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Here’s why Thailand’s dire economic outlook is the worst in Asia

THAILAND has been cited as a success story in containing the coronavirus outbreak, having gone more than 40 days without any local transmission of COVID-19. Yet its economic outlook is the darkest in Asia.

Gross domestic product (GDP) is forecast to contract 8.1% this year, according to the Bank of Thailand. That’s worse than official forecasts for any of the main economies across Asia, and would be Thailand’s biggest GDP decline ever, surpassing even its plunge during the Asian financial crisis two decades ago.

“Thailand has large exposure as a tourism hub, close to 15% of GDP, and it also has large exposure of the export-oriented sector,” said Kiatipong Ariyapruchya, senior economist for Thailand at the World Bank. “Hence the large shock to GDP.”

Analysts surveyed by Bloomberg predict Thailand’s economy will contract more than others in Southeast Asia, at 6%, and with a weaker rebound in 2021 of 4%.

The state of emergency, nighttime curfew and business closings imposed across the country to fight the virus have crushed private consumption and investment, which were already on a modest downtrend last year. Purchases are expected to pick up as the lockdown restrictions are lifted and as government stimulus measures filter through to the economy, but investors could be slow to return given the gloomy prospects.

Thailand recorded no foreign tourist arrivals or receipts for a second straight month in May as the pandemic forced border closings. Annual tourist arrivals are forecast to drop to 8 million, just one-fifth of last year’s total.

Despite plans for travel bubbles with select countries, Thai authorities are proceeding to open the country slowly and carefully. Efforts to kindle domestic tourism won’t offset the tremendous losses to this critical industry, which last year made up about one-fifth of Thailand’s economy.

At first glance, Thai exports appear to have held up relatively well this year, contracting for only two of the first five months of 2020.

As it turns out, distortions in one commodity have helped cushion the overall blow. Rising gold prices during the outbreak have led local investors to sell gold, boosting total exports.

Excluding gold, total shipments have been hit hard by weak global demand and supply-chain disruptions.

The baht has gained almost 6% against the dollar in the past three months, the second-best performer in Asia tracked by Bloomberg. Despite the Bank of Thailand’s three interest-rate cuts this year, which have brought the benchmark rate to a record low of 0.5%, the country’s success in containing the pandemic has kept the currency strong.

The central bank has showed concern about the baht’s strength, which hampers exports and will complicate the economic recovery. Officials have warned they’re considering additional steps to tame the baht if needed. — Bloomberg

Big harvests, big waste: Farm logistics remain the missing link

By Revin Mikhael D. Ochave

IF any incident during the pandemic illustrated the continued inadequacy of agricultural logistics, it was the dumping of produce by desperate farmers.

At a time of great plenty, which coincided with a time of great need, the transport just wasn’t there to get the goods to market. And the few trucks that did manage the feat were also delayed at checkpoints.

A vegetable farmer from Tuba, Benguet, who asked not to be identified, said that most Benguet farmers chose not to transport their products during the enhanced community quarantine (ECQ), and elected to plow the crop back into the land as fertilizer.

“During the ECQ, the prices of our produce drastically fell. I don’t remember the exact prices. We didn’t want to risk contracting COVID-19 so we just recycled our products,” the farmer said.

The farmer said some attempts at online selling were initially viewed as a means of recovering some of the capital spent on the crop, but might be the only viable way to sell if the pandemic is prolonged.

“Online selling is an effective way for us to offer our products. We have a stable market, and consumers are encouraged by the convenience,” the farmer said.

The farmer noted that logistics have improved since the government shifted to a more relaxed general community quarantine (GCQ) for Metro Manila and modified general community quarantine (MGCQ) in other areas of the country.

Housewife Agnes D. Monreal, who has purchased agricultural products during the lockdown, said she supported online sellers, because, apart from the convenience, she was driven to help farmers and delivery staff make money during the crisis.

“I saw the online store’s advertisement on a social media platform. I bought because social distancing measures were in force. It’s difficult to physically buy these things in the store because of the pandemic,” Ms. Monreal said.

Ms. Monreal said the disadvantages of buying online are the delivery fees and the inability to inspect the produce.

TRANSPORT PROBLEMS
Though government planners anticipated the need to keep food supplies rolling in after the biggest market, Metro Manila, was locked down, snags remained in the form of checkpoint accreditations and local governments playing by their own rules, which were not harmonized with the movement rules set by the national government.

The number of times the government had to troubleshoot the checkpoint rules gives you an idea of how often the rules were misunderstood, ignored, or flouted.

• On March 16, the Department of Agriculture said that cargo vehicles carrying food may use “green lanes” subject to temperature checks for the drivers and delivery crew.

• On March 17, the department issued decals or passes to vehicles delivering food to Metro Manila

• On April 13, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) declared all agriculture and fishery workers essential personnel, entitled to unhampered movement.

• On April 23, the DA announced that the issue of food cargoes being held up at local government checkpoints was resolved.

MIDDLEMEN
DA officials said the logistics role in agriculture was typically played by traders and consolidators, who have, over time, been derided as “middlemen,” who squeeze farmers for low prices while selling their produce for much higher prices in urban centers.

DA Senior Technical Advisor Dennis M. Layug said the department’s direct-selling program for farmers, the so-called Kadiwa ni Ani at Kita, initially consisted of pop-up markets but recently expanded to online selling, or e-Kadiwa.

“The e-Kadiwa program aims to help farmers and fisherfolk to sell their products, while also preventing the spread of COVID-19,” Mr. Layug said.

Mr. Layug expects e-Kadiwa to disrupt the middleman.

“This app or program can assist in cutting down middlemen. This is the dream. But the e-Kadiwa is also meant to help all stakeholders,” Mr. Layug said.

Assistant Secretary for Agribusiness and Marketing Assistance Kristine Y. Evangelista said that the DA also acknowledges the role of middlemen and traders in the value chain.

“These traders are the ones who… add value by packaging, processing, etc,” Ms. Evangelista said.

CONSOLIDATORS
University of Asia and the Pacific (UA&P) Center for Food and Agri-Business executive director Rolando T. Dy said the effect of online selling on middlemen only changes the dynamic and does not expect them to be eliminated entirely.

“Middlemen will turn to consolidators. The consolidator can be in the form of a farmers’ cooperative, marketing, or contractor,” Mr. Dy said.

Mr. Dy said that a consolidator can provide digital connectivity and logistics to farmers.

According to Mr. Dy, the group that would be directly affected by the modernization of farm logistics is small farmers.

Whatever form the food distribution industry may take, the Pork Producers Federation of the Philippines, Inc. (ProPork) is alread seeing adjustments among its members.

ProPork President Edwin G. Chen said that one of its members, Holly Farms, Inc. has its own online selling channel called The Meat Market PH.

“We need to adapt to the new landscape. Most of the demand was lost especially in the hotel and restaurant sector,” he said.

Mr. Chen said that the company has tapped motorcycle ride-hailing service and logistics provider Angkas to deliver its products.

“This is the new normal,” Mr. Chen said.

Magsasaka Party-list Representative Argel Joseph T. Cabatbat said traditional middlemen will still play a role in the flow of agricultural products despite the emergence of online selling and digital markets.

“For a long time, big companies and corporations that played the role of middlemen have received the biggest share in the profit and contributed to the reason why our farmers are still poor,” Mr. Cabatbat said.

Samahang Industriya ng Agrikultura (SINAG) Chairman Rosendo O. So said small growers currently do not have the means to attempt online selling.

“Mobile signal reception in the provinces is erratic. What more for internet signal? Online selling of agricultural products will only benefit online sellers and traders. Not small farm growers,” Mr. So said.

IGNORED SECTOR
UA&P’s Mr. Dy said that the poor are missing out on the logistics revolution in agriculture, simply because they remain tied to traditional markets.

“The poor don’t shop in supermarkets. They only buy in small portions or ‘tingi.’ Most of them buy in wet markets or talipapas,” Mr. Dy said.

Magsasaka Party-list’s Mr. Cabatbat said barangay officials should bear the burden of modernizing such markets to ensure compliance with safety rules, as every location is unique and one-size-fits-all solutions impractical.

“The officials should enjoin their constituents to find a solution that will work for the betterment of everyone in the barangay,” Mr. Cabatbat said.

UP IN THE AIR
The Benguet farmer said that online selling was an eye-opener during the pandemic.

“Now that gadgets are the trend, I might consider trying online selling,” the farmer said.

Mr. Cabatbat said the distances, poor infrastructure, and irregular transport links remain hurdles to an online-selling future.

“It is not the answer because of how far the consumers are to farmers,” Mr. Cabatbat said, betting on measures like rolling stores at the barangay level.

“The future of agricultural retail is still up in the air. No one really knows. But it looks like the trend for the future is making farm products within reach of consumers who do not have to exert much effort,” Mr. Cabatbat said.

This is a spike we welcome

 

Car sales making a recovery, according to CAMPI, AVID

WHAT AN opportune moment indeed to talk about the automotive industry just as we celebrate the anniversary of BusinessWorld. Why, you ask? Well, this should be a day of rejoicing or, perhaps more appropriately, flashing a defiant, stiff upper lip, in the middle of what is perceived to be a print medium under siege. Thirty-three years on, the paper is still here, and we’re soldiering on amid the naysayers and a tough time for basically everyone.

Resiliency is never overrated because it is simply what enables us to rise and overcome. Filipinos are famously known to smile in the face of adversity. But smiling is half the battle, because if you don’t put the work in, you’ll stay a victim of circumstance — a tiny sailboat caught in a storm at sea, not knowing where it will end up. Dead Poets Society taught us that it’s about seizing the day instead of, well, ceding control to fate.

The local auto industry has done exactly that. Instead of laying on the ground to throw a tantrum and rail in vain against lost chances and rue limited opportunities, brands have stepped up in the new normal by putting on their thinking caps instead of grasping at straws.

The recently concluded “Mobility in the New Normal” three-part webinar series powered by our sister publication The Philippine STAR’s motoring section “Wheels” and co-sponsored as a media partner by BusinessWorld’s own “Velocity” section spoke volumes about how, amid the limitations brought about by our being mindful of the pandemic, the auto industry has found a way to recover.

Instead of waiting for the situation to revert back to the old, companies welcomed the new and learned to work within its parameters.

Mindful of the real threat of infection (and, yes, since we don’t have a vaccine yet, we don’t want to tempt fate), showrooms and service centers have reopened cautiously with a whole slew of protocols in place — from sterilizing shoe mats, numerous hand sanitizers, to transparent barriers and PPE for everyone. They have learned to work around the situation and not be paralyzed by it.

Those who had merely covered the digital base before as an afterthought are now learning to leverage the advantages of the platform. Digital or virtual showrooms have become the norm, and many brands are leveling up the functionalities of these websites/microsites.

Jurassic Park said that life finds a way. Well, auto brands have surely found a way, and they are making hay with what little sunshine is filtering through dark clouds.

In April, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) reported an all-time low of 133 units in sales as most dealerships were shuttered for the quarantine. I’m sure you all recall how dire and bleak the situation was. Four months from the first lockdown via enhanced community quarantine, we can already look back at a tale of resiliency.

Dealerships and shops opened, and with it, an influx of a) people who needed to have their vehicles serviced, and b) people who were actually on the lookout to buy vehicles. Yes, we’re buying cars again.

Just last week, CAMPI/TMA revealed consolidated sales of 15,578 units in June. While still a modest number compared to pre-COVID figures, I’d like to point out that this represents 225.4% growth over May’s total of 4,788. Compare that again to April for an even more eye-popping number — incredible 11,612% growth from April to June. I’d take that any day.

The story is pretty much the same over at the Association of Vehicle Importers and Distributors (AVID). In June, its 21 member companies representing 26 global brands sold 3,697 vehicles, increasing by 198% compared to May’s 1,239 units sold.

Experts are divided on when we’ll exactly get back to normal. I’ve heard opinions ranging from the end of 2020 to well into next year. But what’s important is that industry players are predicting a renaissance, period, of the industry that used to be a shining star of the Philippine economy.

We, at BusinessWorld, surely cling on to warm, fuzzy thoughts like that — not because the alternative is unfathomable, but because we truly believe that, well, print is not dead.

US pandemic aid program saved 51.1M jobs, but wealthy and connected also benefited

WASHINGTON —A high-profile pandemic aid program protected about 51.1 million American jobs, the Trump administration said, as it revealed how $521.4 billion in taxpayer cash was injected into small businesses but also into the pockets of the rich and famous.

The data on the small business Paycheck Protection Program (PPP) seemed to confirm worries among Democrats and watchdog groups that in addition to mom-and-pop shops, the funds went to well-heeled and politically connected companies, some of which were approved for between $5 million and $10 million.

Those include several firms that lobby on public policy, such as Wiley Rein LLP and APCO Worldwide, as well as prominent law firms like Kasowitz Benson Torres LLP, which has represented President Donald Trump, and Boies Schiller Flexner LLP.

Kasowitz Benson Torres said the funding helped the law firm preserve hundreds of jobs at full salary at a time when federal courts and its offices were shut down.

The gallery of well-connected names extended deeply into the world of America’s privileged and super famous.

Sidwell Friends School, an exclusive private school which educated former President Barack Obama’s daughters, was approved for between $5 million and $10 million, as was Saint Ann’s School in Brooklyn, which — with tuition exceeding $50,000 per year — is attended by the children of hedge fund managers and celebrities.

Newsmax Media, Inc., the media company run by Trump donor Christopher Ruddy, got the nod for between $2 million and $5 million. So did billionaire rapper Kanye West’s Yeezy LLC clothing company. Newsmax said in a statement it was eligible for the program and did receive a loan, but declined to elaborate.

Aside from Kasowitz Benson Torres and Newsmax, the other companies and schools did not immediately respond to a request for comment.

“The initial data is revealing many recipients that are appropriately raising eyebrows, which was one of the many reasons we wanted it public,” said Danielle Brian, executive director of the Project on Government Oversight.

DETAILED PICTURE
The colossal data set released by the US Treasury department and Small Business Administration (SBA), after initial resistance, gives Americans their first full look at who got cash from the first-come-first-served PPP that has been dogged by technology, paperwork and fairness issues.

To date, the SBA has released geographical distribution figures but the new data paints a much more detailed picture of which communities and sub-sectors received support. Senior administration officials hailed the program as a “wild success,” with the data showing it supported about 84% of all small business employees.

The data includes information on 660,000 loans of $150,000 or more, including recipient name, address, lender, business type, jobs retained, and some demographic information. That accounts for roughly 73% of the dollars granted, but only 14% of the 4.9 million loans, according to a summary of the data.

While the data does not say exactly how much money each borrower received, they are placed in one of five bands: $150,000-350,000; $350,000-1 million; $1-2 million; $2-5 million; and $5-10 million. More than 4,800 loans were issued in the top band, while the overall average loan size was $107,000\.

Among those in the mix: the Americans for Tax Reform Foundation, whose stated mission is to curb government spending. It was approved for a loan of between $150,000 and $350,000.

Despite some eyebrow-raising recipients, the funds reached a wide swath of businesses — more than $67 billion for the healthcare and social assistance sector, $64 billion-plus for construction businesses, $54 billion for manufacturing and, at the smaller end, more than $7 billion for religious organizations.

LINGERING QUESTIONS
Treasury Secretary Steven Mnuchin had initially refused to name any recipients, saying it could expose borrowers’ proprietary business information. But under pressure from lawmakers, he agreed to shine a light on large borrowers.

Launched in April, the unprecedented program — which has been extended until Aug. 8 — allows small businesses hurt by the pandemic to apply for a forgivable government-backed loan from a lender.

More than 5,000 US lenders participated in the program, with JPMorgan accounting for $29 billion in loans. JPMorgan, Bank of America, Truist Bank, PNC Bank and Wells Fargo originated 17% of total PPP loans, according to the data.

In the scramble to distribute funds, the program was beset by technology glitches, documentation snags and revelations that some lenders prioritized their most profitable clients.

Some investment firms, for example, were also on the list.

That included Advent Capital Management LLC, a New York-based debt investor with $9 billion in assets; Metacapital Management LP, a New York-based fixed income investor with more than $1 billion in assets; and Semper Capital Management LP, which invests nearly $4 billion in mortgage-backed securities.

Deepak Narula, the head of Metacapital, said his company decided it did not want the money and returned it “pretty quickly.” A spokesperson for Advent said the company explored but never completed an application and did not receive any funds. Semper did not respond to a request for comment.

The data is likely to raise further questions over whether the most needy benefited from the program and whether more companies should have returned the cash.

Roughly $30 billion in loans have already been returned or canceled, a senior administration official said. Those include loans taken by large or publicly listed companies which attracted fierce criticism for breaching the spirit of the rules, as well as loans issued to companies that decided they did not want or need the money after all.

The data shows loans that have been approved, but it does not say how much was disbursed, nor which loans have been forgiven so far. The loans were largely dished out on a good-faith basis, with borrowers certifying to their eligibility and the accuracy of the data they provided, meaning the figures on how many jobs were retained have not been thoroughly vetted.

Loans that appear to breach the letter or spirit of the rules may not be forgiven, and the Treasury plans to conduct a full review of loans of more than $2 million.

The Department of Justice has brought charges against several PPP borrowers for fraudulently seeking loans, while several federal and state regulators are also probing misuse of the funds. — Reuters

Educators in uncharted waters with return to classroom still uncertain

By Gillian M. Cortez, Reporter

THE APPROACH of the new school year while the pandemic remains uncontained is filling many with dread, including the students who may have to spend large parts of it cooped up at home, staring at screens, away from their friends.

Karla Martinez, an incoming university freshman, said the thought of another unusual school experience is “devastating.”

“It’s depressing to think (that) you can’t do anything about it. You have to follow the rules,” she said. COVID-19 has already caused her to miss milestones like her Senior High School graduation. It also denied her the opportunity to experience things will serve her well at the next level of her education, like working with a group to put together a thesis, as well as the pressure cooker of the thesis defense itself.

“We had school requirements we weren’t able to pass. We had to pass our thesis unfinished,” Ms. Martinez said.

When President Rodrigo R. Duterte first ordered the Luzon lockdown in mid-March, Ms. Martinez lost the remainder of her school year, which had a few unexpected consequences — like losing a sense of purpose “because it affected my education.”

The education sector consists of nearly a million teachers and millions more students. The lockdown first announced in Luzon was followed by similar lockdowns in other areas. Where possible, educators and students worked out their lessons remotely. Some schools made the difficult decision to cut the school year short.

The old reliance on traditional classroom learning, and the growing realization that the old ways may no longer be workable, have sent educators scrambling for new ways of doing things — while absorbing the cost and toughing out the transition to the new methods.

The Department of Education (DepEd) and the Commission on Higher Education (CHEd) have said that distance learning requires special preparation and investment. Some private schools have upgraded their systems or launched online portals, which allow students who own computers and devices to keep up.

Graduate student Noah Shen Datinginoo is no stranger to alternative pathways to learning, including online portals and apps. While her remote pursuit of Biology studies is facilitated by computers, her constraint is the reliability of her internet connection. She also notes that non-classroom channels may not work out for everyone.

“We have different styles of learning. Some can keep up via online classes but there are a lot of factors (that can interfere) especially internet quality. It’s difficult. I would say distance learning effectiveness is 50/50. I’m not 100% sold on it,” she said. When her connection failed, Ms. Datinginoo found herself asking her professor to repeat what they just said.

“It’s a good thing they are patient.”

Private-school teacher Rodney De Leon, who handles grade school and high school students, has found the pandemic learning experience manageable, though the biggest downside of the new reality is a diminished ability to monitor what his students are actually absorbing. He regrets his inability to personally judge whether the student has succeeded in taking in the lessons.

“Student supervision is a challenge because in a face-to-face setting you can see who is cheating or who’s doing their work honestly. (Online), you’ll never know if someone is copying the answer from the internet or is asking for help. Some teachers overlook that,” he said.

Classes will resume in August for K-12 schools, while tertiary institutions have the option to open, depending on the delivery systems for teaching. Schools are scrambling to prepare curricula with an eye towards selecting appropriate subject matter and adjusting for the many ways in which pupils learn.

Teachers Dignity Coalition National Chairman Benjo Basas said in the case of K-12 teachers, the sudden shift to learning outside the classroom has raised the issue of inequality in accessing the online classes.

“We do not oppose the opening of classes on Aug. 24. What we are saying is the government should assure the system won’t leave behind any learner or family in this new modality of learning,” Mr. Basas said.

University of the Philippines (UP) College of Education Dean Jerome T. Buenviaje said the Philippines has a relatively young population, with a student population of 32 million, and the outcomes largely depend on two things: the teacher, and the student’s learning environment.

“Which is better, face-to-face or remote learning? I would say it depends. Quality education is not assured if you have face-to-face classes that you get quality education. It depends on the teacher and it depends on the learning environment you provide.”

Both the DepEd and CHEd have been trying to ensure the continuity of learning and the safety of all involved. Both agencies are pushing for blended learning, which combines traditional learning with out-of-classroom alternatives. While online learning is an option, blended learning will also employ printed modules, radio, and television.

As early as February, CHEd released guidelines for higher education institutions (HEIs), discouraging large crowds, prescibing hygiene and health standards, and establishing screening protocols. Some HEIs suspended classes when the first cases of community-transmitted COVID-19 emerged in March while others sought to complete the semester online. Others decided to suspend their school year.

In May, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) issued its Omnibus Quarantine Guidelines, which permit HEIs operating under modified general community quarantine (MGCQ) to conduct face-to-face classes when the school year begins, but with capacity restrictions.

HEIs that opt for online classes are permitted to conduct classes any time while those planning to implement flexible learning can open in August. Those opting for face-to-face instruction are not allowed to start before September.

Meanwhile, the DepEd is making its own tweaks to ensure learning is effective.

Undersecretary for Curriculum and Instruction Diosdado M. San Antonio said the game plan is basically to supplement online classes with printed self-learning modules.

“There are materials that are almost ready to be shared with our own field officials for reproduction and contextualization but some have yet to be submitted because they are in the process of quality-assuring the learning resources that have been prepared,” he said.

Mr. San Antonio said modules have been around for some time as a contingency against emergencies and natural disasters. But the scale of the requirements during the pandemic is unprecedented.

“What we are doing now is really scaling up. In the past, we only prepared a few alternative delivery modules.”

The DepEd is also working to train teachers to deal with the sudden shift, and noted that parents can play a part — but not all of them.

Mr. Basas said, “Not all parents are able to help out… Can they teach their kids? Also, after the pandemic and the lockdowns, the main focus of families, especially poor families, is earning a living. Maybe parents won’t be able to juggle this.”

Mr. San Antonio acknowledged that not all parents will be there to supervise their children’s lessons, and to fill the gap, the department will enlist volunteer tutors among college graduates, teacher applicants, or displaced workers who can be trained. DepEd said such volunteers could help parents unable to home-school, especially if the children are in the lower grades.

Mr. Basas said the shift to online learning will stress the internet infrastructure and may leave students in far-flung areas behind.

The Department of Information and Communications Technology (DICT) is currently in talks with both the DepEd and CHEd to provide free wi-fi in schools.

Mr. San Antonio said students in areas with weak connectivity will not be left behind if they are provided modules. He added, “traditional printed learning modules have also been found to be effective.”

For the long haul, everything is up in the air until the availability of a vaccine — the one prerequisite President Rodrigo R. Duterte has cited before ordering students back to school.

Ms. Datinginoo, the biology graduate student, said hands-on laboratory experiments and fieldwork might be where online learning hits a wall. She has had to defer these aspects of her eductaion.

Ms. Martinez, the incoming college freshman, said the new environment will require a major adjustment as she has known only classroom teaching.

Mr. De Leon said his default preference is also the classroom.

“There are pros and cons but I will always prefer the traditional classroom setting because as a teacher, it’s not just lecturing. That’s part of it, but I can also get to relate to my students personally and… can adjust my lessons because I can see how they work, how they react, how they perform,” he said.

Mr. Basas said that while the new environment will require learners to adapt to other modalities, it should not go on indefinitely. “It is not normal, and what is not normal will never be sustainable especially if you’re talking about the long term, and you’re talking about education.”

Nevertheless, Mr. Basas said delaying education may do more harm than good, as many students were falling behind even before the COVID-19 crisis.

“We have to be prepared given the limited time and resources. We have to make the most out of it,” Mr. Basas said. He added the government and private schools should also ensure the security of teachers, since blended learning will require them to leave their homes and increase their exposure.

Mr. Buenviaje said remote learning should only be resorted to in order to mitigate the risk of COVID-19 and “should be all temporary in nature.”

He added that the suspension of face-to-face classes could offer opportunities to innovate. “It is also a chance for us to fight for the right of the Filipino children now in this time of emergency and that is non-negotiable.”

Mr. San Antonio added the key is to keep students motivated, adding that DepEd is ready to adapt and adjust to any problems.

“I think if we do it well the first time, we should not be worried about how it’s going to be done in the future. We assure everybody that even if we are doing new things on a massive scale, we are ready to reconfigure the strategy if needed,” Mr. San Antonio said.

Indonesia’s V-shaped recovery looks elusive as cases spike

INDONESIA is struggling to contain a surge in coronavirus cases in the world’s fourth-most populous nation, casting doubts on the likelihood of a V-shaped recovery for the economy.

For more than a month, hundreds of thousands soldiers and police have been busy enforcing social distancing rules to contain the outbreak in Indonesia. But new cases have continued to spike, more than doubling to over 55,000 since then. Evidence is also fast emerging of the wide spread of the virus outside the main Java island, the nation’s epicenter of commerce and industrial activities.

The spike in infections may prompt businesses to delay reopening and weigh even more on consumer sentiment, deepening a slump in Southeast Asia’s biggest economy and forcing the cash-strapped government to add to its stimulus measures.

Nomura Holdings, Inc. is forecasting a 3.2% contraction in the economy, with the fiscal deficit ballooning to 7.5% of gross domestic product this year. That’s far worse than the government’s projection of growth in a range of -0.4% to 1% and a budget gap of 6.34%.

“The daily cases have worryingly continued to accelerate in recent days, suggesting the reopening may have increased the risk of transmission,” Euben Paracuelles and Rangga Cipta, economists at Nomura, wrote in a report last week. “We believe the increase in COVIDd-19 cases could hamper the recovery, as demand remains weak and consumer confidence is low.”

Indonesia didn’t impose a nationwide lockdown like many of its neighbors, and has already begun easing some of the restrictions put in place to contain the pandemic. Shopping malls, places of worship and restaurants were allowed to reopen from early June in the capital Jakarta and some other cities.

RHB Investment Bank, which forecasts a 1% contraction in GDP this year, says rising COVID-19 cases could force the government to maintain some form of restriction on movement, further suppressing growth. It could also prompt Bank Indonesia to continue its easing cycle by cutting interest rates by 25 to 50 basis points, depending on the severity of the crisis, economist Ahmad Nazmi Idrus said.

Indonesia’s virus strategy is muddled by a lack of uniform policy response across its disjointed islands and may warrant a long period to contain the pandemic, according to Panji Fortuna Hadisoemarto, an epidemiologist at Padjadjaran University in Bandung. More than two-thirds of the country had loose social distancing rules such as mandatory use of masks in public and working from home, and they haven’t been very effective, he said.

“We can no longer estimate the peak of the pandemic nationally because policies are different for each region,” Hadisoemarto said. “If we continue with this strategy, then we have to wait a very long time to get through this. It can be years.”

On a visit last week to Surabaya, the country’s second-largest city, President Joko Widodo set a two-week deadline to control the outbreak there. The region has become a hotspot, recording the highest fatalities among 34 provinces. Having earlier this month ended a partial lockdown in the city, Widodo reminded officials of the need to balance the health of the population with pressures to reopen the economy.

The president also ordered officials to accelerate spending on healthcare and social safety nets to put more cash in the hands of beneficiaries. The government has announced almost $50 billion in fiscal stimulus measures to shore up the economy.

Finance Minister Sri Mulyani Indrawati expects the economy to recover in the third quarter after an estimated 3.8% contraction in the current one. Coordinating Minister for Economic Affairs Airlangga Hartarto has said the country is poised for a V-shaped rebound given its less punishing virus containment strategies.

The spike in new cases in recent weeks in East Java, South Sulawesi, South Kalimantan and Jakarta has prompted authorities to abandon forecasts of a June peak and rather focus on measures to stem its spread. Indonesia’s test ratio of 2,750 for every 1 million of the population is below that of Bangladesh and Sri Lanka.

With that kind of backdrop, the outlook for the economy is darkening.

“Given the uncertainties about the health situation in Indonesia, our baseline forecast assumes a more U-shaped profile for the economy’s recovery as opposed to a V-shape,” Sung Eun Jung, an economist at Oxford Economics Ltd. in Singapore, wrote in a report. “Even if consumers and businesses are allowed to move around and operate, they’ll be hesitant to do so if their health concerns persist.” — Bloomberg

LGUs rise above the chaos — and strained relationship with gov’t

By Maya M. Padillo, Correspondent
and Marifi S. Jara, Mindanao Bureau Chief

When the state of emergency was declared on March 8, the President’s proclamation cited the need for a “whole-of-government” response to the pandemic — a term first used in the Duterte administration’s strategy to end the communist armed movement, which had local governments as the lead envoys.

But coronavirus disease 2019 (COVID-19) was a different kind of adversary.

It is an “invisible enemy,” said Mayor Michelle N. Rabat of Mati City, the capital of Davao Oriental which has been recognized as a model province for its reintegration program for former rebels.

“We were fighting blind. And with a weak health system, we had to find ways and be innovative in our approach,” Ms. Rabat said.

One of the innovations launched by the city was a heatmap, a mobile phone application for keeping track of all persons confirmed with COVID-19 as well as those categorized as suspected and under monitoring.

Ms. Rabat said the app was prompted by public clamor for the local government to disclose information on its three confirmed cases, which violates privacy laws.

“So we were in a dilemma as to how to deal with it. Thus, we came up with the heatmap. That way, the public could visualize (where the confirmed and potential patients are)… They would now have the choice which areas to avoid,” she said.

Until May 28, with the province in a more relaxed form of quarantine for almost two weeks, the confirmed cases stayed at three, all of whom recovered.

On May 29, a dozen new cases were recorded. Eight were returning overseas workers and four were residents who were locked out of the province when airports and borders closed.

The 12, all asymptomatic, went straight to isolation facilities across the province, which were set up during the almost three-month lockdown.

“By containing (the returnees), we decrease the chance of local transmission… We did not take chances,” said Reden V. Bersaldo, head of the Davao Oriental Provincial Hospital and lead action officer of the province’s COVID-19 task force.

Local governments around the country have generally taken similar ultra-cautious approaches, driven in part by the knowledge that healthcare facilities will be hard-pressed to handle a surge in cases.

Governors and mayors were often a step ahead of, stricter than, and sometimes in conflict with, the National Government.

They were able to do so as the national health emergency declaration authorized them to issue executive orders, which do not require approval from their councils.

President Rodrigo R. Duterte, in his March 16 speech expanding the Metro Manila lockdown to Luzon, did not spell out what the rest of the country was supposed to do, but granted pretty much blanket authority to local governments.

“Just go ahead and the mayor will do it for us… one line lang ngayon, mayor lang muna (it’s one line for now, just the mayor). And he can come up with any measure to protect public health, public interest, public order, public safety and whatever is needed to make life more livable in your place,” the President said.

The Philippines has 1,634 mayors, leading 146 cities and 1,488 towns.

Of the cities, 38 are highly urbanized or independent while 108 are governed by provinces. All towns are under provincial jurisdiction.

Mayor Oscar S. Moreno of Cagayan de Oro, an independent city, said making the initial decisions and taking the first steps were not easy.

Mr. Moreno noted that it was particularly challenging in his case as he had to take into consideration that the city serves as a regional center and is home to the best-equipped public hospital in Northern Mindanao.

“As the pandemic started, we were totally in the dark… Being in the dark, I decided back on March 13 that we will have our daily briefings… the reason is to inform the people on matters that we feel we need them to know,” he said during a May 15 webinar on Vulnerabilities, Preparedness and Resilience organized by the Ateneo de Manila University’s Institute of Philippine Culture.

The briefings, both internal and open to the public through live streaming on social media, were attended by regional and city health authorities, officials of the Northern Mindanao Medical Center, and the police.

The mayor said this constant communication was important because “public health is very elusive, it is like catching mudfish.”

Mr. Moreno said the city also launched an “intensified surveillance program” with teams deployed on a house-to-house mission to collect data, especially for potential COVID-19 patients among those who recently returned to the city.

The data collected will be used in an app being developed by Xavier University for contact tracing and other emergency situations.

As of June 11, the city managed to keep its COVID-19 cases at 15, with six recoveries and six deaths.

“I think the common factor in cases of success at the local level is decisive action from the local chief executive that is principally driven by a real desire to meet the identified needs of the community,” Michael Henry Ll. Yusingco, senior research fellow at the Ateneo Policy Center, said.

“In fact, I think the chaos at the national level has been a hindrance in some way for some local governments to mobilize efforts to serve their respective constituencies,” he added.

‘NOT AN ENEMY’
One widely reported injured party of the chaotic state of affairs was Marikina City and its initiative early in the outbreak to set up its own testing facility — just as global health experts were starting to stress the value of “test, test, test” to immediately identify and isolate virus carriers.

Marikina’s plan was held hostage by the Department of Health’s inability to expedite the accreditation of facilities in the face of the emergency.

Another instance was when Pasig Mayor Victor N. Sotto wanted to keep tricycles operating in the city to serve frontline workers and those needing medical care, despite the ban on all public transportation. He ended up being threatened by national officials with administrative and criminal charges.

At the same time, a food supply crisis was brewing as local government executives started to impose stringent rules at their borders in an attempt to keep the virus out.

By March 19, Mr. Duterte, who was mayor of Davao City for almost two decades before becoming president, backtracked on his pronouncement three days earlier with a message addressed specifically to local government units (LGUs).

“I know you have the mandate to deal with emergencies affecting your localities. I was a mayor myself, in case you have forgotten. But this is an emergency of national proportions, and therefore it is the National Government that should call the shots,” he said.

“Let us work together to implement this quarantine, and it should all begin with the LGUs making sure that your actions are consistent with the national directives. To do otherwise would sow confusion.”

Things cooled off over the succeeding weeks as LGUs and local health authorities busied themselves attending to the relatively minimal number of COVID-19 cases, contact tracing, preparing isolation facilities and strengthening existing healthcare institutions, ensuring the implementation of quarantine protocols, and distributing aid.

But in the last week of May, tensions between national agencies and local governments again erupted as some 24,000 overseas Filipino workers — who were displaced by the pandemic, with most returning via Manila where they were quarantined for 14 days and then became “locally-stranded individuals” (LSIs) — were suddenly being loaded on to planes and buses bound for the provinces without sufficient notice to local authorities.

The rush was prompted by a directive from Mr. Duterte to various departments to sort out the situation within a week.

“Surprise flights from the National Government” that did not always arrive on schedule was how the South Cotabato provincial government described the repatriation, with teams suddenly needed to be deployed in the wee hours to process and provide further transport to the returnees.

Mayor Richard I. Gomez of Ormoc, an independent city that managed to stay COVID-free prior to the reopening of its borders, unwittingly became the poster boy of the LGUs’ frustration.

Mr. Gomez, a former actor and national athlete, stood up to the President’s chief legal counsel and interior secretary when they accused him of having gone into panic mode by blocking returnees.

“The point being, we are honest enough to disclose kung ilan lang ’yung (what is our) capacity… and we will not pretend to be heroes by accommodating more than that at any given time. Because the system cannot collapse. It will be disastrous,” he said.

The mayor said local governments are ready to follow the President’s orders “because we are the soldiers on the ground,” but the implementation has to be coordinated and organized.

“Hindi po kami kalaban (We are not the enemy),” he said.

Cebu Governor Gwendolyn F. Garcia, who locked horns with national officials over such issues as the airport’s closure and the ban on motorcycle back-riding, said in a June 9 briefing, “Sometimes, it is so difficult if there is a national policy that does not seem to consider the realities on the ground and what the people need.”

Mr. Yusingco said while “obviously, the central government must play a robust role in a national emergency,” a more “cooperative and collaborative approach would be a welcome change.”

RECOVERY
Such collaboration will be even more crucial as the country navigates the road to economic recovery with COVID-19 remaining a serious threat.

One National Government initiative — the Balik Probinsya, Bagong Pag-asa Program — could put pressure on areas outside the capital as urban migrants take up the offer to start again in their home provinces with promises of decent housing and livelihood prospects.

The government is expecting at least a million people to sign up, according to National Housing Authority General Manager Marcelino P. Escalada, Jr.

These Balik Probinsya beneficiaries will be joining displaced overseas workers who have come home as well as local residents who lost their jobs or closed their businesses.

The program intends to achieve countryside development by supporting micro, small and medium enterprises and rationalizing fiscal incentives to “encourage the transfer of medium and large businesses to provincial economic hubs.”

Economist Cielito F. Habito, a former socioeconomic planning secretary, said attracting investors to trigger job creation in rural areas would require not just the usual tax breaks and other financial stimulus but infrastructure.

Mr. Habito noted that the current lineup of the administration’s “Build, Build, Build” (BBB) program is still dominated by “mega projects” in Metro Manila and Luzon.

“So are we really putting our money where our mouth is in terms of Balik Probinsya and dispersing economic activity when our BBB program is still inordinately focused on Metro Manila and Luzon,” he said during a May 29 webinar on the Mindanao economy organized by the European Chamber of Commerce and Industry and the Davao City Chamber of Commerce and Industry.

In the 10 years to 2018, Luzon accounted for an average of 73% of the country’s economic output as measured by gross domestic product (GDP).

Of this, 63% was generated by the National Capital Region and the surrounding regions — Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon provinces) and Central Luzon.

The central islands comprising the Visayas account for 12.5% of GDP while Mindanao generates 14.5%.

Mr. Habito noted that infrastructure development does not just involve roads, bridges and transportation, but online connectivity — an asset that has become even more valuable in the COVID era.

“These are the important magnets for investment and unless we put these in place, it will not be easy attracting investors,” he said.

Philippine Chamber of Commerce and Industry Vice-President for Mindanao Ma. Teresa R. Alegrio, in the same webinar, said apart from infrastructure, local governments should be ready to market their areas with “hard facts.”

“We should be able to give hard facts like the availability of land or special economic zones, and apart from the incentives that they will get is the cost and ease of doing business itself,” Ms. Alegrio said.

She added that the private sector must also strengthen collaboration with LGUs and provide inputs to create a fertile business environment.

“The private sector must have a very active role in ensuring that it gives the right perspective and context as to how we can do business in a better, organized and systematic way.”

The Mindanao Development Authority (MinDA), designated the coordinating body for the Balik Probinsya implementation in the south, has come up with a formula.

A MinDA team led by its chairman, Secretary Emmanuel F. Piñol, has been going around the Mindanao mainland to connect directly with local officials, and he has received commitments from at least three for the establishment of pilot sites.

In the discussions, they identified land for resettlement areas and agricultural ventures, including a complete value chain that will also involve residents outside the returnees’ new village.

“With the needed funding and support in place… the first resettlement area will be ready by September this year,” Mr. Piñol said in May.

As of June 11, clearing was ongoing at a 6.3-hectare site in Kauswagan, Lanao del Norte where an initial 200 returnees from Manila will resettle and produce organic broiler chickens and vegetables.

Mr. Piñol said the land was donated by GNPower Kauswagan Ltd. Co., a subsidiary of the Ayala Group’s AC Energy.

A project management office is also being organized, with Kauswagan Mayor Rommel C. Arnado in the lead and representatives from MinDA and national agencies involved in the program.

“MinDA, under my leadership, will see to it that it (Balik Probinsya program) will succeed in Mindanao and we hope that by doing this, we will be able to provide a template for Balik Probinsya communities in other parts of the country,” Mr. Piñol said.

The COVID-19 economic recovery plan and its immediate implementation are in the hands of current leaders as local and national elections won’t be happening until May 2022.

What they do in the next 24 months will determine how fast the country emerges from the crisis, and whether the recovery heads in the direction of a more equitable development nationwide.

“It is very difficult to identify particular strengths and weaknesses exhibited by local executives in this crisis. Some have risen to the occasion for sure. And I’m sure there are a lot more local officials who are performing well but are not getting media coverage. But I think it is pretty clear that the success or failure of a local government unit depends highly on who is the local executive,” said Mr. Yusingco, “Pretty much the same way the country’s success or failure depends on the person holding the office of President.”

Bangsamoro project confronts threats, old and new, during the pandemic

JUDGING by the numbers, the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) has done well in responding to the coronavirus public health crisis.

As of June 12, the region had 54 confirmed cases of coronavirus disease 2019 (COVID-19), one of the lowest among the 17 regions in the country. And of the total, 80% were returning residents or overseas workers who were immediately placed in prepared isolation facilities as they started to arrive in late May.

From the initial 11 cases, a potential surge in local transmission did not happen and the four deaths recorded were mainly from among the first patients who contracted the virus.

Another threat in March that was contained involved some 200 Islamic preachers from various parts of the country, but with a majority from BARMM, who attended a gathering at the Jamek Sri Petaling Mosque in Kuala Lumpur, a meeting to which many of Malaysia’s COVID-19 cases were linked.

BARMM Health Minister Saffrullah M. Dipatuan said at the time that the region’s inter-agency task force immediately organized a contact-tracing effort with local governments, the National Commission for Muslim Filipinos, other national agencies, and the Malaysian government.

“The Bangsamoro Government has been doing great with minimum tallied cases… Even if BARMM has been operating for merely almost a year, the response has been commendable,” Secretary Carlito G. Galvez, Jr., chief implementer of the national COVID-19 task force, said during a visit to the region in early June.

Having a government in transition means challenges in governance, manpower recruitment, and budget access and coordination with the National Government, among other areas.

On top of this, BARMM is also contending with the region’s longstanding problems: poverty, with 54% of households having insufficient income to buy minimum basic needs, violent extremism, clan disputes, and the physical — and corresponding psychosocial — rehabilitation of Marawi City.

BARMM Cabinet Secretary Mohd Asnin Pendatun, designated spokesperson of the regional inter-agency task force (IATF), said the effective response may be attributed to the regional government serving as “consolidator” for the health emergency measures.

He noted that BARMM used existing disaster management structures such as the Incident Command System and its management teams down to the provincial level.

“Our role really was to be the regional consolidator… to synchronize our approach and responses to COVID-19,” he said in a May 20 webinar organized by the Institute for Autonomy and Governance.

AUTONOMY
On the other hand, Francisco Lara, Jr., senior peace and conflict adviser for Asia of the independent organization International Alert, flagged how the regional government and the Bangsamoro Transition Authority (BTA) allowed the National Government to take back “most of its devolved and autonomous powers and authority” in response to the crisis.

Mr. Pendatun said local government units (LGUs) were initially “given much power… room to implement community quarantine rules in their localities,” but this was withdrawn in what the national IATF called a “streamlining” of the response structure.

“So beginning May 16, no LGU, be it province, city, or municipality, can implement its own version or add or subtract to the guidelines without approval from the national IATF and endorsement from the regional IATF,” he said.

The cabinet secretary also noted the difficulty of distributing cash aid from the National Government.

Mr. Lara cautioned that, “If unchecked, the public health crisis may undermine the agenda of devolution, decentralization, and autonomy embedded in the Bangsamoro project.”

Finance Secretary Carlos G. Dominguez III, who co-chairs the Inter-Governmental Relations Body with BARMM Education Minister Mohagher Iqbal, is aware of such concerns and has given reassurance that the national government is committed to achieving a genuinely autonomous Bangamoro.

One of the key issues is the Bangsamoro government’s push to be lead implementer of nationally funded programs in the region.

“I assure you that the agencies of the National Government serving as counter-parties in these coordination mechanisms are as fully committed to move forward with this bold initiative in autonomy,” Mr. Dominguez was quoted as saying during a May 29 online meeting with BARMM officials.

Asserting BARMM’s wider autonomy is important as it pursues recovery, said International Alert Country Manager Nikki Philline C. de la Rosa, because it is in the best position to build on the gains of the peace process and deliver sustainable economic and social reforms — especially in the face of the continuing COVID-19 crisis and reemerging threats.

“The inability of state actors to respond in a timely and effective manner to reduce people’s vulnerabilities in the face of a pandemic has caused new tensions, pressures, and horizontal conflicts. Criminal groups, violent extremists, and warring clans are showing renewed activity as security forces remain focused on the implementation of the enhanced community quarantine. The pandemic has caused further delays in the Marawi rehabilitation process, and this also contributed to the mounting social unrest,” Ms. Dela Rosa said.

Moving forward, Michael Henry Ll. Yusingco, senior research fellow at the Ateneo Policy Center, said the Bangsamoro transition administration, which will be in place until 2022, “should build on the dynamics of cooperation and coordination amongst the different LGUs and national government agencies within the BARMM fostered during this national health emergency.”

Ms. Dela Rosa also said the region should tap “evidence-based and data-driven tools” to ensure that “plans and responses are sensitive to the new context and conflict dynamics.”

She said, “Utilizing local capacities in monitoring tensions and conflict and coordinating appropriate response before they erupt into violence would make economic recovery easier.”

Mr. Pendatun acknowledged that the coronavirus is undeniably “an added burden” to what the region needs to accomplish for the transition phase by 2022, but he said “the Bangsamoro government will be up to the challenge.”— Marifi S. Jara

Hazmat suits for air travel are here

AFTER THE Centers for Disease Control and Prevention officially recommended widespread use of face masks to help slow the spread of the COVID-19 (coronavirus disease 2019), the minimalist medical mask quickly got reimagined as a fashion accessory. Then model Naomi Campbell — a famous germaphobe — and musician Erykah Badu stepped it up a notch, sporting custom hazmat suits for stylish social distancing. Now, with the novel coronavirus pandemic showing no sign of slowing, travelers are taking note.

Yezin Al-Qaysi says haute hazmats are just the thing to make flying feel safe again. In mid-April the co-founder of VYZR Technologies, a Toronto-based company specializing in personal protective gear, launched a new product called the BioVYZR via crowdfunding site Indiegogo. The $250, futuristic-looking outer layer resembles the top half of an astronaut’s uniform, with anti-fogging “windows” and a built-in hospital-grade air-purifying device. Paranoid flyers were quick to scoop it up, pre-ordering about 50,000 suits and raising $400,000 for the nascent company. The first batch is set to be delivered by the end of July.

Nobody, not even Al-Qaysi, knows how TSA officials or airline staff will react to the suit, but that hasn’t dissuaded such early adopters as Ginny Maxwell, a talent manager based in Nashville. The mother of two children aged 10 and four had been on the fence about returning this fall to her childhood home of St. Thomas in the US Virgin Islands to see her parents. “I was especially concerned about our four-year-old not being able to keep a mask on for a flight,” she says.

After learning about BioVYZR through an e-mail from Indiegogo, she and her husband decided that being laughed at for looking like Teletubbies would be worth a degree of safety; $1,000 later, the family of four feels better prepared to travel.

“They give us a lot of peace of mind,” says Maxwell. “And the kids are excited to wear their ‘space helmets.’ If nothing else, they will be a strange souvenir of this crazy time.”

THE BACKSTORY
Al-Qaysi says the suit is an adaptation of his company’s first invention, a solar visor meant to provide hands-free shade in desert environments.

“When the [COVID-19] outbreak happened, we realized that in a perfect world, everyone would have access to a Powered Air Purifying Respirator,” he says, referring to a respirator device that provides clean, filtered air from a lithium battery-operated blower. PAPRs provide more protection than a face mask but aren’t as extreme as a full hazmat suit, ordinarily taking the form of a loose-fitting hood or helmet. They’re commonly used by firefighters, medical workers, and people in pharmaceutical and chemical labs.

“We’ve taken a product usually limited to healthcare and industrial settings that’s typically priced around $1,800 and adapted it to be accessible to the public,” says Al-Qaysi.

He declined to give the name or affiliation of the infectious-disease doctor who consulted on the design, raising questions as to how legitimately the product has been tested.

THE SPECS
Constructed from silicone, neoprene, and vinyl, the BioVYZR weighs less than three pounds and is easy to disinfect and pack away between uses. A chest harness, currently available only in a general adult size and a general child size, sits on the shoulders; two adjustable side straps with buckles can be cinched around the waist, similar to those of a life jacket.

An upgrade from the standard face shield, the suit’s tightly sealed, anti-fogging helmet has two peripheral windows for optimal visibility. While the suit looks as if it could stifle the wearer, Al-Qaysi says it is only 1 degree to 2 degrees F warmer than without the suit. Less comfortable, perhaps, is the fact that it adds four to five inches of height, which would make tall travelers fit even more awkwardly into the cramped quarters of an airline coach seat.

The BioVYZR fits snugly below the shoulders, so it shouldn’t interfere with your neighbor’s space aloft. It will, however, cripple any attempt at making small talk with you. In addition to blocking airborne contaminants, the BioVYZR dampens outside sound; a seat mate or flight attendant can hear a user clearly but cannot be heard.

The helmet’s lithium-ion batteries last up to 12 hours on a single charge, keeping them within approved TSA guidelines. (While lithium-ion batteries are not allowed in checked luggage, they’re generally allowed in carry-ons.)

WHO’S BUYING — AND WHO’S NOT
So far, customers have included doctors, dentists, hairstylists, and long-haul travelers, though Al-Qaysi has seen a recent surge in interest from teachers and school administrators looking for a way to keep staff safe as schools look to reopen.

The design isn’t perfect. Based on feedback and insights from the crowdfunding community, VYZR Technologies has already made tweaks that will appear in its already sold-out second batch of shipments. These include a rear pocket for a hydration pack, a slit for a stethoscope, an additional fan for added circulation, and a replaceable power bank. The company also plans to launch new color patterns and additional sizes.

Brooke Berlin, founder of Karoo Consulting, which focuses on business development for African travel companies, spends a lot of time in the air but isn’t sold on the BioVYZR. “I’ve been 1K with United for the past five years,” she says. “I will always wear a mask in public, but I have no interest in spending money — which could otherwise be used to support conservation and community efforts — on a protective suit, or playing into the fear of being around people or traveling by wearing something so extreme.”

Hillary France, founder of Brand Assembly, a business platform built to accelerate fashion and lifestyle brands, believes the fancy hazmat suit will have a moment and then fade quickly. “I don’t think this will replace the face mask as the garment we will put into the COVID-19 time capsule, but it is nice to be able to see someone’s smile,” she says.

The celebrity buy-in of stylish protective suits has others thinking that this hazmat suit is more than a fashion fad. Meredith Del Bello Zec, a mother of two young children who works as a New York-based buyer for Erica Wilson, a fashion boutique in Nantucket, Mass., says she’d invest in a BioVYZR.

“We’re in a moment where supermodels are traveling in full hazmat suits, so function and safety are, thankfully, the focus over all else — aesthetics included,” she explains. “That said, fashion will embrace this as it did with masks, and we will likely start to see versions of this type of gear evolve from designers at every level. I personally would look forward to a version that would be easy to wear when wrangling children on airplanes and through airports.” — Bloomberg

PSE screens brokers for first REIT trade

By Denise A. Valdez, Reporter

THE Philippine Stock Exchange, Inc. (PSE) has started accepting applications for eligible brokers to trade real estate investment trust (REIT) securities ahead of Ayala Land, Inc.’s (ALI) REIT offering.

In a July 15 memorandum on its website, the PSE said it would accept applications for eligible brokers at least one day before the price setting of a REIT initial public offering (IPO).

ALI’s approved REIT offering has its price setting scheduled on July 22, based on the PSE’s disclosure at the PSE EDGE website on Friday. The offer period will begin on July 27 and end on Aug. 3, and the listing date is tentatively set on Aug. 13.

Interested participants in the offering must tap eligible brokers approved by the PSE. Like in trading dollar-denominated securities, trading REITs may only be done through eligible brokers.

Eligible brokers are trading participants that have attended a PSE-organized REIT seminar and have a sworn certification of operational readiness.

To qualify for the 20% broker allocation, a trading participant must submit its application to the PSE at least one day before the price setting of a REIT IPO.

To participate in the 10% allocation for local small investors via the PSE EASy website, a trading participant must submit its application at least one day before the end of the offer period of a REIT IPO.

But the PSE said it “highly recommends that (trading participants) submit their applications as early as possible to be able to participate in a REIT IPO.”

The PSE will upload a list of all confirmed REIT eligible brokers as reference for the investing public. All related REIT information may be found on https://pse.com.ph/REITS/REITS.htm.

ALI’s REIT is set to be the Philippines’ first REIT offering in history, to be done through AREIT, Inc. The company will be offering 456.88 million shares with an overallotment option of 45.69 million shares.

The offer’s indicative price is up to P30.05 per share, which would generate about P15.1 billion in proceeds for the company.

In a statement over the weekend, PSE President and CEO Ramon S. Monzon said the bourse operator is optimistic that ALI’s REIT offering will have a “positive multiplier effect on the economy.”

“We are pleased that AREIT has decided to pursue its IPO even under the present economic challenges… We are optimistic that the company’s IPO will pave the way for other property firms, even those that are not yet listed in the PSE, to consider listing REITs,” Mr. Monzon said.

Aside from ALI, DoubleDragon Properties Corp. earlier announced plans to do a P16.97-billion REIT offering in the fourth quarter.

Imagining a ‘better normal’ for PHL innovation

By Santiago J. Arnaiz, Mariel Alison L. Aguinaldo,
and Patricia B. Mirasol

THE FIRST CALLS for volunteers went out in early March. As local government units scrambled to respond to the spread of COVID-19 in their municipalities, nonprofit Developers Connect (DevCon) decided to mine its nearly 40,000 Facebook followers for tech developers willing to help it “hack the pandemic.”

March 15 saw President Rodrigo R. Duterte formalizing a partial lockdown for Metro Manila. Classes were suspended. Non-essential businesses were asked to close shop. Checkpoints quickly became chokepoints, throttling the government’s ability to mobilize resources through the capital. On March 16, DevCon announced that its thousand-strong global army of volunteers was hacking together four initiatives. The flagship project was RapidPass, a QR code-based mobile system for quickly processing frontliners moving through Metro Manila’s checkpoints, enabling the distribution of vital goods to those who need it.

RapidPass was formally launched on April 3, backed by the Department of Science and Technology (DoST), as well as by the Inter- Agency Task Force Against Emerging Infectious Diseases (IATF). “Hundreds of DevCon volunteers made this possible just three weeks after the quarantine,” said Information and Communications Technology Secretary Gregorio B. Honasan during the platform’s launch. “This proves to the world the triumph of the indomitable Filipino spirit.”

The system had over 300,000 users in less than a month, streamlining movement through Metro Manila’s 48 quarantine control points so effectively that Defense Secretary Delfin N. Lorenzana said he expects the security forces to deploy the system even beyond the pandemic.

RapidPass is one of the tech solutions that cropped up across the country these last few months. Another IATF-backed system, StaySafe.ph, was developed by software engineering solutions firm Multisys as the nation’s official app-based contact tracing platform. Futuristic Aviation and Maritime Entreprise, or FAME, received funding from the DoST to fabricate specimen collection booths, producing and distributing 132 units in Department of Health (DoH)-designated facilities. Thinking Machines, a data science consultancy firm, was similarly tapped by both the DoH and DoST to “deliver quality insights to government agencies and the public to best respond to the pandemic.”

These collaborations don’t stop at the national level. Medical imaging firm Lifetrack Medical Systems has begun working with local government units, offering its CT scan analysis services for free, promising to expedite the process of identifying potential COVID cases. As pressure mounts on the education sector to digitize, startups like DCLA, a gamified e-learning platform, have begun offering their digital solutions for struggling schools — allowing them to manage enrollment and payment systems online, digitize their curricula, and even access comprehensive training and certification programs on online teaching for their staff.

Across industries, startups and tech firms have taken the initiative to address the nation’s most pressing issues. The glaring gaps that COVID-19 has exposed span not only our healthcare systems, but also our infrastructure, logistics, and financial systems. In response, the innovation community has mobilized, partnering with the public sector to plug the gaps and reconnect a socially distanced nation. While the long-term impact of these initiatives remains to be seen, some experts believe that, should the embracing of these tech community-led efforts be sustained, it may trigger an innovation renaissance.

INNOVATING THROUGH CRISIS
In its Global Ecosystem Report 2020, research center StartupBlink analyzed the startup ecosystems of 1,000 cities across 100 countries, and found that in the efforts to develop innovative solutions around COVID-19, Manila ranked 64th. Among the hundred countries analyzed, the Philippines ranked 29th. While cross-sectoral projects like RapidPass, StaySafe.ph, and the like contributed greatly to those rankings, the study highlights a number of factors that make the Philippines such a hotbed for innovation — many of which predate the pandemic.

Whether it’s embracing fintechs like PearlPay or UnionBank to raise financial inclusivity, or looking to digital platforms like PayMaya to streamline LGU operations, the Philippines has a long track record of turning to the innovation community for tech-driven solutions. But it isn’t only partnership opportunities being extended to these startups. Over the years, government agencies have built a robust support system to help them grow.

“The first thing is just the formal recognition that startups need to be nurtured, prioritized, and separated from the traditional MSME,” said Katrina Chan, executive director of QBO Innovation Hub. “They’ve put in resources, funding, mentorship — all of these activities are very much supported by the government.”

QBO itself was one of the first examples of collaboration between the government and the private sector, being one among a number of groups supported by the DoST’s Technology Business Incubation (TBI) program. Since 2009, 30 of these industry-based TBIs have been established all over the country. Through collaborations with higher learning institutions and global startup incubators, the DoST has directly invested over P413 million in the innovation community, helping the 556 startups it has incubated create a total of 1,960 jobs, secure P506 million in private investment, and generate P423 million in revenue.

According to Ms. Chan, even through the current crisis, the government has continued to bank on this community. “Across-the-board, in order to be able to fund the coronavirus (response), the government has had to cut its budget on literally everything,” she said. “But even in IATF meetings, it’s been recognized… that supporting startups and our innovative technology companies are going to be a priority, and so the funding for these programs wasn’t touched.”

Rowena L. Guevara, Science and Technology undersecretary for research and development, affirmed this policy, saying, “the startup community will be the main movers in the new normal since they are agile and fast. Startups may provide solutions to problems in logistics, supply chains, work-from-home challenges, etc. and they are assured of government support through the implementation of the Innovative Startup Act where the DoST, the Department of Trade and Industry (DTI), and the Department of Information and Communications Technology (DICT) were tasked to provide programs, benefits, and incentives for startups.”

Signed on Nov. 22, the implementing rules and regulations of the Innovative Startup Act promise to incentivize and empower the proliferation of innovative tech firms across the country, with a goal of generating 1,000 startups by 2022.

As with most developing nations, the Philippines suffers from a wealth of interlocking problems. But these present opportunities for innovative companies to enter the fray.

In Rwanda, a lack of infrastructure (e.g. power lines, airspace control, commercial flights) has made the nation a hotspot for the global drone industry. A Red Cross study published by Cambridge University Press in 2017 described African airspace as “less cluttered with flights that have slowed the adoption of commercial drones in North America and Europe.” There, drones are deployed not only as a means for monitoring and data collection, but also as the primary logistics channels for humanitarian efforts, bridging the last mile to bring blood and other medical supplies to remote communities.

By leveraging this relationship between humanitarian crises and solution-driven innovation, Rwanda has managed to establish itself as Africa’s drone capital, incentivizing the adoption of these technologies through legislation and tech-friendly regulations.

Keller Rinaudo, CEO and founder of Zipline, one of the firms spearheading drone-based logistics to solve Rwanda’s health gaps, told BusinessWorld that “it is precisely the countries that embrace innovation that will end up leapfrogging even developed nations.” Looking to find new applications for its innovations, Zipline has recently expanded into the Philippines, recognizing its potential as a base of operations for Southeast Asia.

CO-CREATING A ‘BETTER NORMAL’
But adopting new technologies simply for the sake of innovation poses its own set of risks as well. The “fail fast, fail early, and fail often” mentality that drives much of the global tech community stands in direct contrast to the slow, deliberate pace of governance. Where failure might present opportunities to learn for a lean startup, it takes on a different weight when it comes to government projects.

In a lengthy post shared on his personal Facebook page, former DICT undersecretary for operations Eliseo M. Rio, Jr. warned of the wasted resources and potential harm the IATF’s adoption of StaySafe.ph might cause. Echoing IT experts wary of the data privacy concerns surrounding the contact tracing platform, he said that in their haste to put out and endorse a tech solution to the pandemic, the task force failed to allot enough time to complete the comprehensive tests needed to ensure its security and compliance with data-privacy regulations.

Mr. Rio said it was this stance on the StaySafe.ph project that ultimately lost him his post at DICT, though these allegations have been denied.

For all the traction and support structures already in place, the innovation community is still young by global standards. Just as COVID-19 has revealed the glaring gaps in our nation’s infrastructure, so has it revealed the gaps in its ability to support the firms innovating at the grassroots.

According to James Lette, executive director of the Manila Angel Investors Network (MAIN), these gaps are most evident in the funding opportunities currently available to our nation’s startups. On the long list of priorities the government needs to address in its COVID-19 response, Mr. Lette says that startups rightfully trail behind the health and livelihoods of the Filipino people. But that doesn’t mean that startups are going to keel over and die.

“I’ve been told of one startup that had an annualized revenue of over $1 million per year, but following lockdown, it saw revenue collapse to almost zero overnight,” Mr. Lette said. “This global health crisis that this pandemic has wrought is now not simply a health crisis, it’s become this economic calamity.”

Mr. Lette said these kinds of dramatic crashes not only lead to staff layoffs, but also flow-on effects throughout the ecosystem, such as other companies reliant on them no longer being able to use their services. While the IATF has outlined at least 19 public-sector programs tailored towards assisting MSMEs through COVID-19, Mr. Lette believes that they just don’t meet the needs of startups.

“Startups take large risks with new and experimental business models,” he said, pointing out that there simply is no way for programs designed for traditional MSMEs to properly service them. “These 19 programs provide fantastic and much-needed assistance to the backbone of the Philippine economy, but through their targeting, they exclude the majority of startups.”

While the government has recognized this and begun taking strides towards plugging these gaps through legislation like the Innovative Startup Act, the clock is ticking for grassroots innovators. Immediate action is needed, and the slow, deliberate pace of the public sector may not get the job done in time.

As the executive director of MAIN, Mr. Lette has proposed establishing a government-partnered facility to issue bridge financing for tech startups. In these high-risk times, he argues that the government can do a lot to help mitigate those risks and allow private investors to step in where they can’t towards supporting the nation’s fledgling startups.

“People know that startups have a high chance of failure under normal conditions, so it’s a fair question to ask why we should save them, and why we shouldn’t just let them fail,” he said. “But startups are more than just businesses. They are a driver of economic innovation. If nothing is done and the startups are left to fend themselves, our greatest concern is that the startup economy of the Philippines will be severely weakened. The number of years and the level of investment that has gone into building the community to the point where it is now is going to be lost.”

Times of crisis are a powerful motivator for innovation, and these last few months have seen the local community rising to meet the pandemic head-on.

“You can look back at the last global financial crisis and see that there’s opportunity in this moment,” Mr. Lette said. “It was during the last recession that some of the world’s unicorns (companies valued at over $1 billion) were founded. What survives through this process proves the grit of its founders.”

While the government has shown a clear interest in embracing these initiatives, only time will tell if these firms will live long enough to see the fruit of their efforts. Today, the innovation community stands at a crossroads. Will COVID-19 be the final curtain call on a generation of startup enterprises, or will it be the dawn of a new era for innovative entrepreneurship?

Your flight will not be boarding soon

By Arjay L. Balinbin, Reporter

On June 6, a healthy baby boy named Pali was born on a Philippine Airlines (PAL) flight between Dubai and Manila.

“The name combines PAL and Ali, which means ‘most esteemed’ in Arabic,” PAL Spokesperson Cielo C. Villaluna said on her Facebook page.

It’s a rare bit of good news for airlines everywhere, which have been devastated by the pandemic as borders close and fearful travelers cancel their plans. The lockdown in the Philippines also focused on Luzon, which had most of the country’s international gateways and its largest pool of travelers — devastating domestic tourism as well.

The list of international industry titans that required bailouts is sobering, led by Singapore Airlines Ltd.’s $13 billion. Deutsche Lufthansa AG’s package from the German government is about $10.1 billion. Hong Kong’s Cathay Pacific Airways Ltd. secured a $5 billion bailout.

It’s not yet clear how much the airline industry in the Philippines will receive, but the size of the ask is staggering — P8.6 billion a month, according to an industry proposal before Congress.

Air Carriers Association of the Philippines Executive Director Roberto C. O. Lim told the Senate in May that the industry could lose up to $4.9 billion in 2020, with 500,000 workers at risk of displacement, he added, citing estimates from the International Air Transport Association (IATA).

ACAP’s members are PAL, Cebu Air, Inc. (Cebu Pacific), Philippines AirAsia, Inc., Air Philippines Corp. (PAL Express), and Cebgo, Inc.

“This is unprecedented for the commercial aviation industry. Its impact will last until an effective vaccine is discovered,” Avelino D.L. Zapanta, a Philippine aviation industry expert, said.

He noted the industry had survived crises before but the current one is a perfect storm, and estimated that it may take about five years for passenger demand to return to 50% of pre-pandemic levels, assuming a vaccine is available within the next two years.

ASSISTANCE
ACAP’s Mr. Lim said the industry’s bailout proposal breaks down into P1.3 billion for wage subsidies, P500 million for fees to be foregone by the government, and P6.8 billion for working capital.

He noted that airlines might be able to sustain 20-30% of their pre-outbreak network due to “lack of consumer confidence” and restrictions on domestic travel set by local government units.

Mr. Zapanta added that as it is with schools, the key to restoring confidence in air travel is a vaccine.

“Remember, that is also the apprehension of parents in allowing their children back to school. Some are saying no vaccine, no school,” he said.

Airlines started operating commercial flights in early June after quarantine restrictions were eased.

On June 4, the House of Representatives approved on third and final reading a P1.3-trillion stimulus package called ARISE (Accelerated Recovery and Investments Stimulus for the Economy) bill, the new name for what had been called the proposed Philippine Economic Stimulus Act (PESA).

Under the measure, this year the transportation industry will receive P70 billion this year, while the tourism sector will receive P58 billion.

The Transportation department said the transportation industry’s share of the package “will cover the needed assistance in the recovery of the aviation sector” including wages, fees due to governments, and working capital.

Is the rescue package enough? Mr. Zapanta said: “Any industry is dependent on demand. If the demand is not there, the rescue package will be for naught.”

He noted that the government’s intention over the short term is “to keep the industry alive by coming up with measures to protect the airlines from bankruptcy.”

Airlines also sought government credit guarantees, access to emergency lines of credit for six months of operations, and long-term facilities at below-market rates or guarantees to allow them to restructure their debt and obtain better terms from aircraft leasing companies and creditors.

They likewise sought a full waiver on all navigational and airport charges, which include airport office rentals and land leases, until the end of 2020.

Mr. Zapanta said substantial financial assistance “will be needed and more meaningful” in the medium term. “That’s five to seven years from now, when demand will return and heavy re-investment in fleet expansion is needed,” he added.

STRONGEST
Mr. Zapanta noted that both PAL and Cebu Pacific are exposed because of recent fleet expansion, suggesting they were carrying “huge liabilities” when the pandemic hit.

“Both have equity holders with deep pockets based on popular perceptions. Cebu Pacific is reported to have unloaded some aircraft already,” Mr. Zapanta said.

In a disclosure to the stock exchange on May 18, Cebu Pacific said it was undertaking an overall review of its long-term fleet plan, “notwithstanding that it already has a very conservative fleet growth plan compared to other low-cost carriers in the industry, with a five-year estimated growth of only 8-9%.”

“Cebu Pacific has begun discussions with suppliers on this overall fleet plan and schedule, to establish flexibility to adapt to current events,” the budget carrier said.

As for Philippines AirAsia, Mr. Zapanta said the low-cost airline’s future will depend on the mood of the minority shareholders, the founders of AirAsia Bhd. of Malaysia, which first developed the AirAsia brand. The Philippine arm is majority-owned by the family of Representative Michael L. Romero.

He believes PAL will have the “strongest staying power based on experience and ownership commitment.”

Asked whether low-cost product offerings can be sustained, Mr. Zapanta said: “The low-cost business model will be one of the biggest victims of the pandemic. The ability to offer low fares was based on reduced operating costs, sustained by huge demand generated by low fares. Without the demand, the low-cost carrier (LCC) equation is drastically skewed. The LCC cannot sustain low fares without low operating costs. Absence of demand makes low fares unsustainable.”

He added: “The yield per passenger from very few passengers must be able to sustain the operating cost. That means increased fares. The full-service airlines will be in better position after the pandemic.”

Mr. Zapanta said operations over the short term will be some form of full service, focused on safety.

“Once conditions normalize, the LCC might stage a comeback,” he said.

RIGHT-SIZING
PAL cut about 300 jobs in February to help it recover from its 2019 losses, which worsened in the first two months of 2020 due to the coronavirus outbreak.

PAL Holdings, Inc., the listed operator of PAL, reported a net loss of P10.31 billion last year, more than double the year-earlier loss.

PAL President and Chief Operating Officer Gilbert F. Santa Maria said in a television interview in May that the company was not in immediate danger of bankruptcy as its shareholders had injected around P15.2 billion into the flag carrier to keep it afloat.

Mr. Santa Maria said a “good chunk” of the losses last year were caused by the new lease accounting standard, PFRS 16.

Since 2017, PAL has lost a total of P17.6 billion.

In the first quarter , PAL’s net loss was P9.38 billion, more than 10 times the year-earlier level, as travel restrictions caused by the pandemic grounded its aircraft.

In March, budget carrier Cebu Pacific, operated by Cebu Air, Inc., announced that it would let go of its more than 150 cabin crew, as fewer flight staff were needed.

Cebu Pacific senior management officials also took a pay cut that month.

The budget carrier reported a net profit of P9.12 billion in 2019, sharply higher from the 2018 level, mainly driven by the passenger business , which accounted for revenue of P61.68 billion, up 13.7%.

The company registered a net loss of P1.18 billion in the first quarter.

Unlisted low-cost airline Philippines AirAsia, Inc. cut 12% of staff in June, while senior management also took pay cuts.

AirAsia said the moves will help the company ride out a prolonged period of “extremely low travel demand” while minimizing the impact on its employees in junior posts.

ACAP’s Mr. Lim said in April that airlines were losing P7 billion per lockdown month and have had to issue ticket refunds of P4 billion.

“If you aggregate the amounts for the members of ACAP, if you look at the average, the fixed cost that they incur… this is the cost that they have to pay even if they are not flying, around P7 billion a month,” he said.

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