicants may get the SM – Pasay Tech Voc Scholarship Program application form and apply through the Pasay City Mayor’s office from January 4 to February 28, 2021.

The SM Scholarship Program started from the vision of the late SM patriarch, Henry “Tatang” Sy, Sr. He believed that if you send one child from an economically challenged family to college, that child would have more opportunities to have gainful employment and later on uplift the economic status of his/her family.

SM Foundation, through its Scholarship program, provides deserving and qualified students with access to college education and technical-vocational studies since 1993. To date, SMFI has supported almost 5,500 scholars nationwide.

Inflation picks up as food costs spike

January 6, 2021 | 12:34 am

Snacks are sold at the Commonwealth Market in Quezon City, Jan. 5. The country’s headline inflation rose to 3.5% in December on the back of higher prices of food and transport. — PHILIPPINE STAR/MICHAEL VARCAS

By Luz Wendy T. Noble, Reporter

ANNUAL INFLATION quickened to a 22-month high in December, driven by a surge in food and transport prices during the holiday season, the Philippine Statistics Authority (PSA) said on Tuesday.

Headline inflation stood at 3.5% last December, faster than 3.3% in November and the 2.5% in December 2019.

The rate was higher than the 3.2% median estimate in a BusinessWorld poll last week, and near the high end of the 2.9-3.7% forecast given by the Bangko Sentral ng Pilipinas (BSP).

This brought the average inflation for 2020 to 2.6%, a tad quicker than 2.5% in 2019 but matches the BSP forecast.

“The main reason for the faster inflation in December is the uptick in the rise of prices of food and nonalcoholic beverages,” National Statistician Claire Dennis S. Mapa said at a briefing.

Prices of food and nonalcoholic beverages, which contributed 54% to the month’s overall inflation, quickened to 4.8% in December from 4.3% in November. Food and nonalcoholic beverages account for 38.33% of the theoretical basket of goods that an average Filipino household consumes.

For the month, prices of vegetables and meat rose by 19.7% (from 14.6% in November) and 10% (from 8.2%), respectively.

Rice prices inched up by 0.1%, the first time it posted an increase after 19 months of deflation attributed to the impact of the Rice Tariffication Law (Republic Act No. 11203).

“I cannot tell right now if this is the start of an upward trend [in rice prices]. We will see in the next month or two if it will really go positive,” Mr. Mapa said.

Transport prices, which contributed 19.6% to overall inflation, rose by 8.3% in December from 7.6% in November. Inflation in tricycle and jeepney fares jumped by 47.2% (from 45.9% in November) and 6.6% (from 5.9%), respectively.

Prices of restaurant and miscellaneous goods quickened to 2.5% in December, from 2.2% in November. Faster annual price increases were seen in meals, personal hygiene items such as alcohol and toothpaste, and barbershop services.

On the other hand, the PSA noted a slowdown in the indices of the following commodity groups: alcoholic beverages and tobacco (12.2% from 12.3% in November); housing, water, electricity, gas and other fuels (0.5% from 0.8%); and furnishing, household equipment and routine maintenance of the house (3.3% from 3.5%).

Core inflation, which excludes volatile food and energy prices, stood at 3.3% in December, picking up from 3.2% in November and 3.1% a year ago. This brought its 2020 average to 3.2%, the same rate in 2019.

BSP Governor Benjamin E. Diokno said the inflation uptick in December was “largely transitory, reflecting the short-term impact of weather disturbances.”

A spate of strong typhoons hit Luzon in late October and early November, causing significant crop damage in parts of Luzon.

“The overall balance of risks to future inflation continues to lean toward the downside owing mainly to the continued uncertainty caused by the pandemic on domestic and global economic activity,” Mr. Diokno told reporters in a Viber message on Tuesday.

The BSP chief, however, noted that the upward pressure on food and oil prices might come from a stronger-than-expected recovery, given recent vaccine developments.

“The BSP continues to expect inflation to settle within the target range over the policy horizon,” Mr. Diokno said.

The faster uptick in food prices is seen as a continuing impact of the typhoons and the African swine fever, Security Bank Corp. Chief Economist Robert Dan J. Roces said.

“This cost-push effect — likely transitory as food prices tend to remain sticky going down — coupled with higher demand during the holiday season nudged overall price growth higher,” he said in a text message.

“The higher demand, on the other hand, underscored improved mobility and consumption, and this is good news for the country’s economic managers banking on the legion of consumers to propel recovery,” he added.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the quicker rise in transport costs was due to “higher fuel prices and expenses related to minimum health standards.”

Mr. Mapa said the central bank is unlikely to go for another rate cut given the current negative real interest rate environment, but he expects the BSP to keep its accommodative monetary policy.

“With the central bank pushing up its 2021 inflation forecast to 3.2%, we do not expect BSP to adjust its main policy rate soon. However, [Mr.] Diokno did hint at a possible reduction to reserve requirements in the near term,” Mr. Mapa said in a note.

To support the economy during the crisis, the central bank slashed rates by a total of 200 basis points in 2020, bringing down the overnight reverse repurchase, lending, and deposit rates to all- time lows of 2%, 2.5% and 1.5%, respectively.

Mr. Diokno said on Tuesday that the BSP will keep rates low “until maybe the next few quarters.”

Meanwhile, inflation for the bottom 30% income households logged in at 4.3% in December, faster than the 3.6% in November and the 1.9% a year earlier.

The consumer price index (CPI) for the bottom 30% modifies the model basket of goods to reflect the spending patterns of the poor. This compared to the headline CPI which measures inflation as experienced by the average household.

Headline inflation rates in the Philippines (December 2020)

January 6, 2021 | 12:34 am

ANNUAL INFLATION quickened to a 22-month high in December, driven by a surge in food and transport prices during the holiday season, the Philippine Statistics Authority (PSA) said on Tuesday. Read the full story.

BSP to keep rates low ‘for next few quarters’

January 6, 2021 | 12:33 am

BENCHMARK interest rates will remain low “for the next few quarters” to support the virus-stricken economy, but unlikely to cross negative territory, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Tuesday.

“Given the old facts that we have, we intend to keep interest rates low until maybe the next few quarters,” Mr. Diokno told the ABS-CBN News Channel.

Last year, cumulative rate cuts from the central bank amounted to 200 basis points (bps), bringing the overnight reverse repurchase, lending and deposit rates to record-lows of 2%, 2.5% and 1.5%, respectively.

Asked whether the BSP could go lower than current rates, Mr. Diokno said: “I don’t want to make a commitment but it will depend on the inflation level, and whether there is still a need for further monetary easing.”

Headline inflation accelerated to 3.5% in December, driven by the faster pace of food and transport price increases.

However, Mr. Diokno is not keen on pushing rates below zero. “We still have room for conventional monetary policies,” he added.

At its Dec. 17 meeting, the Monetary Board left rates untouched, citing the benign inflation environment as well as the rollout of some coronavirus vaccines that lifted prospects for global economic recovery.

Despite the record low interest rates, lending growth remained sluggish at 1.9% in October, the slowest since the same pace was logged in September 2006.

At the same time, Mr. Diokno said further reductions in the reserve requirement ratio (RRR) of banks are still on the table.

“We still have some play on the reserve requirement. I made a commitment to cut the reserve requirement to a single digit by the end of my term in 2023 so we still have some play there,” the BSP chief said.

The Monetary Board is authorized to cut the reserve ratio by up to 400 bps in 2020. However, the BSP only slashed it by 300 bps, through a 200-bp cut for big banks and 100 bps more for thrift and rural lenders.

Reserve requirements for universal and commercial banks stand at 12%, while those for thrift and rural banks are at 3% and 2%, respectively.

“Instead of policy rate cuts, maybe the BSP will go for a reserve requirement cut in the meantime, as it is in line with Mr. Diokno’s goal to lower banks’ ratio to a single digit,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a text message.

The upcoming fourth-quarter gross domestic product data will be a crucial factor for the BSP to gauge whether to go for a reserve ratio cut, said ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa.

“We believe [Mr.] Diokno will be willing to utilize this space if and when GDP numbers continue to disappoint although an infusion of liquidity may not do much in terms of stimulating the moribund economy,” he said in an e-mail.

The Philippine Statistics Authority will release fourth-quarter and full-year 2020 GDP figures on Jan. 28. The BSP’s first policy-setting meeting is scheduled for Feb. 11, although previous reserve requirement cuts were done off-cycle.

The country’s economic output shrank by 11.5% in the third quarter, bringing the contraction for the first nine months to 10%. The government expects the economy to shrink by 8.5-9.5% for 2020.

“[Mr.] Diokno will continue to call fiscal authorities to act but he will also likely look to do whatever it takes to get the economy back on track,” Mr. Mapa said. — Luz Wendy T. Noble

Factory output down for 9^th straight month in Nov.

January 6, 2021 | 12:32 am

By Beatrice M. Laforga, Reporter

THE country’s manufacturing output extended its losing streak for the ninth consecutive month in November, the statistics agency reported on Tuesday.

Preliminary results of the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries (MISSI) showed factory output, as measured by the Volume of Production Index (VoPI), further declined at an annual rate of 10.8% in November, from the revised -9.3% in October and -7.6% in the same month of 2019.

November saw the steepest drop in four months or since the revised -13.6% in July 2020.

VoPI has been on a decline since March, when the government began imposing stringent lockdown measures to curb the spread of the coronavirus disease 2019 (COVID-19).

In the first 11 months of 2020, factory output shrank by 11.5% on average, against the 8.5% average drop in the same period in 2019.

The PSA attributed the sustained slide in November to the double-digit slump in the indices of 16 industry groups, led by petroleum products (-61.9%), tobacco (-58.6%) and printing (-51.5%).

Meanwhile, the Value of Production Index (VaPI), a similar composite indicator in the survey, slipped by 13.8% year on year from the revised -12.3% in October. This marked the ninth straight month VaPI recorded an annual contraction rate and the fastest since July’s revised 16.8% drop.

Year to date, VaPI fell by 15.3% on average, against the 6.9% drop in the comparable 11-month period in 2019.

The average capacity utilization — the extent to which industry resources are used in producing goods — slipped to 70.9% in November, from 71.8% in October. Only six out of the 20 sectors saw their capacity usage rates reach at least 80%, led by machinery except electrical (91.7%), electrical machinery (85.4%), and furniture and fixtures (84.4%).

In an e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the latest data highlighted how the coronavirus pandemic dampened consumption.

“This may be a good confirmation that consumption demand really took a big hit with COVID-19 still around and that the usual seasonal uptick may have also been clearly affected by the pandemic,” he said.

“If December numbers confirm a change in trend with more easing of restrictions and controls in the economy, it would be easier to confirm if things are actually getting better. However, at this point, it is difficult to determine the trend even with seemingly more vehicles and people moving around in recent months,” he added.

Factory activity in the country, as measured by a survey conducted by the IHS Markit, continued to deteriorate in December as shown in the manufacturing Purchasing Managers’ Index (PMI) falling to 49.2 from 49.9 in November.

Japanese firms in PHL expect profits to improve this year

January 6, 2021 | 12:31 am

Most Japanese companies in the country are hoping to recover from the pandemic this year. — PHILIPPINE STAR/MICHAEL VARCAS

MOST Japanese companies in the Philippines expect the economy to recover from the coronavirus disease 2019 (COVID-19) pandemic this year, with 60% anticipating an improvement in operating profits.

A summary of Japan External Trade Organization (JETRO) in Manila’s annual business survey was released on Tuesday, showing two-thirds of the Japanese respondents expecting the economy to recover this year, while about 15% expect a recovery after 2022.

“As for operating profit in 2020, 43% of respondents expect a ‘surplus,’ while 22% expect ‘even’ and 35% expect a ‘deficit.’ Some 60% of respondents think that their operating profit in 2020 will be worse than 2019, but 2021 will be better than 2020,” JETRO said.

The survey was held in August and September 2020, with 133 respondents across industries.

“Some 80% of respondents think their market size after COVID-19 would be the same or slightly smaller than that before COVID-19,” JETRO said.

Almost half of respondents revised their business strategies amid the pandemic, such as the implementation of work-from-home or telework schemes. Some Japanese manufacturers also diversified their production base in many countries to strengthen their global supply chain.

A third of the companies surveyed said they planned to expand their business in the Philippines this year, including sales expansion and the production of high value-added products, compared with 52% that said the same last year.

Most companies or 57% will keep the status quo, 8% will scale down, and 1% will pull out their operations from the country.

Japanese companies said the Philippines’ advantages as an investment destination include favorable tax incentives and reasonable worker compensation. It cited the Philippines as the most cost-competitive in terms of compensation for engineers in the manufacturing sector.

However, many cited out negative factors such as unstable politics and society, insufficient power and telecommunicationsinfrastructure, traffic congestion, slow telecommunications, concerns about safety and security, natural disasters, and “complicated” permit process and tax practices.

More than half of the Japanese manufacturing companies said they had difficulties in getting raw materials and parts locally. About 43% said Japan was their major part supplier, while 10% got theirs from the Association of Southeast Asian Nations. Although 30% mostly get their parts locally, only 38% of these suppliers are Filipino.

“Although Japanese manufacturers are trying to raise local procurement, they still need to import many parts and raw materials from abroad. Accumulation level of suppliers in the Philippines is much lower than that in neighboring countries,” JETRO said.

In terms of employment, more than 70% of firms retained their Japanese employee headcount last year, and more than half retained their Filipino staff count. In contrast, 17% cut Japanese staff and 23% decreased local staff.

“The ratio of respondents that consider decreasing their employee doubled in 2020, but majority chose ‘the status quo,’” the report said.

In the following years, 32% of respondents said that they will increase the Filipino staff count. — J.P.Ibañez

Job cuts seen as gov’t slaps car import duties

January 6, 2021 | 12:10 am

By Jenina P. Ibañez, Reporter

THE duties slapped on imported vehicles will delay the sector’s recovery and put jobs at risk, car manufacturers said, as they warned of other possible repercussions such as weakened trade relations and competitiveness.

The Trade department on Monday placed provisional safeguard duties on imported cars after its investigation showed that a surge in imports has hurt domestic manufacturing. In effect for 200 days, the duties will be in the form of cash bonds of P70,000 per passenger car unit and P110,000 per light commercial vehicle unit.

The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) has been pushing back against the measure, saying that it would limit industry recovery from the effects of the pandemic. The industry group’s sales fell 41.6% as of November last year.

CAMPI President Rommel R. Gutierrez expects the duties to further reduce car sales volumes.

“[This] in turn poses risk of employment downsizing, not to mention government revenue loss,” he said in a mobile message on Monday.

Mr. Gutierrez said that the duties would also encourage the revival of the “grey market” or used vehicle sales.

“With much uncertainty, investments in dealer expansion and parts localization may be deferred,” he said.

He added that there could be regional production disruption in the short term, while a regional overall economic slowdown in the longer term is made possible by a chain reaction to other industrial sectors.

International trade relations, he said, could be weakened by potential retaliation from countries exporting to the Philippines.

The investigation on safeguard duties was launched in response to an application from labor group Philippine Metalworkers Alliance (PMA), which flagged a possible link between a surge in automotive imports and a decline in local employment.

Trade Secretary Ramon M. Lopez had said that the safeguard duties are being put in place to protect local manufacturing and prevent car companies from leaving the Philippines, noting that Honda Cars Philippines, Inc. closed its plant in early 2020. Honda now sells to the Philippines through its regional network.

Meanwhile, the Association of Vehicle Importers and Distributors, Inc. (AVID) in an e-mailed statement on Tuesday said that the duties could further dampen recovery for an industry that has been appealing for government support. AVID sales plummeted 42.6% as of October last year.

The group said that it does not believe import duties would attract investments and create more jobs in the Philippines, or improve the country’s manufacturing competitiveness in the region.

“The measure will aggravate the already anemic demand and make it harder for Filipinos to afford personal mobility with the projected price hikes,” the group said. AVID instead called for long-term policies that would improve ease of doing business in the country.

The duties will take effect 15 days after publication in newspapers on Tuesday. The case will be sent to the Tariff Commission, which will conduct its own investigation and public hearings.

Megawide gains support for NAIA rehab

January 6, 2021 | 12:09 am

By Arjay L. Balinbin, Reporter

BUSINESS groups from Cebu added their voice to calls to give Megawide Construction Corp. and its foreign partner a chance to rehabilitate the Ninoy Aquino International Airport (NAIA).

In her letter to President Rodrigo R. Duterte on Dec. 28, Cebu Association of Tourguides, Inc. President Mary Grace Melendres said Cebu’s experience with the Mactan-Cebu International Airport developed by Megawide and its Indian partner GMR Infrastructure Ltd. should be replicated at the NAIA.

“The Cebu tourism community is confident that as soon as the vaccines are distributed to our population, which your administration is working hard to acquire, there will be a dramatic surge in travel,” Ms. Melendres said in her letter.

She noted that the redeveloped Cebu airport had helped increase tourist arrivals in Cebu from only 6.5 million passengers per annum to almost 13 million in 2019.

James Peter S. Aznar, head of laboratory at the Prime Care Alpha COVID-19 Testing Laboratory, a third-party partner of the GMR Megawide Cebu Airport Corp. (GMCAC), also wrote Mr. Duterte, saying the anti-dummy case the consortium faces is a “nuisance issue.”

“We continue to believe in the administration’s promise to get the NAIA rehabilitation on its way while protecting the achievements of other Philippine airports,” Mr. Aznar said in his letter dated Dec. 21.

Eduardo L. Solana, Jr., president of Vertical Difficult Access Solutions, Inc., which is also a third-party partner of the GMCAC, reiterated in a separate letter to Mr. Duterte on Dec. 21 that the partnership of Megawide and GMR “has been an asset to Cebu boosting local tourism and the regional economy.”

BusinessWorld received copies of the letters via e-mail on Tuesday.

Megawide posted on its official Facebook page on Monday that it also gained support from Cebu Chamber of Commerce & Industry (CCCI).

The company posted a copy of the Dec. 15 letter of CCCI President Felix Taguiam to Transportation Secretary Arthur P. Tugade that said, “We enjoin you to support our home-grown companies and corporations like Megawide and let them be a source of pride and joy for the country.”

“The NAIA rehabilitation project deserves full support from the government, so Filipinos can ultimately have their long-awaited and much-deserved world-class airport,” Mr. Taguiam said.

In December, Ombudsman Samuel R. Martires ordered the suspension of MCIAA General Manager Steve Y. Dicdican for allegedly violating the Anti-Dummy Law.

Mr. Dicdican was accused of letting foreign officials of GMCAC manage the Cebu airport.

The National Bureau of Investigation had filed a complaint before the Justice department against Mr. Dicdican, other airport executives, and GMCAC officials for violating the same law.

Mr. Dicdican questioned the filing of the complaint, saying the concession deal was awarded years before he joined the airport authority.

The Manila International Airport Authority also revoked in December the original proponent status of the Megawide-GMR tandem for the NAIA rehabilitation project.

Merger and acquisition deals hit P909 billion in 2020

January 6, 2021 | 12:08 am

THE Philippine Competition Commission (PCC) reviewed P909 billion in 26 mergers and acquisitions transactions last year, approving 20.

The commission reviewed the most transactions from the electricity and gas sector, followed by transportation and storage, PCC said in a report on Tuesday. The agency also processed transactions from the manufacturing, finance and insurance segment, as well as the real estate sector.

Among the applications, one was withdrawn, two were returned, and three are still being processed.

In comparison, PCC reviewed P758 billion in 44 transactions in 2019.

Required notifications and reviews for business mergers and acquisitions with transaction values below P50 billion has been temporarily suspended since September.

The Bayanihan To Recover As One Act, known as Bayanihan II, exempted parties in these transactions from being required to notify the competition regulation body within two years from the effectivity of the law.

PCC review of these transactions, conducted on its own initiative or motu proprio, is also suspended for a year. The exempted transactions may be reviewed after a year if they are seen as likely to substantially lessen competition.

“With fewer merger notifications expected and motu proprio review effectively suspended, our Mergers and Acquisitions Office refocused its resources on capacity building and market monitoring to gear up for the return of motu proprio review powers in September 2021,” the commission said.

“We also continued to encourage firms to voluntarily notify the Commission of their M&A transactions to avoid the possible unwinding of these transactions, should these be found anti-competitive after motu proprio review.”

PCC also said that there is a higher risk of anti-competitive behavior from firms experiencing smaller margins during the recession. The commission since the start of the lockdown has been warning about potential collusion among firms to exploit the crisis to raise prices.

PCC started 13 investigations after it received 162 queries and complaints in its channel for pandemic-related concerns.

“These particularly concerned water utilities, internet services, retail associations, and poultry,” the commission said. — Jenina P. Ibañez

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