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DTI seeking fiscal incentives for relocating firms, worker retention

By Jenina P. Ibañez, Reporter

THE Department of Trade and Industry (DTI) has proposed fiscal incentives for companies to retain employment and relocate to the provinces, addressing areas not tackled by the Bayanihan II stimulus bills now being harmonized in bicameral conference sessions.

Bayanihan II is known formally as the proposed Bayanihan to Recover as One Act.

In a letter dated Aug. 9 to Deputy Speaker Raneo E. Abu, a member of the bicameral conference committee, Trade Secretary Ramon M. Lopez asked that certain businesses be allowed to register as eligible for incentives under Executive Order 226.

Under this order, businesses in preferred areas are given incentives such as income tax holidays, a deduction of taxable income equivalent to 50% of wages, and tax exemptions on imported capital equipment if they meet certain requirements.

The DTI is asking that incentives be applied to manufacturers relocating to the Philippines, businesses that retain 90% of their employees during the pandemic, and new outsourcing projects that start in 2020 or 2021 or employ returning overseas Filipino and displaced workers.

They are also asking to apply this to certain business activities outside the capital and agri-industry or businesses that source from marginalized communities.

For corporate taxpayers that retain 90% of their workforce up to 2021, the DTI said the net operating loss for tax years 2020 and 2021 that had not been offset as a deduction from gross income should be carried over as a deduction from gross income for the six consecutive tax years after the loss.

The DTI said that the companies should get a year of income tax holiday in the first year of positive income after 2021.

The department is also asking that businesses retaining their workforce at government-owned freeport, export, and industrial zones be given a reprieve from lease payments.

MANUFACTURING AND CONSTRUCTION SUPPORT
The department is requesting P50 million to support its COVID-19 (coronavirus disease 2019) response for the industrial sector.

This includes P30 million for COVID-19 testing for small and medium-sized construction companies working on public infrastructure, P15 million for a testing laboratory for personal protective equipment for domestic manufacturing firms, and P5 million for the testing and quarantine of prospective foreign investors entering the country.

The proposals include relaxing the travel ban for foreign investors.

Mr. Lopez said that Bayanihan II had left out the manufacturing and construction sectors, which experienced declines in demand and productivity.

“Our competitors have largely insulated their manufacturing sectors from lockdowns and, by now, have even relative success in containing the COVID-19 pandemic. In spite of their success so far, they are implementing substantially more generous stimulus and subsidy/incentive packages,” he said.

“As our neighbor-competitors, however, still do experience depressed demand, their heavily-subsidized manufactured and tradeable products will look for markets elsewhere and the Philippines’ large population base, continuous government spending, and zero-duty for imported products, is an important target market.”

Electronics exporters supported Mr. Lopez’s proposal, which they said would prevent the shut down of companies and displacement of workers in the manufacturing sector.

Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica in a letter to Senate President Vicente C. Sotto on Aug. 12 said that the industry is expecting a contraction from its 2019 export levels.

“This may conceivably get worse if we don’t arrest the infection rate,” he said.

Mr. Lopez is also asking for authorization to amend tariffs even as Congress is in session to raise government revenues.

The department also batted for government preferential treatment in procurement for domestic suppliers.

“Government expenditure to effectively stimulate the economy should create demand for domestic manufacturers,” Mr. Lopez said.

Metallic minerals output falls 14.4% in first half of 2020

METALLIC MINERALS production fell 14.4% by value to P53.88 billion in the first half due to disrupted mining operations during the pandemic, the Mines and Geosciences Bureau (MGB) said.

In a report, the MGB said direct-shipping nickel ore and its products such as mixed nickel-cobalt and scandium oxalate accounted for 44.8% of the total or P24.13 billion, followed by gold at 41.5% or P22.12 billion, and copper at 13.5% or P7.19 billion, and silver and chromite at less than 1% or P430 million.

The MGB said the gold industry saw a 26% increase in global market prices to $1,647.44 per troy ounce in the first half of 2020, compared to $1,307.36 a year earlier.

“Market analysts believed that gold prices would continue to go up given the current world economic situation,” the MGB said.

Gold is regarded as a safe-haven investment during crises.

Nickel prices in the first six months rose 1.3% year on year to $12,473.17 per ton, while copper prices fell 10.8% to $5,496.36 per ton.

By volume, nickel fell 27.7% to 102,310 metric tons (MT).

The MGB said all nickel producers posted declines in production by value except for Rio Tuba Nickel Mining Corp., Adnama Mining Resources, Inc., SR Metals, Inc., Agata Mining Ventures, Inc., Carrascal Mining Corp., and Marcventures Mining and Development Corp.

Palawan led all nickel-producing provinces with production of 31,123 MT, followed by Agusan del Norte at 25,321 MT, Surigao del Norte at 21,358 MT, Surigao del Sur at 15,724 MT, Dinagat Island at 6,918 MT, and Zambales at 1,865 MT.

“We expect, however, that production in the Surigao provinces and Dinagat Island will at least pick up or improve in the coming months since weather conditions will be more apt for mining operations,” the MGB said.

Production of mixed nickel-cobalt sulfide fell 4.6% to 25,306 MT with an estimated value of P14.22 billion.

Surigao del Norte-based Taganito HPAL Nickel Corp. accounted for 59% or 14,867 MT while Coral Bay Nickel Corp. in Palawan was responsible for 41% or 10,440 MT.

Gold production fell 26.7% to 8,246 kilograms with a value of P22.12 billion.

Philippine Gold Processing Refining Corp. in Masbate was the top gold producer, accounting for 35% or 2,909 kilograms and followed by Mindanao Mineral Processing and Refining Corp. in Agusan del Sur with 18% or 1,454 kilograms.

Copper production was led by Cebu-based Carmen Copper Corp. at 24,572 MT, followed by Philex Mining Corp. at 6,142 MT, and Lepanto Consolidated Mining Corp. at 316 MT.

The MGB said the performance of the metallic minerals sector was affected by the slowdown in economic activity, pandemic-disrupted mining operations, and unstable global prices.

The MGB said that as of July 8, it has utilized P364.41 million of the funding for mining companies’ Social Development and Management Program (SDMP), assisting mining communities affected by COVID-19.

The MGB issued a memorandum on March 27 that permitted the realignment of the program’s unutilized funds for the provision of personal protective equipment and other items to medical personnel and affected families. — Revin Mikhael D. Ochave

Fuel import duties approach P100B after marking program

DUTIES and taxes collected from imported fuel products hit P99.8 billion as of Aug. 12, counting from September 2019 when the government imposed a marking system on such products, the Bureau of Customs (BoC) said.

The revenue was generated from 11.193 billion liters of marked fuel products, it said.

Diesel accounted for 62% of the total at 6.987 billion liters, followed by gasoline with a 37% share at 4.15 billion liters. The remainder is from kerosene.

Around 75% was generated in Luzon, 20% in Mindanao and 5% in the Visayas, according to a report issued by the Department of Finance (DoF).

In a statement Friday, the bureau said the “program’s strong performance affirms the BoC’s continued commitment to protect the borders and collect lawful revenues for the government.”

The Fuel Marking Program aims to deter oil smuggling by injecting the products with a special dye to signify tax compliance. The absence of the dye is deemed prima facie evidence that the fuel was smuggled.

In February, the DoF estimated that the government can generate P20 billion in additional revenue this year from the fuel marking program.

It estimated that revenue foregone due to oil smuggling was between P20 billion and P40 billion a year. — Beatrice M. Laforga

Rice tariff collections top P11 billion — BoC

RICE TARIFF collections totaled P11.036 billion in the seven months to July, up 4% year on year despite lower import volume, according to Customs data obtained by BusinessWorld.

The volume of imported rice dropped 26.2% from a year earlier to 1.705 million metric tons.

In mid-July, the Bureau of Customs (BoC) exceeded the P10 billion worth of tariffs that must by law go to the Rice Competitiveness Enhancement Fund (RCEF), which will support farm mechanization and other measures to allow farmers to better compete against imports.

The RCEF is authorized by Republic Act (RA) No. 11203 or the Rice Tariffication Law.

The BoC collected P12.1 billion from rice tariffs last year. Agriculture Secretary William D. Dar has asked the Budget department to release the P2 billion worth of excess revenue.

The Agriculture department wants to use the excess as follows: P1 billion for the crop diversification program and P1.1 billion to expand crop insurance.

RA 11203 was signed into law in February 2019, allowing unrestricted imports by private parties, who need to pay 35% tariffs on Southeast Asian grain. The tariffs fund the RCEF budget of P10 billion a year. — Beatrice M. Laforga

CALAX Laguna interchanges to open on Aug. 18

PUBLIC WORKS and Highways Secretary Mark A. Villar said Sunday that the Laguna Boulevard Interchange and the Laguna Technohub Interchange of the Cavite-Laguna Expressway (CALAX) will be opened to motorists starting Aug. 18.

“I am very happy that this ‘Build, Build, Build’ project has progressed despite the challenges brought about by the coronavirus pandemic. The community quarantine affected the mobilization of construction, the manpower that oversees the coordination to secure the service roads and the overall timeline of the project. We have carefully navigated through this situation and we are ready to open these interchanges to the public at 12:01 a.m. on Aug. 18, 2020,” Mr. Villar said in a statement.

“It is really a delicate balance as we aim to reach more milestones of this project, while keeping our people, the community and the construction sites safe,” he added.

Mr. Villar and officials of MPCALA Holdings, Inc., a subsidiary of Metro Pacific Tollways Corp. (MPTC), conducted an inspection of the CALAX Laguna segment interchanges Sunday.

“With these interchanges operational, motorists can enjoy access to and from the Laguna Technopark and have an alternative route to and from Nuvali via Laguna Boulevard and South Boulevard, thus decongesting Santa Rosa-Tagaytay Road and other local service roads in the area,” MPCALA Holdings said.

MPCALA Holdings President Roberto V. Bontia said the interchanges will open in full electronic mode as a measure against the spread of the coronavirus.

“Operating the interchanges using 100% RFID (radio frequency identification) will eliminate cross contamination of the virus, which may spread through bills and coins used in cash payments. By November the whole of CALAX will be on RFID technology,” he added.

The 45.3-kilometer CALAX project aims to connect the Manila-Cavite Expressway (CAVITEx) from Kawit, Cavite, to the South Luzon Expressway (SLEx) at the Mamplasan Interchange in Biñan, Laguna.

“The whole stretch of CALAX has nine interchanges in the following locations: Kawit, Governor’s Drive, Aguinaldo Highway, Silang, Santa Rosa-Tagaytay, Laguna Boulevard, Laguna Technopark, and a Toll Barrier before SLEx,” MPCALA Holdings said.

Once fully operational, the P35.43-billion project is expected to cut travel time between CAVITEx and SLEx to 45 minutes from the current 2.5 hours.

MPTC is the tollways unit of Metro Pacific Investments Corp., one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin

EU business council touts waste reduction as potential investment draw

EUROPEAN businesses asked the government to back measures reducing plastic waste and offer incentives for recycling to promote investment and facilitate the post-pandemic economic recovery.

A circular economy model, which minimizes waste in the design process and through reuse and recycling of manufactured products, will help reduce pollution and promote a healthier and more productive population, EU-ASEAN Business Council (EU-ABC) Executive Director Chris Humphrey said in an online interview Tuesday.

The council cited a report from the Economic Research Institute for ASEAN and East Asia saying that the adoption of circular economy models could bring about economic growth of $324 billion and create 1.5 million jobs in Asia by 2025.

EU-ABC recommends domestic waste collection and reuse, adding costs to plastic waste to discourage their use, and regulations for waste collection.

Mr. Humphrey said that such moves could help the Philippines attract more investment.

“Absolutely, as long as the government will place the right policies and for industries to do so, and that means encouraging things like setting up recycling, maybe some incentives for recycling. It will mean changing policies around single-use plastics as well.”

He said that a circular economy model is key to post-pandemic recovery.

“What’s really changed is the degree of lockdowns that we have seen right across the region and indeed globally allowing us to stop and think and do a bit of a reset of how we approach business and how we approach investments in the longer-term… we need a way that’s gonna be more inclusive, is gonna protect the environment we live in, but will still allow for sound economic growth.”

Waste from single-use plastics like surgical masks and plastic cups has been on the rise due to the pandemic, the World Economic Forum said last month.

Mr. Humphrey recommended environmental education for private households, corporates, and the government.

“Hopefully things will change and get better as we start dealing with COVID-19… online shopping and e-commerce will become a lot more prevalent as well, but it doesn’t mean these things can’t be done in a more sustainable and environmentally-friendly way. It doesn’t mean we can’t promote the idea of recycling.” — Jenina P. Ibañez

Digital transformation: A growth necessity

The coronavirus pandemic has irreversibly altered society and the global economy. This forced companies in every sector to reflect on how they have been dealing with market forces in the past and, moving forward, how can they address the rapid shifts in consumer behavior. Some of the biggest shifts are going to be witnessed in the financial, telecommunications and retail sectors, with significantly accelerated steps taken towards digitalization.

Even before the pandemic, disruptive technology startups (created in the digital age with purely online marketplaces or platforms) that organically intensify disruption in various sectors forced industry leaders to undergo digital transformation to compete and, for some, to survive. For many entities, it has become critical to develop a digital customer experience that creates a personalized, seamless process across every touchpoint a consumer has with a brand.

For banks, COVID-19 has accelerated shifts in consumer behavior patterns, while elevating the risk of financial distress for businesses and customers. Telecommunications providers find themselves in a unique situation where they provide the very platform that so many disruptive technology startups depend upon — powering the phones that make their mobile apps possible. And yet telcos find that they too, must still digitally transform to remain relevant. Traditional retail companies find themselves in the precarious position of seeing a dramatic drop in foot traffic as consumers shift almost exclusively to online purchases.

UNDERTAKING THE DUAL TRANSFORMATION JOURNEY
Although digital transformation is multi-faceted, this segment will cover just two aspects of it.

• Increasing current customer value — This segment of the dual transformation initiative relies on companies offering better experiences and more services to its existing customers. This enhances the likelihood of “stickiness” for their customers, meaning it is more likely that those customers will continue to transact with the company, but it also increases the customer lifetime value through availing of new subscriptions and upselling/cross-selling various other products. The perfect example of this are the telcos that not only offer consumers an online platform to pay their bills but also additional services such as savings, investment products, and small ticket loans. One particular telco offers its consumers an opportunity to borrow load amounts via its digital payments app. Another telco is utilizing alternative credit scoring data to offer gadget loans to its customer base, albeit offline. Financial institutions are similarly undertaking this journey to enable customers to not only transact digitally but be able to avail of various products for their needs.

• New customer acquisition — This segment of the dual transformation journey pertains to how organizations can transform digitally, thus enabling them to broaden their customer base in cost-effective ways. For financial institutions, this is critical: 66.4% of the population in the Philippines remain unbanked or underbanked (BusinessWorld article dated May 22: “Unbanked Filipinos to decline by 2025”). Traditional financial institutions are increasingly adopting an omni channel model to enable branchless banking. Initiatives such as agency banking, virtual onboarding, and relying on alternative credit scoring models to lend to more retail customers enable banks to significantly reduce friction in reaching untapped segments. For telcos, the race to develop the next super app is imperative for them to reach new customers in a market where Internet penetration is at 67% (Datareportal Digital 2020 Report). Since new demand for traditional telco products has stagnated, they must shift to offering more innovative products through cost effective digital channels.

To execute a dual transformation strategy, it is critical for organizations to establish a viable channel strategy that can accelerate their objectives and can provide an effective route-to-market.

CHANNEL STRATEGY
To accelerate their digital transformation, traditional organizations are increasingly moving towards an omni-channel approach. This approach enables companies to cater to their customers in a more efficient and effective way by reducing overhead and expenses and marketing a new service or product to a certain geographical demographic.

Organizations such as banks, telcos and retailers can analyze data to better understand the prospective adoption rates of digital services so that they can better expand to those markets digitally rather than physically. For example, a bank can analyze which consumers in which areas are more likely to undertake simple transactions (check deposits, money transfer, cash withdrawals) to better understand which customer bases can be reached through a digital platform that offers the same service. Areas where a majority of the transactions are complex (high-value loans, wealth management services, etc.) can still be catered to via the bricks and mortar route.

Similarly, telcos can use their own data to ascertain which customers are more interested in transacting online, thereby giving the telcos more initiative to reduce overhead through shorter branch hours and fewer personnel, among others. The shift from offline to online can also be accelerated through the gamification of tasks that can tie into rewards programs, especially those catering to a more digital-savvy generation of customers. One online retailer, for example, offers additional coins or rewards points on their app in exchange for completing tasks such as watching livestreams or reviewing products. Some banks or telcos are also adopting this approach by offering reward points in exchange for additional information about their customers on their apps.

THE ULTIMATE SHIFT
As we move through challenging times because of the pandemic, it will be important to see how organizations and even countries maneuver to address the ultimate shift to the digital sphere, the timeline of which has been accelerated. Organizations need to disrupt internally to meet the future demands of changing consumer preference, behavior and real-time priorities. At the same time, governments need to promote regulations that not only encourage improvements in existing technological infrastructure, but also create an environment that strongly supports and encourages innovation. We live in troubling times, and the only way to see our way to the future is by taking the necessary steps to evolve and adapt digitally, rapidly and efficiently.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Akhil Hemrajani is a Consulting Senior Director of SGV & Co.

Who is an oligarch? A taxonomy from one ruminant’s backside

“I dismantled oligarchy in PH without declaring martial law…” was President Rodrigo Duterte’s boast to the soldiery in Jolo, Philippines, on July 13. This inspired a mushroom cloud of reactions. Some pointed to the lie of the avowed neutrality of Malacañang on the ABS-CBN franchise issue; others to the claimed dismantling of the oligarchy as premature; still others, to the possible mere replacement of one set of oligarchs by another of a friendlier persuasion.

Duterte’s claim coming after the franchise denial to ABS-CBN was commonly understood as gloating over the take down of the Lopez family. The Lopez group, though no longer among the most powerful among the business groups, still wears the unique distinction of surviving the ire, and figuratively getting the better of the dictator Ferdinand Marcos. A similar gloating followed the giving up under duress by Manuel “Manny” V. Pangilinan (MVP) and Jaime Augusto Zobel de Ayala (JAZA) of their respective company’s claim to the billions of pesos awarded by the international arbitral courts in Singapore. These novel thrusts against those previously viewed as untouchable overlords serve as object lessons to the oligarchy.

President Duterte, looking bored and unengaged through most of his July 27 State of the Nation Address (the aside “Kung hindi nyo naintindihan, lalo na ako!” [If you do not understand it, I especially don’t] was revealing) came alive when entering his comfort zone calling out and demonizing enemies: the drug lords, the owners of the two telcos, and Senator Franklin Drilon. Congress was chastised for wasting time on political dynasties when it should be dismantling true oligarchs.

There clearly was a disconnect between Duterte’s and Drilon’s use of the term “oligarch.” The disconnect, so off-footing and yet so ubiquitous, got me ruminating. If you loathe what blows out of a ruminant’s backside, cease reading or don a face mask.

Many current discussions on oligarchs and oligarchy become quickly tedious for lack of common definitions. The question “Who is an oligarch?” elicits different answers. President Duterte’s call out of MVP and JAZA as true oligarchs implies a definition that, at first blush, does not stray from the textbook oligarchy: the rule by a few. This goes back to Aristotle who wrote in Politics Book 3 that “oligarchy is when men of property have the government in their hands; democracy, the opposite, when the indigent, and not the men of property, are the rulers.” MVP and JAZA are “men of property” and there are a scant “few” others in their club. In most discourses, this rule by a few causes discord and poverty and is roundly denounced. Not to Aristotle: the ideal government in Politics is an “oligarchy of virtuous men.” Oxymoron?

In Aristotle as well, great economic wealth curves the political space in favor of its owner regardless of the owner’s behavior — a type of iron law echoing Robert Michel’s The Iron Law of Oligarchy (1911). Among the Greeks of that era, democracy had a dark synonym with chaos. Thus, salvation lies only with virtuous oligarchs who, either by temperament or by study of philosophy, pull their preponderant weight to advance not their own but the welfare of all. Was Aristotle naïve?

That virtue and wealth can coexist in the same person has been exiled from many well-meaning minds following anarchist Pierre-Joseph Proudhon’s new doctrine of property: “Property is theft.” Oligarchs are thus thieves covered in legal finery. Somewhere along the way, either they or their forebears had hoodwinked the community. This thieving kind has to be erased from the face of the earth, a goal which Stalin in Ukraine and Pol Pot in Kampuchea accomplished with clinical brutality.

Senator Drilon defines the “oligarch” differently: “It is not in wealth that you are an oligarch; you are an oligarch if you use your power to promote through the political system your own interests.” (July 15, 2020, Online Media Forum). To be an oligarch in Drilon’s sense requires three elements: (i) he is a man of wealth and property, (ii) he employs his wealth to bend the political space (iii) to advance or protect his exclusive interest. Drilon departs somewhat from the contemporary textbook definition of oligarch, given, say, in Winters’ Oligarchy (2011): you are one if you belong to the few who own “…massive material resource that can (italics mine) be deployed to defend or enhance… your exclusive social position.” For Drilon, being an oligarch is a behavior: you are consciously employing wealth to bend rules in your favor; for Winters, being an oligarch is a state: having enormous wealth curves the political space in your favor despite the owner’s proclivities. Winter’s and thus the textbook oligarch echoes Aristotle’s by virtue of great wealth’s automatic curving of the political space; Drilon’s oligarch is closer to Aristotle’s by virtue of behavior: he can bend rules for himself but can also bend rules for all. Warren Buffet’s support of a higher income tax on the rich seems to instantiate this genre! By contrast, Proudhon’s “oligarchs as thieves” is alien to Aristotle and progeny.

Duterte’s oligarch, however, seems closer to Proudhon’s: expropriation of the oligarch’s property on the presumption of theft. Both MVP and JAZA, who occupy most of the telco landscape, also have long-term contracts with the government on the distribution of water. These contracts have been adjudged by international arbitral courts as valid and above board. And yet Duterte threatened them with expropriation, even after forcing them to give up their claim on the arbitral awards. That is how you treat Proudhon’s property owners. Perhaps a case of JM Keynes’ “Practical men (being) the slaves of some defunct economist.”

Every science begins with a taxonomy: the classification of phenomena into well-defined groups, say, into different taxa (biology) or into different flavors (in particle physics). Without  proper definitions, we run around in circles forever. Clearly, by the Aristotle-Drilon definition, the “robber barons” of the Gilded Age of the USA were oligarchs — they were fabulously wealthy and they rode the US Congress to secure or protect exclusive benefits. But this baronetcy of robbers also led to the creation of millions of productive jobs and a world-beating US economy. Warren Buffet and Jeff Bezos, who built fabulous wealth away from the political sphere and judiciously avoided overt political involvement for exclusive interests are, by definition, not in the same fold. By contrast, Kapitan Lucio Tan, whose political connections were said to have led to the blocking of “sin tax” adjustment bills for decades, was an oligarch. So was the late “Danding” Cojuangco who actually headed a political party and shaped policy on the Tobacco Levy. JAZA and MVP are clearly out of their league. By the Proudhon-Duterte definition, however, they all are the same banana deserving of expropriation.

With convenient exceptions, of course.

 

Raul V. Fabella is a retired professor of the UP School of Economics, a member of the National Academy of Science and Technology and an honorary professor of the Asian Institute of Management. He gets his dopamine fix from bicycling intra-subdivision and tending to flowers with wife Teena.

No one is safe until we are all safe

I was ill in the last two weeks of March with the worst flu-like episode I had ever encountered. Given the state of COVID-19 testing at the time, I did not get myself tested. Actually, I could not. That was around the time the Philippines had tested only a little over 1,000 people due to a lack of testing kits.

Four months later and I am still going through the ups and downs of poor health, still feeling  some of the debilitating effects that had prevented me from working for more than two months. Amid the frustration of wanting to recover and not really knowing if I contracted the virus, I can relate with many survivors’ experiences of seemingly getting better, and then not, and facing an onset of other ailments. I’m at 16 weeks and counting, and still recovering.

I pause to reflect on my experiences and the uneven manner in which the government has responded to COVID-19 in the Philippines. The greatest challenge so far is ensuring everyone is able to access tests, treatments, and (hopefully in the near future) vaccines as quickly as possible and free of charge. The Philippines is among the participating nations in the global clinical trial for a vaccine. The Inter-Agency Task Force for the Management of Emerging Infectious Diseases has approved the collaboration with five COVID-19 vaccine manufacturers from China and Taiwan. According to the Department of Science and Technology (DoST), the Philippines’ participation in the global search for a vaccine will ensure a secure portion of the vaccine supply for the country, and more likely be given for free. Other expenses needed to provide vaccination in communities will likely be shouldered by the DoST and the Department of Health. Is this a likely scenario?

Oxfam has launched the People’s Vaccine initiative that urges governments and stakeholders to ensure that when a safe and effective vaccine is developed, it is produced rapidly at scale and made available for all people, in all countries, free of charge. More than 140 world leaders and experts signed the petition that was drafted for the World Health Assembly in May 2020, including the former Presidents of Timor Leste and Ecuador; and the heads of state of Senegal, Ghana, and Pakistan; alongside heads of UN agencies and global health institutes, to cite a few.

In the Philippines, more than 50 organizations, led by Action for Economic Reforms — and including groups of farmers, fisherfolk, urban poor, students, health workers, and various women’s networks — have signed Oxfam’s petition. The National Secretariat for Social Action (NASSA) of the Catholic Bishops’ Conference of the Philippines and the Protestant National Council of Churches in the Philippines also expressed support for the campaign. Father Edu Gariguez, then NASSA Secretary, said in a statement that NASSA was “calling for free COVID-19 testing, treatment, and this vaccine because we know that when the vaccine is developed, the poor will be left behind again.”

Oxfam’s call is for a global agreement on COVID-19 vaccines, diagnostics and treatments implemented under the leadership of the World Health Organization (WHO). There must be a mandatory worldwide sharing of all COVID-19 related knowledge, data, and technologies with a pool of COVID-19 licenses freely available to all countries. This means that any nation, regardless of their wealth or location, will be able to produce or buy affordable doses of vaccines, treatments, and tests. To make this a reality, countries should be empowered and enabled to make full use of agreed safeguards and flexibilities in the World Trade Organization Doha Declaration on TRIPS (Trade-Related Aspects of Intellectual Property Rights) and Health to promote access to medicines for all.

Second, there must be a global and equitable rapid manufacturing and distribution plan of COVID-19 products and technologies that is fully funded by rich nations. The plan must guarantee transparent “at true cost prices” and supplies per need rather than the ability to pay. To achieve this, there must be urgent action to massively increase manufacturing capacity to produce the vaccines in sufficient quantities, and train and recruit millions of health workers to distribute them. It is time to revisit priorities — are governments spending more on its military or on public health?

Finally, there must be an absolute guarantee that COVID-19 vaccines, treatments, and tests are provided free of charge to everyone, everywhere, with priority given to frontline workers, vulnerable people, and poor countries with the least capacity to save lives. Women living in poverty are hit the hardest whenever there is a crisis. Thus, a rights-based and inclusive global guarantee, implemented via transparent democratic governance principles set by the WHO, means no one can be left behind. Independent expertise and civil society partners will also be essential to lock-in accountability for this agreement.

These are all consistent with a rights-based approach to health, which requires that policies and programs, and their implementation, must prioritize the needs of those furthest behind first towards more equity.

Now more than ever, this approach should be paramount. There is no going back to the way we were. No one is safe until we are all safe.

 

Lot Felizco is a Fellow of Action for Economic Reforms (www.aer.ph) and the Country Director for Oxfam Pilipinas. Oxfam is an international confederation of 20 humanitarian and development organizations working together with partners and local communities in more than 90 countries.

https://philippines.oxfam.org/

A tribute to Filipino frontliners in the US

President Duterte may be enamored by China and may make overtures towards Russia, but there is no denying, the trust and confidence of the Filipino people belong to the United States. This was validated in a recent survey conducted by the Social Weather Station which showed that Filipinos’ trust quotient towards China was at an abysmal -33 points while the US enjoyed a +72 point rating.

One of the champions of US-Philippine relations is Trevor Neilson. Neilson served under the administration of former US President Bill Clinton and attended the APEC conference in Subic back in 1995. This was when his relationship with the Philippine began. He married a Filipina, the beguiling Evelin Weber, and they have one son together. Subsequently, Neilson worked with the Bill & Melinda Gates Foundation and was the President of G2 Investment and the Global Philanthropy Group. He recently co-founded the i(x) Investment Group where he is CEO — the company is making large investments in the Philippine industrial sector.

I have known Neilson for several years and have observed, with amazement, how he honors the deep relationship that exists between the United States and the Philippines. Neilson often talks about how our forefathers shed blood together in wars against common enemies. We share the same values, the same educational system, and many aspects of our culture, he says with a sense of pride. Unlike the Trump administration whose relationship with the Philippines is distant, unengaged, and uninvolved, Neilson embraces our brotherhood and works tirelessly to hone the relationship, whether it be in the realms of business, philanthropy, or issues relating to the environment. Neilson is raising his son to be American and Filipino in culture and values.

Last week, Neilson sent me a beautiful tribute to Filipino frontliners. It is too beautiful not to share. He honors our kababayans (countrymen) so eloquently, as America’s unsung heroes in this COVID war. He notes, with reverence, how more Filipinos have died caring for American COVID patients than Americans themselves.

While our very own government fails to recognize the contributions of our healthcare workers around the world, it’s refreshing (and gratifying) to hear someone from abroad giving our countrymen the honor they deserve. This is what Neilson wrote.

“In the terrifying war against COVID the incredible sacrifice of frontline workers has been frequently and appropriately noted.

“But, within the statistics, a startling fact in the United States has been largely ignored. Filipino Americans are dying at a 40% mortality rate, significantly higher than the overall 3.7% mortality rate in the US, according to research by Johns Hopkins.

“Serving as nurses and healthcare workers, and too often without appropriate personal protective equipment, Filipino Americans have been on the front lines of this war and have paid a terrible price.  More Filipino’s have died fighting COVID in the United States than in the Philippines.

“Where I live in California, 20% of all registered nurses are of Philippine ancestry.

“In New York, 34% of all Filipinos serve in the healthcare industry.

“Almost 16% of nurses in the United States are immigrants, and nearly a third of them are Filipinos.

“If your American friends or family have had COVID, there’s a good chance that a Filipino-American nurse has been at their bedside, providing care and comfort at great personal risk.

“For many of the 163,000 American’s who have been killed by COVID, it was a Filipino American nurse who was their only companion in their final moments.  The last person whose hand they held, the person who held the phone for final goodbyes.

“These nurses have by all accounts performed miracles — innovating their way through a mysterious disease, working endless shifts without effective medicines or clear scientific consensus and doing their best to calm distracting political fights and a public consumed by  fear. They have worked around the clock in overflowing emergency rooms and intensive care units, collapsing for a few hours of sleep before returning to the fight.

“Far too often they have become victims themselves.

“A  Los Angeles base website called Kanlungan has tracked these deaths in powerful and painful detail. Beautiful tributes to the workers who have lost their lives are posted by those who knew them — smiling, hopeful faces of people who are gone too soon.

“Celia Yap Banago… Kenneth Lambatan… Maria Guia Cabillon… as you scroll through the photos you see the kind, calm and competent people that all of us want to meet when we walk into a hospital full of pain and fear. To many American COVID patients, these are the faces of hope.

“The service of Filipinos in American healthcare is no accident. In response to a critical shortage of healthcare workers, the United States’ Immigration Act of 1965 changed a system of country-based quotas to a new system whereby immigrants with nursing degrees were given preference for visas. Filipinos seized on the new opportunity, enrolling in nursing schools (often paid for by their extended family), moving to the US and sending billions of dollars back in the form of remittances.

“Now, over four million Filipinos live in the United States and the Los Angeles area has the second-largest concentrated population of Filipinos in the world. Healthcare workers from this community are the army in the war we are fighting against this terrible disease.

“But it was another war that first forged this special relationship between the Philippines and the United States.

“Ten hours after the attack on Pearl Harbor in December of 1941, the Japanese invaded the Philippines. American and Filipino forces were overwhelmed. On March 11, 1942, General Douglas MacArthur left the Philippine’s upon orders from President Franklin D. Roosevelt. MacArthur had resisted leaving and promised the men and women of the Philippines in a statement, ‘I shall return.’

“A brutal Japanese occupation followed with over 500,000 Filipinos killed and millions of others abused and exploited.

“But MacArthur kept his promise.

“On Oct. 20, 1944, MacArthur waded ashore at Leyte with Filipino military leaders. That day, he made a radio broadcast in which he declared, ‘People of the Philippines, I have returned!’  Fighting alongside Filipino forces, MacArthur ended the horrors of the Japanese occupation.

“America helped the Philippines win its most important war. Now, 75 years later, Filipino Americans are on the frontlines in the war against COVID and hundreds, if not thousands, have paid the ultimate price.

“Once we have won this war, America must not forget their sacrifice — and the special relationship between our two great nations.”

 

Andrew J. Masigan is an economist

How to negotiate with cyber terrorists during a pandemic

By Mark Gilbert

AS THE PANDEMIC trashes the world economy, one business is booming. The number of ransomware attacks, where hackers encrypt a user’s data files and then demand payment to restore access, climbed by 20% in the first half of the year to reach 121.4 million assaults, according to data security firm SonicWall.

Many of the victims chose to pay up. In June, the University of California said it paid $1.14 million to extortionists who’d besieged servers at its medical school. CWT, a travel-management company, handed over $4.5 million worth of Bitcoin last month to resolve a hack, Reuters reported. Garmin Ltd., which sells portable devices linked to global positioning systems, suffered outages in the final week of July it said were due to a cyber attack. While the company hasn’t commented on how it solved the interruptions, various media reports put the ransom demand at $10 million.

In the past four years, Kivu Consulting has been involved in more than 700 ransomware incidents. Last year, the cyber security firm was the agent for 143 payments worth more than $17 million. So what should you do when the e-mail arrives saying you’ve been hacked, your data has been compromised and if you don’t pay a ransom, your servers will remain frozen? I caught up with Winston Krone, Kivu’s global managing director, to find out. The following is a lightly edited transcript of our telephone conversation this week.

MARK GILBERT: The number of ransomware attacks has climbed substantially this year. Is lockdown having an impact?

WINSTON KRONE: We’re in the middle of a huge wave of attacks right now. Companies are coming back to work, employees are bringing infected computers back into the organization. Attackers have waited. The value of a ransomware attack is much bigger now that companies have gotten through the worst part of COVID and have the money to pay. It’s all about business interruption, that’s why people pay a ransom. If the company’s not working, if it’s hobbling along, a ransomware attack is not going to have the impact it would if the company was going full blast. We had attacks a couple of months ago where the victim of the attacks said, “We’re not sure we’re gonna be in business, we’re not paying a ransom because we’re not sure we’re gonna make payroll next month.”

MG: Given that companies are reluctant to admit to being hacked or paying ransom, how big is the iceberg that we only see the tip of?

WK: I would suspect the ratio is about 10/1, based on our metrics in the past four years where we know the number of ransomware attacks we were involved in that went public. There are very few unreported cases for publicly traded companies these days. Four years ago there was a huge embarrassment factor, now there’s no incentive to keep it secret. If anything, there’s quite a bit of sympathy for public companies that are hit with ransomware attacks. Of course, it’s different for private companies.

MG: Of the industry-identifiable ransoms your company handled last year, more than half came from manufacturing companies even though they were the targets of less than a fifth of attacks. Why the disparity?

WK: Because of just-in-time manufacturing, they aren’t able to go offline even for just a few days. Increasingly we deal with clients who are under penalty clauses if they can’t get stuff out. It becomes a purely mathematical equation as to whether or not to pay a ransom. And the attackers know this. The hackers know that manufacturers will pay more.

MG: Are cyber terrorists increasing the amounts they demand?

WK: You’ve got different types of cyber extortion, like with other criminal activity. There’s the young thug who will grab your mobile phone late at night outside the tube station, and then you’ve got sophisticated gangs who will break in to steal gold bullion. Some of the attack groups we’ve seen, they’ll stick to their numbers, a quarter of a million dollars where these companies will just pay it, bury it and move on, and they’ll be hitting four or five companies a day. Then you get the guys who are going for the big ones, going for $10 million. It’s grown into an enormous ecosystem. You’ve got groups who will facilitate attacks, you’ve got hackers for hire, you have groups who all they do is dispose of bitcoin.

MG: How willing are they to negotiate?

WK: It completely depends on the group, and that’s something we stress with clients. In the decision about whether to pay, there’s a bunch of different steps you need to think about. Is the decryption going to actually work? Even if it works, a lot of the ransomware can corrupt things like databases. You’ve got to know the ransomware variant. In at least half of the cases, you’re gonna have to go back to the attacker and get their help to get the decryption going, because it’s not one decryption key for the entire  attack, every single computer will have its own decryption key, every single infected computer.

Sometimes these attackers are dealing with a dozen victims, so we’ve had the decryption keys for the wrong client sent to us. If you want to bring down the price, that can work so long as it’s a bona fide move and you will pay the lower price. If it’s a question of just stalling for time and you play it badly, the attackers will just double the price. The reason you’re paying is to get back online quickly, but you’re losing time haggling. If you’re losing $250,000 a day in revenue then messing around for several days to try to bring the price down by $50,000 doesn’t make sense.

MG: So it sounds like if you do get hacked, you hope it’s by a more sophisticated player?

WK: You want to be attacked by somebody who’s not a complete clown, who can supply you with the right decryption tool to decrypt your data, and who understands that this is a difficult process for you. There are attackers out there who are completely inept and don’t know what they’re doing. We’ve had situations where, halfway through the attack, the client wanted to pay a ransom, the attacker disappears and never comes back. That’s because other attackers, the head of the Mafia, decides that this group is so bad that they just yank them halfway through the attack. So you want to be hit by someone who’s very technical.

MG: Are the ransom payments always made in Bitcoin?

WK: Traditionally they were. There’s been a move away from Bitcoin. Attackers know that their ransom payments are being traced across wallets and law enforcement is beginning to be able to track people down. Non-Bitcoin currencies are not as traceable. That said, it’s harder for victims to get hold of other cyber currencies, and the attackers know this.

BLOOMBERG OPINION

France plans masks at work as daily COVID-19 cases surpass 3,000

PARIS — France is to propose that masks be worn in shared workspaces as the country grapples with a rebound in coronavirus cases that rose again in the past 24 hours to over 3,000.

The health ministry reported 3,310 new coronavirus infections, marking a post-lockdown high for the fourth day in a row.

The number of clusters being investigated increased by 17 to 252, it said in a website update.

The resurgence prompted Britain to impose a 14-day quarantine for people arriving from France, and led the authorities in Paris to expand zones in the capital where wearing a mask is mandatory outdoors.

Employment Minister Elisabeth Borne said she would propose on Tuesday at talks with employer and union representatives that masks be compulsory in collective workspaces.

“A theme that appears in all scientific opinions is the value of wearing them (masks) when there are several people in a confined space,” Ms. Borne said in an interview with French newspaper Le Journal du Dimanche.

Doctors have increasingly called for masks to be required in the workplace while the HCSP, a body advising the government on health policy, issued a recommendation calling for masks to be compulsory in all common indoor spaces.

This week’s upswing has taken the seven-day moving average of new infections above the 2,000 threshold for the first time since April, when France was in the middle of one of Europe’s strictest lockdowns.

The number of people in hospital has trended downwards in recent weeks even as new COVID-19 (coronavirus disease 2019) cases have risen, with experts pointing to the spread of the virus among younger people.

However, the latest daily figures showed a slight rise in the number of hospital patients, at 4,857 against 4,828 a day earlier, as well as a rise in intensive care patients to 376 from 367. — Reuters