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Tax relief for losses and public school donations under Bayanihan II

Republic Act No. 11494, otherwise known as the Bayanihan to Recover as One Act (Bayanihan II), was signed by President Rodrigo R. Duterte on Sept. 11. It contains the government’s second wave of relief measures to address the health and economic crises stemming from the COVID-19 outbreak. Such measures include tax relief or provisions to ease the burden on taxpayers, two of which I will be discussing below.

EXTENDED NET OPERATING LOSS CARRY-OVER (NOLCO)
Net operating loss (NOL) refers to the excess of deductible expenses over gross income resulting in a loss position in a given taxable year. Under normal circumstances, a business or enterprise having operating losses may carry it forward to the three succeeding taxable years and claim it as a deduction against gross income for income tax purposes. In other words, NOL incurred in the preceding three years may be claimed as a deduction from the current year’s gross income, thus reducing the company’s income tax liability for the current year.

With Bayanihan II, the NOL incurred by a business for the taxable years 2020 and 2021 can be carried over as a deduction from gross income for the next five consecutive taxable years following the year of such loss, i.e., from 2021 through 2026.

Under Revenue Regulations (RR) No. 25-2020, a taxable year means the calendar year, or the fiscal year ending during such a calendar year, upon the basis of which the net income is computed. RR 25-2020 further clarifies that the fiscal years 2020 and 2021 shall include fiscal years ending on or before June 30, 2021, and June 30, 2022, respectively. The extended NOLCO should therefore cover operating losses incurred by taxpayers using the calendar years 2020, and 2021, and all those corporations with fiscal years ending on or before June 30, 2021 and 2022.

Applying current reporting guidelines, the NOLCO (applied or unused) for 2020 and 2021 needs to be shown in detail in the income tax return and in the notes to financial statements. Further, under RR 25-2020, they must be presented separately in the notes to financial statements apart from the NOLCO from other taxable years. Failure to comply with the reporting requirement will disqualify the taxpayer from claiming the NOLCO.

This two-year extension of the NOLCO is needed given that the adverse impact of COVID-19 on businesses and the economy is expected to continue until a definite cure is found. Its inclusion in Bayanihan II is a lifeline to struggling businesses given that the CREATE (Corporate Recovery and Tax Incentives for Enterprises) bill, where this extended NOLCO is also proposed, is still being discussed in Congress. The extension will help businesses recoup the losses incurred and may continue to incur during these two years.

TAX INCENTIVES FOR DONATIONS TO PUBLIC SCHOOLS
Another tax relief provided by Bayanihan II is the tax exemption of personal computers, laptops, tablets, or similar equipment appropriate for use in schools that are donated for distribution to public schools during the implementation of Bayanihan II from Sept. 15 until Dec. 19.

As defined in RR No. 26-2020, a public school refers to a government school, including State Universities and Colleges (SUCs) and vocational institutions under the Technical Education and Skill Development Authority (TESDA), regardless of school level.

The following tax incentives are available to the donor:

1. Applying Section 34(H) of the Tax Code, the contribution/donation may be claimed as a deduction against income tax. In addition to the current limitations, conditions, and rules, donors must also indicate in their deeds of donation the types and quantities of donated items and their total value by submitting sales invoices and delivery receipts on top of proof or acknowledgment of receipt by the beneficiary-schools.

2. The donation is exempt from donor’s tax.

3. Imports are exempt from value-added tax (VAT) provided that the donor secure a Deed of Donation duly accepted by the Department of Education (DepEd), the Commission on Higher Education (CHED), or TESDA. In case of imports by the aforementioned agencies, the transactions are likewise exempt from VAT.

The imported goods may be released by the Bureau of Customs (BoC) without the need for an Authority to Release Imported Goods (ATRIG). The Bureau of Internal Revenue (BIR) may, however, conduct a post-investigation audit on the imports released by the BoC without ATRIG pursuant to RR 26-2020.

4. In case of local donation of items originally intended for sale or for use in the business of the donor, the donation will not be treated as a transaction deemed sale subject to output VAT. Further, any input VAT attributable to the purchase of donated items not previously claimed as input VAT remains creditable against any output VAT liability of the donor.

It is worth noting that tax incentives 1 and 2 above are already available to the donor under the Tax Code even without Bayanihan II.

The value of the donation will be based on the acquisition cost of the items donated. If the items are second-hand, the value of the donations shall be the carrying amount after deducting accumulated depreciation.

With the benevolence of donors in helping the education sector adjust to blended learning and online classes, it is but equitable not to respond to their generosity with a tax burden. Through tax relief, continuing education is possible in a pandemic and fiscal stimulus for ailing businesses and the economy is underway.

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.

 

Renz Anthony K. Boaloy is a manager with the Client Accounting Services group of Isla Lipana & Co., the Philippine member firm of the PwC network. 

+63 (2) 8845-2728

renz.anthony.k.boaloy@pwc.com

Trump falsely claims victory but US election is too close to call

WILMINGTON, Del./WASHINGTON — President Donald Trump falsely claimed victory over Democratic rival Joe Biden on Wednesday with millions of votes still uncounted in a tight White House race that will not be resolved until a handful of states complete vote-counting over the next hours or days.

Shortly after Mr. Biden said he was confident of winning the contest once the votes are counted, Mr. Trump appeared at the White House to declare victory and said his lawyers would be taking his case to the US Supreme Court, without specifying what they would claim.

“We were getting ready to win this election. Frankly, we did win this election,” Mr. Trump said. “This is a major fraud on our nation. We want the law to be used in a proper manner. So we’ll be going to the US Supreme Court. We want all voting to stop.”

Polls have closed and voting has stopped across the country, but election laws in US states require all votes to be counted, and many states routinely take days to finish counting legal ballots. More votes still stood to be counted this year than in the past as people voted early by mail and in person because of the coronavirus pandemic.

Earlier in the evening, Mr. Trump won the battlegrounds of Florida, Ohio and Texas, dashing Mr. Biden’s hopes for a decisive early victory, but Biden said he was confident he was on track to winning the White House by taking three key Rust Belt states.

Mr. Biden, 77, was eyeing the so-called “blue wall” states of Michigan, Wisconsin and Pennsylvania that sent Mr. Trump, 74, to the White House in 2016 for possible breakthroughs once those states finish counting votes in hours or days to come.

“We feel good about where we are,” Mr. Biden said in his home state of Delaware, shouting over a din of supporters in cars honking their horns in approval. “We believe we’re on track to win this election.”

Winning those three states would be enough to give Biden an Electoral College victory. Fox News projected Mr. Biden would win Arizona, another state that voted for Mr. Trump in 2016, giving him more options to get to 270 Electoral College votes.

Mr. Biden leads 220 to 213 over Mr. Trump in the fight for the 270 Electoral College votes needed to win the White House, according to Edison Research.

Even without Pennsylvania, Biden victories in Arizona, Michigan and Wisconsin, along with his projected win in a congressional district in Nebraska, which apportions electoral votes by district, would put him in the White House, as long as he also holds the states that Mr. Trump lost in 2016.

“We are up BIG, but they are trying to STEAL the Election. We will never let them do it. Votes cannot be cast after the Polls are closed!” Mr. Trump said on Twitter before his White House appearance, which swiftly tagged the tweet as possibly misleading.

“It’s not my place or Donald Trump’s place to declare the winner of this election. It’s the voters’ place,” Mr. Biden said on Twitter in response to the president.

Mr. Trump has repeatedly and without evidence suggested that an increase in mail-in voting will lead to an increase in fraud, although election experts say that fraud is rare and mail-in ballots are a long-standing feature of American elections.

In Pennsylvania, Democratic Governor Tom Wolf said the state still had to count more than a million mail-in ballots. He called Mr. Trump’s remarks a partisan attack. According to Edison Research, more than 2.4 million early ballots were cast in the state, of which nearly 1.6 million were by Democrats and about 555,000 by Republicans.

Supporters of both candidates called the election a referendum on Mr. Trump and his tumultuous first term. The winner will lead a nation strained by a pandemic that has killed more than 231,000 people and left millions more jobless, racial tensions and political polarization that has only worsened during a vitriolic campaign.

Trump monitored election returns with members of his family in the living room of the White House residence. Going in and out of the room were first lady Melania Trump, his son-in-law Jared Kushner and his daughter Ivanka among others. “He’s calm, chilling,” said a source familiar with the scene.

In the East Room of the White House, where 200 Trump supporters were having drinks and eating chicken fingers, sliders and cookies, cheers broke out when Fox News called Florida for Mr. Trump, said a source in the room.

“The place just erupted,” said the source, who said the mood was both “extraordinarily positive” and “cautiously optimistic.” “Everyone started cheering.” Florida was a must-win state for any Mr. Trump path to victory.

Voters were also to decide which political party controls the US Congress for the next two years, with Democrats trying to recapture a Senate majority and favored to retain control of the House of Representatives.

A Democratic drive to win control of the Senate appeared to fall short, with Democrats picking up only one Republican-held seat while six other races remained undecided early on Wednesday. The six were in Alaska, Maine, Michigan, North Carolina and two in Georgia.

NO EARLY SURPRISES
There were no early surprises as the two contenders split the US states already projected. Mr. Trump captured conservative states like Alabama, Indiana, Kentucky and Tennessee while Democratic-leaning Connecticut, Massachusetts, New York and Vermont went to Biden, according to projections by television networks and Edison Research.

Mr. Trump’s strong performance in Florida was powered by his improved numbers with Latinos. His share of the vote in counties with large Latino populations was larger than it was in the 2016 election.

For months there had been complaints from Democratic Latino activists that Mr. Biden was ignoring Hispanic voters and lavishing attention instead on Black voters in big Midwestern cities. Opinion polls in key states showed Mr. Biden underperforming with Latinos in the weeks leading up to the election.

Many younger Hispanics were ardent supporters of US Democratic Senator Bernie Sanders during the party’s primary campaign, but in opinion polls expressed little enthusiasm for Mr. Biden, viewing him as too moderate and out of touch.

In the Miami area, Latinos are predominantly Cuban Americans, where generations of families have fled communist rule in Cuba. Mr. Trump’s messaging about Biden being a socialist seemed to work with them and with Venezuelans there despite Mr. Biden’s denials.

Edison’s national exit poll showed that while Mr. Biden led Mr. Trump among nonwhite voters, Mr. Trump received a slightly higher proportion of the nonwhite votes than he did in 2016. The poll showed that about 11% of African Americans, 31% of Hispanics and 30% of Asian Americans voted for Mr. Trump, up 3 percentage points from 2016 in all three groups.

Edison’s national exit poll also found that support for Mr. Trump declined by about 3 points among older white voters, compared with 2016.

The poll found Mr. Biden made significant gains in the suburbs.

In 42 suburban counties spread across 13 states where most of the votes had been counted, Mr. Biden was doing about 5 percentage points better than Clinton did in 2016 and than Barack Obama did in 2012.

US stock futures jumped late on Tuesday as Mr. Trump’s showing improved, but were volatile and last up 0.25% at 1:50 a.m. ET (0650 GMT).

“I think markets were jolted a little bit by how close the race now appears. We are seeing a little bit of a flight-to-safety response in some asset classes,” said Mona Mahajan, senior US investment strategist at Allianz Global Investors, New York.

On betting website Smarkets, odds reflected a 74% chance of Trump winning, up from 33% earlier in the day.

Voters, many wearing masks and maintaining social-distancing to guard against the spread of the coronavirus, streamed into polling places across the country through the day, experiencing long lines in a few locales and short waits in many other places. There were no signs of disruptions or violence at polling sites, as some officials had feared.

Mr. Biden, the Democratic former vice president, put Mr. Trump’s handling of the pandemic at the center of his campaign and had held a consistent lead in national opinion polls over the Republican president.

But a third of US voters listed the economy as the issue that mattered most to them when deciding their choice for president, while two out of 10 cited COVID-19, according to an Edison Research exit poll on Tuesday.

In the national exit poll, four out of 10 voters said they thought the effort to contain the virus was going “very badly.” In the battleground states of Florida and North Carolina, battleground states that could decide the election, five of 10 voters said the national response to the pandemic was going “somewhat or very badly.”

Mr. Trump is seeking another term in office after a chaotic four years marked by the coronavirus crisis, an economy battered by pandemic shutdowns, an impeachment drama, inquiries into Russian election interference, US racial tensions and contentious immigration policies.

Mr. Biden is looking to win the presidency on his third attempt after a five-decade political career including eight years as vice president under Mr. Trump’s predecessor, Barack Obama.

Mr. Biden has promised a renewed effort to fight the public health crisis, fix the economy and bridge America’s political divide. The country this year was also shaken by months of protests against racism and police brutality. — Reuters

As Japan moves to revive countryside, pandemic chases many from cities

TOKYO — When the coronavirus outbreak caused rice and instant noodles to disappear from supermarket shelves in Tokyo this year, Kaoru Okada, 36, decided to leave the capital because he was worried about food security.

Mr. Okada settled in the central Japanese city of Saku, Nagano prefecture, about 160 kilometers (100 miles) northwest of Tokyo, maintaining his online retail and export business while growing vegetables in shared farms and threshing rice.

“I moved out of Tokyo in June as soon as the domestic travel ban was lifted, thinking now is a once-in-a-lifetime opportunity,” Mr. Okada told Reuters. “Living close to a food-producing centre and connections with farmers give me a sense of security.”

As the pandemic has pushed many companies to allow telecommuting, it has also caused population to flow out of Tokyo — the first time that has happened in years, the latest government data showed.

The shift could boost Prime Minister Yoshihide Suga, who made revitalizing Japan’s decaying rural regions a core plank of his socioeconomic platform.

In September, 30,644 people moved out of Tokyo, up 12.5% year-on-year, while the number moving in fell 11.7% to 27,006, the data showed.

It was the third straight month the those moving out outnumbered those moving in, the longest run on record, led by people in their 20s and 30s.

Mizuto Yamamoto, 31, now uses telecommuting to skip Tokyo’s jam-packed morning trains.

An employee at staffing firm Caster Co., he moved about 150 km (93 miles) west of Tokyo to Hokuto in the mountainous Yamanashi prefecture last year with his wife and 2-year-old son.

“It was good to move to quiet areas like Hokuto surrounded by rivers, the Southern Alps and Mt. Fuji,” Mr. Yamamoto told Reuters. “There’s no crowd of people, which reduces the virus risks.”

NOT CLINGING TO TOKYO
Premier Suga, from rural Akita prefecture in the north, made the revitalization of Japan’s countryside one of his key goals.

Despite a lack of jobs and infrastructure to support them, local governments and businesses have been trying for years — largely in vain — to draw more people to rural areas.

Hidetoshi Yuzawa, an official in Iida, Nagano Prefecture, said Nagano is among the most popular places to migrate because of how much support, including mentors, it offers newcomers.

With help from Iida, Mio Nanjo, a 41-year-old pastry chef, is renovating a traditional house into a cafe, which she plans to open in the town of Matsukawa next spring.

A single mother of three, Ms. Nanjo moved from an area southwest of Tokyo this summer after the pandemic shut down the confectionery where she was working and her son lost his job at a truck maker.

“The move allowed me to start all over again,” Ms. Nanjo told Reuters. “There’s no point of clinging to Tokyo, where there are crowds and many people commit suicide.”

Jobs are also leaving the city.

A major staffing firm, Pasona Group, Inc. said in September it would move its headquarters and 1,200 employees to Awaji island off Kobe, western Japan, the home of 68-year-old chief executive Yasuyuki Nambu.

The lockdowns this spring were a decisive factor, Mr. Nambu said, adding that the trend would continue as companies and employees changed their mindsets about work-life balance.

“Regional society is stress-free, and you can live a life rich in delicious foods and activities such as fishing and farming,” Mr. Nambu told Reuters.

Other firms, such as Caster, have already based their business model on telecommuting, making it easy to hire workers by offering jobs wherever they are, said Shota Nakagawa, 34, CEO of the company in the southern Japanese city of Saito.

“Workers can avoid commuting on rush-hour trains and companies can spare transportation costs and reduce office space, all of which will improve profits,” Mr. Nakagawa said.

But in Saku, Okada, the online business owner, has no intention of living there forever — although that doesn’t mean he’ll move back to Tokyo.

“As long as I can work anywhere, I will keep hopping to find a place best suited to my life at the time,” he said. — Reuters

Wall Street frets as US presidential election is too close to call

NEW YORK — Wall Street and financial industry executives urged caution overnight as no clear winner emerged in the hours after polls closed in the 2020 US presidential election, threatening a drawn-out count that keeps markets and businesses hanging.

While Republican President Donald Trump has handed the financial industry huge tax breaks and deregulatory wins, his first term has also been marked by volatility and unpredictability, particularly in international trade.

This year, the administration’s uneven response to the coronavirus pandemic also came under fierce criticism. The US economy slumped, with markets gyrating wildly and unemployment skyrocketing, as cities and states took different approaches to lockdowns to stop the spread of the virus.

Wall Street has been leaning left this election, with Democratic challenger Joe Biden outstripping Mr. Trump in financial industry fundraising. While many executives said they did not support all of Mr. Biden’s policies, they believed he would be more predictable and better for the country.

“This is a vote for the soul of our nation. Who we really are. Who we aspire to be,” Mike Novogratz, chief executive of New York-based Galaxy Digital and a major Democratic donor and fundraiser, tweeted early on Tuesday.

“Have to admit a feeling of Deja vu. Don’t like it. Still early though,” the former macro hedge fund manager tweeted later as results started to roll in showing the race still too close to call.

Global investors late on Tuesday began reversing some Biden trades that had prompted a jump in Wall Street’s main indexes earlier in the day.

Analysts expected record voter turnout, especially through mail-in ballots, which means it could take days to get certainty about a final tally. Both Mr. Trump’s and Mr. Biden’s teams said they were prepared to litigate the outcome.

Investors and fund managers said they were expecting a long night monitoring the results from home. For many, it was a far cry from Nov. 9, 2016 when, with no pandemic raging, New York city and other financial centers played host to countless informal watch parties in bars, and Trump’s victory was called at around 2.30 a.m.

This year, Mr. Novogratz tweeted about being at home with a bottle of wine, watching the results on television with his family. Max Gokhman, head of asset allocation for Pacific Life Fund Advisors, said he was working from his home in California, nursing a glass of bourbon and a cold brew coffee and not expecting to get any sleep.

Anthony Scaramucci, a hedge fund executive who spent 11 days as Mr. Trump’s communication director in 2017, said after many polls closed on the East Coast that the race would be closer than he initially thought but that he still expected Mr. Biden to win. Mr. Scaramucci, who became strongly anti-Trump following his brief White House stint, said he voted for the Democratic nominee.

“Yes, he can win and it will be very good for stocks.”

In anticipation of possible protests, some buildings and stores were boarded up in cities including Washington and New York. While there were few signs of disruptions or violence at polling sites on Tuesday, some finance executives said it was too soon to rule out civil unrest.

“There are no problems right now, but that’s only because there’s no answer right now,” said Billy Weber, CEO of Checkpoint Capital, a fixed-income platform.

‘PERFECT STORM’
The S&P 500 Index has risen 48.8% during Mr. Trump’s tenure, which he has frequently cited as a measure of success.

Policy-wise, the Trump administration has focused on lower taxes, deregulation and rethinking the US position on global trade agreements in order to boost domestic manufacturing.

Mr. Trump has not been uniformly loved, however, by the financial industry. He has attacked corporate leaders, including JPMorgan Chase & Co CEO Jamie Dimon, and close Wall Street associates have distanced themselves from Mr. Trump as he came under fire over his handling of the pandemic and racial justice protests.

Mr. Biden has called for higher corporate taxes, tougher regulation and a less combative stance with trade partners. The financial industry is also worried about an enforcement crackdown and an emboldened consumer watchdog, which Mr. Trump had diminished.

The former vice president has cast himself as someone who will unify the country and has aligned himself with progressives fiercely critical of Wall Street. But many financial executives said they were more worried about a second dose of Trump chaos.

Regardless of the winner, a decisive outcome was the key to giving Wall Street the certainty it craves, said David Boies, who represented Vice President Al Gore in the US Supreme Court case that put George W. Bush in the White House.

Still, some young Republican finance executives said they were anticipating gathering to celebrate Mr. Trump’s quick victory.

Charles Kolean, a 25-year-old investment industry worker who spent months raising cash to re-elect Mr. Trump, said he had reserved a chunk of a Dallas bar where he and some 100 friends planned to toast another four years for the president, albeit wearing masks.

“The perfect storm is coming together to make Donald Trump a two-term president.” — Reuters

A COVID vaccine is the next tourist attraction

COVID-19 (coronavirus disease 2019) has brought so many new and difficult choices into people’s lives, and now there is another one, particularly for well-to-do Americans: If a vaccine were not yet available in the US, would you fly to another country to get it?

It is now possible to have a decent sense of which nation is winning the vaccine race, and it is not the US. A Chinese vaccine is being distributed now, and so far it seems to be safe and modestly effective. The data are not sufficiently clear that you ought to get one now, but it is easy to imagine that in another month or two the Chinese vaccine will be a plausible option.

And no, you probably won’t have to go to China for the jab. The Chinese vaccines are being distributed on a global basis, and are already in extensive tests in the United Arab Emirates. The timing is uncertain, but with delays on the US side it is entirely possible that come January you will be able to get a “good enough” vaccine in Dubai but not in Dallas.

So would you get on that plane?

There is also talk of the UK and Germany having some vaccines available before Christmas, with a greater supply to follow shortly thereafter. The European Union has an explicit policy, by setting a lower effectiveness threshold, to approve some vaccines that the US Food and Drug Administration will not. The safety threshold in the EU still should be fine.

You might think there will be complicated allocation rules limiting your ability, as a foreigner, to have access to these vaccines. That is likely true, but there is also going to be slippage. Say you are a frontline nurse overseas, and you already had COVID-19 back in March. The private clinic you work for will be able to order a vaccine on your behalf, but then turn around and sell it to a visiting foreigner for, say, $20,000.

The regulations on these vaccines will be so new there are certain to be loopholes, so don’t think this is necessarily an illegal or black-market transaction. It is more akin to a grey market. There might be some legal risk, of course, and the higher it is, the higher the price will be to induce some sellers to divert supply.

Or imagine that the Chinese encourage some countries to set up completely legal vaccine tourism programs for wealthy Americans, if only to score a propaganda victory and make a point about dependence. I hear Cambodia is lovely in winter.

The US itself might be on board with such an arrangement. If reasonable vaccines are approved in other countries first, American elites might start a revolt of sorts. Rather than fixing America’s cumbersome vaccine approval and distribution system, the federal government might find it easier to encourage an allied nation or two to offer their product to visiting Americans. It won’t be fair, but the US might find that creating such a system for well-to-do squawkers will defuse their opposition to the status quo.

What might vaccine tourism look like? You will get multiple rapid tests before boarding the plane and taking your business-class seat. Upon landing in Dubai or Hong Kong, you will quarantine briefly, get your jab, then spend a few days more under observation and hotel quarantine. You will then fly back home. As for payment, maybe you sent bitcoin in advance. You are paying more for the reliability and reputation of the clinic than for the vaccine itself.

Is vaccine tourism unethical? That is hard to say. On the one hand, you might be taking a vaccine away from someone who needs it more. On the other, there is a comparable and probably higher risk that any government-approved vaccine allocation method, whatever it may be, will be less than morally optimal.

Say the government tries to be as objective as possible by using an algorithm to rank citizens based on their need for a vaccine. How many people would say it is wrong to follow the algorithm? Would vaccine tourism and market forces be egregiously more unfair? Wealthy foreigners fly to the US all the time for better medical treatment without provoking widespread moral outrage.

Furthermore, to put it bluntly, if you are a highly productive person who runs a business and creates a lot of jobs, it probably is best for society that you get a vaccine early. And it is not just to keep you healthy. It’s also to lower your perceived risk so you can travel, go to meetings and do your thing. Is it so wrong when selfishness and altruism coincide?

In this way COVID-19 doesn’t present a new choice so much as illuminate an old maxim: When there are gains to be made from trade, the safe bet is that they will be captured.

BLOOMBERG OPINION

Renewable recycling

It is never the intention of governments to actually pollute the Earth. On the contrary, they enact and enforce laws that aim to protect the environment. However, even in their pursuit of sustainable growth, at times, there are missing steps and unintended consequences. Policies paving the way for the shift to renewable energy provides a number of examples of this.

The moratorium on new coal-fueled power plants, for instance, is moving initiatives and capital towards renewables. It is already forecast to result in about $30 billion worth of investments in renewable energy by 2030, according to a commentary by the Institute for Energy Economics and Financial Analysis (IEEFA).

The IEEFA also expects the share of coal in the Philippine energy supply mix to drop to 16% from the current 41.5% in the next 10 years, and the contribution of solar and wind to rise to a combined 43.8% from 5.4% to date. This shift paves the way for what Energy Secretary Alfonso Cusi referred to as “sustainable growth” on the back of “cleaner energy sources.”

With this shift, initial capital investment may be high, but operating costs of solar and wind power plants will definitely be lower than coal and other power generators running on fossil-based fuel. The shift also cuts our spending on imported coal and oil, and the environmental damage resulting from the extraction of local coal. But the shift will also have its own “costs.”

As I wrote previously, I believe that reducing power industry demand particularly for fossil fuel like bunker oil and coal can insulate us from external factors like supply bottlenecks and geopolitics that impact on the supply, transport, and prices of imported fuel. I also wrote that I believed the Energy department was on the right track. But I also noted lowering energy and fuel prices should not be at any cost to the environment. In short, clean energy should be a win-win. However, for this to happen, the investments should not just be in renewable energy production, but should also be in recycling in its related components as well.

A report in Bloomberg Green by Chris Martin noted how wind turbine blades from wind energy farms all over the world couldn’t be recycled and were now piling up in landfills, and that companies were now searching for ways to deal with the tens of thousands of blades that have reached the end of their lives.

And just to provide readers some reference, Martin noted that a wind turbine’s blade could be “longer than a Boeing 747 wing, so at the end of their lifespan they can’t just be hauled away. First, you need to saw through the lissome fiberglass using a diamond-encrusted industrial saw to create three pieces small enough to be strapped to a tractor-trailer.”

In short, while disposal doesn’t happen often, it does happen. And, it is far from easy. Worse, it doesn’t seem like large-scale recycling is an option at this point. So, those used giant fiberglass blades will mostly end up getting dumped in landfills and add to solid waste pollution. I am uncertain if they degrade over time, and if they do, if toxic waste goes into the soil.

Energy policy cannot be short-sighted. If the government will offer incentives to companies that will invest in renewable energy, then it should also require them to provide for technologies and facilities to recycle their own waste. Or, offer incentives as well to companies that will go into the business of recycling used components for the renewable energy industry.

Isn’t it that we require industries to clean and recycle their own waste water? Then, why can’t we require solar energy companies to recycle their own used solar panels, or wind energy companies to recycle their own used wind turbine blades? Why should these industries be allowed to leave other people — or government landfills — to deal with their wastes?

The “problem” with turbine blades is that they are too well-built. They have been manufactured to withstand the elements and extremely severe weather. And so, the fiberglass blades cannot just be “crushed, recycled or repurposed,” reported Bloomberg Green, thus the “urgent search for alternatives in places that lack wide-open prairies.”

In the US, Bloomberg Green added, used turbine blades could go only to several landfills that are willing to accept them. And “the wind turbine blade will be there, ultimately, forever,” Bloomberg Green quoted Bob Cappadona, chief operating officer for the North American unit of Paris-based Veolia Environnement SA. “Most landfills are considered a dry tomb,” he said.

Simply put, the very things we are doing now, like shifting to renewable energy, to save the environment, are the very things that will become the source of environmental challenges in the future. That is, if we don’t plan things better. “Clean up” should always be part of the energy agenda, and should be required of all future investments in the energy industry.

Obviously, this is going to be easier said than done. In the US alone, Bloomberg Green reported, about 8,000 blades will go down annually in the next four years. Europe will have about 3,800 blades to replace every year all the way to past 2022. In just the last decade, far more wind turbines have come online, and these will be contributing to “blade waste” in the future.

Used blades have been used to fire up kilns in cement and power plants in Europe, which seems like a good idea. However, “burning fiberglass emits pollutants,” reported Bloomberg Green. It also reported that one company is looking into grinding them to dust, while another developed a method to break down blades and press them into pellets and fiber boards to be used for flooring and walls. But more needs to be done to achieve a significant level of recycling.

The “problem” affects the solar energy industry as well. The International Renewable Energy Agency estimates that by 2050, up to 78 million metric tons of solar panels will have reached the end of their life, and this will result in about six million metric tons of new solar e-waste annually. And, just like wind turbine blades, these used solar panels will also mostly end up in landfills. And with solar panels, when they break down, toxic waste actually goes into the soil.

As I had written previously, I am all for going renewable, and I believe solar and wind are good options for the Philippines. Add to this geothermal energy. However, when the government and investors plan on these renewable energy projects, are they also planning on how to dispose or recycle damaged or end-of-life solar panels and turbine blades?

This early, we need government regulations on proper disposal. We need science- and data-based policies and standards on how to “recycle” renewable energy components. And we need to incentivize investments in facilities and technologies that can put to good use the “waste” generated by the renewable energy industry. For there will be waste, and lots of it.

The shift to renewables is a solid waste management problem down the line. As we look into it now, we also need to start investing in the manufacturing and installation of equipment and renewable energy systems that could actually be recycled or “renewed” later on. For the system to work, and to protect the environment, renewable energy and recycling must go together.

 

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

matort@yahoo.com

Trade, stock markets and indefinite lockdown

The Philippines is now into eight months of indefinite, no timetable lockdown since mid-March. The adverse impact on the economy and people’s livelihood is also indefinite. Estimates of the country’s GDP contraction this year range from -6% to -9.5%. At this rate, with this very low economic base in 2020, we need to grow by at least 10% in 2021 just to be at the economic level of 2019.

For this piece, I will briefly discuss the impact of the virus scare plus global lockdowns on two sectors, merchandise or goods trade and stock market capitalization.

The Philippines GDP size in 2019 was $377 billion and ranked 34th worldwide. In merchandise trade, the Philippines in 2019 ranked 43rd with $70-billion exports and ranked 34th with $113-billion imports.

With the COVID-19 scare and lockdowns in many countries, workers, investors and goods, from raw materials to finished products, have limited mobility. Among the countries listed in Table 1, data from the World Trade Organization (WTO) show that the Philippines has the second deepest contraction in exports next to India, the first half 2020 is only 40% of total exports in 2019. In imports, the Philippines has the deepest contraction, the first half 2020 only one-third of 2019 imports (see Table 1).


When it comes to the stock market, data from the World Federation of Exchanges (WFE) show that the Philippine Stock Exchange (PSE) capitalization of $275 billion in end-2019 shrank to only $192 billion by March 2020 and slowly inched up to $220 billion by September 2020, still a huge -20% contraction from the 2019 level and among the deepest dive in the world. Which means the already small capital base of the PSE became even smaller (see Table 2).

Strict lockdown policies — ECQ, MECQ, GCQ — which prohibit many public transportation options, among others, continue to wreak havoc on the economy affecting both rich and poor. Only government officials and personnel are not affected because their salaries and allowances, which have been appropriated in the 2020 budget, are already secured and funded.

The Concerned Doctors and Citizens of the Philippines (CDC PH) wrote to President Rodrigo Duterte on Oct. 7 appealing for lifting the lockdown nationwide. In that letter, the physicians and other signatories argued,

“…we do not need to sacrifice our nation’s economy to save the lives of the 800+ high-risk Filipinos each month who are actually threatened by COVID. To do this we propose the adoption of a scientific, data-driven and objective response: (1) isolation and early treatment of the sick, (2) protection of the vulnerable, i.e. the elderly and those with medical comorbidities, (3) quarantine only of affected localities based on metrics such as death rates, ICU capacity.”

“We propose the early treatment of COVID-19 with a variety of drugs and supplements such as Faviparivir, Budesonide, the very promising Ivermectin and the Zelenko Protocol, which combines zinc and Azithromycin with the highly politicized yet long proven effective hydroxychloroquine. Despite all the controversy surrounding HCQ, there remains very strong medical support for its efficacy in reducing mortality, hospitalization and the severity of the disease…”

The rising number of prohibitions and mandates make our lives and freedom more restricted. There is the mandatory closure of public transportation, closure of schools, churches and cinemas, and soon there will be mandatory vaccination — as if government and vaccine pushers are Gods who cannot make mistakes in the quality and safety of those vaccines. Mandatory vaccination is wrong and should not be imposed on all people.

 

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

minimalgovernment@gmail.com

Also in the photo

 

PHOTOS highlight the importance of an event (or pseudo-event) by recording those who attended it. Business tycoons, triumphant politicians, and TV celebrities, moving out and moving in, get into the picture. Often, there is a less glittery crowd that also manages to join (usually running) the group — wait for me.

Isn’t there the moment just before participants in a virtual meeting take their leave that an unmuted voice shouts, “photo”? The now trite layout of small boxes of smiling faces, arrayed like a rogues’ gallery, is clicked and saved in the virtual album. In this layout, there is no distinction between principals and hangers-on.

In a political shootout where there are two protagonists facing the slouched leader, there is a fourth person in the background looking on. They may all be wearing face masks, but their identities are readily known, even without captions.

There is a place for the anonymous crowd, if only to show the importance of an event. A mammoth crowd makes a protest rally more newsworthy.

The photographed supporters were critical in the recent tug-of-war for leadership in the legislative body. The battle cry (or rhetorical question) from each side dealt with a simple body count devoid of celebrity status — show me your numbers. Can the total of claimed supporters be higher than the full membership in this house? The time stamp was important as the bodies tended to keep changing sides.

Those who win the top post invariably give token mention of their supporting cast who are warmly described as team playvers. (It is time to heal the divisions that I have created.)

A photographer of events makes a list of those in the picture to make sure his captions, especially corporate titles and designations, are accurate to the minute. But sometimes, he doesn’t get all the names down. When unsure of identities, he has stand-by designations, including “a special friend,” “gatecrasher,” “bodyguard,” or “unknown social climber.”

Photographed nonentities make the leads more interesting by bestowing glamor, if only by contrast. In romantic comedies (also called “rom-coms”) supporting characters are gay or funny, or both. There is also the friend who is beaten up by bullies, to be rescued by our hero to provide comic relief when the story starts to drag. In dramas, the support may be a villain, a competitor who does unsavory things that make the hero look virtuous.

The role of a good supporting cast is to raise the profile of the star. In our photo opportunity, the favorite of lifestyle magazines and blogs, those surrounding the glamorous personalities tend to be overweight, balding (though not in an extreme sports buff type of way), paunchy, and a little less chicly dressed than the stars. Sometimes the scruffy lookers happen to be the sponsors of the event. Corporate benefactors invite celebrities who look much better than them — you wanna have a drink later?

Companies have their own supporting cast. Whole departments are designated as “staff support” which entitles them to smaller variable pay than the ones they provide services to. While marketing and sales have easily measurable goals which they can surpass, the same is not true for such functions as Finance or HR. Audit is not even considered a support role. There is the other category of pest.

Thus, the track for the top job of CEO often goes to marketing or those in charge of bringing in revenues, never those who try to control costs and measure performance targets. Only when a company implodes with declining market shares do the support heads (who are the most virulent critics of the line people) get a shot at the top. They usually open their acceptance speech with tales of the warnings they issued which went unheeded.

Supporters without the charisma of the leader are always included in the photo featuring a winning team with a trophy. But there is no mistaking where the leader is (fifth from right — holding the metal).

Still, in terms of job security, it is the staff groups that manage to stay on and serve different CEOs. The stars can be too visible and high-profile, whether in success or failure. The support groups manage to get in the picture in any situation, even when they are described merely as “also in the photo.” They’re always available… for the next photo opportunity. 

 

Tony Samson is Chairman and CEO, TOUCH xda

ar.samson@yahoo.com

Customer experience and convenience matter most to consumers — report

Ninety-one percent of Filipino consumers say that their customer experience is as important as the company’s products and services, according to “State of the Connected Customer 2020,” a report by customer relationship management (CRM) firm Salesforce released on October 29.

Customer experience is so valuable that 91% of global consumers would be more likely to make another purchase if they had a positive encounter. A further 78% say that they will forgive a company for their mistake after receiving excellent service.

Convenience is one aspect of customer experience, with over 60% of global consumers saying that they prioritize it over their loyalty to a brand. They have become accustomed to digital convenience solutions such as self-service account portals, which are the most used tool at 59%. More than 40% also sign-up for recurring subscription services and use chatbots for simple customer service.

Several less-used digital convenience solutions have the potential to gain traction: 41% of global consumers are interested in pre-ordering new or out-of-stock items; and more than 30% would like to use curbside pickup, wherein the customer waits in their car for the seller to deposit their purchases in the trunk. Automatic order replenishment is also a feature consumers would like to see.

Personalization is another aspect that consumers are particular with, as 63% percent of Filipino consumers preferring personalized products and services. Aside from the benefit of being recommended bespoke solutions, personalization is also considered as an act of sensitivity, especially during this time of the COVID-19 pandemic. It would be tone-deaf of a company, for example, to send an offer for an expensive item to someone who had just lost their job.

Unfortunately, this is a need that is not being met by most companies. While 66% of global consumers expect companies to understand their unique needs and expectations, only 34% say that companies deliver in reality. Sixty-eight percent of global consumers expect brands to demonstrate empathy, but only 37% say that brands actually do this.

If companies are able to take this challenge, they may be able to inspire loyalty from their customers that could go beyond a transactional level. Fifty-three percent of global customers say they feel an emotional connection to the brands that they buy from the most.

“Extraordinary experiences help companies earn more than sales—they build relationships,” said Salesforce in the report.

 

The data from “State of the Connected Customer 2020” was collected between July 16 and August 18 of this year. Twelve thousand consumers and 3,600 business buyers from North America, South America, Europe, Africa, and Asia Pacific were interviewed, including 650 respondents from the Philippines. Furthermore, the interviewees were comprised of four generations, namely baby boomers, Gen Xers, millennials, and Gen Zers. — Mariel Alison L. Aguinaldo

Consumers support brands that have the same values

Sixty-one percent of global consumers stopped buying from companies that did not align with their values, according to the same Salesforce report. On the other hand, 59% have switched to another company because of shared values.

Values are becoming a bigger consideration when it comes to brand support. Seventy-one percent of global consumers say that they are paying more attention to what a company stands for than they did in the previous year. Eighty-nine percent expect companies to express these values clearly in statements, and 90% expect that these be demonstrated through action.

“Companies’ reputations are shaped by the intersection of long-standing issues that have been laid bare by the events of 2020 … In short, companies are being held to a higher standard, and in areas that boardrooms have largely not considered,” said Salesforce in their report.

These issues include a company’s treatment of its customers and employees during the COVID-19 pandemic, which influenced over 80% of global consumers in their decision to buy from them. Close to 80% were influenced by a company’s environmental practices and actions on economic injustices. A little over 70% decided based on a company’s actions on racial injustices and practices of community involvement.

While one may assume that these sentiments are only popular among younger consumers, they are actually pervasive across generations. Considering the issues mentioned in the previous paragraph, no less than 70% among baby boomers, Gen Xers, millennials, and Gen Zers showed concern for them.

 A company’s values and actions become a gateway to consumer trust. There is some distrust among global consumer age groups, with 42% saying that they don’t trust companies to tell the truth. Forty-one percent say that they do not trust companies to act with society’s best interest in mind, while 36% feel that companies do not do what’s best for their customers.

However, there is hope for companies in proving consumers wrong during the COVID-19 pandemic. Fifty-one percent of global consumers said that they trusted a company more during this time, higher than the 31% rate that trusted a company less. In terms of direction, 80% of Filipino consumers identified environmental practices as a major point for improvement, while 71% cited social practices.

“The criticality of building trust with customers isn’t new, but its importance is magnified in the midst of a series of cascading crises. Today, customers aren’t just putting more emphasis on the importance of trust in their relationships with brands but also setting a higher bar for earning that trust,” said Salesforce.  — Mariel Alison L. Aguinaldo

NLEX scores back-to-back wins

By Michael Angelo S. Murillo, Senior Reporter

THE NLEX Road Warriors chalked up back-to-back victories in the PBA Philippine Cup after defeating the Rain or Shine Elasto Painters, 94-74, in the opening game of a quadruple-header offering on Wednesday at the Angeles University gym in Pampanga.

NLEX rode on a collective effort in putting up a steady fight throughout the contest to get the better of Rain or Shine and give added jolt to its Philippine Basketball Association (PBA) campaign.

The win improved the Road Warriors’ record to 3-5 while Elasto Painters dropped to 4-2 with the loss.

NLEX trailed early in the contest until Kevin Alas came off the bench and gave the Road Warriors a push on offense en route to taking the opening quarter, 24-18.

It was a control that the team would maintain in the second canto despite a spirited charge by Rain or Shine to swing the tide in its favor.

The Road Warriors held a 42-39 advantage at the halftime break.

The teams came out swinging to start the third quarter, fighting to a 48-47 count, with NLEX narrowly on top, at the 7:21 mark.

But Mr. Alas and Company went to outscore the Elasto Painters, 16-6, in the next six minutes to extend their lead to 11 points, 64-53. Rain or Shine then got to narrow its deficit after, 64-57, heading into the final frame.

In the fourth, the Road Warriors built on the momentum they got in the previous quarter and kept frustrating the Elasto Painters.

They led by 10 points, 79-69, midway into the quarter before they exploded and put the game away for good.

NLEX finished with a flurry, outgunning its opponent 15-5, to book the win. Mr. Alas top-scored for NLEX with 18 points followed by Jericho Cruz with 17.

JR Quinahan finished with 13 points while Raul Soyud had a near double-double of nine points and nine rebounds for the Road Warriors, who still have three games left in their elimination round assignment.

For Rain or Shine, it was Rey Nambatac who showed the way with 15 points followed by Jewel Ponferada with 10.

“One thing going for us of late is we are getting in better shape. When we started it was really tough because we were not in good shape. Defense was lousy but in our last few games we were playing better defense. And I think that is a major development for us. Hopefully it’s not too late,” said NLEX coach Yeng Guiao in the postgame interview as he talked about their winning streak of late.

In their previous game, the Road Warriors dealt the league-leading TNT Tropang Giga their first defeat.

Next for NLEX are the defending champions San Miguel Beermen on Nov. 6.

Rolando ‘Dy Incredible’ Dy in Brave lightweight title eliminator fight

MIXED martial arts fighter Rolando “Dy Incredible” Dy of the Philippines treks back to the Brave Combat Federation stage today in a lightweight title eliminator fight against New Zealand’s John “Trouble” Brewin.

His second fight in his return to lightweight, 29-year-old Dy (13-9) looks to better position himself for a shot at another title at “Brave CF 44” happening at the Bahrain National Stadium.

The Filipino took the fight in two weeks’ notice after Mr. Brewin’s original opponent Sam Patterson withdrew because of injury.

Mr. Dy, who last fought in Brave in September, does not see the short notice as being much of a problem since he has kept himself in shape.

He also said he is banking on his experience as a fighter as he goes up against his Kiwi opponent.

“I went to Brave to win another title in a different weight class. The fight is the same as my other fights. It was on two weeks’ notice and I’m a replacement opponent. I have nothing to lose and the pressure is on him (Brewin),” said Mr. Dy in his session with Tiebreaker Vods’ The Hit List on Monday.

“I think I have the advantage over him as far as experience. I have fought at the highest level and held a title. He has never fought a puncher like me,” added the former Abu Dhabi Warriors featherweight champion.

In his last fight, Mr. Dy hacked out a split decision win over Polish Maciek Gierzewski.

The victory snapped for him a two-fight losing streak.

At Brave CF 44, Mr. Dy will battle Mr. Brewin (5-1), who is currently riding a two-fight winning streak which earned him the promotion’s breakout fighter of the year award for 2019.

He, too, defeated Mr. Gierzewski in his last fight in November last year by way of submission (armbar).

Mr. Dy said there is no denying what Mr. Brewin would be bringing to the fight, but he expressed his readiness for it.

“Brewin is a complete fighter. He’s tall, grinder and has a lot of stamina, but I am also a complete fighter. I really don’t mind where he brings the fight. I know I can adjust anywhere the fight goes,” he said.

Brave CF 44 is headlined by the lightweight world title fight between defending champion Cleiton “Predator” Silva and top contender Amin “Fierceness” Ayoub. In the co-main event, top welterweights in former champion Abdoul Abdouraguimov and Louis “Spartacus” Glismann collide.

Founded in 2016, Brave, under the patronage of His Highness Sheikh Khalid bin Hamad Al Khalifa, has made headway in bringing top-class MMA action to different parts of the globe. — Michael Angelo S. Murillo

PFL: Stallion-Laguna FC underscores need to ‘follow the process’ to better compete

STILL finding its traction in the ongoing season of the Philippines Football League (PFL), Stallion-Laguna FC underscored the need for the team to “follow the process” from training to better compete in the two-week-long tournament.

Padded their cause after holding tournament favorite Kaya FC-Iloilo to a 1-1 draw in their matchup of league pioneers on Tuesday, the Stallions (0-1-1) now look to have some stability as the league’s coronavirus pandemic-hit season progresses.

“We learned our lesson in our first game; that we must follow what we do in training,” said Stallion assistant coach Richard  Leyble following their match on Tuesday, referring to their first game against Maharlika Manila FC on Oct. 31 where they lost, 1-2.

Against Kaya, Stallion-Laguna took a while still to get it going, down, 1-0, by the halftime break after Jovin Bedic broke through for Kaya in the 10th minute.

But instead of folding, the Stallions regrouped and came out more aggressive and steady in the second fold of the contest.

Their efforts were rewarded when Jhan-Jhan Melliza scored the equalizer in the 80th minute.

The teams tried to go for the go-ahead after, but nothing would come as the full-time buzzer sounded, leaving them to share the spoils with a point each.

“Kaya is one of the strong teams in the tournament. We just told the players to just follow the process, and it’s good for us to hold Kaya to a draw,” said Mr. Leyble.

Stallion-Laguna plays league-leader United City Football Club on Nov. 6. — Michael Angelo S. Murillo

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