AS QUARANTINE restrictions ease around the country, a group of economists identified key industries that should be prioritized in reopening and securing assistance, based on their impact on the rest of the economy. Read the full story.
By Beatrice M. Laforga, Reporter
THE ongoing tax amnesty program has yielded more than P2.5 billion in collections so far, according to the Bureau of Internal Revenue (BIR), which expects more taxpayers to avail themselves of the program after the cut-off date was extended to end-2020.
In a text message, BIR Deputy Commissioner for Operations Arnel S.D. Guballa told BusinessWorld the agency has collected as of May P2.5 billion from the tax amnesty program for delinquent accounts, which started in April 2019.
Taxpayers can avail themselves of the tax amnesty on delinquency until Dec. 31, 2020, according to Revenue Regulations (RR) No. 15-2020 dated June 19.
BIR Commissioner Caesar R. Dulay issued the order to amend the previous directive under RR-4-2019 and further extend the cut-off date for availing of the tax amnesty on delinquency to Dec. 31, from June 22.
The deadline has been extended four times from the original schedule of April 23, 2020.
“The deadline is extended to accommodate more delinquent taxpayers and at the same time, (collect) additional revenues for the government and (for the) taxpayers (that have) pending tax cases be settled,” Mr. Guballa said in a text message last week.
Maria Lourdes P. Lim, tax managing partner of Isla Lipana & Co., PwC Philippines said the extension of the cut-off period will be beneficial for both taxpayers to settle their cases as well as the government to raise revenues “with reduced enforcement cost.”
“(However), considering the pandemic and income tax filing season, this may not be a priority given limited resources,” Ms. Lim said in a text message on Sunday.
The RR 15-2020 also set a three-working-day period for offices of the BIR to issue Certificate of Delinquencies or Tax Liabilities from the day of request, one of the documents needed to avail for the program.
“Previously, it took at least one week to secure the COD. This somehow will streamline the process,” Ms. Lim added.
BIR also has an ongoing estate tax amnesty that gives individuals a two-year window starting May 2019.
Republic Act No. 11213, signed into law in February 2019, provides tax amnesty programs for individuals to settle their outstanding obligations and close their delinquency assessment cases in past years up to 2017 for delinquent accounts, as well as the unsettled estates due to nonpayment of estate taxes.
The two tax amnesty programs are among the revenue-generating measures under the government’s comprehensive tax reform program.
The Department of Finance (DoF) earlier estimated the tax amnesty for delinquent accounts could yield the government up to P21 billion in collections and another P6 billion from estate tax amnesty.
DoF data showed there were 18 tax amnesty programs implemented between 1972 and 2008, with the last one yielding P4.913 billion in collections.
MILAN/NEW YORK — From Armani to Gucci, top fashion houses are redesigning their calendars to slow down the frantic pace of catwalk shows and new collections, as the coronavirus pandemic forces a rethink of the way the industry works.
Luxury labels are scaling back the number of collections they show at fashion weeks across the year in London, Paris, Milan and New York or at other events in exotic locations.
After more than two months of lockdown, with shops shut across the globe and manufacturing sites idled, the $310 billion luxury goods sector is on course for a 2020 sales drop of up to 35%, consultancy Bain estimated.
Brands are grappling with piles of unsold stock and the prospect of widespread discounts that risk denting their aura of exclusivity as well as profits.
US designer Michael Kors was the latest to call for a post-virus slow down in the fashion calendar last Monday, as he pulled out of New York’s shows in September.
He said he would only make two collections a year — one for spring/summer and one for fall/winter, skipping so-called resort and pre-fall collections that many high-end labels have recently begun producing to refresh stores in the winter and over summer.
These collections showcase holiday wear for foreign travel that jetsetters may have to forgo this year.
These have added to the number of designers’ creations, capsules and collaborations that critics say are out of sync with consumers’ needs, particularly in a global recession. A cruise or resort collection is typically shown in May and delivered to stores in November.
Robert Burke, founder of luxury retail consultancy Robert Burke Associates, said the move towards fewer collections fits with a consumer shift away from disposable fashion.
“Buying things that you know you’ll only have for a short time period or go out of fashion immediately doesn’t seem attractive right now.”
SLOW FASHION
The debate about fashion industry excesses pre-dates the crisis, but has been given a sense of urgency by the pandemic, which is pressuring brands to cut costs and shed inventory without losing too much money.
Kors said deliveries of its products would from now on be scheduled to arrive in store incrementally over the spring/summer and fall/winter seasons, more closely reflecting “how customers actually live and shop.
“It is imperative that we give the consumer time to absorb the fall deliveries, which will just be arriving in September, and not confuse them with an overabundance of additional ideas, new seasons, products, and images.”
Armani, in an open letter to fashion trade publication WWD, said luxury labels should stop mimicking hectic fast fashion delivery schedules.
“It makes no sense for one of my jackets or suits to live in the shop for three weeks before becoming obsolete, replaced by new goods that are not too different,” he wrote.
Alessandro Michele, who turned Gucci into a cash cow for French owner Kering, has also said he would cut the label’s yearly shows to two from five.
And in its end-May earnings presentation, Ralph Lauren said it had rebalanced its assortments towards “core,” less seasonal products, which have faster lead times and less mark down risk.
CFO Jane Nielsen said the summer collection would stay in stores through August “to maximize full-price selling.”
The brand will also set aside some finished products for upcoming seasonal collections, even if that means keeping clothes in inventory longer than usual.
Brands like Gucci and LVMH’s Dior have used more frequent collections and expensive events in exotic places to lure a rich, but also voracious, clientele, particularly in China.
With luxury spend hit by the crisis, some industry insiders say it no longer makes sense to have such huge marketing expenses — a fashion show can cost well over $1 million.
The move towards showing and producing less also reflects a power shift between brands and big US department stores, which long dictated the timing of product releases to keep their stands looking fresh.
Multiple deliveries allowed the stores’ sales associates to call their clientele regularly, saying “Come in, we’ve got some new products,” Ron Frasch, former president of Saks Fifth Avenue, told Reuters.
That puts winter coats in shops in the middle of the summer and gives department stores leeway to discount as they see fit — something that Frasch said was a “bloodbath” for most brands.
With the pandemic accelerating the demise of Neiman Marcus and other top US retailers, that model is now increasingly being called into question, he said.
Yet some brands are resisting the call for a leaner fashion schedule. Chanel, which in a show of strength increased prices in May, said it would stick to six collections a year. — Reuters
THE government has no immediate plans to revise a fiscal support program for automotive companies investing in local production after industry sales slumped due to the pandemic.
Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. are participating in the Comprehensive Automotive Resurgence Strategy (CARS) program, which offers fiscal support to car companies that locally produce 200,000 units of high-volume car models for six years.
Trade Undersecretary Ceferino S. Rodolfo in a recent online press briefing said that he does not think the participating companies will be able to reach the required volume of vehicles.
“So ‘yung kanilang variable incentive, di nila makukuha siguro ‘yun (So I don’t think they will be able to get their variable incentives),” he said.
Automotive companies like Toyota stopped production in March to comply with lockdown restrictions, restarting some operations only in mid-May.
Industry sales started to recover in May after sales plummeted 99.5% to 133 units in April from 25,799 in the same month last year. The industry sold 4,788 units in May, which is still 85% lower than the 30,998 in May 2019.
Mr. Rodolfo said there were no talks about revising the CARS program targets.
“So far, walang ganung usapan, even nung nakikita namin nahirapan ‘yung iba dahil for whatever reason na sinasabi nila. (So far, there are no talks [of revising targets] even though we saw some of them are having a hard time for whatever reason they’re saying).”
Possible revisions would be time extensions on producing the volume target, but the target will remain the same.
“Sa ngayon wala pa, siguro darating din ‘yan but now wala pa (For now there won’t be revisions. Maybe it will come, but for now not yet).”
In the meantime, Mr. Rodolfo said they were looking at repositioning bicycle manufacturing exporters for the domestic market.
“‘Yung domestic market natin, kung lalakas ‘yung demand, pwede tayo kumbaga market repositioning more towards the domestic. (If demand spikes, we could reposition to the domestic market).” — Jenina P. Ibañez
By Katia Dmitrieva and Kim Bhasin, Bloomberg
FASHION executives have spent the lockdown figuring out how to sell their products online. They’re learning lessons that may shape the retail trade even as America’s shopping malls reopen.
That’s just one of the abrupt changes forced on an industry highly attuned to shifting trends. Here’s another: If customers are more likely to be buying clothes from home, they’re more likely to wear them there too. In the absence of dress-up events, there’s a surge in demand for comfort.
From food to furniture, businesses are mapping out what they expect to be the new patterns of demand — and repositioning their companies accordingly. Fashion has faced some of the worst upheaval of all.
In the pandemic’s early stages, Americans all but stopped buying clothes. Sales plunged almost 90%, four times the drop in overall commerce. The demand shock threatened to bankrupt big-name retailers, and import-reliant companies had to grapple with supply disruptions too.
Here’s how four corners of the stricken industry are making it work.
WHOLESALER: ‘WEEK BY WEEK’
Richer Poorer, which sells “elevated basics” like tailored T-shirts and sweatpants, had just rebranded itself in January when the shocks started to arrive. The coronavirus knocked out two factories in China. Retail customers began to cancel orders. And then its headquarter city of San Juan Capistrano in California imposed a work-from-home regime.
“That was our first round of ‘Oh, this is actually going to have big impacts for us,’” says co-founder Iva Pawling. “Not just for this season immediately, but through spring 2021.”
In a normal March and April, most of what Pawling does — from designs and fittings to factory orders — would be geared to the season starting 12 months later. This year, “it’s just been trying to survive week by week.”
The company had planned a gradual pivot toward selling direct to consumers online. Instead it happened in a rush. Last year, wholesale accounted for 70% of revenue. This year, 90% has come from e-commerce.
Sales held up because pandemic-era demand was a good match for Pawling’s offerings. “I have friends that run brands that don’t sell the most comfortable clothing on earth, and they’re not experiencing the same thing.”
She quickly sold out of some items, and had to figure out how to speed up shipments from suppliers in Peru or Indonesia. She’s in talks with a US factory that could deliver quicker — though it’ll also cost more. And with trade shows canceled, she’s working on creative ways to showcase her collections online instead. Between March and July, “the entire business operations will completely have changed.”
DESIGNER: ‘THAT’S FOREVER’
Cynthia Rowley’s cheery, playful aesthetic has been a staple of New York fashion for decades. Her boutiques closed during the pandemic, and department-store client Neiman Marcus Group filed for bankruptcy. But for a few years now, Rowley has been moving away from such venues anyway, toward her own e-commerce operation.
That’s gathered pace in the pandemic — and so has the shift toward informal attire. There’ll be fewer dresses for weddings or evening events. “It has to be things that are appropriate to the new normal,” she says. “That’s forever. People will have a more relaxed approach to what they wear.”
Rowley says that will naturally lower prices. Also, “when you start talking about more accessible and more casual fabrics, that’s when really good design has to come into play.”
One thing that won’t change is “that feeling that you get when you look at something that makes you really excited to put on,” she says. “That’s never going away.”
RETAIL: ‘SECULAR SHIFT’
Clothing stores all over the world are reopening, but Tapestry Inc. — which operates more than 1,500 of them — foresees a “secular shift” toward online shopping, according to Chief Executive Officer Jide Zeitlin. He’ll likely pare back the company’s network of Coach, Kate Spade, and Stuart Weitzman outlets, with a higher threshold for renewing leases as they expire.
Tapestry’s stores canceled $500 million of orders for handbags, jackets and dresses, saving cash to weather both the shutdown and what’s likely to be a slow recovery. “This downturn is going to be more protracted than a quarter or two,” Zeitlin says.
Meanwhile, online luxury retailer Farfetch has seen sales skyrocket — by 90% last quarter. Further changes may be on the way for the industry, says Chief Executive Jose Neves. “We’ll see headwinds and tailwinds and side-winds.”
The decimation of global tourism during the pandemic will hit luxury labels hard, Neves says. Visitors from China, for example, were a reliable source of sales in hubs like New York, London and Paris.
Neves says fashion is rooted in the wider culture, and will survive. His brick-and-mortar rivals may need a bit of reinventing — but “this was true before COVID.”
MARKETING: ‘DISCOVERY MAGIC’
Searching for a way to sum up consumption patterns in the pandemic, Jake Cohen invokes the “hierarchy of needs” theory of psychologist Abraham Maslow. “As soon as people were sent home, the first thing they did was buy three weeks of food,” he says. “That’s the bottom rung.” Later on, “people are going to spend on things to reintroduce themselves into society” — like clothes.
Cohen is head of product marketing at Klaviyo, a Boston-based e-commerce marketing company. He says there’s been a surge of interest in recent months, with the clothing business accounting for about 30% of his clients.
Traditionally, “the golden discovery magic was being in the department store,” he says. “If you’re a brand that got picked up by Bloomingdale’s or Barneys or wherever, people walk through going for Chanel, but they see you, and all of a sudden you’re a thing. People aren’t in stores now, so how do they go find that new brand?”
Fashion is coming up with answers online, from customer quizzes to influencers on social media. Instagram is full of ads for face masks that match up with shirts or skirts. A swimsuit brand has its own blog and travel guide: “no one’s traveling right now,” but they’re hoping to, so they might click the link. “Good storytelling, good branding and good content is going to attract people.”
By Denise A. Valdez, Reporter
ASIAN consumers are expected to lead the change in consumer behavior in the post-pandemic world, and businesses are advised to adapt to at least five key shifts as they happen, global data analytics firm Kantar said.
Vicky V. Abad, chief client officer at Kantar Philippines, said companies in Asia need to acknowledge new consumer insights more promptly as these trends will unfold faster in Asia than in other parts of the globe.
“While we are monitoring the same for the global markets, we believe that in Asia, the shift in attitudes is going to be more accelerated… Because Asia is a part of the globe which is primed for pandemic,” she said in a media briefing last week.
Ms. Abad said the region’s past experiences with epidemics, such as the severe acute respiratory syndrome (SARS) and influenza A virus subtype H1N1 outbreaks, make Asians “ahead of others” and “almost very comfortable” in dealing with the coronavirus disease 2019 (COVID-19) outbreak.
She added the community-based mindset of the region makes for a societal cohesion at the heart of Asia’s culture, allowing Asians to be quicker to adapt when something hits them as a group.
Kantar has identified five key behavioral shifts that will emerge and last through the post-pandemic world: heightened focus on protection, well-being, connections, flow and experiences.
Protection refers to seeking stability and crisis-proof opportunities. This means favoring reduced human contact and contactless processes as people remain wary of contracting COVID-19. And if hygiene used to be in the periphery, Kantar said it would now be central and viewed as a life saving tactic.
With this mindset, companies and brands must consider offering physical shields, protective spaces, crisis investment and digital defenses.
The previous trend of maintaining outdoor lifestyles may also slow down post-pandemic, as consumers start to favor wellness offers that can be done within the home.
This insight allows for the rise of proactive ingredients in food, digital fitness and wellness zones. The slower pace of life with people mostly in their homes will also allow for new wellness pastimes and hobbies to thrive.
The way people interact and build connections will also change, shifting from seeking meaningful face-to-face interactions to rebuilding digital platforms for intimate connections.
Kantar introduces the idea of a “Generation COVID” in which people are drawn closer together because they are united by the global pandemic. But while digital intimacy may grow, people may also have minimized networks as they grow more conscious with who they interact with physically.
Maintaining a steady flow of life will also be an aspiration after the pandemic, as the disruption brought by the lockdowns will trigger a want for self-sufficiency and reliability.
This poses an opportunity for subscription models to arise. People will also be more conscious of accommodating under-privileged and needy groups, while prioritizing essential products and services.
Lastly, people will maintain a desire for “novel experiences that provide unadulterated fun,” but will remember to have it in stable and controlled boundaries.
This means any opportunity that would strike the balance in giving multi-sensory experiences while ensuring safety will gain traction. Entertainment that can be consumed and exercised at home may also be a new trend, giving opportunity for analog experiences to revive.
“The COVID-19 pandemic is a turning point in our history — not only for the healthcare system but also for business models that are changing the way they run their operations to adapt to the new normal,” Ms. Abad said.
“Obviously there will be mistakes here and there, because it couldn’t be a polished response immediately. But people really have to adjust in terms of being available online, if it had to be that way. These are your quick response, but there will also have to be an organized response moving forward,” she added.
OKAY, so you’re late, only beginning to shop for a Father’s Day present the day after. Don’t worry, we’ve got you covered. With a purchase from these brands, not only will you be helping a local business (and maybe a few charities), you’ll also be able to give your father a nice unique present — and because of the prices, you can even go and match him, just like he always wanted.
Here’s a proposition: locally made sneakers. Marikina-made brand ButingKicks. While the brand also offers masculine dress shoes, a flagship line is its collection of leather and knit sneakers, named after the deities of Greek myth. The knit sneakers even have a wing-tip pattern on them, seen in the Athena line, so they can look dressy, even with jeans. Other designs combine wingtips with outdoor soles, giving a casual, masculine look. Until the end of the month, ButingKicks has a free shipping promo. Find them on Facebook @ButinghKicks.
Another Marikina-made shoe brand, Bayani, is making a statement by highlighting its local makers. The handmade pairs are named after heroes of the Philippine Revolution (a pair of tasseled loafers are dubbed The Jacinto). You have a choice of wingtips, topsiders, oxfords, mules, and, yes, even sneakers. They’re holding a sale, so be sure to catch them (June being Independence month for the Philippines, too). Find them on Facebook @bayanishoesph.
They’ve got flair, and they’re there. Social enterprise Eye Know Right kind of follows the lines of classic Ray-Ban models the Wayfarer, the Clubmaster, the Round Metal. They’re named The Boss, The Bully — and the Burgis. They come with Alpha-UV and Blue Light protection, so they display both form and function. Furthermore, despite a tough-boy brand image, this bad boy has a heart of gold: a previous project raised funds from every purchase to send a child to school, while a present project donates to Project Pearls with an aim to end hunger caused by the COVID-19 lockdown. So far, it has raised P320,555. Visit the website at eyeknowright.com.ph. — Joseph L. Garcia
THE Court of Tax Appeals granted the petition of Watsons Personal Care Store (Philippines), Inc. to cancel its P430.2-million tax assessment for 2010 for being reviewed by unauthorized revenue officers.
In a 27-page decision dated June 11, the court’s first division said the records showed that the revenue officers who conducted the investigation were not authorized through a letter of authority (LoA) to review the company’s accounts records, deeming the assessments void.
“Not having the authority to examine petitioner in the first place, the subject tax assessments are void,” the court ruled.
“Wherefore, in light of the foregoing considerations, the instant Petition for Review is granted. Accordingly, the FLD (formal letter of demand) and the tax assessments dated December 17, 2014…inclusive of penalties and interest, are withdrawn and set aside,” it added.
The court cited jurisprudence that says a letter of authority be issued to authorized representatives before an examination of deficiency tax assessment. If the revenue officer who conducted the examination is not authorized by the said letter, “the assessment is inescapably void.”
It said the letter was issued in 2011 by the Bureau of Internal Revenue (BIR) to examine Watsons records for 2010. However, a memorandum of assignment was issued referring the case to another set of officers to replace those initially assigned.
The 2014 assessment worth P1.5 billion was then issued by the BIR upon recommendation of one of the officers in the memorandum and two others.
The court said a referral memorandum does not give authority to the new set of revenue examiners, noting that a letter of authority validly issued does.
While the issues framed by the parties can be tackled by the appellate court, there are exceptions such as when, in the interest of justice, matters of record have some bearing on issues submitted but were not raised or ignored and questions involving matters of public importance.
“In this case, whether or not the assailed Decision of respondent and the subject tax assessments are valid is a matter of record, and of public importance,” it said.
“In view of the finding that the subject tax assessments are invalid for lack of the requisite LoA to conduct an investigation or examination of the petitioner’s books of accounts and accounting records, it becomes unnecessary to address the other issues and respective arguments raised by the parties,” it added.
Watsons was first assessed by the BIR for deficiency in taxes worth P1.85 billion in the preliminary assessment notice.
In the formal letter of demand in December 2014, the amount was reduced to P1.46 billion and to P430.2 million in the final decision on disputed assessment in November 2015, which was then raised to court after the company’s request for reconsideration was denied by the bureau.
Watsons questioned the findings of the bureau for its assessment for deficiency income tax. It also said that for failure to properly compute its value added tax liability per quarter, it must be declared void.
The expanded withholding tax and withholding tax on compensation assessments “lack a solid mathematical computation” and since the computation was not made on a monthly basis, it was not apprised of which of the expanded withholding tax fell under which month.
The final withholding tax, final withholding value-added tax, and documentary stamp tax are “bereft of factual and/or legal basis,” it claimed.
The BIR maintained that Watsons is liable for the assessed deficiencies.
The decision was penned by Associate Justice Catherine T. Manahan and concurred by Presiding Judge Roman G. Del Rosario. Associate Justice Esperanza R. Fabon-Victorino was on leave — Vann Marlo M. Villegas
RATES OF government securities on offer this week will likely move sideways on signals of a pause in monetary easing.
The Bureau of the Treasury (BTr) on Monday will offer P20 billion in Treasury bills (T-bills), broken down into P5 billion each for 91- and 182-day papers and P10 billion via 364-day instruments.
On Tuesday, the BTr will auction off P30 billion worth of reissued five-year Treasury bonds (T-bonds) with a life of five years and two months.
Two bond traders interviewed Friday said average rates for the T-bills will likely edge sideways.
The first trader gave a forecast range of 2.95-3.15% for the five-year T-bonds, while the second trader expects its rate to settle between 2.9% and 3.1%.
“Yields are perceived low by the market and without any further guidance on policy, yields continue to move sideways,” the second trader said via Viber.
Last week, the BTr raised P20 billion as planned in its sale of T-bills as total bids hit P82 billion.
It awarded P5 billion in 91-day papers at an average rate of 2.035%, slightly lower than 2.038% in the previous auction on June 8.
It also raised P5 billion as planned via the 182-day instruments, yielding an average rate of 2.101%, which was slightly higher than the previous 2.099%.
For the 364-day T-bills, it borrowed P10 billion at a lower average rate of 2.35% and raised another P10 billion later that day via the tap facility.
The last time the BTr offered five-year papers was on May 27 when it raised P30 billion at a lower average rate of 2.676% and another P20 billion via the tap facility.
At the secondary market on Friday, the three-month and six-month papers were quoted at 2.155% and 2.233%, while one-year and five-year notes fetched rates of 2.598% and 2.957%, respectively, according to the PHP Bloomberg Valuation Service Reference Rates.
“Bond players were seen trimming positions in the past week due to expectations that BSP (Bangko Sentral ng Pilipinas) could keep its policy rate unchanged this coming Monetary Board meeting,” the first trader said via Viber
The BSP Monetary Board will review its policy settings anew this Thursday.
BSP Governor Benjamin E. Diokno early this month signaled that benchmark interest rates will likely be kept at current levels in the meantime as inflation continues to ease, with latest print settling at 2.1% in May.
The overnight reverse repurchase rate is currently at 2.75%, while the overnight lending and deposit rates are at 3.25% and 2.25%, respectively.
According to the first trader, offerings of short-term papers will still be met with strong demand as liquidity remains robust in the market.
The second trader supported this, saying “without any hints on future policy, demand will be more on the short tenors but there’s still a lot of cash in the market so that keeps a cap on yields towards the long end of the curve.”
The government plans to borrow P170 billion from the local market in June: P110 billion via weekly T-bill auctions and the remaining P60 billion in T-bonds to be offered fortnightly.
The state borrows to fund its budget deficit which is now seen to hit 8.1% of gross domestic product. — Beatrice M. Laforga
THAILAND has been widely hailed as a COVID-19 success story as the country managed to stop the spread of the virus in its early days through rigorous contact tracing using a “thousand epidemiological teams” across the country. Now, the country is poised to re-open for tourists, with a focus on domestic tourism, as the government tries to revive a major contributor to the Thai economy hit by the pandemic.
“Like everywhere else, Thailand’s tourism sector was affected by the COVID-19 pandemic. The number of foreign tourists in Thailand may plunge as much as 25.8 million to 14 million in 2020. This is the lowest rate in the past four years,” the Tourism Authority of Thailand told BusinessWorld in an e-mail interview on June 19.
This is a grim prospect for a country whose tourism receipts account for almost 14% of the country’s gross domestic product, according to the Bangkok Post.
As of this writing, the Kingdom of Thailand has recorded 3,147 COVID-19 cases, 3,018 of whom recovered while 58 died.
HSBC Global Research, a research house focusing on emerging markets, predicted in early June that the Kingdom of Thailand is poised to lose $47 billion in tourism revenues for 2020.
“Tourism is a key growth driver in the country, and it has taken a huge hit, but the health and safety of our citizens and visitors are our priority. We are confident that we can revive Thai tourism, and recover our losses in the long run,” the tourism authority said.
From January to May, Thailand’s international tourist arrivals dropped by 59.97% which meant a loss of 330 million baht (approximately $10.6 million).
The World Tourism Organization noted in its May impact assessment report that domestic tourism may recover faster than international travel and Thailand is looking to persuade 6 million Thais who had plans to go overseas to stay and travel within the country instead.
The tourism authority expects domestic trips to double as some travelers might travel more than once. In the e-mail, they cited a survey by the Suan Dusit Rajabhat University which said that “over 75% of Thais agreed that they would like the Thai people to tour their own country first before going elsewhere.”
And in order to support tourism, the Thai government has approved a 22.4 billion baht (approximately $709 million) stimulus for domestic tourism including a “moral support” program to help finance holiday travel for 1.2 million health volunteers and officials of sub-district hospitals. They will be given a subsidy of 2,000 baht ($64) per tourist for at least an overnight trip.
The government will also be subsidizing “5 million nights of hotel accommodations at 40% of normal room rates, but the subsidy will be limited to 3,000 ($97) baht per night for up to five nights,” the authority told BusinessWorld in the e-mail. The remaining 60% will be shouldered by the traveler.
There will also be subsidies for other expenses including food and admissions fees for attractions capped at 600 baht ($19) per person per day for up to five days.
They also allotted 2 billion baht ($64.5 million) to subsidize “domestic flight fares, inter-provincial fares, and car rental fees” for 2 million people. The amount is said to cover up to 40% of expenses but capped at 1,000 baht per tourist ($32)
In Mid-June, there were reports that the country is opening up select destinations for a limited number of people from select countries that are considered low risk in order to help international tourism recover. These so-called “travel bubbles” initially included a list of countries such as New Zealand and China, but according to a June 19 story by The Bangkok Post, Thailand “is in no rush to open up travel bubbles as more thought is needed into putting the concept into practice,” quoting the head of security of the pandemic response team.
“[The] arrangement is still up for discussion, and nothing has been finalized yet,” the Tourism Authority of Thailand said in the e-mail before adding that the idea for travel bubbles was first introduced by the Civil Aviation Authority of Thailand.
Aside from the stimulus, the government also placed safety measures in tourism establishments including a registration system that supports contact tracing. The government also asks people to “ear a face mask, wash your hands frequently, keep a meter away from other people, book ahead to ensure a time slot, and avoid paying in cash,” according to a press release.
In the end, while the pandemic has undoubtedly been a huge hit to the tourism industry, the Tourism Authority of Thailand said “the health and safety of everyone is our topmost priority. We can recover in the long run.” — Zsarlene B. Chua
METRO Pacific Tollways Corp. (MPTC) had submitted a proposed roadmap to the Transportation department for the full execution of cashless payment on all its toll roads.
“We have been actively talking to DoTr (Department of Transportation) and DPWH (Department of Public Works and Highways) in relation to contactless passage. We submitted a proposal last May 26 already, which details the roadmap to execute 100% cashless transactions for our expressways,” said J. Luigi L. Bautista, president of Metro Pacific Tollways North, a unit of MPTC, at a virtual media conference on June 13.
He said the Transportation department is currently evaluating the proposal. “They are very supportive. We are just sorting out some final details.”
Once approved, the MPTC will be implementing the cashless payment plan in three phases. “The first phase is 100% RFID in the five to six months; phase two will be the interoperability with the other expressways which can happen in the next 12 months; and phase three is the free flow already, which is what they call open-road tolling, and this can happen in the next two to three years,” Mr. Bautista said.
The group has also proposed that the government should require all motorists to put radio frequency Identification (RFID) tags on their vehicles.
Mr. Bautista noted that the Land Transportation Franchising and Regulatory Board currently requires public utility vehicles to have RFID tags.
“In the case of private cars, there is no mandate yet,” he said.
He added that only 30% to 35% of vehicles that pass through the MPTC’s toll roads are equipped with RFID.
MPTC operates North Luzon Expressway, Subic Clark Tarlac Expressway, and Cavite Expressway.
MPTC is the tollways unit of Metro Pacific Investments Corp. (MPIC), one of the three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin
A MEASURE amending the law setting quotas on bank lending to the agriculture and agrarian reform sectors has been filed in the Senate.
Senate Bill No. 1585, filed by Senator Cynthia A. Villar, will amend the Agri-Agra Credit Act of 2009 to include investments and grants for agriculture activities that will improve productivity.
At present, the law requires banks to set aside 25% of their total loanable funds, with at least 10% set aside for agrarian reform beneficiaries.
Ms. Villar said banks typically comply with the 25% requirement by subscribing for shares of stock or investing in special deposit accounts offered by accredited rural financial institutions.
“The Bankers Association of the Philippines explained that its members usually gravitate towards alternative modes of compliance with less risk exposure and are seeking alternative ways to comply with the requirements,” she said in the bill’s explanatory note.
The bill will also remove the distinction between agriculture and agrarian reform lending for a more inclusive financing system.
In addition to existing alternatives, the bill will allow financial institutions to comply through investing in shares of the Philippine Crop Insurance Corp. or lending to agri-business enterprises that engage directly with rural community beneficiaries.
Ms. Villar is also seeking to expand the category of projects that may be financed through bank loans or investment to include fishery activities, agricultural mechanization, agri-tourism and green finance projects, among others.
Other eligible activities, such as the promotion of agribusiness and the acquisition of work animals, farm and fishery equipment and machinery, are currently covered by the Agri-Agra law.
The bill provides for non-compliance fines of 0.5% of the amount below the quota, or rates to be otherwise prescribed by the central bank’s Monetary Board.
Ten percent of the penalties collected will be retained by the central bank while the rest will be remitted to a special fund that will be managed by the Agriculture, Fisheries, and Rural Development Financing Policy Council.
The program will build capacity and institutional know-how for banks and their clients in rural areas. It will also promote the titling of agrarian reform land, and extend credit to cooperatives or associations. — Charmaine A. Tadalan
