Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 7641

Major vegetable output mixed in second quarter; tomato, sweet potato production posts gains

PRODUCTION of major vegetables in the second quarter was mixed with output gains posted by farmers of mung beans (monggo), tomato, bitter gourd (ampalaya), native onion, and sweet potato and declines recorded for potato, cabbage, eggplant, bermuda onion, and cassava, according to the Philippine Statistics Authority (PSA).

In its quarterly bulletin, the PSA said tomato production rose 3.2% year on year to 74,266 MT.

Ilocos Region was the top producer, accounting for 38% or 28,247 MT, followed by Central Luzon with 10.9% or 8,111 MT, and Cagayan Valley 10.2% or 7,596 MT.

Sweet potato production rose 4.9% to 157,469 MT.

Bicol Region was the top producer, accounting for 29.1% or 45,759 MT, followed by Central Luzon with 21.2% or 33,406 MT, and Eastern Visayas 14.3% or 22,540 MT.

Native onion production rose 0.4% to 1,018 metric tons (MT), led by Ilocos Region with 76.7% or 781 MT.

Ampalaya, or bitter gourd, production rose 0.5% to 30,666 MT, led by Central Luzon, which accounted for 41% or 12,560 MT, followed by CALABARZON (Cavite, Laguna, Batangas, Rizal, and Quezon) with 13.7% or 4,207 MT, and Ilocos Region 11.9% or 3,657 MT.

Monggo production rose 1% year on year to 23,799 MT, led by Ilocos Region, which accounted for 40.4% or 9,614 MT, followed by Cagayan Valley with 25.2% or 5,990 MT, and Central Luzon 24.4% or 5,818 MT.

Meanwhile, Bermuda onion production fell 7% year on year to 54,957 MT.

Potato production fell 5.3% to 12,520 MT, while cabbage output fell 0.6% to 22,356 MT. Eggplant production fell 1.8% to 104,435 MT, and cassava output fell 3.8% to 722,820 MT.

In August, the PSA estimated that the overall crop production in the Philippines rose 5% year on year and accounted for 53.7% of total agricultural output. — Revin Mikhael D. Ochave

DTI seeking end to Brazilian poultry import restrictions

THE Trade department is asking for a ban on poultry products from Brazil to be lifted, after meat processors said such a ban could lead to food shortages.

The Philippines had imposed a temporary ban after China reported that it found traces of the coronavirus disease 2019 (COVID-19) in products from Brazil.

The Department of Agriculture (DA) in its order also cited the rising number of COVID-19 confirmed cases in Brazil, which included workers at meat packing facilities.

Trade Secretary Ramon M. Lopez said that he has written to the DA to ask for a lifting of the ban, adding that there is no scientific evidence that the products transmit disease.

“Kung hindi, ma-te-threaten po ang ating food supply, lalo na iyong galing dito sa mga meat processors na isang malaking food category na binibili po ng ating mga kababayan (Our food supply could be under threat, particularly those that according to our meat processors are in high demand),” he said in a Laging Handa briefing Monday.

He said the department will also look at the ban’s possible impact on pricing, noting that Brazilian meats are cost-competitive.

“Delikado itong nangyayari ngayon in the sense na pwedeng magtaas din iyong cost ng raw material na iyon. At siyempre kapag nangyari iyan hihingi ng pagtaas ng presyo ang mga meat processors (The situation is very sensitive because raw material prices could rise, which could lead meat processors to request higher retail prices),” he said.

“But we will not automatically give it. In other words kailangang pag-aralan iyong cost impact. Pero sinasabi natin may impact ito sa presyo kapag hindi na-solve itong problema na ito (We’ll need to study the cost impact. But costs will definitely rise if we don’t resolve this problem).”

The Philippine Association of Meat Processors, Inc. has been asking the DA to lift the ban, saying there could be a shortage of mechanically deboned meat which could lead to an increase in canned goods prices.

The Bureau of Animal Industry earlier this month said that there is no shortage of poultry products in the Philippines as it continues to import from other countries.

Brazilian chicken imports account for around 15% of all such imports, the bureau said.

The World Health Organization said there is no evidence that COVID-19 can be transmitted through the food chain. — Jenina P. Ibañez

DoF freezes textile firm’s tax incentive application after CoA finds irregularities

THE Department of Finance (DoF) has suspended the issuance of P262 million in tax credits and P57 million in refunds to a Bulacan textile firm after the Commission on Audit (CoA) cited “irregularities” in its tax credit certificates (TCCs).

The DoF said in a statement Monday that its One-Stop Inter-agency Tax Credit and Duty Drawback Center (OSS) decided to withhold the application of Indo Phil Group of Companies (IPGC) for the tax perks after the CoA audit of TCCs issued between 2008 and 2014.

IPGC is a Filipino-Indian joint venture based in Marilao, Bulacan. It includes Indo Phil Textile Mills, Inc. (IPTMI), Indo Phil Acrylic Manufacturing Corp. (IPAMC) and Indo Phil Cotton Mills, Inc. (IPCMI). The total TCCs applied for each company amounted to P69 million, P102 million, and P91 million for IPCMI, respectively.

The statement was based on the letter of OSS Executive Director Emee I. Macabeles to Labor Secretary Silvestre H. Bello III who referred to the request of the company for a P57-million tax refund and issuance of TCCs worth P262 million. It was Indo Phil Group President Shanti Sipani who made the request, the DoF said.

“We highlight that IPAMC, IPCMI, and IPTMI are covered by the CoA SAO (Special Audits Office) Report 2018-06, with findings of irregularities on the TCCs issued to each company for years 2008-2014,” according to the letter sent by Ms. Macabeles.

Citing the IPGC’s  request, the DoF said the tax perks were put on hold because of the CoA report but Mr. Sipani was quoted as saying the company only “followed the government’s directions” in applying for the tax credits.

Ms. Macabeles, however, said CoA has started issuing notices of disallowance to companies that have TCCs that are ”tainted with irregularities.”

“Due to these developments and the enormity of the amount involved, the DoF and OSS Center (are) taking precaution(s) before any request for TCCs, Tax Debit Memos (TDMs) or duty drawbacks are acted upon,” she said, adding that the agency will update the Labor department on developments.

BusinessWorld asked the company for comment but had not received a response at deadline time.

The DoF reported last month that CoA has rejected P377.29 million worth of tax credits granted to four textile firms from 2008 to 2012. — Beatrice M. Laforga

Remittance decline seen weakening consumer spending, demand — Diokno

THE DECLINE in cash remittances due to the coronavirus pandemic will translate to lower consumer spending as well as demand, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.

“The impact of lower overseas Filipino remittances on inflation is via lower consumer spending hence less aggregate demand,” he said in a text message.

Consumption accounts for 70% of the economy, which posted a record 16.5% gross domestic product contraction in the second quarter.

Mr. Diokno said  the pandemic is “unprecedented” because remittances would increase in the past regardless of crisis. He described it as “invariant to world economic performance.”

The peso’s strengthening past the P48 per dollar level is expected to encourage overseas workers to send money to take advantage of the favorable exchange rate.

“That said, the impact of peso appreciation on inflation is tilted on the downside,” he said.

The peso ended trading at P48.485 to the dollar on Friday, gaining P14.50 centavos. Its Friday close was also its strongest in more than three years.

Inflation in July was 2.7%, against 2.5% June result and the 2.4% year-earlier level. It remained within the 2-4% target by the BSP.

A BusinessWorld poll of 16 economists yielded a median estimate of 2.8% for August inflation, which would be significantly higher than the year-earlier 1.7%. The official August data will be reported by the Philippine Statistics Authority on Sept. 4.

Economists studying the link between remittances and inflation have concluded that overseas Filipio workers (OFWs) tend to send more to their relatives back home when prices are rising.

“We surmise that increases in inflation in remittance-recipient economies motivate migrant workers to send more remittances to their families, by virtue of altruism, to smooth their family’s consumption, provide additional funds to maintain their consumption as well as their standard of living,” John Paolo R. Rivera, an economist from the Asian Institute of Management and Tereso S. Tullao, Jr., an economist from the De La Salle University said in their paper, “Investigating the link between remittances and inflation: evidence from the Philippines.”

The authors said their research showed that remittances reacted “instantaneously but at a lethargic pace.” They noted that the impact of rising inflation on remittances tapered off after six months.

“An increase in inflation… will immediately increase remittances, which we attribute to the altruistic motive of sending remittances so that recipient households can maintain their consumption levels despite the reduction in purchasing power due to inflation,” they said.

The authors argued against previous studies which showed remittances induced inflation in developing countries by fueling domestic consumption and creating short-run demand pressures.

“We did not find empirical evidence that remittances directly cause inflation in the Philippines. Results from the Philippine case present conclusions dissimilar from other economies,” they said.

The Philippines is the fourth largest recipient of cash remittances in 2019, behind only India, China, and Mexico, according to World Bank data.

More than 153,000 OFWs have been repatriated as of Aug. 29 due to the crisis, the Department of Foreign Affairs said. — Luz Wendy T. Noble

Conquer your transfer pricing blues

The year 2020 is like no other. With a pandemic still raging, a volcanic eruption, explosions, wildfires, plane crashes, social unrest, tragic deaths, and many other unexpected events — each one of us is affected one way or another. The year is not yet over but it has dished out something out of the ordinary to each and every one of us.

For taxpayers in the Philippines, this year is remarkable, because of the issuance of Revenue Regulations (RR) No. 19-2020 by the Bureau of Internal Revenue (BIR). The revenue regulation requires taxpayers with related party transactions (RPT) to submit Information Return on Related Party Transactions (BIR Form No. 1709) or RPT Form, along with transfer pricing documentation (TPD) and other supporting documents, as an attachment to the annual income tax return (AITR).

Failure to comply by not submitting the accomplished RPT Form, TPD, and other supporting documents may result in fines and penalties on the part of the taxpayers.  Also, the BIR may impose transfer pricing adjustments which could result in deficiency tax assessments in case a taxpayer is not be able to justify its transfer price through a TPD.

Admittedly, though, taxpayers may face challenges surrounding the preparation of TPD and submitting the RPT Form and its attachments.

First, some Philippine taxpayers may not be familiar enough with the transfer pricing rules or may not have enough experience in preparing TPD.

TPD is not just mechanical documentation. Under the BIR issuances, TPD should at least include statement of facts (organizational structure, nature of business of the taxpayer and its related parties, and nature of the covered controlled transactions), industry analysis, FAR (functions, assets, and risk) analysis, selection and application of transfer pricing method, search for comparable companies, benchmark analysis, and conclusion. With all these required contents, the preparation of TPD would require some substantial effort in data gathering and a great deal of analysis of the collected data.

In preparing TPD, a taxpayer should always keep in mind that, simply put, the objective is to determine the reasonable arm’s-length range from the most reliable information and support, that its RPTs are within the arm’s-length standard.

Taxpayers will also need to consider that the preparation of TPD entails some costs such as subscription fees for a commercial database to gather candidate comparable companies as well as securing the copies of their financial statements to be used in the analysis.

A second concern would be the deadline for the submission of the RPT Form and the TPD. The RPT Form, along with the TPD and other supporting documents, serves as one of the attachments to the AITR. eFPS filers have 15 days from the statutory due date or actual date of electronic filing of the AITR within which to submit the RPT Form, TPD, and other attachments.

The preparation of the RPT Form, TPD, and other attachments during the year-end closing, financial audit, and AITR filing season could take the stress for accountants and tax practitioners several notches higher. Thus, it will be advisable to start the preparations as early as possible. Most of the sections of the TPD can actually be prepared well in advance ahead of the year-end closing.

The completion of the other attachments to the RPT Form, aside from the TPD, will also not be easy. Under RR No. 19-2020, the attachments to the RPT Form, in addition to the TPD, are certified true copies of the relevant contracts or proof of transaction (regardless of volume), withholding tax returns and the corresponding proof of payment of taxes withheld and remitted to the BIR, proof of payment of foreign taxes or ruling duly issued by the foreign tax authority where the other party is a resident, and certified true copy of advance pricing agreement, if any. The copies of the contracts and proof of transactions such as sales invoices, official receipts, delivery receipts, among others, could be challenging to collate. In this regard, taxpayers should ensure that the relevant documents are properly kept and maintained in a way that it would be easy to retrieve the documents supporting the RPTs.

Last, taxpayers should be reminded that the submission of the RPT Form, TPD, and other attachments, is applicable to Philippine taxpayers with RPTs regardless of the amount and volume of transactions. There is currently no threshold considered for RPTs. Thus, the submission is applicable even to small-sized taxpayers or to those with minimal RPTs. Hopefully, this is something that would be addressed in a tax issuance in the future. Besides, one of the objectives of requiring the submission of the RPT Form is for the BIR to be able to focus on the most important and significant transfer pricing issue.

It is understandable that taxpayers may feel anxious about the submission of the RPT Form, TPD, and other attachments considering all the efforts that will be exerted in order to comply with the requirement. However, taxpayers should rather accept the fact that the BIR is looking at RPTs now more than ever and that these requirements may be here to stay. As it was said, all things are ready, if our mind be so.

Most certainly, being aware of the rules, seeking help from experts, being prepared, and having the appropriate mindset, could blow your transfer pricing blues away.

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

 

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

pagrantthornton@ph.gt.com

Metro Manila mayors want status quo on quarantine level

MAYORS IN Metro Manila have recommended to extend the quarantine measures that are in effect until end-August while the national task force on the coronavirus response were still meeting as of Monday late afternoon on what will be the lockdown status of the capital starting Sept. 1.

Presidential Spokesperson Harry L. Roque said the mayors, who met with the task force on Sunday, want to keep the general community quarantine (GCQ) category with easing of some rules such as shortening the common curfew hours.

Mr. Roque said various factors are still being assessed, including the capacity of health care facilities and the continued increase in coronavirus disease 2019 (COVID-19) cases in the capital.

“Pinag-uusapan pa po nila, tinitingnan po iyong critical care capacity, tinitingnan po iyong case doubling rate at malalaman po natin maya-maya lamang po, mag-iinspeksiyon lang si Presidente (They are still discussing, they will look at the critical care capacity, case doubling rate, and we will learn their decision later, the President will just inspect),” he said in an interview with Teleradyo Pilipinas.

Meanwhile, Trade Secretary Ramon M. Lopez said the government is considering a shift to one month-long period for the declaration of quarantine status from the previous two-week cycles.

“Ang pinaka-benefit po nito, of course, mas may stability ho sa ating pagkilos, sa pag-prepare ng reopening of the economy. Hindi nagbabago-bago (The main benefit of this, of course, is more stability in our movements, in preparing the reopening of the economy. Not a shifting) every 14 or 15 days,” Mr. Lopez said in a Palace briefing on Monday.

He added that the government is leaning towards an overall easing of restrictions with strict lockdowns to be imposed in smaller areas where there are surges in COVID-19 cases.

Mr. Lopez, a member of the task force, said he believes the country could eventually shift to the more relaxed modified GCQ category as long as the system to contact trace, isolate, and treat patients is firmly in place.

Metro Manila, also referred to as the National Capital Region (NCR), is the country’s economic center and has also been the hotbed of COVID-19 transmissions.    

As of Aug. 30, the capital accounted for more than half of the country’s total COVID-19 cases at 122,174.

The Department of Health (DoH) reported 3,446 new cases on August 31, bringing the national total to 220,819.

Metro Manila accounted for 1,900 of the new cases, while the nearby provinces of Laguna, Cavite, and Pampanga each had over 100.

There were 38 new deaths, bringing the toll to 3,558, while new recoveries stood at 165 for a total of 157,562.

More than 2.4 million individuals have been tested, according to the Health department. — Gillian M. Cortez, Jenina P. Ibañez and Vann Marlo M. Villegas

On contracts with Chinese firms: Not easy to terminate

THE SENATE committee on foreign relations is ready to look into proposals to terminate existing contracts with Chinese companies that are involved in reclamation activities in the South China Sea, but its chairman noted that aborting signed deals is not that simple.

“The problem with terminating contracts entered into is that this can open us (the country) to lawsuits,” Senator Aquilino L. Pimentel III, the committee chairman, said in a phone message on Monday.

He said any termination must be based on the failure to meet terms in the  contracts.

“It is better to look at the delivery or satisfaction of the deliverables in each contract. Those non-compliant (like delay, substandard work) shall be terminated,” Mr. Pimentel said.

Foreign Affairs Secretary Teodoro L. Locsin, Jr. last week recommended to cancel contracts signed with Chinese companies that have been blacklisted by the United States.

The American government last week imposed a restriction on 24 China-owned companies that took part in the illegal construction of artificial islands in the disputed sea.

This comes after the US categorically declared in July that most of China’s territorial claims are illegal, and expressed support for the Hague ruling won by the Philippines in 2016.

Mr. Pimentel said, “The question to ask is: Why did we in the first place enter into contracts with these companies? Do we have such poor intel work?”

The senator said hearings on the issue will be conducted once a resolution or bill has been formally filed and referred to the committee.

He added that the committee may recommend adopting Mr. Locsin’s proposal “for future contracts.”

“The executive branch can expressly specify that (involvement in South China Sea activities) as a negative criterion,” Mr. Pimentel said. — Charmaine A. Tadalan

5 hospitals to join China vaccine trial

FIVE HOSPITALS will join the clinical trial for the vaccine against coronavirus developed by China-based Sinovac Biotech Ltd., according to the Department of Health (DoH).

Four of the hospitals are state-owned — Philippine General Hospital, San Lazaro Hospital, Research Institute for Tropical Medicine, and the Vicente Sotto Medical Center — while one is private, the Manila Doctors Hospital.

“Itong Sinovac ngayon nasa Phase 2 siya and I think they have started already their Phase 3, and meron na ring ganitong isinasagawa sa ibang bansa katulad ng Brazil (Sinovac is in Phase 2 and I think they have already started their Phase 3 and there are also trials conducted in other countries like Brazil),” Health Undersecretary Maria Rosario S. Vergeire said in an online briefing on Monday.

The corresponding manufacturing company in the Philippines is already processing applications for the Phase 3 clinical trial study and has filed the confidentiality disclosure agreement. “Pinagaaralan na ngayon ng ating (This is being studied now by our) vaccine experts panel. We will provide additional information once everything is finalized,” Ms. Vergeire said.

The Philippines will also be participating in clinical trials for other vaccines for the coronavirus disease 2019 (COVID-19), including the Russian-developed Sputnik V and the COVID-19 Vaccines Global Access facility.

The government is also in talks to join the solidarity trial for vaccines led by the World Health Organization (WHO). — Vann Marlo M. Villegas

Regional Updates (08/31/20)

Tuna capital’s fish port market to be on 4-day lockdown after COVID-19 infections

ALL THREE market halls of the fish port complex in General Santos City, the tuna capital of the country, will be closed for at least four days starting September 2 to give way to disinfection and contact tracing activities after coronavirus cases were traced in the area. In a statement on Sunday, the city government said the temporary market closure may be extended “if needed.” The city government said the lockdown decision was made in coordination with the local task force in charge of the coronavirus disease 2019 (COVID-19) response, the Philippine Fisheries Development Authority (PFDA), and the SOCSKSARGEN Federation of Fishing & Allied Industries, Inc. “A special Barangay COVID Control Force will be created to monitor the area, and new rules will be formulated for people entering the Fish Port once it is reopened,” it said. The 32-hectare General Santos Fishport Complex is considered as the most modern fishport facility in the country. Apart from the market area, it also has cold storage and blast freezing facilities. Several barangays in the city are also under lockdown while contact tracing is ongoing for confirmed COVID-19 patients from these communities. As of August 30, the city had 76 confirmed cases, up by about 38% from a week ago. Of the total, 36 are active and no deaths.

‘Triple A’ slaughterhouse in Tanauan City opens in November

THE FIRST government-owned slaughterhouse in Tanauan City, Batangas with a triple A classification will start operations in November 2020, the Department of Agriculture (DA) said. “The Tanauan ‘AAA’ slaughterhouse will help propel the modernization of the livestock industry in Batangas, and subsequently provide a sustained livelihood, source of income, and affordable, safe, and hygienic meat products to constituents and neighboring communities, including Metro Manila,” Agriculture Secretary William D. Dar said during a recent inspection of the site. An ‘AAA’ category means the facility has equipment and operational procedures that meet international standards, and its output may be sold in both the local and international markets. The Tanauan abattoir, built at a cost of P187.2 million, has a capacity to process 500 hog heads per eight-hour shift. The facility will be managed by the Unified Batangas Swine Producers Association. Meanwhile, Mr. Dar also committed to expand the ‘AAA’ facility in Tanauan by integrating a poultry cutting plant with an additional P50 million budget from the National Meat Inspection Service (NMIS). Another P50 million has also been earmarked for the establishment of a separate cold storage and cutting facility for poultry stakeholders in the town of San Jose, also in Batangas. “With these poultry dressing and cutting facilities, we will be a step closer to producing mechanically-deboned meat (MDM), and thus reduce imports. At the same time, it would allow for a value-added enterprise for the benefit of poultry farmers in Batangas and neighboring provinces,” Mr. Dar said. — Revin Mikhael D. Ochave

Nationwide round-up

DoH warns vs posting COVID-19 patients’ names online

THE DEPARTMENT of Health (DoH) warned the public against posting names of coronavirus disease 2019 (COVID-19) patients online. Health Undersecretary Maria Rosario S. Vergeire said sharing of names of patients publicly may breach the laws on notifiable diseases and data privacy. “We are violating yung karapatan ng isang tao (the right of a person) to confidentiality and yung kanyang (and his/her) privacy,” she said in a briefing on Monday. She also appealed to the public and officials to be more considerate of COVID-19 patients and stop the stigma and discrimination against them. — Vann Marlo M. Villegas

Duterte tells soldiers to ‘fight hard’ vs terrorists, but peace table open

PRESIDENT RODRIGO R. Duterte rallied soldiers to continue fighting terrorists after two bombings in Jolo, Sulu last week that claimed the lives of 14, including soldiers, and wounded at least 75 others. “If we cannot really agree, then we fight and we fight hard hanggang magkaubusan na (until everyone is dead). Maybe by that time… wala ng giyera (the war will end),” Mr. Duterte said in a speech to troops in Jolo on Sunday evening. The Islamic State-linked Abu Sayyaf group, which has its stronghold in the southern island of Sulu, is suspected to be behind the blasts. At the same time, Mr. Duterte called for continued openness to peace initiatives, particularly with the help of local leaders. “Why don’t you try to help me within the next few months (of my) last term just to talk about peace? It need not really be a — an arrangement, just talk about peace,” he said. — Gillian M. Cortez 

Senator seeks probe on PPE procurement

A RESOLUTION has been filed in the Senate seeking to look into the government’s procurement of personal protective equipment (PPE), particularly on reports that imported supplies are favored over local production. Senate Resolution No. 506 calls for an inquiry on the implementation of the Bayanihan PPE Project led by the Department of Health (DoH), Department of Trade and Industry (DTI), and the Bureau of Investments (BI). “We have the supply, we have the quality, and we have the funds — bakit patuloy pa ang mass importation natin (why do we continue with mass importation)?” Senator Risa N. Hontiveros-Baraquel said in a statement on Monday. The resolution cited that some 57.6 million PPEs are being produced monthly by the Confederation of Philippine Manufacturers of PPEs (CPMP) under the project, but the government has so far procured only 10 million. Ms. Baraquel also filed Senate Bill No. 1796, which will give priority to local manufacturers in the procurement of PPEs, medicines among other essentials. Also on Monday, another lawmaker asked the Health department to discourage the use of rapid testing to screen people for COVID-19 due to its “very low” reliability. “There have been plenty of reports that these rapid tests produce false positive and false negative results,” Cagayan de Oro Rep. Rufus B. Rodriguez said in a statement. He added that rapid testing had already been banned in countries such as Australia, Dubai and India. — Charmaine A. Tadalan 

Lizada asserts sub judice rule does not apply to Congressional inquiry

CIVIL SERVICE Commissioner Aileen Lourdes A. Lizada stood by her earlier statement that the sub judice rule “does not apply to a case under investigation if it is done in aid of legislation.” She cited a Supreme Court ruling as well as the Civil Service Commission’s (CSC) Citizen’s Charter. “I say it again, may evidence, mayroon po tayong basehan (we have evidence, we have basis),” she said in an online press conference Monday. Ms. Lizada made the assertion after CSC Chairman Alicia dela Rosa-Bala denied suppressing information amid the Congressional inquiry on alleged irregularities at the Philippine Health Insurance Corp. Ms. Bala cited the sub judice rule which regulates publications on matters that are already under court proceedings. — Gillian M. Cortez   

Out of the mouths of babes: Lessons from businesses born in quarantine

With most of the world still in some form of lockdown, one would think that everything would be placed on hold. But life goes on… It must go on. Aside from babies still being born during the quarantine, we have seen something else being birthed that gives many of us hope: micro enterprises.

You have probably seen the rise of new business accounts on your social media feed. Perhaps you have received notifications that this business account started following you on Instagram (which we all know is really an invitation to follow them back). You may have also received direct messages (DMs) from your friends, acquaintances, and even strangers about the products that they have on hand. These new businesses have been so active online that even the Bureau of Internal Revenue has taken notice.

I have had my fair share of these feeds, follows, and DMs, so I decided to get to know the stories of some of these startups that were conceived and birthed under lockdown, starting, of course, with those of my friends. Here are some of the lessons I have learned and relearned from them:

Behavioral changes create opportunities. I initially thought that starting a business during a lockdown would be suicide because how would one even get raw materials given everyone’s limited mobility? It turns out that being quarantined at home has allowed people to get hold of their suppliers because they are not stuck in a meeting or in the middle of traffic. Because online transactions have become the norm and everyone is eager for a sale, suppliers have also become more responsive to cold calls, texts, e-mail messages, and DMs. Consumer behavior has also changed. More people are now willing to wait for their orders to be fulfilled because it is not as if we can just walk over to another store if the salesperson takes too long in attending to us. In a way, the lockdown has leveled the playing field for both startups and existing businesses because whichever one you choose to buy from, you will have to wait.

You can always choose what to do with your time. I asked my friends what had motivated them to start their business despite the lockdown. Some of them said they need additional sources of income because the pandemic has negatively affected their original livelihood. Some of them discovered a new hobby that they wanted to share with other people. Some of them had always thought of starting a business around their hobby but had never really found the time to do so until now. Some of them are using their new ventures to help other people make a living by hiring them for production or delivery. Whatever their reasons, they wanted to be productive during the quarantine.

“As we let our light shine, we unconsciously give others permission to do the same.” This Marianne Williamson quote is embodied in the stories of the handful of friends that I talked with about their new micro enterprises. Many of them were hesitant to jump into business until they saw another friend take the plunge. The risks that people see you take may be that last nudge they need to do something great, and I think that should count for something.

Micro enterprises have always made up the majority of listed businesses in the Philippines, which means that their success can very well be our economy’s ticket to bouncing back. Their success, of course, depends on our support. So, go ahead and reply to your friends’ DMs. Try their products at least once and give them honest feedback so that they can improve. Help them figure out their value proposition if they have not already done so. If you are already spending money, why not spend it to support a friend?

 

Liza Mae L. Fumar is a PhD in Business student of De La Salle University, where she also teaches Corporate Social Responsibility and Governance, and Leadership in Organizations.

liza.fumar@dlsu.edu.ph

Universal health care is 10 years early for PHL delivery system

In my last column I wrote that PhilHealth was far from ready to administer the universal health care program. Today, I say that the country’s health care delivery system is far from ready for universal health care (UHC).

UHC is firmly based on the World Health Organization constitution of 1948 declaring health a fundamental human right. Achieving UHC is one of the targets members of the United Nations set in 2015. On Sept. 25 that year, the resolution on “Transforming Our World: the 2030 Agenda for Sustainable Development” adopted the target of universal health coverage by 2030, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all.

UHC means that all people can use the preventive, curative, rehabilitative, and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services will not ruin him financially.

This definition of UHC embodies three related objectives:

1. Equity in access to health services — everyone who needs services should get them, regardless of his ability to pay;

2. The quality of health services should be good enough to improve the health of those receiving services; and,

3. People should be protected from being pushed into poverty because unexpected illness requires them to use up their life savings, sell assets, or borrow — destroying their futures and often those of their children.

The advantages of UHC are:

• Lowers overall health care costs

• Lowers administrative costs

• Standardizes service

• Creates a healthier workforce

• Prevents future social costs

The disadvantages are:

• Healthy people pay for the sickest

• People have less financial incentive to stay healthy

• Long wait times

• Doctors may cut care to lower costs

• Health care costs overwhelm government budgets

• The government may limit services that have a low probability of success

UHC, however, does not mean free coverage for all possible health interventions, regardless of the cost, as no country can provide all services free of charge on a sustainable basis. UHC is not only about individual treatment services, but also includes population-based services such as public health campaigns, adding fluoride to water, controlling mosquito breeding grounds, and so on.

Countries that achieve UHC will progress towards other goals. Good health allows children to learn and adults to earn, helping people escape from poverty and advance towards economic growth.

For universal health care to achieve its goal, several factors must be in place. They are:

1. A strong, efficient, well-run health system that meets priority health needs by:

• informing and encouraging people to stay healthy and prevent illness;

• detecting health conditions early;

• having the capacity to treat disease; and,

• helping patients with rehabilitation.

2. Affordability — a system for financing health services to prevent people from falling into bankruptcy.

3. Access to essential medicines and technologies to diagnose and treat medical problems.

4. A sufficient capacity of well-trained, motivated health workers to provide the services to meet patients’ needs based on the best available evidence.

Primary health care is the most efficient and cost effective way to achieve universal health coverage. Primary health care is an approach to health and wellbeing centered on the needs and circumstances of individuals, families and communities. It addresses comprehensive and interrelated physical, mental and social health and wellbeing.

It is about providing whole-person care for health needs throughout life, not just treating a set of specific diseases. Primary health care ensures people receive comprehensive care, ranging from promotion and prevention to treatment, rehabilitation, and palliative care as close as feasible to people’s everyday environment. This is the concept on which the Health Maintenance Organizations in the US are based.

Quality health care makes UHC a large expense for governments. It is usually funded by general income taxes and/or payroll taxes. There are three UHC models: single payer, social health or mandatory insurance, and national health insurance.

In a single-payer model, the government provides free health care paid for with revenue from income taxes. Services are government-owned and service providers are government employees. Every citizen gets the same quality of healthcare. The United Kingdom developed the single-payer system. Cuba has the same system.

Countries that use a social health insurance model requires everyone to buy insurance, usually through employers. The government has a strong influence on insurance premiums, and prices of service providers. Private doctors and hospitals provide the services. The insurance firms pay the doctors and hospitals. Germany, France, the Netherlands, and Switzerland use this system.

The national health insurance model uses public insurance to pay for private-practice care. Every citizen pays into the national insurance plan. Canada, Taiwan, and South Korea use this model. The US Medicare and Medicaid systems use this model.

In observance of the World Health Organization (WHO) declaration of healthcare for everyone, many countries launched universal health care programs. President Rodrigo Duterte signed on Feb. 20, 2019, the Universal Health Care Bill into law, Republic Act No. 11223, An Act Instituting Universal Health Care for All Filipinos. When implemented effectively, the law will mean all Filipinos get the health care they need, when they need it, without suffering financial hardship as a result.

RA 11223 enrolled all Filipino citizens in the National Health Insurance Program. That is 109 million Filipinos spread all over the archipelago — from Batanes in the north to Jolo in the South, from Samar in the East to Palawan in the West.

According to the Department Health (DoH), as of 2009 around 40% of hospitals are public. Out of 721 public hospitals, 70 are managed by the DoH while the remaining hospitals are managed by LGUs and other national government agencies.

Both public and private hospitals can also be classified by the service capability. Level-1 hospitals account for almost 56% of the total number of hospitals. They have very limited capacity, comparable only to infirmaries.

Private hospitals outnumbered the government hospitals in all categories. The disparity is more pronounced in tertiary hospitals where the number of private hospitals is four times that of the government hospitals.

Levels 1 and 2 hospitals are relatively well-distributed across the country. However, hospitals with higher service capabilities are highly concentrated in Region 3 and National Capital Region (NCR).

The number of hospital beds is also a good indicator of health service availability. Per WHO recommendation, there should be 20 hospital beds per 10,000 population. Almost all regions have insufficient beds relative to the population except for the NCR, Northern Mindanao, Southern Mindanao, and the CAR. Among the 17 regions, the Autonomous Region for Muslim Mindanao (ARMM) has the lowest bed to population ratio (0.17 beds per 1,000 population), far lower than the national average.

Based on the data I had when I was with a private health insurance company, 6% of those insured are going to get sick during a one-year period. The average stay in the hospital is four days for a patient. That means six hospital beds would be occupied for four days during the one-year period.

Ninety percent of the insured were working people, the rest were their dependents, excluding those above the age of 60. Excluded also were maternity cases. RA 11223 enrolled every citizen in PhilHealth. With a population of 109,000,000, this means 6,540,000 people are expected to need hospitalization during a one-year period.

But that 6% is based on a population of relatively healthier people. RA 11223 insured even centenarians and included maternity. The rate of hospitalization would be much higher than 6%. Let us say it is 8%. That is 8,720,000 people falling sick. Spread over 365 days, that is 23,890 bed-days occupied at any time. But as each patient on an average occupies the bed for four days, 95,560 bed-days are needed. That is beyond the capacity of Philippine hospitals.

According to PhilHealth, 38 million enrollees are indigents. The moral hazard becomes a bigger factor. The jobless poor will seek hospitalization even if he is not sick. Hospitalization means three free meals a day and a real bed instead of a cart or the sidewalk. The doctor would agree to ordering confinement as it means revenue for him (PhilHealth pays his professional fee). The hospital also gets paid by PhilHealth for virtual services. This is actually happening as the various investigations of PhilHealth irregularities and anomalies have shown.

The private doctors with dismal practices and the lowly paid government physicians are prone to resort to fake hospitalizations. According to the DoH, the country has a huge human reservoir for health. However, they are unevenly distributed in the country. Most are concentrated in urban areas such as Metro Manila and other cities.

WHO’s target was for universal health care in developing economies by 2030. It looked like some of our legislators rushed the enactment of the universal health care bill into law so that it could be presented as their gift to the Filipino people in the elections of 2019. Among the authors were Senators JV Ejercito, Sonny Angara, Nancy Binay, and Cynthia Villar who were running for re-election to the Senate that year.

However, the country’s health care system is far from being able to provide the services the law mandates. But the politicians must have said, “Bahala na si Batman.”

 

Oscar Lagman was at one time or another country manager for a multinational health insurance company, adjunct lecturer in the Master in Hospital Administration program of a university, and head of Healthcare Consulting at a large consulting firm. He was also a member of the USAID-sponsored team that set up the universal healthcare program of the Province of Bukidnon.

1...7,6407,6417,642...12,747Page 7,641 of 12,747
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube