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Redefining Philippine Taxation: CREATE

Second of four parts

Said to be the first-ever revenue-eroding tax reform package and the largest economic stimulus program in the country’s history, Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act was signed by the President on March 26. It amends our tax and incentives laws with the goal of helping businesses move into their post-pandemic recovery while encouraging foreign investment.

In the first part of this series, we discussed the passing and goals of the CREATE Act and how it reduces Corporate Income Tax. In this second part, we continue by discussing additional changes: the exemption of foreign-sourced dividends, the repeal of improperly accumulated earnings tax (IAET), tax-free exchange, additional provisions to consider and provisions that were vetoed.

EXEMPTION OF FOREIGN-SOURCED DIVIDENDS
To better compete within ASEAN, the CREATE Act adds a new provision on foreign-sourced dividends for domestic corporations with outbound investment. Generally, dividends received by domestic corporations from their subsidiaries abroad are subject to tax. This new provision states that these dividends are now exempt from income tax, provided that the domestic corporation directly holds at least 20% of the outstanding capital stock of the foreign subsidiary for at least two years at the time of dividend distribution. The funds must also be reinvested in the working capital, capital expenditure, dividend payments, investment in domestic subsidiaries, and infrastructure projects of the domestic corporation within the next taxable year from the time when the dividends were received. All these conditions must be met, otherwise the foreign-sourced dividends are subject to Philippine tax.

This falls within the objective of encouraging businesses — particularly domestic corporations — to reinvest in the Philippines all profits earned here and overseas to help our economy recover from the downturn caused by the pandemic.

REPEAL OF IMPROPERLY ACCUMULATED EARNINGS TAX
There will be no more IAET from 2021 onwards, which is great news for corporations that accumulate earnings beyond the reasonable needs of their business or paid-up capital. The imposition of IAET, ironically, compels the distribution of profits to investors or shareholders, or to repatriate the foreign investor’s money out of the Philippines instead of reinvesting or spending it locally. To address this, the CREATE Act now encourages investors to keep their money in the Philippines and potentially reinvest it in business expansion and generate employment.

Since the repeal does not provide any retroactivity, it will follow the general effectivity date of the CREATE Act. As such, any excess retained earnings in 2020 and prior years will still have to be dealt with by the taxpayers and be appropriated or declared as dividends. Otherwise, it will be penalized through the imposition of 10% IAET on excess retained earnings.

TAX-FREE EXCHANGE
The CREATE Act now expressly provides that a prior Bureau of Internal Revenue (BIR) confirmatory ruling will not be required to avail of the tax exemption in the case of business reorganizations, including mergers or consolidations, further control, recapitalization, and reincorporation. It likewise reiterates the TRAIN Law provisions that the sale or exchanges of property used for business for shares of stock are exempt from VAT and any gain or loss may not be recognized for tax purposes. This, however, only defers the payment of taxes since any subsequent transfer/s will be subject to applicable taxes on a substituted-cost basis. This new provision will ultimately reduce the problematic and long-running backlog of the BIR.

One notable wording added to the CREATE Act is on “further control” under Section 40 (c)(2). It has put to rest the further control issue, a gray area in the past, by expressly stating that an exchange is tax-free when the “transferor or transferors, collectively, gains or maintains at least 51% of the total voting power of all classes of stocks entitled to vote of the issuing corporation.”

ADDITIONAL PROVISIONS
The CREATE Act includes more provisions surrounding exemption from VAT. Upon effectivity of the Act, the sale, importation, printing or publication of educational reading materials, including those in digital or electronic format not principally used for advertisements, are exempt from VAT. Additionally exempted beginning Jan. 1, 2021 are the sale of medicines for cancer, mental illness, tuberculosis, and kidney diseases. Moreover, the sale or importation of COVID-19 drugs, vaccines and medical devices, COVID-19 treatment drugs for use in clinical trials, and the capital equipment, spare parts and raw materials for the production of personal protective equipment components are exempt from Jan. 1, 2021 to Dec. 31, 2023.

VETOED PROVISIONS
The President vetoed the increase of the VAT-exempt threshold for the sale of real property by real estate developers, the 90-day period for the processing of general tax refunds, the definition of investment capital and the special corporate income tax incentive for domestic enterprises. Also vetoed were new incentives for same activity of existing registered enterprises, limitations on the power of the Fiscal Incentives Review Board, specific industries under the activity tiers, the power to exempt any investment promotion agency from the reform, and the automatic approval of applications for incentives.

With the veto of the VAT-exempt provision on sale of real property, the sale of house and lot and other residential dwellings with a selling price of more than P2 million, along with residential lots regardless of the selling price, shall continue to be subject to 12% VAT beginning Jan. 1, 2021 except those qualified as socialized housing (based on price ceilings set by the Housing and Urban Development Coordinating Council) which remain VAT-exempt, pursuant to the TRAIN Law.

Originally, Congress proposed to increase VAT-exempt thresholds to P2.5 million for the sale of house and lot and other residential dwellings, and to P4.2 million for the sale of residential lots which could have benefitted those who can actually afford proper housing. However, the President vetoed it to avoid potential revenue losses of about P155.3 billion.

REDEFINING PHILIPPINE TAXATION FOR RECOVERY AND INVESTMENT
The passage of CREATE is certainly welcome to aid businesses during these challenging times, while also serving as a sign to investors that the Philippines is a worthwhile investment destination. Government efforts to redefine Philippine taxation by developing more globally competitive tax incentives and improving the current corporate tax system through wider tax bases, lowered tax rates and reduced tax leakage will hopefully progress the economy further along the path of post-pandemic recovery.

In the third and fourth parts of this series, we continue our discussion on the CREATE Act by covering the rationalization of incentives.

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 authors and do not necessarily represent the views of SGV & Co. 

 

Karen Mae L. Calam And Aiza P. Giltendez are a Tax Senior Manager and Manager, respectively, of SGV & Co.

Preparation for FIBA World Cup hosting progressing, says SBP

FIBA
THE Samahang Basketbol ng Pilipinas is steadily communicating with different partners, including officials from co-hosts Japan and Indonesia, in laying the groundwork for the staging of the 2023 FIBA World Cup, said SBP President Al S. Panlilio. — FIBA

By Michael Angelo S. Murillo, Senior Reporter

NOTWITHSTANDING the challenges presented by the pandemic, the Samahang Basketbol ng Pilipinas (SBP) assured preparation for the country’s hosting of the 2023 International Basketball Federation (FIBA) Basketball World Cup is progressing.

Speaking on the Power & Play radio program on Saturday, SBP President Al S. Panlilio shared that the local federation is steadily communicating with different partners, including officials from co-hosts Japan and Indonesia, in laying the groundwork for the staging of the quadrennial basketball spectacle.

“We have been working for this since before the World Cup in China in 2019. During this pandemic, we’ve had a lot of virtual meetings. We’ve been having board meetings at the level of MVP (SBP Chairman Emeritus Manny V. Pangilinan) and the heads of the other host countries the past year. We’ve been discussing the budget and other matters. Our objective is to host the best World Cup,” said Mr. Panlilio, who is also first vice-president of the Philippine Olympic Committee.

The SBP official went on to say that for the 2023 FIBA World Cup, their thrust is to provide the best fan experience possible.

“China hosted successfully built around technology and the venues and all of that. We want to push technology, of course, with our own initiatives and in our own way, but we want to have the best fan experience for 2023,” said Mr. Panlilio.

“Hopefully, by that time vaccines are in excess and travel restrictions are already lifted so we can have a ‘normal’ World Cup with the fans in attendance,” he added.

The 2023 FIBA Basketball World Cup is scheduled to take place from Aug. 25 to Sept. 10 with the Group Phase taking place in all three host countries, and the Final Phase of the tournament happening in the Philippines.

Thirty-two national teams are set to compete in the high-profile tournament. 

In winning the hosting job, Philippines-Japan-Indonesia won over the joint bid of Argentina and Uruguay in 2017.

AGHAST AT VISMIN ISSUE
Meanwhile, Mr. Panlilio expressed his displeasure over the recent “game-fixing” controversy in a newly launched regional basketball league.

“I was aghast with that incident. It’s completely disrespecting the game that a lot of us love. Even FIBA will frown on this,” said the SBP official of the game between ARQ Builders Lapu-Lapu City Heroes and Siquijor Mystics last week in the Pilipinas VisMin Super Cup.

Said game was marred by “questionable” free throw shooting and botched wide-open fastbreak layups, raising red flags for possible illegal activities by participants.

League officials and the Games and Amusements Board (GAB) immediately took action and stopped the contest midway and conducted an investigation.

After assessment, the league moved to expel and ban the Mystics for wrongdoing and fined and suspended some members of the Heroes for conduct detrimental to the league.

The GAB is also in the process of studying the matter further for possible sanctions on those involved.

For the SBP, Mr. Panlilio said they will conduct their own probe and issue sanctions if needed.

“We’re just checking our bylaws and seeing what sanctions we can give them. I have asked SBP Executive Director Sonny Barrios and Operations Director Butch Antonio to look into this, investigate what happened here because this is not acceptable, in any sport, honestly,” he said.

Adding, “There are only a few privileged people to play basketball professionally and they have to show responsibility and show the youth how to play the right way. It is also terrible for the sponsors as this can destroy their brand. There is nothing good about the situation.”

Celtics outduel Warriors; no White House visit for Lakers

Celtics-Jayson Tatum
BOSTON CELTICS FB PAGE
Celtics-Jayson Tatum
ALL-STAR Jayson Tatum led the Boston Celtics past the Golden State Warriors (119-114) on Saturday. — BOSTON CELTICS FB PAGE

JAYSON Tatum lost his personal duel with Stephen Curry, but the Boston Celtics won their battle with the Golden State Warriors on Saturday night, outfinishing the visitors for a 119-114 win in a nationally televised duel of streaking teams.

Tatum scored a driving hoop to break a tie with 48.8 seconds left, and Kemba Walker delivered the dagger with a three-pointer 24 seconds later, allowing the Celtics to record their sixth straight win.

Tatum finished with a team-high 44 points, three fewer than Curry, who continued his week-long assault on the three-point line with 11 more.

Curry, who turned his left ankle in the fourth quarter but never left the game, topped 32 points for a league-best 10th consecutive game and surpassed 40 for the third time in four games in the last six days.

Curry, the league leader in three-pointers, went 11-for-19 from beyond the arc, giving him 10 or more three times in his six-day flurry.

Tatum shot 16-for-25 overall and 5-for-9 on threes en route to his second-highest point total of the season for the Celtics, who were coming off a 3-0 trip against Western heavyweights Denver, Portland, and the Los Angeles (LA) Lakers.

Tatum also found time to complete a double-double with a game-high 10 rebounds.

Walker finished with 26 points and Marcus Smart with 16 for the Celtics. They combined for seven more three-pointers, helping the Celtics nearly keep pace with the Warriors from beyond the arc, making 15 in 46 tries as compared to Golden State’s 17 in 40.

Jabari Parker had 11 points off the bench in his Celtics debut and Peyton Pritchard matched that total for the Celtics, who swept the two-game season series from the Warriors despite sitting out Jaylen Brown.

Andrew Wiggins had 22 points, Kent Bazemore gained 16, and Jordan Poole got 12 for the Warriors, who saw a four-game winning streak come to an end.

Draymond Green, who missed two key interior shots late in the tight game, accumulated a game-high 10 assists to go with five points and five rebounds.

The Warriors not only outscored the Celtics (51-45) on three-pointers, but also outshot them overall, 51.3% to 46.8%.

NO WHITE HOUSE VISIT
Meanwhile, the Los Angeles Lakers continue to be stifled by effects from the coronavirus pandemic.

The Lakers were unable to hold a parade to celebrate its 2020 NBA title in Los Angeles, and now they won’t be able to visit the White House, as they had hoped, during a road trip later this month.

The visit to President Joe Biden’s White House is not on the schedule surrounding LA’s April 28 game against the Washington Wizards, according to the Los Angeles Times, because of scheduling conflicts and coronavirus concerns.

Yahoo! Sports wrote early this year that the Lakers sought to make their visit month and that the team was eager to do so.

LeBron James expressed his excitement following the team’s victory in the NBA Finals.

ESPN reported that a future visit was still possible.

The Lakers expect to have James and Anthony Davis back for the playoffs, which begin in mid-May. — Reuters

Filipino golfer Saso ends up at joint sixth in Lotte Championship

golf Yuka Saso
SCREEN GRAB FROM YUKA SASO’ OPENING ROUND INTERVIEW AT THE LOTTE CHAMPIONSHIP
golf Yuka Saso
TOP Filipino golfer Yuka Saso wound up at joint sixth place at the conclusion of the Lotte Championship at the Kapolei Golf Club in Oahu, Hawaii, on Sunday. — SCREEN GRAB FROM YUKA SASO’ OPENING ROUND INTERVIEW AT THE LOTTE CHAMPIONSHIP

TOP Filipino golfer Yuka Saso wound up at joint sixth place at the conclusion of the Lotte Championship at the Kapolei Golf Club in Oahu, Hawaii, on Sunday (Manila time).

Ms. Saso, an Asian Games gold medallist for the Philippines in 2018, fired up a 2-under 70 to finish her campaign in the US LPGA tournament.

New Zealand’s Lydia Ko ruled the tournament, which carried a purse of $2 million.

Nineteen-year-old Saso led the event in the early goings, but struggled in the third round and saw her more seasoned opponents take advantage and make their move.

She could not reclaim the lead from there.

Despite falling short, the sixth place finish was the best for Ms. Saso in the US LPGA to date. For her efforts, Ms. Saso took home $54,848 (roughly P2.65 million).

Finishing joint second were South Koreans Inbee Park and Sei Young Kim, Irish Leona Maguire and American Nelly Korda.

Joining Ms. Saso at sixth, meanwhile, were Jenny Shin (South Korea), Wei-Ling Hsu (Taiwan), and Sarah Schmelzel (United States).  Michael Angelo S. Murillo

PBA Board in special meeting to discuss new season

PBA-Board of Governors
PBA IMAGES
PBA-Board of Governors
Board of Governors of the Philippine Basketball Association is set to gather for a special meeting on Monday to reassess the direction the league will take for its Season 46 amid the ongoing conditions with the pandemic. — PBA IMAGES

THE Board of Governors of the Philippine Basketball Association (PBA) is set to gather for a special meeting on Monday to reassess the direction the league will take for its Season 46 amid the ongoing conditions with the pandemic.

Among the matters the league officials are set to discuss concern those of vaccine rollout for the PBA, the association’s financial standing and the activities to be staged for the season.

The league had already discussed and laid down its thrust for Season 46 in March, but was forced to reevaluate it after the situation with the pandemic turned for the worse of late with coronavirus cases rising.

Initially, the PBA was planning to be “busier” this year after a muted 2020 as its season was greatly affected by the pandemic, limiting it to just a single conference done in a “bubble” at Clark City in Angeles, Pampanga.

The league set to have two conferences for this season running for a combined 10 months in a closed-circuit setup where player movements are confined to home-gym-home instead of staging another expensive bubble.

It is also angling to roll out its inaugural 3×3 tournament, which is planned to run alongside the five-a-side offering.

These are expected to be discussed and recalibrated if needed in Monday’s meeting.

Also to be tackled, the league said, is the PBA’s involvement in the national team both for 5-on-5 and 3×3 basketball.

The meeting will be held with some of the governors physically in attendance, while some will join by way of Zoom Meetings. — Michael Angelo S. Murillo

GAB suspends Mindanao leg of Pilipinas VisMin Super Cup

As the Games and Amusements Board continues with its investigation of wrongdoing and reevaluation of the Pilipinas VisMin Super Cup, the regulatory body moved to ask for the suspension of the start of the Mindanao leg of the new regional league. (Pilipinas VisMin Super Cup)

By Michael Angelo S. Murillo, Senior Reporter

The fallout from the controversial match in the Pilipinas VisMin Super Cup last week extended at the weekend with the Games and Amusements Board (GAB) suspending the yet-to-start Mindanao leg of the newly launched regional basketball league.

In an announcement released on Sunday, GAB said its board had ruled for the deferment of the start of the Mindanao side of the VisMin Cup as the regulatory body reevaluates the league.

The Mindanao leg of the regional league was targeted to start on May 20 in Dipolog City, with nine teams expected to compete.

The GAB action came on the heels of the questionable game between ARQ Builders Lapu-Lapu City Heroes and Siquijor Mystics last Wednesday in the Visayas leg of the VisMin Super Cup “bubble” in Alcantara, Cebu.

Said game was marred by “poor” free throw shooting and botched wide-open fastbreak layups, raising red flags for possible illegal activities, game-fixing in particular, by participants.

League officials and GAB immediately took action and stopped the contest midway and conducted an investigation.

After assessment, the league moved to expel and ban the Mystics for wrongdoing and fined and suspended some members of the Heroes for conduct detrimental to the league.

The GAB is also currently in the process of studying the matter further for possible added sanctions on those involved, forcing it to ask for the suspension of the Mindanao leg.

“We are in the process of investigation and seriously looking into the allegations of wrongdoing. The board would like to further observe the ongoing Visayas leg before giving a go signal for the other,” GAB said in a statement.

“In the meantime, GAB is reviewing the official reports of its field officers in the bubble and that of the league to determine the administrative liability of the licensees as well as the possibility of proceeding with criminal charges if warranted by the circumstances. Our mandate is to ensure the integrity of professional sports/welfare of players and were doing just that,” it added.

Apart from GAB, the Samahang Basketbol ng Pilipinas, the country’s national federation for the sport, too, is set to conduct its own probe on the issue.

The Visayas leg of the Pilipinas VisMin Super Cup kicked off on April 9.

The league was set up with the end view of spotlighting basketball talents in the south.

Rolando Dy, Jenel Lausa hope to be part of Brave CF’s debut in Belarus

BRAVE CF
FILIPINO Jenel Lausa has expressed his desire and readiness to be part of Brave CF’s first event in Belarus in June if asked. — BRAVE CF

BAHRAIN-BASED Brave Combat Federation (CF) will stage its debut event in Belarus in June, an event that Filipino fighters under the promotion hope to be part of.

To be held at the Falcon Club Arena in Minsk on June 4, “Brave CF 51” has the organization descending on Belarusian soil for the first time, part of its continued push to take its brand of mixed martial arts (MMA) action to more places and fans in the world.

Brave has yet to announce the fight lineup for the breakthrough event but Filipinos Rolando “Dy Incredible” Dy and Jenel “The Demolition Man” Lausa have expressed their desire and readiness to be part of the card if asked.

Coming off a loss in his previous lightweight fight in March to Abdisalam Kubanychbek of Kyrgyzstan, 29-year-old Dy (14-10) is seeking to bounce back and is looking at Brave CF 51 to be the jump-off point.

“I have no other options but to get back up. I know the loss to Kubanychbek will make me a better fighter. I learned a lot from that loss more than I learned from my wins. I will be ready for the next one. I hope I will be back in action very soon,” said Mr. Dy.

The son of Filipino boxing legend Rolando Navarrete is also looking to showcase his MMA skills to European fans if given the opportunity.

“I haven’t been to Europe yet, and it’s enticing to fight over there. Belarus is a great starting point of my road to redemption. I won’t think twice about taking that offer to fight in Europe.”

Redemption is also in the minds of flyweight Lausa (7-6) after dropping his maiden fight in Brave also in March against Ryskulbek Ibraimov of Kyrgyzstan.

The boxing champion who has transitioned to MMA said he is aiming for a quick turnaround and sees the Belarus event as a great opportunity to get back on the winning track.

“I think of it as a lesson. It will serve as an inspiration to push myself to the limit. I will triple my time in training. I’m not discouraged at all. I want to fight as soon as possible. Winning and fighting again will motivate me,” said Iloilo native Lausa of his Brave debut loss and his mindset moving forward.

The chance to fight in Belarus also has added significance, Mr. Lausa shared, as he is a fan of Belarusian MMA legend Andrei “The Pitbull” Arlovski, a former Ultimate Fighting Championship heavyweight champion.

“He’s one of my idols. I admire how he fights in the cage because he’s exciting and gives it all in every fight. It will be a dream come true if I get to fight where he started his career,” Mr. Lausa said.

Founded in 2016, Brave has made significant headway in bringing top-class MMA action in different parts of the globe, including the Philippines.

Since being established, the company has visited more than a dozen countries.

Brave said that by taking MMA to a wider range, it hopes to give a truly global platform to athletes for their in-cage abilities and fighting qualities.

Most recently, the promotion staged an historic four-event stretch, dubbed “21 Days of MMA Mayhem,” which ran from March 11 to April 1. — Michael Angelo S. Murillo

Olympic President Bach to visit Japan in May, meet PM Suga

TOKYO — International Olympic Committee President Thomas Bach will visit Japan in May, the Kyodo News agency said at the weekend, as the nation struggles to contain a surge in coronavirus cases before the start of the Games.

Bach will attend a torch relay ceremony in the western city of Hiroshima on May 17 and meet with Prime Minister (PM) Yoshihide Suga the next day, Kyodo said, citing sources close to the matter. Bach is expected to back Japan’s commitment to safely host the Summer Games, Kyodo reported.

“We are aware of President Bach’s intention to come to Japan and would welcome such a visit,” the Tokyo Olympic organizing committee said in a statement. “However, nothing concrete has been decided.”

With fewer than 100 days until the Olympics are due to start in Tokyo, Japan expanded quasi-emergency measures to 10 regions on Friday as a fourth wave of coronavirus cases spread.

Suga, who is on a state visit to the United States, said at a news conference on Friday that he told President Joe Biden he was committed to moving forward with the Games and that Biden offered his support. — Reuters

Ayala Foundation virtual endurance event for learning initiative

CURRENTLY ongoing is the first Magiting “Virtual Run and Bike,” an initiative of Ayala Foundation which seeks to raise funds to help provide learning and hygiene kits for public elementary school students nationwide.

Done under the group’s Brigada ng Ayala program, the endurance event officially kicked off on April 1 and will continue until May 15, and is part of the response to the Department of Education’s Brigada Eskwela and Oplan Balik Eskwela initiatives.

To date, Brigada ng Ayala, the group shared, has provided over 21,000 learning and hygiene kits for students in Luzon, Visayas and Mindanao.

Through the Magiting Virtual Run and Bike event, Ayala Foundation, the conglomerate’s social development arm, seeks to encourage fitness enthusiasts of various forms and shapes as well as development advocates to incorporate a good cause to their fitness routine.

In the virtual event, which is also in celebration of Ayala Foundation’s 60th anniversary, participants can run, trek and bike at their own pace, at their own time, and in locations of their liking given the prevailing conditions with the pandemic.

Categories are 20 km, 60 km, 100 km and 200 km for running and trekking, and 60 km, 100 km, 200 km and 500 km for biking.

Participants can set their own timeline in completing their chosen categories within the specified schedule and are not necessarily expected to complete them in one go.

To track and record their progress, participants can use any free running app from their Android or iOS smartphone (e.g.. Strava, Runkeeper, and Runtastic) and take a screenshot of their run and upload it to their profile and account.

Registration fee is P1,500. Those who complete the virtual run and bike event will receive the following: a Magiting Medal, a finisher shirt, a face mask, and an e-certificate. Delivery of items in the Philippines is covered by the registration fee.

To register and for more information, visit http://www.takbo.ph/vr/magiting-virtual-run-2021/. — Michael Angelo S. Murillo

Contrasts

Stephen Curry continued his hot streak yesterday, topping 40 points for the third time in four outings, and 30 for the 10th consecutive time. His 47 included 11 treys, most of them taken with defenders draped over him. So remarkable was his under-duress shotmaking that even the 2,298 spectators at the TD Garden could not help but be appreciative. In the end, though, Celtics fans got the best of both worlds: a gallant stand by the visitors, but the green and white still on top in the end. And, in this regard, they have their third overall pick in 2017 to thank.

Indeed, Jayson Tatum was equally proficient with the ball in his hands. He put up an extremely efficient 44 on 25 shots, along with 10 boards and three dimes, and the Celtics needed just about every single contribution he made to keep the Warriors, starring Curry, at bay. He didn’t get as much attention as the league’s second-leading scorer, but his effort was no less extraordinary. When he did face focused coverage, his height coupled with sound footwork enabled him to simply shoot over, or around, defenders.

In the final analysis, the victory was a testament to the superiority of the Celtics, the absence of All-Star Jaylen Brown notwithstanding; with Tatum and Curry effectively canceling each other out, the talent around them made the difference. Kemba Walker and Marcus Smart made timely baskets in the crunch. In contrast, Draymond Green missed a seeming gimme layup out of a time out, and Ken Bazemore flubbed two charities. Which was just too bad, because the Warriors otherwise did everything well — everything but the shots.

Perhaps, the Celtics did deserve the triumph more. In any case, there can be no disputing the benefits that came with it. The outcome stretched their winning run to six matches and provisionally gave them a Top Four standing in the East. True, there’s still a lot of hoops to be played; anything can happen in the 15 contests still on their calendar. That said, they’re trending in the right direction, generating significant momentum heading into the playoffs. They certainly need it in the top-heavy Eastern Conference; the Nets, Sixers, and Bucks are formidable foes.

Meanwhile, the Warriors are battling for a better seeding in the West. They’re currently ninth, buoyed by Curry’s otherworldly exertions. He’s ailing, though, and it’s fair to wonder how long his body can hold up to the rigors of carrying the team on his back. And one thing’s clear: They’ll go only so far as he can take them.

The BARMM timetable: Another COVID casualty?

STARLINE-FREEPIK

The Philippines today faces dire challenges from the COVID-19 and regional security — violent extremism and Chinese incursion in the West Philippine Sea, among others. We from Muslim Mindanao worry that the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) will again be the last priority. This will surely be counterproductive.

Last Thursday, the World Bank hosted a Technical Working Group (TWG) on “Knowledge Sharing and Training Capacity” focused on Public Finance Management in the BARMM. Members of the TWG include development partners and selected organizations that are operating in BARMM in the field of knowledge and training. The TWG first met in October 2020.

We were honored to be joined by no less than the Chief Minister of BARMM, Ahod “Al Haj” Murad Ebrahim, a clear signal of the Regional Government’s prioritization of Public Finance Management.

BARMM’s challenges for transition are much greater now than before, particularly as precious time has been lost due to the pandemic. At the outset, we already knew that a three-year transition period was extremely tight as the Moro Islamic Liberation Front (MILF) leadership had to learn how to manage and steer the ship without the benefit of years of training in governmental processes and bureaucracy. They were “inheriting” the poorest, most conflict-affected and least served region of the country.   

Over a decade ago, as the negotiators focused on the nitty gritty of the peace process, we at the Philippine Center for Islam and Democracy (PCID) realized that it was important to start focusing on the economics of the region — business and investment, fiscal management, and introduce the MILF leadership to the private sector leaders of the country. No one, at that time, was working on this critical area. We convinced a distinguished group — the Foundation for Economic Freedom (FEF) — to help. Former Finance Secretary Gary Teves agreed to lead the initiative. This led to a fruitful partnership among FEF, the MILF, and PCID. We had a two-year project which focused on business and investments, fiscal matters, land issues, agriculture, and labor issues among others, including capacity building for the Bangsamoro Development Agency (BDA) management staff.

Our two-year project led us to the following observations:

• Weak fiscal management of the Autonomous Region in Muslim Mindanao (ARMM), resulting in poor performance as an autonomous region, was attributed to little control over fiscal resources from the National Government and expenditures as well as weak governance and accountability in ARMM.

• Poor implementation of available taxing powers complicated by politics and clan relationships interfering with local tax collection since taxation would erode the standing of local politicians.

• Revenues generated would be insignificant in a conflict-affected war-torn economy with a high poverty incidence dependent on a largely underground and informal economy.

• Budget processes in the ARMM were fragmented, complicated and thus unsound. Non-integration of the ARMM budget processes with the national budget processes leading to difficulties in promoting coherent policy goals through budget allocations.

• ARMM has a history of poor governance and accountability marked by misuse of funds and the lack of effective expenditure control systems and reporting.

Achieving fiscal autonomy is critical for overall autonomy to be effective. Institutions and capacity need to be in place to ensure that fiscal resources are mobilized efficiently and with transparency and accountability; and spent wisely, reflecting the needs for sustainable and inclusive growth in a still conflict-affected and war-weary region. (FEF and PCID had actually prepared a follow through proposal for this and other economic issues in 2019 but COVID-19 intervened.)

The TWG discussions also picked up the issues raised above, particularly as we were focused on Public Finance Management in a fragile state.

However, the BARMM Regional Government seems to have fared better than expected, less than two years after taking over with the budget left by the previous administration. BARMM was able to access the block grant only in 2020, as the COVID-19 pandemic raged. According to the Chief Minister’s Report last January, the Regional Government has:

• strengthened revenue collection with the Ministry of Environment, Natural Resources, and Energy’s P306-million collection in 2019 which is P101 million more compared to the highest annual remittance of ARMM.

• 28 Seal of Good Local Governance Awardees in the region, five more than ARMM achieved, making BARMM the No. 1 region in Mindanao and 5th in the entire country.

• increased level of transparency in infrastructure work with the Expanded Bangsamoro Advanced Road Mapping and Management (E-BARMM) System — an online repository of Ministry of Public Works (MPW-BARMM) projects using geotagged photos for data validation.

• registered an amount of P4.153 billion in 2019, exceeding the Regional Board of Investments (RBOI-BARMM) target by 180%.

• 5.9% growth rate in terms of Gross Regional Domestic Product (GRDP), ranked 2nd among the regions in Mindanao and ranked 7th in the country.

All these accomplishments and more were attained even as the Chief Minister and his administration were learning the ropes of governance and bureaucracy. What makes these even more remarkable is the fact that the implementation of major programs and plans of the various ministries and offices were greatly affected by the pandemic, in the first year that BARMM accessed the block grant.

Clearly, the Chief Minister and his administration should be allowed more time and support to implement the transition. As the world, particularly South East Asia and the Philippines, still face security challenges due to violent extremism extension, the success of the peace agreement between government and the MILF is critical to ensure Muslim Mindanao’s resilience to the lure of extremism and terrorism.

President Rodrigo R. Duterte should certify as urgent the extension of the term of the Bangsamoro Transition Authority and Congress should act on it before the political winds slow down legislative action. Government needs to ensure the success of the transition not only for the sake of regional security but because it is obligated to address the needs of the most conflict-affected, least served region of the country. Government is best served to support the extension, bearing in mind that the transition mechanism is also designed to ease the MILF from revolution to bureaucratic evolution.

 

Amina Rasul is the President of the Philippine Center for Islam and Democracy and a former member of the Ramos Cabinet

Defending Sinovac and AstraZeneca

PHOTO COURTESY OF THE AUTHOR

Good old pal Melo posted on his Facebook account: “I was scheduled for vaccination today. When I found out na Sinovac, I declined.”

Our common friend Mike reacted and said: “I totally disagree with your decision my friend.” In response, Melo cited the e-mail letter he sent to his mayora wherein he cited his reasons for declining the vaccine. First, the Director of the Chinese Center of Disease Control says that the efficacy of China’s vaccines is low. Second, the publication of peer-reviewed data on Sinovac is not available. Third, the Sinovac manufacturer has a record of bribery.

Melo’s reasons are already familiar to me. In mid-January 2021, a journalist friend conducted a straw poll about Sinovac among the University of the Philippines activists during the early years of martial law (the martial law babies). The question that he asked: “Who among us will be willing to have a Sinovac vaccination? Yes or No.”

All those who joined the straw poll — more than a dozen — responded “No.”  The reasons are similar to those that Melo enumerated. To summarize, the criticisms revolve around efficacy, transparency, pricing, and corruption. We will return to these issues later.

Of course, these are but anecdotes. But surely, such fear or apprehension causes concern because it can affect efforts to convince the general public to be vaccinated. Note that the people involved in the anecdotes are highly educated and highly articulate.  (Melo also claims to be handsome, and I believe him.)

In other words, this is the class that has the ability to sway public opinion in favor of vaccination. Only when the significant majority of adult Filipinos are vaccinated can society attain herd immunity.

Sadly, the majority of our people are hesitant to be vaccinated. The Pulse Asia survey conducted from Feb. 22 to March 3 shows that only 16% of the respondents are willing to take the vaccine. In the same vein, 61% of the respondents do not want to be vaccinated. The main reason behind the hesitation is safety, probably arising from the dengvaxia vaccination strategy. (See Scott B. Halstead, “Dengvaxia: Knowns and unknowns, March 21, 2021, BusinessWorld.)

And among the small number of respondents willing to be vaccinated, only 21% of them choose the Sinovac vaccine.  But AstraZeneca fares worse, getting favor only from 6% of those willing to be vaccinated. (Pfizer is the preferred choice of 52% of those willing to be vaccinated.) AstraZeneca has also suffered from a perception that is unsafe. Rare blood clots, which can be lethal, have occurred in relation to the AstraZeneca and Johnson and Johnson vaccines.

These issues can set back our vaccination effort since the currently available vaccines for the Philippines are Sinovac and AstraZeneca. In light of these issues, it is imperative to answer the questions that cast doubt on the available vaccines in the country.

We thus tackle squarely the issues confronting Sinovac as well as AstraZeneca.

Our principal concern should be about safety and efficacy or effectiveness. The term “efficacy” is used during clinical trials (or randomized controlled trials) to measure the degree to which a vaccine can prevent COVID-19 infection. The term “effectiveness” is used in measuring the degree to which the same vaccine will prevent transmission in real world conditions.

In this regard, the history of bribery becomes extraneous so long as the evidence on the COVID-19 vaccines’ safety and efficacy (or effectiveness) is incontrovertible. The paramount consideration is whether the vaccine makers “stand with science.”

Morality, however, matters when a manufacturer is found to be guilty of fraud or corruption in the making of the COVID-19 vaccine. So far, the regulators worldwide have shown competence in approving emergency use authorization for COVID-19 vaccines based on stringent safety and efficacy standards.

Besides, raising a past issue of bribery or corruption is a slippery slope argument. If we would use a company’s history of corruption as a barrier to accepting COVID-19 vaccines, we would probably end up having insufficient vaccines. A Google search of corruption involving big pharma will yield undesirable results for corporations like Pfizer, Johnson and Johnson, and AstraZeneca.

Moderna, a startup, has likewise been embroiled in controversy. According to National Public Radio (NPR), an “examination of official company disclosures has revealed additional irregularities and potential warning signs.” (See Tom Dreisbach, “Bad Optics’ Or Something More? Moderna’s Executives’ Stock Sales Raise Concerns,” Sept. 4, 2020.)

The issue of supposed overpricing of Sinovac vaccines in the Philippines is now a dead issue. The allegation: The Philippine price for Sinovac was significantly higher than the prices found in other emerging market economies.

But it turned out that the so-called Philippine price was obtained from information on the Web. It was a hypothetical price since no agreement had taken place then. The actual price was derived from the negotiations. Ultimately, the Sinovac price that the Philippines has secured is aligned with prices of other countries.

The next issue is about information. Here, it does not help that China’s system is opaque. But the information to make sound decisions on Sinovac is actually available. The Lancet, a leading peer-reviewed journal and the world’s oldest general medical journal, published Sinovac’s randomized, double-blind, placebo-controlled Phase One and Two clinical trials on Nov. 17, 2020.

Just recently, SSRN (formerly known as Social Science Research Network) posted on April 14 an article on Sinovac’s Phase Three clinical trial among health professionals in Brazil. The efficacy results are as follows: 50.7% against symptomatic COVID-19, 83.7% against moderate cases, and 100% against severe cases.

Old pal Melo and others are concerned over the 50.7% rate against symptomatic COVID-19. They argue that this rate is low in comparison to the efficacy rates of Pfizer and Moderna.

Two important points counter the said argument. The first point is that the principal objective of getting vaccinated is to prevent severe or critical cases and deaths. On this score, the Sinovac vaccine performs well.

The second point is that comparing the efficacy rates of different vaccines is like comparing apples and oranges. Confounding variables make comparisons difficult. Take the case of Sinovac’s clinical trial in Brazil. The trial happened at a time of high virus transmission in a country most overwhelmed by the pandemic. Moreover, the participants in the trial were very vulnerable health workers.  This combination of factors tended to yield a lower primary efficacy rate.

The latest information on Sinovac comes from Chile, which, like Brazil, has been hard hit by the COVID-19 surge. But this time, the study applies to real world conditions. Chile is one of the leading countries that have high inoculation rates for COVID-19. Sinovac supplies around 60% of Chile’s total vaccines. Chile’s real world investigation covers 10.5 million people, observing both those who had been vaccinated and those who had not.

The real world study shows that the Sinovac vaccine is 67% effective in preventing symptomatic infections, 85% effective in preventing hospitalizations, and 80% effective in preventing deaths. According to Reuters, the study’s authors stressed that “a lower protection against death than in clinical trials, should be considered against the backdrop of a fierce second wave.”

Before the release of this real world study, the media highlighted a frank statement from Gao Fu, the Director of the Chinese Center for Disease Control and Prevention that “current vaccines don’t have very high protection rates.”

Some looked at his statement as a confirmation of the inferior quality of the Chinese vaccines. But Gao Fu said that his statement was completely misunderstood. In an exclusive interview with China’s The Global Times, he said that his statement was to offer a “scientific vision” towards improving the vaccine’s efficacy.

We should in fact welcome Gao Fu’s statement. Science is about humility, experimentation, and improvement. In fact, what he said is quite similar to the statement of Pfizer’s Chief Executive Officer (CEO), Albert Bourla. Mr. Bourla recently announced the likelihood that people who have taken the Pfizer vaccine will need a booster shot. He also suggested the possibility of a yearly Pfizer re-vaccination.

Another point raised by my friend Melo is that instead of taking Sinovac, he’d rather wait for the arrival of a vaccine with a higher efficacy rate. The statement from Pfizer’s CEO should give him and others pause.

Furthermore, the experts have cautioned against this approach of waiting for a vaccine with higher effectiveness. In a paper titled “The Benefits of Vaccinating With the First Available COVID-19 Coronavirus Vaccine” in the American Journal of Preventive Medicine, in January this year, authors Sarah Bartsch, Kelly O’Shea, et al., share their findings:

“Except for a limited number of situations mainly early on in a pandemic and for a vaccine that prevents infection, when an initial vaccine is available, waiting for a vaccine with a higher efficacy results in additional hospitalizations and costs over the course of the pandemic.”

Finally, we turn our attention to AstraZeneca. Worldwide, the confidence of governments and people in AstraZeneca has suffered as a result of findings that the vaccine is associated with blood clots. Some governments have restricted the use of AstraZeneca to older people. Denmark, lately, stopped the AstraZeneca rollout.

Yet, we must give weight to an Oxford University paper authored by Maxime Taquet, Masud Husain, et al., titled “Cerebral venous thrombosis: a retrospective cohort study of 513,284 confirmed COVID-19 cases and a comparison with 489,871 people receiving a COVID-19 mRNA vaccine” (undated). The relevant findings are:

• The likelihood of developing a blood clot from COVID-19 tremendously increases beyond the risks related to vaccination.

• The odds of getting a blood clot are five in a million for those vaccinated with AstraZeneca.

• The odds of having a blood clot are four in a million for those vaccinated with Pfizer and Moderna.

• But the risk of blood clotting resulting from COVID-19 is eight to 10 times more than reported for vaccines.

Thus, even as vaccination may increase the odds of getting a blood clot (four or five in a million), the odds are still extremely low. Moreover, having a vaccination has to be weighed against the bigger risks associated with COVID-19, including much bigger chances of developing clotting.

Ultimately, each one of us has to balance the benefits and the costs. Based on the information that is available, the benefits from being vaccinated soonest, regardless of vaccine brand, enormously outweigh the risks associated with vaccination. 

 

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph