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Metro Clark Waste Management plans P300-M landfill expansion

METRO CLARK Waste Management Corporation (MCWM) said Wednesday that it is investing P300 million to expand its engineered sanitary landfill in Sitio Kalangitan, Clark.

In a statement, MCWM said that it is planning to add seven more hectares to its facility in the Clark Special Economic Zone. The expansion of the sanitary landfill is targeted for completion this year.

It added that it is building an additional leachate treatment plant for waste by-products, a separate disposal cell for industrial waste, and investing in additional vehicles and equipment.

“It is very gratifying to us that we can continue to provide such an essential service to our clients; and that they don’t need to worry about the proper disposal of their waste,” MCWM Executive Vice-President and General Manager Vicky E. Gaetos said in a statement.

MCWM said that, despite the public health emergency, it processed 20% more waste last year.

In its statement, the company said it submitted an “unsolicited proposal to the government” for a $200-million integrated waste management system in Sitio Kalangitan. The investment will be fully funded by the international consortium to which MCWM belongs.

“The system will employ proven globally proven technologies involving waste sorting, and the construction of a 35 MW waste-to-energy plant, all of which will effectively expand the landfill’s capacity for another 50 years,” MCWM said.

It added that it continues to implement strict on-site protocols to ensure the safety of its workers. Some of these measures include the regular and frequent disinfection of waste collection trucks and official company vehicles and the use of personal protective equipment for its staff, including hospital-grade gear for personnel inspecting medical waste.

On its website, MCWM claims to be the country’s sole sanitary landfill operator with an ISO certification for landfill management, environmental compliance and operational health and safety.

Two weeks ago, the Department of Environment and Natural Resources ordered its regional offices to close all open dumpsites by next month. The Ecological Solid Waste Management Act of 2000 defines open dumpsites as those where solid waste is deposited without planning and consideration for environmental and health standards. They are illegal to establish or operate. — Angelica Y. Yang

CREATE’s amendatory provision on withholding tax

More than three years after the start of its legislative journey, and having undergone several rebrandings — from TRABAHO to CITIRA and now CREATE — the government’s second tax reform package has finally been ratified by Congress. Now touted as an economic relief measure rather than a fiscal reform, this tax reform package was originally intended to have a revenue-neutral effect. Under the proposed Corporate Recovery and Tax Incentives for Enterprises Act or CREATE, the corporate income tax rate is reduced to 25% (or 20% for small businesses), with tax incentives that are performance-based, time-bound, and transparent offered to targeted enterprises.

CREATE also includes timely measures intended to address the urgent need to combat the ongoing pandemic. Primarily, it provides a value-added tax (VAT) exemption on all drugs, vaccines, and medical devices specifically prescribed and directly used for the treatment of COVID-19, as well as capital equipment, spare parts, and raw materials necessary for the production of personal protective equipment components for COVID-19 protection from 2021 to 2023. Sadly, it appears that the personal protective equipment components themselves — N95 mask, coveralls, gown, gloves, etc. — are not exempt from VAT.

CREATE AND THE CURRENT CREDITABLE WITHHOLDING TAX SYSTEM
One particular amendment in CREATE that this author believes should warrant more attention is the amendatory provision to Section 57 of the Tax Code, which covers Withholding of Tax at Source. The amendment consists of the following sentence: “The Department of Finance [DoF] shall review, at least once every three (3) years, regulations and processes for the withholding of creditable tax under this Code, and direct the Bureau of Internal Revenue [BIR] to amend rules and regulations for the same, should it be found during the review that the existing rules, regulations, and processes for the withholding of creditable tax under this Code adversely and materially impact the taxpayer.”

Section 57 of the Tax Code is mainly implemented by Revenue Regulations (RR) No. 2-98 as amended (Consolidated Withholding Tax Regulations). While originally promulgated in 1998, this set of rules and regulations has been undergoing amendments for more than two decades. In more recent times, several RRs were issued after the TRAIN Law came to effect in 2018. The previous rule on the requirement for deductibility (Section 2.58.5 of the RR) was reinstated, also in 2018.

The current creditable withholding tax rules under Section 2.57.2 of the RR has 27 subsections, each imposing a different requirement to withhold creditable tax on certain income payments. The rates range from 1% to 15% (there’s even an effectively 0.5% rate for a transaction taxed at 1% computed on one-half of the income payment amount). Moreover, for the same type of income payment, there may be two tiers of rates that could apply, depending on the income level of the payee, among other conditions. Hence, knowing the correct rate is just as important as determining whether a transaction is subject to tax in the first place.

As to the rule on timing of withholding, Section 2.57.4 of the RR provides for the “paid, payable or accrued, whichever comes first” rule, which has not been updated since 2001. Particularly on the requirement to withhold upon accrual, this sometimes creates a timing mismatch, when a taxpayer withholds on the accrued expense, even though its supplier will only record the income upon billing, which could occur in the period after accrual. In this case, the income-earner may be constrained from claiming the income tax credit for being out-of-period.

On the certificate of taxes withheld (i.e., BIR Form No. 2307) requirement, although not expressly stated in the rules, in practice, taxpayers may strictly require originally issued certificates from their customers, for fear that the return could be disallowed if not supported by originals. This situation poses a compliance challenge, especially in a pandemic when many are still working from home.

SUGGESTIONS FOR IMPROVEMENT
With the aforementioned amendatory provision introduced by CREATE in mind, this author would like to offer a few suggestions specifically addressing some of the challenges with the current rules as explained above, with the end-goal of improving taxpayer compliance.

On the high number of prevailing tax rates, the DoF/BIR may consider reducing the number of applicable rates, without necessarily reducing the types of income subject to withholding tax. In principle, the creditable withholding tax system was designed with the intention of equaling or at least approximating the tax due of the payee on the income payment subject to tax. However, some of the rates may no longer be reflective of current economic conditions and profit margins, resulting in some taxpayers carrying significant excess creditable taxes, which are computed at their top line.

As for the rule on when to withhold, the inclusion of accrual in triggering withholding tax may be reconsidered. A simpler “paid or payable” rule would minimize instances when the timing difference between income and expense recognition of the payee and payor, respectively, could come into play. While this would consequently result in a timing difference between claiming the deduction (upon accrual) and withholding the tax (once billed and payable after the year of accrual), this may be less challenging to resolve, especially with the relaxation of rules under the reinstated Section 2.58.5 of RR 2-98.

As for the BIR Form No. 2307 requirement, the DoF/BIR may consider explicitly allowing soft copies of the form to give taxpayers peace of mind, both from a tax and a safety perspective, subject to necessary safeguards.

CREATE is the most integrated tax reform package since the 1997 Tax Code was enacted. It is arguably at its best form since it was originally conceptualized, and marks a great opportunity, for policymakers and taxpayers alike, to give our country a fighting chance in these less than certain times. I hope we all maximize this invaluable opportunity.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Marion D. Castañeda is a Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

marion.castaneda@pwc.com

Philippines may remain under lockdown after vaccine rollout

By Kyle Aristophere T. Atienza

MANY parts of the country would probably remain under a lockdown even after the government starts vaccinating Filipinos against the coronavirus, according to the presidential palace.

Easing quarantines would depend on the recommendations of health authorities, Cabinet Secretary Karlo Alexei B. Nograles told reporters via Zoom Cloud Meetings on Wednesday.

“Quarantines won’t be immediately relaxed once the vaccines are rolled out,” he said in Filipino. “Once the vaccines take effect and cases fall, we will consider easing the quarantines.”

The Philippines is expected to receive more than 100,000 doses of COVID-19 vaccines from Pfizer, Inc. this quarter under a global initiative for equal access. These will be given to about 56,000 health frontliners.

About 9.2 million doses of vaccines developed by AstraZeneca Plc are also expected to arrive in the first half.

The Cordillera Administrative Region in northern Philippines was placed under a general community quarantine this month, joining Metro Manila and other cities with high rates of coronavirus infections after a new coronavirus strain was detected there.

The lockdowns in most parts of the country have been eased.

Metro Manila mayors earlier urged the government to keep the region under a general lockdown even after the first batch of vaccines are given out, Navotas Mayor Tobias M. Tiangco said this week.

Trade Secretary Ramon M. Lopez has been pushing for a gradual easing of quarantines to boost consumer spending and business activity.

He said relaxing the lockdown in the capital region would help the Philippine economy recover faster.

The government was unlikely to hit its growth targets this year unless lockdowns were eased further, Acting Socioeconomic Planning Secretary Secretary Karl Kendrick T. Chua said earlier.

Policymakers had been unable to balance the health risks and the impact of strict quarantines on economic output because they were risk-averse, he said.

Mr. Chua said he expects Metro Manila and other provinces to shift to a modified general community quarantine (MGCQ) soon.

He said President Rodrigo R. Duterte would probably make an informed decision on the lockdowns once he sees both the latest health and economic data. He added that age restrictions during the lockdown should be eased “anytime soon.”

The economy fell into its worst recession since World War II last year as output contracted by 9.5%. This year, the government expects the economy to grow by 6.5% to 7.5%.

Mr. Chua said the rollout of coronavirus vaccines this year would probably boost consumer and business confidence.

Mr. Duterte last month recalled a decision by an inter-agency task force (IATF) to let minors as young as 10 years to go out and visit malls, citing the risk from a new coronavirus strain first detected in the United Kingdom.

COVID-19 infections nearing 550,000 with 11,401 deaths — DoH

THE DEPARTMENT of Health (DoH) reported 1,345 coronavirus infections on Wednesday, bringing the total to 541,560.

The death toll rose to 11,401 after 114 more patients died, while recoveries increased by 276 to 499,971, it said in a bulletin.

There were 30,188 active cases, 88.2% of which were mild, 6.1% did not show symptoms, 2.6% were critical, 2.5% were severe and 0.6% were moderate.

DoH said 12 duplicates had been removed from the tally. Nine deaths were reclassified as recoveries, while 59 recovered cases were reclassified as deaths, it said.

Four laboratories failed to submit their data on Feb. 9, the agency said. More than 7.7 million Filipinos have been tested for the coronavirus as of Feb. 8, according to DoH’s tracker website.

The coronavirus has sickened about 107.4 million and killed almost 2.4 million people worldwide, according to the Worldometers website, citing various sources including data from the World Health Organization (WHO).

About 79.4 million people have recovered, it said.

Meanwhile, the government is studying a proposal to include national athletes among those who will be first to get vaccinated against the coronavirus, Health Undersecretary Maria Rosario S. Vergeire said.

“This will be considered because it’s a request and it’s something that the National Government would like to pursue when it comes to sports,” she told an online news briefing.

Senator Christopher Lawrence T. Go on Monday said he had asked vaccine czar Carlito G. Galvez, Jr. to consider prioritizing national athletes who would be competing in the Tokyo Summer Olympics and Southeast Asian Games in Vietnam.

Ms. Vergeire said the government would also study whether the state’s vaccination drive could include foreigners living in the Philippines. “If ever, they might be under the rest of the population,” she said.

Presidential spokesman Harry L. Roque, Jr. last week said health workers would be the first to get vaccinated, followed by senior citizens, persons with underlying illnesses, frontline personnel in essential sectors and indigent groups.

Also listed are teachers, social workers, government workers, other essential workers, socio-demographic groups at significantly higher risk other than senior citizens and migrant Filipino workers.

The Philippines may start inoculating Filipinos against the coronavirus next week as it takes delivery of vaccine orders, Mr. Roque said.

The government expects to vaccinate as many as 70 million citizens against the coronavirus by yearend, vaccine czar Carlito A. Galvez, Jr. said on Sunday.

The country will get about 10 million doses of vaccines under a global initiative for equal access this quarter, including 117,000 doses from Pfizer, Inc. that might arrive this month, he said. — Vann Marlo M. Villegas

Nationwide round-up (02/10/21)

Police to escort COVID-19 vaccine delivery to inoculations sites

POLICE teams will be deployed to escort the delivery of coronavirus vaccines to the inoculation sites, the Department of Interior and Local Government (DILG) said on Wednesday. DILG Undersecretary Jonathan E. Malaya, in a statement, said the Philippine National Police (PNP) will remain on “high alert” despite assurance from communist rebels that they will open a “humanitarian corridor for safe and unimpeded” delivery of coronavirus vaccines to the countryside. The police have been directed to coordinate with local government units (LGUs) to ensure the security of the vaccine supply, he said. The Armed Forces of the Philippines chief earlier said all land, air, and water assets of the military will be used in the vaccination drive. — Kyle Aristophere T. Atienza

Supreme Court chief says Aetas’ petition dropped due to pending case

THE petition-in-intervention of Aeta farmers Jasper Gurung and Junior Ramos in the anti-terror law cases was denied “because there is already a pending case before (a) trial court,” Chief Justice Diosdado M. Prelate explained Wednesday. The message was sent to reporters through Supreme Court Public Information Officer Chief Brian Keith F. Hosaka in a Viber message. When asked for more details, Mr. Hosaka said to “wait for the actual resolution of the court.” The high court announced the denial of the two Aetas’ petition to intervene in the 37 petitions seeking to declare the Anti-Terrorism Act as unconstitutional during the second oral arguments on Tuesday. Messrs. Gurung and Ramos were charged and jailed under Section 4(a) of the Anti-Terror Law or for “engaging in acts intended to cause death or serious bodily injury to any person, or endangers a person’s life.” — Bianca Angelica D. Añago

Immigration bureau reminds aliens to register by March 1

FOREIGNERS with immigrant and non-immigrant visas have until March 1 to renew their registration as the Bureau of Investigation (BI) announced on Wednesday that the deadline will not be extended. “This year’s annual report of aliens will not be extended,” BI Commissioner Jaime H. Morente said in a press release. Under the Alien Registration Act of 1950, foreigners with immigrant and non-immigrant Philippine visas are required to “report in person to the bureau within the first 60 days of every calendar year.” Those who are out of the country during the 60-day period are given 30 more days upon their return. Failure to do so “may result in fines, visa cancellation, deportation, or imprisonment,” Mr. Morente warned. BI Spokesperson Dana Krizia M. Sandoval said measures are in place to ensure observance of health protocols at immigration offices nationwide. An online appointment system is available for the BI headquarters in Manila. BI Alien Registration Division Chief Jose C. Licas said as of January, 77,303 aliens have already reported, 10% less than the 86,683 who complied last year. — Bianca Angelica D. Añago

Regional Updates (02/10/21)

Solons tell DoTr to make 3-strike policy applicable also to tollway operators

SOLONS called on the Department of Transportation (DoTr) to hold expressway operators similarly liable under a “3-strike” policy that will be imposed on road users who pass through tollroads without sufficient load on their radio-frequency identification (RFID) stickers. In a hearing conducted by the House committee on transportation, Valenzuela 1st District  Rep. Weslie T. Gatchalian said operators should also ensure that their RFID system works properly, citing cases of unused loads by motorists that get deducted. “If we’re going to impose heavy fines on our motorists, we should give even heavier penalties to the toll operators,” he said in Filipino. DoTr Undersecretary Garry V. de Guzman said in the hearing they will be releasing the minimum operating standards for toll operators soon, which will include corresponding penalties for violations. The DoTr aims to have a fully cashless system for tollways. — Gillian M. Cortez

2 Palawan bays now free from red tide

THE Bureau of Fisheries and Aquatic Resources (BFAR) said the bays of Honda and Puerto Princesa in Palawan are now free from red tide contamination. In its third shellfish bulletin for the year, BFAR said shellfish harvested from the two areas are now fit for human consumption. Several other areas, however, are still positive for red tide such as Inner Malampaya Sound in Palawan; Sorsogon Bay; Dauis and Tagbilaran in Bohol; and Tambobo Bay in Negros Oriental. Other areas that remain contaminated with red tide include Daram Island, Zumarraga, San Pedro Bay and Cambatutay Bay in Western Samar; Calubian, Carigara Bay, and Cancabato Bay in Leyte; Biliran Islands; Guiuan and Matarinao Bay in Eastern Samar; Dumanquillas Bay in Zamboanga del Sur; Balite Bay in Davao Oriental; and Lianga Bay and Hinatuan in Surigao del Sur. All types of shellfish and Acetes sp. or alamang harvested from affected areas are not safe for human consumption. However, other marine species can be eaten with proper handling. — Revin Mikhael D. Ochave

Malagos Resort partners with birdwatchers for new attraction; open to non-Davao City residents 

MALAGOS Garden Resort (MGR), a part of the Malagos agri-ventures group, has partnered with a group of birders from the Davao Region to ensure the sustainability of its latest attraction — birdwatching through a newly-built tower. The Big Year Davao birder group will assist in identifying and documenting wild birds spotted in and around the resort, and mentor the Malagos core team on birdwatching. “This initiative of MGR is very commendable as it yields positive long term result towards biodiversity conservation,” said Julius R. Paner, spokesperson of The Big Year Davao. The resort has long maintained various species at its bird park, but the shows are currently suspended in compliance with health protocols. “Birds are an obvious indicator of a healthy environment. Birds are also very colorful. I love them because they represent the soul and the spirit. They represent freedom. Seeing them in the wild matters the most, taking pictures of them is secondary,” said Mr. Paner, also the tourism officer of neighboring Sta. Cruz, Davao del Sur. Malagos, a 12-hectare agri-ecotourism resort, is open to guests from outside Davao City, subject to local government requirements. For more information, visit malagos.com. — Maya M. Padillo

South Korea unemployment at 21-year high as a million jobs lost

SOUTH KOREA’S jobless rate surged to its highest in more than two decades, raising concern that an export-driven recovery could be masking a harsher scarring of the economy.

The unemployment rate jumped to 5.4% in January from a revised 4.5% the previous month to hit its highest level since the aftermath of the Asian financial crisis. The result outstripped all survey forecasts as the economy shed almost a million jobs from a year ago for the worst losses since 1998.

The sharp deterioration in the labor market contrasts with the view that Korea’s economy has been one of the best performers in the developed world last year and suggests the government may need to take more action to support jobs.

“The huge hit to jobs is going to weigh on the pace of economic recovery,” said Sung Tae-yoon, an economics professor at Seoul’s Yonsei University. “People looking for jobs will also decrease as the economy worsens, which may technically bring down the jobless rate, but economic difficulties will continue.”

Korea’s job market took a sharp turn for the worse in December when the government tightened its social distancing rules as daily infection cases rose to more than 1,000.

In January, the sector combining retailers, wholesalers, restaurants and hotels was hit hardest with 585,000 job losses from a year earlier. More than 340,000 positions were shed in a sector that includes public service as the government’s job-creation measures expired before a new start. Manufacturing lost 46,000 jobs.

While resurgent export strength has put the economy on track to reach per-capita income levels of Group of Seven (G7) nations, the unemployment jump shows the lagging impact of the pandemic is biting deeper into employment than expected as a K-shaped recovery becomes clearer.

Policy makers will likely be hoping that the situation will ease as further government support feeds in to the economy and virus restrictions are loosened further.

The government takes the situation “seriously” and will use all available options to deal with it, Finance Minister Hong Nam-ki said in a statement, blaming the job losses partly on expired fiscal support for jobs creation at the turn of the year, and a high year-earlier base.

Still, the latest figures may indicate that not enough fiscal support is coming through, or at least, not quickly enough, potentially requiring a tweaking of the timing of existing planned measures, or an outright expansion, wrote Rob Carnell, chief economist for Asia Pacific at ING.

President Moon Jae-in is also calling for incentives for companies that would share some of their profits during the pandemic with ones that suffered, a move that could indirectly support employment. Some lawmakers are putting pressure on the Bank of Korea to adopt a jobs mandate as part of its goals.

The job market outlook based on Korea’s virus caseloads looks slightly better, as the number of daily infections eased to a few hundred from more than 1,000 in December. The government is gradually relaxing its social distancing rules, allowing longer opening hours for some retail businesses such as coffee shops and gyms outside Seoul.

More fiscal stimulus under consideration may backstop workers and companies that have suffered from forced business restrictions. The government is in the process of handing out its third round of cash support as part of its pandemic relief measures, and the possibility of a fourth round has been floated. — Bloomberg

J&J CEO says annual COVID-19 vaccine shots may be needed

JOHNSON & JOHNSON ((J&J) Chief Executive Officer (CEO) Alex Gorsky told CNBC on Tuesday that people may need to get vaccinated against COVID-19 annually over the next several years, like seasonal flu shots.

“Unfortunately, as (the virus) spreads it can also mutate,” he said in an interview.

“Every time it mutates, it’s almost like another click of the dial so to speak where we can see another variant, another mutation that can have an impact on its ability to fend off antibodies or to have a different kind of response not only to a therapeutic but also to a vaccine,” he added.

Last week, Johnson & Johnson said it asked US health regulators to authorize its single-dose COVID-19 vaccine for emergency use, and added it will apply to European authorities in the coming weeks.

The drug maker’s application to the US Food and Drug Administration (FDA) followed its Jan. 29 report in which it said the vaccine had a 66% overall efficacy at preventing moderate-to-severe disease.

Earlier on Tuesday, South Africa’s joint lead investigator for the Johnson & Johnson vaccine trial said that a government regulator was processing an application for the vaccine to be granted emergency use authorisation.

Unlike the COVID-19 vaccines of Pfizer, Inc. and Moderna, Inc. which require two doses, J&J’s vaccine requires only one dose and hence eases logistics for health-care providers.

Mr. Gorsky told CNBC the company was “extremely confident” that it will meet its target to deliver 100 million doses of its coronavirus vaccine to the United States by the end of June.

J&J is continuing work on a two-dose coronavirus vaccine, Mr. Gorsky said. It expects two-shot vaccine data from clinical trials in the second half of the year, he added. -—  Reuters

Human beings are naturally ethical… Or are we?

It is the age-old debate: are human beings naturally selfish or naturally altruistic? Every subject worth researching in economic sociology has that homo economicus versus homo reciprocans issue at its core. In economics, the basic idea of motivation assumes that if left unmonitored and without extrinsic benefits (like bonuses or benefits for example), one will slack off and not work to her or his maximum productive capacity. This has extended into the fundamental onus of a for-profit corporation, wherein according to Milton Friedman’s 1970 New York Times Manifesto, the social responsibility of business is to increase its profits. This is important to understand when we attempt to redefine the purpose of business, investment, and financial markets. That is, we want to reconstruct Finance for good, expose the ills and unethical practices of the industry… but are we as human beings, even naturally good?

Behavioralists and business ethics scholars have argued that not every decision is selfishly made, even though human beings are, in fact, rational. Herbert Simon in 1955 coined the term bounded rationality. He said that we have cognitive limitations in making decisions that differ from person to person. Daniel Kahneman and Amos Tversky expanded this idea in the late 1970s and early ‘80s when they embarked on a series of gambling studies to illustrate how the sense of winning or losing influences how one makes bets outside what should have been a calculated rational decision. Their main contribution was the idea of framing: our backgrounds frame our ways of thinking; the specific situation that we are in frames our decisions. It is not all black and white.

Other more recent studies have illustrated the fact that individuals may willingly choose immaterial utility such as happiness or satisfaction gained from ethical considerations within their utility maximization, basically challenging the value maximization principle in saying that the traditional economic measurement of utility has been incomplete. Some experiments involving retail investors have shown that investors do care about social, environmental, and ethical issues apart from financial return when they invest. Others have illustrated that holding profit constant, people are willing to pay more for ethical shares or accept lower financial returns for their investments in exchange for positive social returns. Such studies have highlighted that the strength of investors’ personal values is important in determining their investment choices.*

Indeed, there is also some practitioner evidence that during financial crises, responsible companies, or those with good ethical and sustainable practices, as well as the funds that invest in such companies — not necessarily performed better per se, but at least were “stickier” or less volatile than their traditional counterparts. According to the Social Investment Forum, the first nine months of the 2001 US downturn saw a 94% drop in the dollars investors put into all mutual funds, compared to just a 54% drop for socially screened funds. Similarly, from the start of 2007 to the opening of 2010, a three-year period when broad market indices such as the S&P 500 declined and the broader universe of professionally managed assets increased less than 1%. Responsible investment assets in the US increased by more than 13%. Some early work in Responsible Funds during COVID-19 illustrate the same trend. Because of this strengthening trend, such investments have attracted more and more investors even though they do not necessarily return a higher profit. Some scholars have called this the “insurance case” for sustainability.

And so here is what we know: in normal situations, human beings somewhat care about ethical practices of firms, depending on the ways in which they were framed, and in crisis situations, even more so because it is the best form of insurance, i.e., ethical attributes produce high levels of stability.

This “even more so” fact, however, does bring to light the idea that people care about predictability and favor “less risky” investment plays — which still reverts to investors being rational after all. But at least, such rationality is guided by an intrinsic appreciation or value attached to companies that happen to do better than everyone else during periods of instability because they had done good in the past.

But apart from risk reduction, are investors motivated beyond profit? The answer is “yes.” But it is not all tree-hugging and pure altruism. Instead, the complexities of human decision-making allow us to navigate between both worlds of being self-interested, and — as social beings, being cognizant that this self-interest necessarily involves a concern for the well-being of others as well as our natural environments. It is in our self-interest to be picky and have long-term thinking in our investments, and to our demise when we make decisions that are beneficial only in the superficial and short-term.

*A list of references of such studies is available from the author upon request.

 

Daniela “Danie” Laurel is a business journalist and anchor-producer of BusinessWorld Live on One News, formerly Bloomberg TV Philippines. Prior to this, she was a permanent professor of Finance at IESEG School of Management in Paris and maintains teaching affiliations at IESEG and the Ateneo School of Government. She has also worked as an investment banker in The Netherlands. Ms. Laurel holds a Ph.D. in Management Engineering with concentrations in Finance and Accounting from the Politecnico di Milano in Italy and an MBA from the Universidad Carlos III de Madrid.

Moratorium on new land transport regulations

Since 1999, or 22 years ago, Congress legislated Republic Act (RA) No. 8750 or the Seat Belts Use Act; Republic Act No. 10586 or the Anti-Drunk and Drugged Driving Act; Republic Act No. 10666 or the Children’s Safety on Motorcycles Act; and Republic Act No. 11229 or the Child Safety in Motor Vehicles Act (mandatory use of car seats for children).

Over the same period, the Land Transportation Office (LTO) has also overhauled the licensing system; required license applicants to secure certificates from privately operated driving schools; required emission tests for vehicles for registration; and, starting this year, require vehicles for registration to be inspected by privately owned motor vehicle inspection centers.

These laws and regulations have also allowed authorities — for over two decades — to impose higher fines and penalties on motorists who fail to follow them. It can be alleged that the same regulations have also become a source of corruption. However, I am not privy to this and do not have any evidence to support this claim.

All these regulations, of course, were intended to be proactive and preventive solutions to land transportation safety. They all aimed to make our roads safer for all users. Better safety was expected to also result in fewer accidents, and injuries and death, related to motor vehicle accidents.

From where I sit, however, it doesn’t seem like our roads have actually become safer in the last 20 years. One report indicates that the number of motor vehicle accidents in the country have actually doubled to 116,906 incidents in 2018 from 63,072 in 2007. An estimated 12,000 Filipinos die on the roads every year. I am uncertain if the number of deaths and injuries have gone down over the years.

I am not against these laws. In fact, I support them. However, I also believe they all require tweaking. It is in this line that I also support the calls of several senators for a suspension or moratorium on the implementation of new regulations in land transportation, to allow for their thorough review.

While safety is a major concern, the attempt to ensure safety should also be tempered with compassion. After all, we are still at the height of the COVID-19 pandemic. Many people have lost their livelihood, and even more are having difficulty making ends meet. And among those severely affected is the transport sector.

It has now become terribly difficult for people to move from one place to the other. Public transportation remains scarce, and those allowed to resume operations are at limited capacity. Workers have resorted to bicycles and scooters just to get to work. Provincial buses, and many city buses and jeepneys as well as shuttles have all been gathering dust, still unable to ply their routes.

Those who own motorcycles and cars have been lucky. They still get to move around with some ease. And these same vehicle owners have managed to provide services to their countrymen by allowing themselves to be hired as private shuttles or car pools, particularly for workers.

People are very concerned about their health and safety, and taking public transportation — if at all it is available — is a major risk for commuters despite all the mandatory health protocols now in place. Public health officials are just as concerned as enclosed public transportation allows for greater transmission of viruses like COVID-19.

So, the least that LTO officials can do in the meantime is to give a break to motorists and commuters. At least while the pandemic rages on. Lack of transportation was among the biggest bottlenecks to reviving the economy in 2020, and possibly in 2021 as well. With new impositions on motorists, which ultimately impact commuters and the public, the LTO is unintentionally making things harder on everybody.

Perhaps when the pandemic ends, or when people have been vaccinated, and with more vehicles and people going out due to work and school, maybe then the government can insist on all its new land transport regulations, to ensure greater safety on our roads as people move about. Perhaps 2023 can be a target date.

But first review these regulations again. Like in the case of RA 8750 or the seatbelt law, why are seat belts required only for front seat passengers in Public Utility Vehicles? Why are buses and jeepneys, as well as tricycles, selectively exempt from the seatbelt requirement for all passengers?

As for Republic Act No. 11229 or the Child Safety in Motor Vehicles Act, if the intent of the law is to promote child safety in motor vehicles — regardless of type and ownership of vehicle — then all types of conveyances must be required to use child safety seats. Why are motorcycles and bicycles exempt? Child safety seats are actually available for two-wheel vehicles. Yet, only car owners with children must have them?

A “child” below 18 years old may board a motorcycle if he or she can comfortably reach his/her feet on the standard foot peg; his or her arms can reach around and grasp the waist of the motorcycle driver; and, he or she is wearing a government-approved helmet.

Based on these conditions, a child as young as 10 years old, with a height of about four feet, can already back-ride on his dad’s motorcycle with only a helmet as a safety requirement. That same child, however, is deemed by law as unsafe inside a car with standard seat belts unless he or she is in a government-approved child car seat.

Better yet, based on existing laws, a child as young as 10 years old, with a height of about four feet, can legally back-ride on his dad’s bicycle on public roads without any safety gear — not even a helmet. His father need not be licensed, either. And, they are not compelled to use the bicycle lane. In short, this father-son biking tandem is deemed beyond the scope of the law, and thus, arguably, perhaps “safer” than any child on a motorcycle or a car. Otherwise, why aren’t they regulated?

Moreover, the implication is that as presently configured, or without government-approved safety seats for children, motor vehicles are generally unsafe for children 12 years and below. Why then do we sell them to families? Also, the legal requirement for child safety restraints should cover all child passengers in both private and public vehicles. Type of ownership and use should not be determinants.

In this line, will child safety restraints also be required of for-hire vans, jeepneys, taxis, Grab Cars, and public buses? Or, will passengers be required to bring their own? If the intent of this law is to ensure child safety in motor vehicles, then it should not single out privately owned vehicles. No motor vehicles, including motorcycles and tricycles and PUVs (public utility vehicles), should be exempt from the requirement. The requirement should be imposed on all, and at the same time.

In the case of car rentals, will they also be required to supply child safety seats to customers with children 12 years and below? How about hotel cars, airport cars and taxis, and commercial vehicles like small delivery vans of small private businesses? Can they allow children to ride without the appropriate child safety seat?

Incidentally, there are thousands of bicycles and electric bikes and electric scooters now on our streets — used for delivery, for going to work, for making short trips from home — and all these are unlicensed and mostly unregulated. Driving school certificate, license and registration, and safety gear not required. And their “vehicles” don’t need to pass government “inspection.”

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

The nicest Clubhouse on the Internet

IN THE TECHNOLOGY world, this may be remembered as the month when Clubhouse started to matter. Elon Musk and Mark Zuckerberg made appearances on the service. For a short time, Chinese-language discussions dealt with the Xinjiang issue in a frank and open manner, attracting wide public attention.

If you don’t already know, Clubhouse is a year-old social media service consisting of virtual “rooms” where people can talk to each other — by voice. That may not sound impressive, but many users swear by it, seeing it as a communications platform that could help restore peaceful discourse and civility rather than exacerbate tensions. I think of Clubhouse, which I joined last summer, as somewhere between talk radio and a dinner party.

Back in the 20th century, famed communications theorist Walter J. Ong suggested that oral cultures are more aggregative, more redundant, more conservative, and more openly questioning and dialogic. Given the social turmoil and polarization that the US is going through, that all sounds pretty good.

To me, a lot of Clubhouse sounds like elders chatting around a traditional campfire, with many of the younger people listening in (noting that “elder” here is defined more by status than by age). Extra points go to those who are genuine, engaging and good at thinking out loud and leading a group. There is a subtle but definite set of hierarchies, though to the benefit of the conversation.

Tech is a major topic on Clubhouse, but there is also chatter about the NBA, South Asian cuisine, Nigerian politics, and dating advice, as well as many other topics. If you are a member, you can start your own room. Black voices are prominent.

Many of the virtues of Clubhouse stem from its software. Although the company has only about 10 people, the user experience is fun and empowering. For one thing, you can be involved immediately by the mere push of a single button, a kind of “one-click” listening.

Unlike a Zoom call, there is no video option, so it is more relaxing (or you can do the dishes while listening). The audience is represented by tiles with photos, so speakers feel the force of the crowd, which further encourages pleasant behavior. Room moderators can decide who has speaking rights and who does not. Practices of calling on people, and granting speaking rights, produce orderly discussions, though there are also more rowdy rooms with 30 or more people with speaking rights.

Members participate by invitation only, although membership has become increasingly easy to obtain since the service’s debut in spring 2020. Through access to your address book and the list of people you “follow,” Clubhouse connects you to conversations and people in a way that Zoom does not.

Recording conversations is against the rules. That lowers the risk of being canceled for a wayward remark. People still say bad things on Clubhouse, of course — but the people who get upset tend to go to Twitter to complain. The expectation is that moderators will restore order, and disgruntled listeners can just leave the room.

Clubhouse is well-designed to create buzz and a sense of excitement — it was a genuine surprise when Elon Musk showed up to question Vlad Tenev, the chief executive of Robinhood, about recent trading suspensions on that platform. Who knew what was going to happen next?

One of the great strengths of Clubhouse is its celebrity-friendliness. If you are a major tech executive, why not speak in a Clubhouse session rather than to a journalist? The assembled crowd will spread your message, and can vouch for what you said and its context. It would not surprise me if Clubhouse soon becomes the major conduit for news about tech and tech executives, perhaps for Hollywood stars too. The one group that seems most out of place on Clubhouse are the journalists, who possess no special status and are discouraged.

So far there are about 3.4 million downloads of Clubhouse, with about 900,000 of those coming just last month. The service probably will not remain open to China once the censors consider it more seriously, but at a suggested $1 billion valuation it has a bright future, even though the revenue model has not yet been pinned down.

My personal frustration with Clubhouse is simple. Often when listening I long for something more rapid and more informationally dense, as I can find on Twitter. Like most people, I do not like the nastiness frequently found there, or elsewhere for that matter. But I am learning that, in open systems, information density and nastiness may come bundled together.

So maybe Clubhouse’s niceness isn’t always for me. But at the margin, I am quite sure that America needs more of it.

BLOOMBERG OPINION

Beyond due diligence

ACQUIRING an operating company involves the determination of its fair market value. This accounting approach is further affected by the buyer’s appetite and the seller’s desperation, especially when the business is swimming in red ink.

“Due diligence” is a process that determines the value of an asset, especially to the buyer. Aside from the usual accounting approach, there is the search for hidden risks, like inventory that is overvalued or booked assets belonging to the sellers of the company in a personal capacity. Should human resources also be considered in the valuation? What is the cost of early retirement for some?

Fair market value after due diligence can be a moving number, until the deal is sealed. And in the case of a listed company, the stock price tracks the possibilities, usually betting on a high number.

Are social mergers, like engagements and marriages, also subject to due diligence?

What can be more deserving of objective assessment than a lifetime union? Dynastic families with comparable net worth tend to move in the same circles and very early in the lives of their progeny, parents plan out mating arrangements. Also, individuals who spent childhoods together due to friendship of families have their built-in knowledge of possible mates and their rising (or falling) net worth.

Social distancing in the last year may have changed practices of courtship and even the celebration of matrimonial ties. But the vetting process for mating still applies.

In the new world of social media, old social barriers of socio-economic status have fallen, making entries and exits of once sacrosanct enclaves more porous. The new fortune-hunters, who are also technologically savvy, are no longer dance or even TV starlets. They can be chat mates, personal trainers (less influential in the pandemic), or party animals booked in a hotel for their own fireworks.

One school of thought ascribed to the liberally inclined consider the past almost irrelevant. Thus, an eligible lady in her late twenties, having no current spouse in the appropriate jurisdiction and even living with or without a love child from a previous relationship is accepted by the social liberal on an as-is-where-is basis, just like a previously owned vehicle. Hopefully, the maintenance cost too is manageable.

It is a presumption in this case that the current relationship is the beginning of a life together. It is Day One in the emotional calendar. Any entanglements of either party before the current relationship have already been disentangled, even if still a bit messy as when a former partner still sends text messages of concern — I still dream of you, Sweetie. These periodic interruptions are relegated to the dustbin of old affairs and treated like clothes that no longer fit and already set aside. Rule Number One: Do not read each other’s text messages.

The other school presents a more traditional approach, short of hiring a detective. The ultra-possessive mate wants to know every detail of past relationships, including the circumstances of previous encounters — what were you wearing after you took off your earrings? (I was wearing nothing but a smile.) A mature girl, now ready to settle down with an earnest suitor who offers marriage, may feel compelled to be totally honest with her new mate and tell him everything — this is a terrible decision that can only end in grief, mostly hers.

If she is very pretty, she may have enjoyed an active lifestyle before deciding to settle down with the wealthy suitor. Her single life may have involved short-term arrangements, featuring a much older partner — he liked me to wash his hair privately in a hotel suite in the afternoon. (He brought his own shampoo. We had room service.) Such sketchy narratives can only raise more questions — did you have café latte?

Requiring too much information of a partner constitutes undue diligence. Let her keep her secrets as their original intensities must surely have faded with time and been replaced by the more stable (and less fiery) situation.

Social mergers, especially those involving asymmetrical net worth, have also assumed a more corporate form with the prenuptial agreement which can dissolve the partnership under certain conditions — who gets what and how much. In both social and corporate cases, highly leveraged relationships with a high level of consumption and expenses can come down like a house of cards. And then the marriage vows click in: till debt do they part.

 

Tony Samson is Chairman and CEO, TOUCH xda

ar.samson@yahoo.com

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